By Alexei Koseff, SAN FRANCISCO CHRONICLE
July 12, 2019
SACRAMENTO — Gov. Gavin Newsom has fired the head of California’s oil and gas regulatory agency after watchdog groups complained that the department was rife with conflicts of interest amid a sharp rise in drilling permits.
Newsom said he was particularly disturbed by a surge of permits for fracking, or hydraulic fracturing, in which high-pressure liquids are injected into the earth to release oil and gas deposits. The governor opposes fracking because of potential health and environmental risks, and he slammed regulators Friday for acting without his knowledge.
“I am very angry about the fact that they signed off on this many permits, period,” Newsom said at a news conference.
In a letter sent Thursday afternoon by his chief of staff, Newsom instructed Natural Resources Secretary Wade Crowfoot to dismiss Ken Harris, oil and gas supervisor in the Division of Oil, Gas and Geothermal Resources. He also directed employees who own oil and gas stocks to recuse themselves from all permitting decisions while new conflict-of-interest rules are developed.
His decision came a day after Consumer Watchdog and the FracTracker Alliance, advocacy groups critical of the effects of drilling, alerted Newsom in a letter to the increase in permits.
The groups raised concerns that the oil and gas division issued 2,365 new well permits during the first five months of his administration, nearly a third more than during the same period last year under then-Gov. Jerry Brown, who appointed Harris.
Almost half the new permits went to companies in which some officials in the department hold stock. Consumer Watchdog and the FracTracker Alliance found eight regulators who reported investments in fossil fuel corporations including ExxonMobil, Chevron and ConocoPhillips on their economic disclosure forms. They include David Gutierrez, the deputy director of programs for the oil and gas division, who unlike Harris is a civil service employee.
“These conflicts and approvals reveal a biased department where oil well permitting is on automatic pilot,” Consumer Watchdog President Jamie Court and senior consumer advocate Adam Scow and Brook Lenker, executive director of the FracTracker Alliance, wrote in the letter to Newsom. They urged the governor to “freeze all new oil and gas well permits until you can guarantee that decisions are made based on public safety.”
The groups also highlighted a doubling of new fracking permits, to 191, compared with the same period last year. More than three-quarters of those went to Aera Energy, a Bakersfield oil drilling company jointly owned by Shell and ExxonMobil.
Records show that Gutierrez, who is in charge of monitoring, compliance and enforcement programs, held up to $100,000 worth of ExxonMobil stock. He told the Desert Sun newspaper in Palm Springs that when he was hired two years ago, his bosses informed him he did not need to divest. He said he sold his stock in April because he was “trying to follow the rules.”
“We need a complete clean house there,” Scow said at a news conference Friday at which Consumer Watchdog applauded Newsom for firing Harris. “We need someone outside the industry who can truly be a watchdog and not an abettor.”
Newsom said the “ethical lapses” at the oil and gas division “were real and very concerning.” He said he would seek ta replacement who shared his opinion about fracking.
“I suspect, and it’s speculative, that the reason there were so many permits signed is they knew exactly what was coming,” Newsom said, pointing to a study he commissioned in the state budget about how California can transition from fossil fuels to low-carbon alternatives.
Harris, who spent most of his career working on state water policy, had served as head of the oil and gas division since Brown appointed him in December 2015. Brown clashed with environmental activists over his refusal to ban fracking or curb drilling, even as he built his political legacy on fighting climate change.
Newsom said he had explored instituting a moratorium on fracking after becoming governor, but concluded he lacks the legal authority to do so.
The governor expressed relucntace to sharply curtail oil and gas production in the state, as many environmental groups have demanded. He said that would simply require California to import more energy.
“Some people want to just turn things off and not deal with the consequences. But you can’t do that,” Newsom said. “I’m not going to run up gas prices, which are already over four bucks. It’s stressful for folks out there.”
Alexei Koseff is a state Capitol reporter for The San Francisco Chronicle, covering Gov. Gavin Newsom and California government from Sacramento. He previously spent five years in the Capitol bureau of The Sacramento Bee, reporting on everything from international recruiting by the University of California to a ride service for state senators too drunk to drive. Alexei is a Bay Area native and attended Stanford University. He speaks fluent Spanish.