California court tosses blanket approval for 72,000 new oil wells

A California appellate court threw out a Kern County law that allowed major oil producers to rely on a single, blanket environmental approval for 72,000 new oil wells, instead of facing scrutiny for each new project's potential impact on air quality, drinking water, wildlife and other concerns.

The Fifth District Court of Appeals, based in Fresno, ruled Tuesday that the county's 2015 environmental impact report failed to disclose the full extent of drilling’s potential harm, in violation of state law known as the California Environmental Quality Act. The appellate court ruled found that Kern County officials ignored threats to public health from particulate soot, and impacts to drinking and agricultural water supplies, along with other deficiencies.

"Based on the ... significant environmental impacts and CEQA's basic purpose of protecting the environment, we conclude the ordinance should not be allowed to remain in effect," the three-judge panel wrote in an exhaustive,150-page decision.

The panel ordered that the environmental report and the ordinance be set aside until county officials can demonstrate compliance with the law. Kern County must stop issuing permits under the ordinance within 30 days. The county typically produces two-thirds of the state's total output per year, according to published reports. 

The environmental impact report had set a cap of 3,647 new well approvals a year, for a total of 72,900 permits over 20 years, to be extended indefinitely if the caps weren't reached. That blanket approval process largely withstood a trial court challenge. But Tuesday's sweeping ruling invalidated the entire policy for now, dismaying oil industry executives but delighting opponents.

Kern County Planning and Natural Resources Director Lorelei Oviatt, who was a major force in crafting the policy, downplayed the long-term significance of the appellate court decision. 

She said she couldn't comment on legal strategy or whether they'd appeal to the state's Supreme Court, but she said she was pleased that the overall concept of over-the-counter, quick permitting with a seven-day turnaround had not been struck down.

Regular CEQA decisions can take years if they are challenged in court.

"We’re committed to this ordinance. If we need to fix it, we'll fix it," she said. "I'm very pleased we won on the very important issues for this innovative approach ... covering 2.3 million acres."

Oviatt and oil industry officials noted that about $100 million in mitigation fees had also flowed into county coffers as part of the policy, largely for new school buses, electric cars and other air pollution reduction measures to make up for emissions from new wells. 

The blanket approval process largely withstood an earlier trial court challenge. But Tuesday's sweeping ruling did halt the entire policy for now, dismaying oil industry executives and delighting opponents.

Rock Zierman, chief executive officer with the California Independent Petroleum Association, which represents about 500 independent crude oil and natural gas producers and others providing approximately 70% of California's total oil production, said in a statement:

“The appellate court’s decision disregarding the thoughtful and detailed holding of the trial court is a major step backward for environmental protection, energy security, and the well-being of Kern County. 

"The massive mitigation measures the industry took under the ordinance change will now be put on hold," said Zierman. "Nobody wins under that scenario.”

Others disagreed.

“This is a huge victory for our health and climate,” said Hollin Kretzmann, senior attorney at the Center for Biological Diversity, part of a coalition of groups that challenged the policy. “The entire point of the county's sham environmental review was to streamline the permitting process and short-change public input and environmental protection. The scheme they set up is basically rubber-stamping all the applications that come across the county's desk for oil and gas wells, and all of the ancillary equipment — pipelines wastewater pits, etc."

The court decision is the latest measure that curtails new oil production in the Golden State. Chevron, Berry, Aera and others have already been forced to scale back plans for profitable high-pressure cyclic steam operations since Gov. Gavin Newsom ordered a moratorium on new permits for the risky technique, which officials say led to a spate of illegal oil spills. He also asked federal scientists to review all applications for controversial fracking techniques. 

Other representatives for the winning side were thrilled with the court ruling.

“For our communities, the decision of the court is a very significant win," said Estela Escoto, president of the Committee for a Better Arvin. Arvin is a small farming community with oil production scattered throughout its boundaries. "This is an example that if we organize ourselves our small communities can win against a giant. However, this fight is not against oil workers, it’s against a chronic pollution problem that the executives of the oil industry have denied addressing.”

Arvin suffers the worst air pollution in the nation due to a variety of sources, including agricultural pesticides, trucking and car fumes and industrial emissions like those from oil production.

Kretzmann and fellow attorneys said the ruling means environmental review of new drilling proposals in Kern County should revert back to state authorities.

While the state's oil and gas supervisor does issue drilling and other permits, he and staff at the state Dept. of Conservation's Division of Geologic Energy Management have relied on Kern County's environmental review to satisfy CEQA requirements, Kretzmann added.

Dept. of Conservation spokeswoman Teresa Schilling said in an email that the state agency is reviewing the court opinion. "Importantly, the decision states that existing permits are not affected by this ruling, and the current permit evaluation system will remain in place for 30 days," she said.

"During that time, DOC will determine appropriate next steps to ensure that any CalGEM approvals include appropriate CEQA compliance. CalGEM will remain focused on providing full and fair oversight of oil and gas production while ensuring protection of public health, safety, and the environment."

CalGEM has experienced its own permitting woes. State reviews are being conducted after The Desert Sun published reports on "dummy" files that didn't contain required environmental and other review documents.

Kretzmann said Newsom had promised reforms at the state agency. A new oil and gas supervisor assumed office last month.

Janet Wilson is senior environment reporter with The Desert Sun and a ProPublica Local Reporting Network staff writer. Reach her at janet.wilson@desertsun.com or @janetwilson66

Desert Sun environmental reporter Mark Olalde contributed to this report.