California, Oil Industry Brace for Big-Money Battle Over Rule Limiting Drilling Near Schools and Homes

Opponents of a state law limiting oil and gas drilling near schools, homes and other residential areas recently gathered enough signatures to put a referendum on the November 2024 ballot, setting the stage for an epic political battle that could shatter campaign spending records.

At issue is SB 1137, signed by Gov. Gavin Newsom last year, which prohibits oil and gas drilling within about a half mile — 3,200 feet — of “sensitive receptors,” including homes, hospitals, medical clinics, community centers and schools.

To environmental and health advocates, the hard-fought restrictions are long overdue. But oil and gas companies — or “Big Oil,” as the governor calls them — argue that the limits are not based in science and will only force California to import oil from other states with weaker health and environmental regulations.

“That has a lot of ramifications,” said Rock Zierman, CEO of the California Independent Petroleum Association, which is among a coalition of industry groups that together spent roughly $20 million to put the issue on the ballot. “Employment ramifications, tax ramifications. And it's worse for the environment.”

One thing’s for sure: By qualifying the referendum for the ballot, opponents of the law have placed it on hold for almost two years, until voters have a chance to weigh in. A simple majority vote is required to scrap the law.

“It’s one thing for Big Oil to make record profits as they rip off Californians at the pump,” Newsom said last week, after it was announced that the referendum had qualified for the ballot. “It’s quite another to push to continue harmful drilling near day cares and schools and our homes. Greedy oil companies know that drilling results in more kids getting asthma, more children born with birth defects, and more communities exposed to toxic, dangerous chemicals — but they would rather put our health at risk than sacrifice a single cent of their billions in profits.”

More than 2 million Californians, many of them people of color, live within a mile of an active oil or gas well.

A number of studies have found that people living near active oil or gas wells are more likely to suffer from serious health issues, including including cancer, cardiovascular and respiratory diseases and chronic cases of fatigue, nosebleeds and headaches.

Additional research also suggests that pregnant people living near active wells are at greater risk of having spontaneous preterm birth, increasingly the likelihood of their babies having  birth defects and lifelong health problems.

“Those outcomes for newborns can have repercussions for the health of the child throughout the life, because being born of low birth weight or preterm puts you at increased risk of other health problems down the line,” said Rachel Morello-Frosch, a UC Berkeley environmental health scientist.

State Sen. Lena Gonzalez, a Democrat from Long Beach, who helped introduce the setback law, said the oil industry simply wants to maintain the status quo, which is “not shocking, but very disappointing” and “not sufficient anymore.”

Embracing the ballot

Kobi Naseck, coalition coordinator with the environmental justice advocacy group Voices in Solidarity Against Oil in Neighborhoods, fought for the setback law and says the oil and gas industry is using the ballot to upend good policy.

“We're seeing big corporations spend money in an unheard-of way to undo a regulation,” he said.

The ballot challenge to the drilling law will be the second referendum to go before voters in 2024. Opponents of AB 257, a law signed by Newsom that aims to increase pay and improve working conditions for the state's fast-food workers, also recently submitted enough signatures to qualify for the ballot.

The right to referendum laws was added to the California Constitution in 1912 as a way for citizens to fight the considerable clout that powerful industries like the railroads enjoyed in Sacramento in the early part of the 20th century. But in recent years, that tool has increasingly been used by deep-pocket interests to overturn laws unfavorable to them.

Last year voters overwhelmingly rejected Proposition 31, an effort by tobacco companies to undo a new law banning flavored tobacco. But, says veteran campaign consultant Gale Kaufman, sometimes the goal isn’t to totally reject a law, but rather to delay its implementation.

“It’s different now. They [corporations] know from Day One that they’re going to try a referendum to stop a law. Tobacco — they didn’t even run a campaign, they just delayed it to give them time,” Kaufman told KQED.

“I’m not sure killing the bill is the goal. It’s stopping it for two years until they figure out what they’re going to do next,” she added.

In 2020, the bail bond industry poured millions of dollars into a successful referendum campaign to overturn SB 10, a law that would have replaced cash bail with risk assessments for those detained and awaiting trial. Ultimately, 56% of voters supported the referendum, and the law was scrapped.

Kaufman, who ran the campaign against the cash bail referendum effort, says that preserving the law was an uphill battle for a number of reasons, including the fact that unlike limitations on oil drilling, voters needed more education to understand what bail was and why it was unfair to lower-income defendants.

“With this [drilling law referendum], it’s easy to know who the good guys are and who the bad guys are. People are pissed at gas prices and high oil prices. That’s all you have to say,” Kaufman said.

High gas prices: an argument for both sides

“Referendums are a different beast [from other ballot measures] because you have to figure out what ‘yes’ means. People get confused. That’s half the battle,” said political consultant Steve Maviglio.

He noted that for this referendum, like others before, the voting rules are somewhat counterintuitive: Voters are asked to vote “no” if they want to invalidate the new drilling law and a “yes” to preserve it.

“Both sides make it confusing and it’s so hard to win a campaign when you’re advocating a ‘yes’ vote,” he said.

Maviglio predicts the oil industry and its supporters will spend $50 million to $100 million to invalidate the law, largely by reinforcing the argument that restricting drilling will only further increase gas prices and hurt drivers.

“I can’t imagine the other side is going to have much money,” he said.

Maviglio said that while voters may not like oil companies, they might also question supporters of the new law.

“Look how much trouble the governor is having on a bill right now” to impose a penalty on excessive oil company profits, he said. “There’s distrust of oil but also of environmentalists, who want to put everyone in an electric car.”

Newsom’s office seems keenly attentive to the issue of gas prices. On Friday, his team blasted out a press release accusing oil companies of “misleading” Californians about the price of gas across the state.

Hector Barajas, a consultant for supporters of the referendum, said that Newsom and the Legislature pushed the buffer-zone law without adequate analysis and testimony.

“The legislative process, with public hearings, notices and the opportunity for public discourse, exists for an important reason — to allow experts, members of the public, science and health leaders, and the impacted industries to provide testimony, ask essential questions, provide evidence or solutions in the public arena,” Barajas said.

It’s an argument that has some resonance with Democrats in the Legislature, like Assemblymember Joaquin Arambula, a Central Valley Democrat, who declined to vote on the original legislation.

“We in California listen to science. We should listen to science. But that then also means you have to wait for the scientists to tell us what their decisions are,” said Arambula, a former emergency room physician. Lawmakers, he added, somewhat arbitrarily chose the 3,200-foot standard for drilling.

“I always will lean towards the public health side of things, as I believe it's important for us when you live in the worst air basin in America,” he said, referring to the Central Valley area he represents. But he added that he would “wait for the scientists” before deciding how to vote on the referendum.

“I think at the end of the day,” he said, “we're going to have to take steps to limit for our communities of color their exposure to many of the harmful air that is in my community.”