Oil giants sell thousands of California wells, raising worries about future liability
The oil industry has made billions of dollars and increased profits by using California’s environmental regulations on land, water and air to prevent contamination. But a new report by the nonpartisan California Resources Commission shows that billions more of these profits could be diverted to pay for lawsuits against people who have done nothing wrong.
The commission is part of the state’s environmental regulatory system and, like other state commissions and regulators, has been working since last year to figure out how to reduce the enormous liabilities of the oil and gas industry. The effort is a welcome development, said commission President Robert F. Martin, a former state assemblyman and state senator who has since joined the company that bought his former company, Pacific Gas & Electric.
“It’s a very good question,” Mr. Martin said. “I think the numbers are going to prove very useful in developing this system.”
The report shows that the largest oil companies in the world are using California environmental law as the chief tool in their fight with individual Californians who are allegedly polluting the air or water. So far, it has resulted in more than 600 cases, including criminal and civil actions.
The new report, known as the Oil and Gas Litigation Project, is the largest single effort to quantify the amount of money involved in the use of California environmental law against private individuals in the state since the law was enacted three decades ago. That amount, known as the “settlement fund” by those who have been sued, has grown from a small fraction of one cent per natural gas well to more than $21 billion per year.
The report shows that oil companies have been settling more than $25 billion of pollution cases since 2009. In 2015 alone, they settled more than 1,500 cases. Oil companies have been doing all this while avoiding more than $23 billion in liability, the report says.
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