Oil and Gas Industry Fights New Regulations in Ventura County

After Ventura County supervisors passed several new measures meant to mitigate harms caused by oil and gas operations, an overlapping network of fossil fuel interests sued to stop them from going into effect, Capital & Main has learned.

At least one of the suits, filed by a nonprofit trade association representing local business interests, may present conflicts of interest among its board members, who are also tied to other lawsuits.

Additionally, the largest oil company operating in the county, together with California’s largest trade association for oil companies, launched an in-person petition drive to collect tens of thousands of signatures amid spiking COVID-19 hospital visits in order to overturn new regulations on future oil extraction covered by permits issued to drillers decades ago.

In comments to Capital & Main as well as in the public record, some of the companies and groups say they are pursuing these actions because the new regulations will impact jobs and tax revenue in Ventura County. It’s not clear how many people the oil industry employs in the county. A report from the Ventura County Community College District (“VCCCD”) Economic Development and Workforce Division estimated 854 people were employed in mining, quarrying, and oil and gas extraction in 2019. But the industry itself gives a higher estimate, declaring that it directly or indirectly employed more than 2,000 people in 2017.

A review of financial filings from the companies involved, including California Resources Corporation and Carbon California, as well as the legal complaint filed by Aera Energy, indicate that the companies face broad financial difficulties as communities turn away from fossil fuels in the face of worsening climate change and updated research on the health impacts of living near fossil fuel operations.

The new regulations in Ventura County, which was long among the state’s top three oil producing counties, represent that broader shift, climate advocates say. But the backlash from oil producers shows how the industry channels its immense resources through court battles and public forums to resist these changes.

A changing tide

Ventura County, which sits just up the coast to the northwest from Los Angeles County, has within its borders more than 3,800 active oil and gas wells, and several thousand more that have been plugged and retired since drilling began in the 19th century.

A substantial number of them, according to an interactive map compiled by the advocacy group Climate First: Replacing Oil & Gas (CFROG) and based on 2018 data from the county, are in the Ventura Oil Field, located northwest of the city of Ventura. The rest sweep east across the county’s northern edge and central region, near the cities of Oxnard, Ventura and Santa Paula, and up into the southern end of the Los Padres National Forest.

During the 20th century, the oil industry held significant influence with the board of supervisors and the county’s planning department, said Assemblymember Steve Bennett, who served on the board from 2000 until he was sworn in to represent the 37th district this past December. “There [haven’t been] very many effective political forces or movements or organizations to counter their influence” until recently, Bennett said.

But over the last decade, the industry’s influence has ebbed. In recent years, environmental groups such as CFROG, Food and Water Watch and the Central Coast Alliance United for a Sustainable Economy (CAUSE) have appealed oil drilling and successfully organized to halt a natural gas power plant NRG, Inc. had planned to construct in Oxnard. In 2020, the Food and Water Watch Action, a political action committee, spent more than $74,000 to elect a longtime environmental activist to the county board of supervisors.

Anti-oil and gas organizers have also tapped local youth to get involved in environmental causes. Evelyn Espinoza, a senior at California State University Channel Islands and a volunteer with CAUSE, said she was unaware that her family, who live in a mobile home park in eastern Ventura, was being exposed to toxins from a nearby oil field until an organizer came to speak to her class last year.

“It’s not something you’re educated on,” Espinoza told Capital & Main. “I didn’t know how it affected me up until last year, so that’s something I find problematic.”

A major target of advocacy over the last four years has been the county’s 2040 General Plan, the guiding blueprint for all of the county’s future development. The plan sets an overarching goal of reducing county greenhouse gas emissions to 61% below a 2015 baseline by 2040 and introduces several new measures in order to achieve that goal, including regulations on oil and gas operators.

The county’s Planning Commission started work on the blueprint in the winter of 2015. Early in the process, Bennett, a climate advocate, sent an email to his staff declaring he wanted the blueprint done before his term expired in 2020. Pro-oil groups suing the county now cite that message as evidence that the General Plan was rushed and should be halted.

A plan years in the making

On September 1, less than a month after the State Senate failed to consider a similar measure, Ventura County’s board of supervisors approved by a 3-2 vote a law mandating “buffer zones” of 1,500 feet between oil wells and residential buildings, and 2,500 for schools. The rules also included a requirement that drillers convey oil and produced water via pipelines instead of trucks, and use “electrically-powered equipment from 100% renewable sources” when available.

The plan also ordered oil and gas producers to capture gases emitted from drilling operations rather than vent unburned methane — a powerful greenhouse gas — into the atmosphere, or set the fugitive gas afire, a process known as “flaring” that emits carbon-dioxide. Exceptions are allowed for testing or emergency situations.

