California Dems Give Up On New Oil Safety Regulations

Democrats killed legislation protecting California homes and schools from oil and gas operations after big campaign donations, industry-funded junkets.

Editor’s note: We are proud to publish this major investigative report today from journalist Steve Horn. As you’ll see, California may be a blue state, but the fossil fuel industry still has enormous power in the state’s politics. — Sirota

This report was written by Steve Horn.

Big money from Big Oil and industry-tied unions has helped to kill a legislative effort to create environmental protections for communities living near oil and gas operations in California.

On August 5, a 5-4 Senate committee vote struck down consideration of legislation calling for consideration of a 2,500-foot setback between future oil wells and homes, schools and playgrounds. Only one of those votes came from a Republican. 

It was the second time in as many years that the bill -- Assembly Bill 345 -- failed to pass, and it failed to do so even after several rounds of significant amendments had watered down the legislation. With that, a years-long activist-led legislative movement went up in smoke for 2020. 

And then came the historically large wildfires. Within a matter of days, the state’s northern half caught fire at an epic scale, wildfires made worse from climate change and fueled by unfettered fossil fuel drilling. California oil is some of the dirtiest, from a climate change perspective, in the United States.

Drilling for oil in the state also has major public health repercussions, an impetus driving AB 345. Recent studies have linked oil drilling in California to health impacts, including low birth weight and small gestational age, as well as preterm births. Research has also linked higher levels of industrial pollution to higher contraction rates of COVID-19. 

Despite these impacts, the bill attracted a core group of Democratic legislators who ultimately oversaw the bill’s demise. Three of those who spoke out the most strongly against AB 345 at the Senate Committee on Natural Resources and Water hearing on August 5 before voting against it -- Sen. Ben Hueso, Sen. Andreas Borgeas and Senate Majority Leader Bob Hertzberg -- have received high dollar contributions and other support from oil interests that lobbied against AB 345. 

The lobbying and influence campaign efforts waged by the oil industry and labor against AB 345 illustrates the difficulty in crafting climate policy and environmental protections -- even in a state with a super-majority Democratic Party legislature that bills itself as a global leader on fighting climate change. 

A big part of the difficulty is the contradiction of the center of it all: California is the sixth biggest oil producer nationwide and the largest west coast oil refiner

Exxon Backdoor?

When he spoke out on the Senate floor against AB 345 before voting it down, Hueso called the legislation a “waste of time” and “publicity stunt” by environmental justice groups. Termed out of the legislature after having served in both the Assembly and Senate, he is now running for the San Diego County Board of Supervisors District 1 seat. 

Campaign financial disclosure data for that race shows that the East Los Angeles-area lobbying firm Urban Associates Inc. donated $90,000 before the March 3 primary to an independent expenditure committee supporting Hueso and a committee that opposed one of his primary opponents.  

Prime Strategies, the firm that owns Urban Associates, has lobbied for ExxonMobil since 2017. ExxonMobil has accounted for roughly 60 percent of the firm’s California revenue. In the first quarter of 2020, Prime Strategies listed AB 345 as the sole piece of legislation on which it lobbied at the state-level.

“Urban Associates, Inc. is a longtime supporter of Senator Ben Hueso,” Katherine Hennigan, a spokesperson for the firm, said via email. “Our company believes he is a strong advocate for good paying, union jobs and working families. To suggest anything more than that is simply insulting and another example of politics at its worst.”

ExxonMobil spokeswoman Ashley Alemayehu told TMI the company had “no involvement in Sen. Hueso’s local campaign.” 

Democrat Nora Vargas, Hueso’s general election opponent in the race, had sharp words on the vote.

“Instead of voting to protect California families and children from the health impacts of oil and gas drilling, Senator Hueso has once again failed our communities and the over 5 million Californians -- mostly black, indigenous, and people of color -- who live in a mile of drilling sites,” said Vargas. 

During his state legislative career, Hueso has received $27,300 in campaign contributions from companies that lobbied against AB 345.

Hueso also has behested tens of thousands of dollars from the fossil fuel industry throughout his political career, including $30,000 from the Western State Petroleum Association, $35,000 from Chevron, $15,000 from Phillips 66 and $1,000 from BP. Behesting is when California politicians raise money from outside groups or corporations and then donate it to other nonprofits, which some have described as another avenue of influence peddling.

Hueso’s legislative office and campaign team did not respond to multiple requests for comment for this story. 

Labor-Oil Alliance

Urban Associates donated to another Democratic lawmaker who helped derail AB 345. Fellow San Diegan Lorena Gonzalez, who serves as Chair of the Assembly Appropriations Committee and Legislative Latino Caucus, received a $5,000 contribution from the firm on April 25 last year for her campaign for Secretary of State in 2022. 

The donation came just three weeks before Gonzalez tabled AB 345 until the 2020 session and four days before the appropriations committee introduced heavy amendments into the legislation. The chair of the committee has unilateral power to table legislation for the second year of a session or kill it altogether. 

A month after she tabled AB 345 for the 2019 session, Gonzalez received another $4,700 campaign contribution from Chevron for her 2020 Assembly race. About two weeks after killing the bill for 2019, Gonzalez received a $15,500 contribution for her Secretary of State race from the State Building & Construction Trades Council, which has formed an alliance with the oil industry to beat back AB 345. 

Throughout her state legislative career, Gonzalez has received $74,000 in campaign contributions from the building trades. Near the end of the 2019 legislative session, Gonzalez received an additional $4,700 campaign contribution from Chevron, $2,000 from ExxonMobil, and $4,700 from Western States Petroleum Association. 

