Despite all the political attention over Sacramento’s role in slowing oil amid high oil prices, nothing is likely to have a bigger impact on the pace of local drilling activity than a protracted legal battle. which is expected to resume next month in Kern County Superior Court.
A trial scheduled for April 28 will determine whether changes made by the county government last year were enough to address problems a judge identified two years ago in the sweeping environmental review underpinning the streamlined system. Kern Oil and Gas License.
If the court finds the changes sufficient, the clearance of local oil fields could accelerate quickly. But if the judge sides with plaintiffs, including environmental groups and a local farmer, scrutiny will remain with a state agency that says it is still trying to adjust to its role as lead agency in the local petroleum regulatory reviews.
Since Judge Gregory Pulskamp ruled in October that the county must wait for court approval before resuming local permits, industry data shows California’s rig count has remained historic low at a when other states have seen an increase in drilling activity more commensurate with oil prices. which recently topped $100 a barrel for the first time since 2014.
Locally elected politicians have called on the Newsom administration to speed up state permit reviews to stimulate the local economy instead of making up for state supply shortfalls by importing oil from other countries.
Meanwhile, there is an understanding within the industry that the upcoming legal proceedings will be critical. Last month, for example, senior executives at Kern producer California Resources Corp. stressed on a conference call with stock analysts that they hoped the county government would prevail in court so that the company can secure more permits to ramp up drilling this year.
A protracted legal battle had been expected since the permit system’s inception, when the state’s oil industry asked the county in 2012 to create its own permit system to replace state review processes that used to subject to legal review.
The county insisted that the industry fund the effort, including covering its legal bills, due to an early recognition that the system would be repeatedly attacked, revised and defended in court.
What the county proposed, and which was put in place by the Board of Supervisors in late 2015, was a strictly departmental licensing process that, for the first time, charged fees to local oil producers to help to offset the environmental impacts identified in an extensive petroleum review. operations in the valley portion of the county.
As expected, the system drew legal challenges claiming that the general county review was too broad and that only project-by-project assessments could provide enough detail.
In February 2020, an appeals court determined that the county’s original order failed to fully address or mitigate the local impacts of the oil industry on air quality, water supply, conversion farmland and noise.
The county then undertook additional environmental review and made revisions to its permitting order which it said corrected the deficiencies. A little over a year ago, the county decided to reinstate its permit system, with adjustments.
On October 4, Pulskamp ruled that the county acted prematurely by resuming licensing activity ahead of a court review. He allowed permits issued in the previous six months to continue, but ordered the county to suspend additional permits pending the outcome of next month’s trial.
The state, however, canceled permits issued by the county between March last year and October, forcing oil producers to relaunch their project applications.
Rock Zierman, CEO of the California Independent Petroleum Association trade group, expressed frustration with the state’s decision to revoke roughly six-month permits despite the judge’s order allowing them. He also claimed that the state’s petroleum regulatory agency, the California Geologic Energy Management Division, should have adjusted by now to take over petroleum permits.
Kern County officials declined to comment on next month’s trial.
A pair of organizations involved in the lawsuit noted in emailed statements that the latest legal wrangle represents the second time the county has been ordered to make changes to its petroleum licensing ordinance.
Earthjustice Assistant Attorney General Colin O’Brien said in an email that the most recent changes were insufficient to address the shortcomings the court found in 2020. The health of county residents, particularly those who live in near oil fields.
Staff attorney Daniel Ress of the Center on Race, Poverty and the Environment said taking over the county’s permitting system would eliminate future environmental reviews and local contributions.
“In its rush to accelerate oil and gas development, the county – for the second time – has neglected its legal obligations to fully disclose and address the adverse impacts of drilling on air quality, water and the health and quality of life of community members,” he said in an emailed statement.
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