During a 12-hour meeting, a representative from the county’s planning department acknowledged the regulations would “render a large number of petroleum resources inaccessible.” During a public comment period, industry sources suggested reducing the setback for schools and allowing flaring for new discretionary wells. The planning department rejected these modifications to the plan as infeasible.

Ahead of the vote, several public commenters who opposed the new regulations referenced issues that would later appear in legal complaints filed by oil companies, including concerns about a loss of jobs and the fact that the general plan hadn’t been translated into Spanish or Mixtec, an indigenous language in Southern Mexico spoken by some county residents. (The county said it had hosted four workshops with Spanish interpreters available, and three more with Mixtec interpreters on hand.)

Board Chair Kelly Long, whose reelection campaign last year received at least $150,000 from California Resources Corporation via an independent expenditure group, said she had “grave concerns” that “disadvantaged communities” in Ventura County weren’t able to access information about the General Plan during the pandemic, and eventually voted against it alongside Supervisor Bob Huber.

Several commenters in support of the proposed oil regulations in the General Plan brought up recent health studies, including one this year from the University of California, Berkeley, that found living near oil and gas wells increased the risk of low birth weights, and another from Stanford that found increased risk of infant death from similar circumstances. Both studies looked at communities in California.

“There’s a growing body of evidence that shows living near wells increases risk of adverse health outcomes, including to fetuses and infants, and increases risk of asthma and depression,” David Gonzalez, lead researcher in the Stanford study, told Capital & Main.

The legal campaign

A month after the General Plan’s passage, seven different legal complaints were filed against the county seeking to halt implementation of the stricter oil regulations and other new measures.

In one, filed by Aera Energy LLC, a joint venture between ExxonMobil and Shell and the largest oil producer in Ventura County, the company said regulations would adversely impact its operations on 4,300 acres in the Ventura Oil Field. The company operates active wells and production facilities within the buffer zone for schools and residential dwellings, and while the regulations only apply to new drilling, they “would prohibit Aera from maintaining or extending the productive life of those wells by re-drilling or deepening them,” according to its complaint.

The complaint also describes what Aera alleges was a lack of transparency in Ventura County’s process of gathering public comment for the General Plan’s Environmental Impact Review ahead of the Sept. 1 vote.

In an emailed statement, Aera spokesperson Michele Newell said the General Plan adds “unnecessary regulations on top of an already heavily regulated industry” and argued that the county risked losing millions in tax revenue and putting 2,000 people out of work.

Related legal complaints were filed on the same day by California Resources Corporation, Carbon California and Western States Petroleum Association. None were publicly available when Capital & Main asked an employee with the Superior Court of Ventura County for them on Dec. 3, and legal counsel for the parties did not respond to requests for the complaints. But SEC filings for California Resources Corporation and Carbon California indicate significant business interests in the county at a time when the coronavirus pandemic and a global oil price war in early 2020 crashed the price of oil.

In a third quarter report for 2020, California Resources Corporation said the new regulations “would prevent or substantially reduce new development” of at least five of its oil fields. The company filed for Chapter 11 bankruptcy last June seeking relief for $5 billion in debt and equity interest due in 2022. And in its second quarter report for 2020 — the most recent available — the parent company of Carbon California, Carbon Energy Corporation, said its operations were “substantially limited” to the Ventura Basin after selling off its assets in the Appalachian and Illinois Basin earlier this year to pay off debts. In 2018, Carbon California took on more than $25 million in debt to finance the purchase of oil and gas producing facilities in the Ventura Basin.

In addition to the these four complainants, three others included Lloyd Properties, a limited liability corporation with significant land holdings in Ventura County; California Construction Industry Labor Management Cooperation Trust, a nonprofit organization that purports to represent both labor and management in the construction industry; and Ventura County Coalition of Labor, Agriculture and Business (CoLAB), a nonprofit organization that represents business interests.

The complaint filed by CoLAB, the only other one Capital & Main was able to obtain, references similar grievances regarding the public commenting process as the Aera complaint. Sometimes the two complaints matched each other word for word; Capital & Main identified several passages in which language or phrasing was nearly identical. A spokesperson for CoLAB told Capital & Main said the two parties did not coordinate litigation together. Both companies’ spokespeople did, however, admit that they drew language from public comments sent to the county throughout the years-long process of developing the General Plan.

CoLAB’s leadership has ties to other complainants: Board member Neal Maguire is the attorney litigating against Ventura County on behalf of Carbon California, and vice chairman Jeff Nobriga is a manager and health and environmental safety operations specialist for California Resources Corporation. In addition, board member Richard Atmore worked at Lloyd Properties for decades and in 2016 founded the Rancho Ventura Conservation Trust, which leases land to Aera.

CoLAB Executive Director Louise Lampara said Maguire recused himself from decision-making regarding the nonprofit’s lawsuit against the county, but did not answer similar questions regarding Nobriga or Atmore. A review of CoLAB’s IRS form 990 shows that it does not have a conflict of interest policy, which the IRS recommends trade associations implement.