Some pundits and insiders have floated Gonzalez’s name as someone under consideration for the U.S. Senate seat vacancy that would open if Kamala Harris successfully wins the vice presidency.

Gonzalez, for her Assembly race, has received $26,500 from donors in the oil and gas industry so far for the 2019-2020 election cycle, according to FollowTheMoney.org.

Overall, legislature Democrats have received $923,252 from the oil and gas industry donors since 2017, according to FollowTheMoney.org. 

Industry-Funded Trips

Other senators who voted against AB 345 in committee took industry-funded trips convened by the California Foundation on the Environment and the Economy (CFEE) as the bill moved through its early legislative stage. 

That foundation brings together industry lobbyists, some of the bigger establishment environmental groups, labor union officials, state legislators and a smaller array of environmental justice groups in one place for study trips abroad involving luxury hotel stays or to California-based business meetings. 

Two Senate attendees of an April 2019 trip, Senate Majority Leader Hertzberg and Borgeas, voted against AB 345 at the August 5 committee hearing. Their trip took place in Switzerland and France and the agenda focused on the study of direct air capture of carbon dioxide and carbon capture and sequestration -- climate solutions pushed by the fossil fuel industry.

CFEE’s executive director is Jay Hansen, a former specialist assistant to Hertzberg when he served as assembly speaker and a former legislative and political director of the state building trades union. Hertzberg reported the trip as a $11,600 gift in disclosure forms, while Borgeas reported it as having a $10,800 value

State law bans gifts above $500, but exempts trips like the ones convened by CFEE where 501(c)(3) nonprofits pay for lawmakers to travel and attend educational conferences or events. 

CFEE is funded by its Board of Directors membess, including Chevron, Shell, Western States Petroleum Association, Marathon Petroleum and others. 

Hertzberg also attended a March 2019 policy-focused meeting at a luxury resort in Napa, Calif., again hosted by CFEE. Topics on the agenda for the theme of “The Road to Carbon Neutrality” included a panel titled “Striking the Right Balance: What is the Oil and Gas Industry’s Role in a Carbon Neutral Future?” which tackled the issue of setbacks. Listed participants included 30 fossil fuel industry representatives, 11 members of the legislature and eight environmental representatives. Of those, only three represented environmental justice groups. 

In a press release, Hertzberg said that “no taxpayer funds” were spent on the week-long trip to Europe. But trips funded by outside groups have faced criticism in recent years in California, with reformers saying gift-giving rules are in need of reform. On its website, CFEE touts its “legislative outcomes” achieved in California, including saying it helped get the state’s cap-and-trade program extended via AB 398 in the goal of getting to a “net zero carbon future.” Cap-and-trade is the state’s central climate program, and investigations have shown it has allowed the fossil fuel industry to continue polluting by writing off those emissions through the scheme.

Hertzberg and Borgeas have also received $28,100 and $21,000 respectively throughout their political careers from oil companies and organizations that lobbied against AB 345. Hertzberg also has received $34,800 from the building trades throughout his political career. Representatives from the legislative offices for Hertzberg and Borgeas did not respond to a request for comment.

Many of the donations to Hertzberg -- and the two trips he took sponsored by CFEE -- came in the aftermath of him signing the “No Fossil Fuel” pledge with the group Climate Hawks Vote, a public oath not to take financial contributions from the fossil fuel industry. 

RL Miller, the founder of that group who took a picture next to Hertzberg when he signed that pledge, slammed him for not listening to the “pleas of Black and Latinx voices crying for relief” and said she was “appalled” that he has broken the pledge.

"He's termed out of the State Senate in 2022 and running for Controller,” said Miller, who is a DNC member. “But how can he be trusted with Californians' money when he breaks a money pledge?” 

Back to Newsom

With AB 345 now history, the Newsom administration is currently considering its own setback rules through the ​​​​​California Geologic Energy Management Division (CalGEM). It is unclear how far that setback distance will be.

The proposed rule will be signed off on by California’s top oil regulator, Uduak-Joe Ntuk -- a former petroleum engineer for Chevron who worked at the Lost Hills Oil Field, according to his LinkedIn page. Newsom has yet to weigh in on the issue of AB 345 or setbacks directly. But in a press release announcing the start of the pre-rulemaking process, he said: “These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources.”

Environmental justice advocates have pointed to that process, in which they have taken part already, as their next exclusive point of focus

As the CalGEM process has played out, the state sued the Trump Administration in January for green-lighting fracking on public lands in many of the same counties in which oil drilling and fracking currently takes place in California. 

“The risks to both people and the environment associated with fracking are simply too high to ignore,” Attorney General Xavier Becerra said in a press release. “We won’t ignore the facts and science when it comes to protecting our people, economy, and environment -- and we’re taking the Trump Administration to court to prove it.”

Yet, even as that lawsuit continues in federal court, CalGEM has issued 7,474 drilling permits in many of those same counties, including 48 fracking permits in the 97% Latino company town of Lost Hills -- the most recent dozen to Chevron, Ntuk’s former employer.

Of those, 36 permits went to a company jointly owned by ExxonMobil and Shell, with lobbyists who are Newsom’s longtime political allies. Chevron also recently landed a permit to do solar-powered drilling in Lost Hills from the California Air Resources Board.

Newsom has also received donations from some of the forces opposed to AB 345. That includes a total of $112,800 from the building trades union before his successful 2018 gubernatorial bid and $500 from Eugene Litvinoff, International Counsel for Chevron. He also received $10,000 from Todd Stevens, CEO California Resources Corporation, and $8,500 from Sunset Exploration owner Robert Nunn.

Photo credit: Getty Images/David McNew


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