Governor Newsom Signs Legislation Protecting Taxpayers from Paying for Oil Industry Cleanup

Press Release
October 12, 2019

Contact: Sarah Hersh-Walker, Full Court Press Communications

510-759-2921 | [email protected]

OAKLAND — The California League of Conservation Voters (CLCV) issued a statement today applauding Governor Newsom’s signing AB 1057, a bill championed by Assemblymember Monique Limón (D-37) to protect the public from paying the costs of cleaning up deserted oil and gas facilities.

As California transitions away from oil, there is growing concern that oil and gas infrastructure could be deserted by operators, exposing taxpayers to potentially hundreds of millions of dollars in financial liability. AB 1057 increases the amount of financial security fossil fuel companies must provide so that in the event that a company fails to fulfill their legal obligation to clean up a site, the public is protected from environmental and financial liabilities.

The following is a statement from Mary Creasman, CEO of the California League of Conservation Voters (CLCV):

“Fossil fuel companies knew about climate change and its catastrophic consequences but chose to cover it up and double down on more extraction. They have a lot of responsibility for putting us in the position that we are today. The very least they can do is to pay for clean up in the communities they’ve polluted.

“AB 1057 is a proactive step to ensuring that California’s taxpayers are not left holding the bag for the cleanup of idle oil wells. We applaud Governor Newsom for signing this important legislation, and Assemblymember Monique Limón for leading on this critical issue. This new law is exactly the kind of thoughtful and bold environmental leadership California needs.

“As California thoughtfully plans for a managed decline of our reliance on fossil fuels, we must also make sure that the financial liability to clean up oil and gas facilities is not placed on the public—the very people who have already been harmed by the pollution and environmental burdens caused by this industry. This is an important first step toward requiring fossil fuel companies to accept responsibility for the pollution they leave behind in many communities across California.

“There’s more work that needs to be done to hold fossil fuel companies accountable and to support a thoughtful transition of our workforce away from extractive industries. CLCV will continue to work with the legislature and the Governor towards a future that is healthy, safe, and just for all Californians.”

Background Information On AB 1057:

As a prerequisite to enter into a lease with the state, fossil fuel companies accept financial responsibility in the form of surety bonds to cover the cost of cleanup. In the event that a company cannot fulfill their responsibility to plug and abandon their oil wells, the state can collect an oil and gas surety bond to pay for the cleanup.

The problem is that those bonds do not adequately cover the cost of cleanup in many cases. There are nearly 30,000 idle oil wells that no longer produce oil, about a quarter of those idle wells haven’t produced oil in over 25 years. If the previous operators of any of those oil wells goes out of business or can’t be located, the responsibility to pay the cleanup costs then falls on taxpayers. The cost to cleanup an onshore oil well can vary significantly depending on factors like the location and depth, in some cases costing upwards of $1 million for an individual oil well.

AB 1057, authored by Assemblymember Monique Limón, increases taxpayer protection tenfold, equaling approximately $1 billion in additional taxpayer protections, by requiring fossil fuel companies to provide additional financial security. This will ensure that Californians are not on the hook for the billions of dollars it will cost to clean up oil and gas wells.

The bill also modernizes the laws that govern the management of oil and gas by putting the safety of people and the environment first, rather than the antiquated policy of maximizing oil extraction,and creating a responsibility for the overseeing agency to support the state’s clean energy goals.

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