This arrangement could run afoul of CoLAB board members’ fiduciary duties, according to James Joseph, a tax attorney and partner at Arnold & Porter.

“The idea is that [board members] should not be participating because the concern is they will be influenced by what their employer wants them to do,” Joseph said.

The antiquated permits

Ventura County’s board of supervisors delivered a second blow to local oil and gas operations on Nov. 10, when it voted to require environmental impact reviews for new oil wells drilled under decades-old permits that had previously evaded such assessments.

Under the change, the county would conduct environmental reviews for new oil and gas activities on land for which companies have drilling permits dating back to the mid 20th century, but companies would have a vested right to continue existing operations on existing wells without such reviews.

The county began to contemplate the change after the United States Geological Survey in February 2019 found that petroleum-related gases from such operations had begun to migrate into the Fox Canyon aquifer underneath the Oxnard Plain.

There are about 2,800 active and idle oil wells operating in the county under 40 discretionary “special use permits” issued prior to 1966 that have no expiration date. Before the new regulations passed on Nov. 9, any new oil operations taking place under these antiquated permits only needed rubber stamp approval from the county. The permits also do not stipulate a limit on the number of wells that can be drilled per permit.

In contrast, wells operating under permits issued after passage of the 1970 California Environmental Quality Act must undergo a discretionary review by the county that examines environmental impacts. Only a certain number of wells can be drilled per permit, and they have expiration dates subject to review.

The new regulations altered both the county’s coastal and non-coastal ordinances to require discretionary review of all new wells in the county.

But almost immediately after the vote, a political action committee funded by Aera Energy and the California Independent Petroleum Association began paying people to gather signatures for two referenda that could overturn the new regulations. The oil-funded group, Working Families for Jobs and Energy Independence, contracted Griffiths Olson Company, a political consulting firm, to gather signatures for the two petitions.

The petition gatherers set up tables outside stores including Michael’s, Walmart, Target and Vons, according to people who observed the petitioners. On Dec. 10, Griffiths Olson Company partner Paul Olson turned in more than 45,000 signatures of registered voters to the county’s election division, prompting the county to pause the regulations set to go into effect that day. If the county’s election division certifies the results, it will continue to halt implementation of the regulations unless the board of supervisors rescinds them or puts the issue to a ballot vote.

The oil group behind the petitions hopes that the referenda will appear on a ballot in the next statewide election in June 2022, according to spokesperson Sabrina Lockhart. The regulations would be unenforceable before election day.

A list of talking points distributed to petitioners include potential job losses, a loss of reliable energy supplies, overregulation of the oil industry, and mitigating economic damage caused by the pandemic, among other things. Lockhart declined to say how much petitioners were being paid.

Yet some of the committee’s hired canvassers appeared greatly misinformed about the new regulations. A letter sent to the county on Dec. 18 by a law firm representing numerous environmental groups alleges that petition gatherers deceived the public by showing people inaccurate versions of the ordinance updates, and also by exaggerating the potential effects of the regulations. In some instances they provided completely false information.

In one video obtained by Capital & Main of an encounter outside a Target in Oxnard on Nov. 20, a canvasser for Working Families for Jobs and Energy Independence erroneously says the petition has to do with supporting construction of a new “efficient and clean power plant.” Other canvassers incorrectly told people the referenda would completely outlaw oil production in Ventura County, according to transcripts of encounters compiled by activists with climate advocacy group CFROG.

Tessa Salzman, a hunger relief worker and environmental activist who lives in Oakwood, says that she and about 19 other people organized against the signature gathering effort, including by approaching petitioners and asking them questions.

“It doesn’t seem that petitioners are that well informed,” Salzman said. “They’re saying a lot of misinformation to the public — like that the board of supervisors had a closed private vote. That’s not true.”

The letter, which was submitted by CFROG and endorsed by Los Padres ForestWatch, Food and Water Watch, and Sierra Club Los Padres Chapter, asks the county’s election division not to certify the petitions.

Asked about misinformed canvassers, Lockhart wrote in an email that her group had provided “basic information about the referenda” to the company it hired to gather the signatures.

From Nov. 10 to Dec. 10, the number of coronavirus infections in Ventura County shot up more than 80% and the county’s ICU capacity dipped below 15%. On Dec. 6, Governor Gavin Newsom issued a stay-at-home order for the county, citing out-of-control spread.

But Lockhart insisted that the canvassing effort was a First Amendment expressive activity and therefore outside the bounds of the stay-at-home order.

“Our signature gatherers took extensive precautions to follow all state and county [COVID-19 related] orders,” Lockhart wrote in an email.

The county has until January 26 to certify the petition signatures, according to Miranda Nobriga, the county’s Clerk-Recorder public information officer.

This story was originally published by Capital & Main.