"The governor has long held concerns about fracking and its impacts on Californians and our environment, and knows that ultimately California and our global partners will need to transition away from oil and gas extraction," O'Leary wrote. "In the weeks ahead, our office will work with you to find new leadership of (the division) that share this point of view and can run the division accordingly."
O'Leary also told Crowfoot to continue an investigation into allegations that division employees have holdings in energy companies and take "the maximum disciplinary action appropriate under law."
Consumer Watchdog and FracTracker Alliance noted a deputy director at the division disclosed owning stock in ExxonMobil worth as much as $100,000.
The company is a parent of the firm AERA Energy, which has received more new drilling permits than any other company in California this year, the report said.
The groups found seven other employees at the agency are invested in the oil industry.
"These conflicts and approvals reveal a biased department where oil well permitting is on automatic pilot," Consumer Watchdog and FracTracker Alliance wrote in a letter to the governor's office.
The groups did not list Harris as owning any stock in oil companies. He did not respond to an email seeking comment.
Jamie Court, president of Consumer Watchdog, said the state should put a freeze on permitting pending the investigation into conflicts of interest and called for a shakeup in the division's entire leadership.
"The rest of the leadership needs to be accountable," he said.
The deputy director with stock in ExxonMobil told The Desert Sun newspaper in Palm Springs that he had already sold his shares in the company.
David Gutierrez told the newspaper that he asked division officials when he was hired two years ago if he should divest from ExxonMobil and Magellan Midstream Partners. Gutierrez said he was told that because California was not regulating either company at the time, he did not need to sell his shares and to leave decisions about the companies to other officials should a conflict arise.
"I'm trying to follow the rules," Gutierrez told The Desert Sun.
Harris was appointed to head DOGGR by former Gov. Jerry Brown, who was criticized by environmental groups for his support of fracking. He previously worked for the State Water Resources Control Board and regional water quality agencies.
The DOGGR post has seen rapid turnover in the past decade and fracking has long been a controversial practice. Harris's predecessor resigned amid allegations of poor oversight of fracking and other drilling after just a year and a half on the job. The division had also faced scrutiny from the federal government for failing to enforce safe drinking water laws around oilfields.