A seasoned official with over three decades of service at California's oil and gas oversight agency, the Department of Conservation (DOC), has resigned following scrutiny over regulatory decisions. The resignation comes just a week after Consumer Watchdog and FracTracker Alliance raised concerns about potential conflicts of interest that undermine two new state laws aimed at regulating oil well permits.
Consumer Watchdog and FracTracker Alliance expressed their concerns in a letter to Governor Gavin Newsom. They criticized recent actions by the California Geologic Energy Management Division (CalGEM) for undermining laws that ban new oil well permits near communities and mandate adequate bonding of oil wells. These actions, according to the groups, resemble the era when the agency was heavily influenced by financial interests tied to oil drillers. The groups specifically highlighted the relationship between David Shabazian, the recently resigned Director of the DOC, and Jason Marshall, a former DOC executive who now works for oil drilling companies.
In May, Jason Marshall joined California Resources Corporation (CRC) as Vice President of Regulatory Affairs, after 28 years at the DOC. The advocacy groups suggest that Marshall used his connections to influence Shabazian’s decision not to enforce the Orphan Well Prevention Act following CRC's acquisition of Aera. According to the law, CRC should have posted a bond of at least $2.4 billion to fulfill obligations for its newly acquired idle and low-producing wells. Additionally, the groups questioned the DOC’s issuance of oil well permits within the half-mile public health setback zone just hours before a ban on such permits took effect. This issuance followed the withdrawal of a referendum challenging the law that established the setback.
The sudden resignation of Shabazian is seen by some as a positive sign that Governor Newsom's administration is taking conflicts of interest seriously. Jamie Court, President of Consumer Watchdog, expressed hope that the administration would revisit Shabazian’s decision not to require adequate bonding for the CRC Aera merger, emphasizing that the public could be left with the financial burden of well plugging and cleanup costs.
Prior to joining CRC, Marshall was employed by Berry Petroleum, which recently received 14 oil well drilling permits from the DOC. Marshall was involved in the 2019 overhaul of the drilling agency after revelations surfaced about oil drilling supervisors holding stocks in the companies they regulated. This led to a leadership change, with Marshall departing as Chief Deputy of the DOC in early 2020.
In a recent letter, the advocacy groups noted Shabazian's past praise for Marshall, highlighting his "many years of dedicated service" and his "wisdom and counsel on important issues." They called for an independent investigation into CalGEM’s decision-making processes, particularly concerning CRC and Jason Marshall's involvement in these decisions.
