Nonetheless, the state’s ambitions must be pursued in a federal system in which state and federal policy often conflict. Regional and economic interests also bring political challenges, as California political leaders have followed legislative failures with executive actions to implement the state’s most ambitious goals. This reliance on the executive orders rests on shakier ground, as these orders can be repealed by future governors.

Despite pursuing an energy policy that is often independent of the federal government, California cannot escape the international economic and geopolitical impact of global energy. In fact, the state’s efforts to reduce oil production have exposed it to greater geopolitical risks. Its foreign oil imports have tripled in the past 20 years.  Since 2012, California has imported more than half of its oil each year except for 2020.  With the efforts to reduce and eliminate the use and production of oil, there are concerns that the state’s reliance on oil imports will only grow. 

The state’s Low Carbon Fuel Standard (LCFS) has made the state more reliant on imports of lighter oil from OPEC countries and has discouraged the use of heavier crude oil produced in the state or imported from Canada.  California does not have pipelines to import domestically produced oil and must import oil shipped in supertankers from Alaska and from OPEC countries.  Shipping, however, brings additional environmental concerns from ship emissions and the risk of oil spills.

The global energy crisis caused by Russia’s invasion of Ukraine and record-high gasoline prices have also complicated California’s efforts to reduce oil production and use. There are claims that a restoration of California oil production could replace the lost Russian oil it imports.  In March 2022, House Minority Leader Kevin McCarthy, a Republican from Bakersfield in Kern County, sent a letter to Newsom stating that the United States must replace Russian oil imports with “cleaner American energy that can be produced in California by Californians.”  McCarthy also argued that increased domestic oil production could help “blunt increases in already-soaring gas prices seen across our state.” 

Oil industry supporters have also argued that California oil is produced under a stricter regulatory standards than foreign oil, although reports have indicated that California oil is increasing in carbon intensity and is dirtier than oils refined here from other states and countries.  Nonetheless, any increase in production of California oil would conflict with the state’s long-term climate goals.

These conflicts indicate the ongoing challenges in California’s energy transition. The issues around oil drilling, including fracking, offshore oil development, and the regulation of auto emissions are part of stories that have played out for decades. To understand the challenge of reducing and eliminating oil production and use requires an understanding of each of these stories and an investigation into the impact of oil on California’s history.

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The regulation of auto emissions, which are critical to the state’s policy to reduce greenhouse gas emissions by 40% below 1990 levels by 2030, also came under challenge during the Trump administration.  In 1970, the Clean Air Act established federal regulation of motor vehicle emissions that preempts state regulation.  California, however, had set its own emission standards since the 1960s, and the act allowed the state to continue to set its own emissions standards that exceed federal standards.  To do so, the state must request a waiver from the U.S. Environmental Protection Agency (EPA), and the EPA must grant the waiver if California can establish that it has “compelling and extraordinary circumstances” for the standard and that manufacturers can develop and apply the necessary technology to meet the standards.  Other states can then adopt California’s standards. Currently, 17 states and the District of Columbia follow the California standards, accounting for more than 40% of the U.S. automobile market.

California had never been denied a waiver until 2008, when the George W. Bush administration rejected California’s request to set its own emissions standard to regulate a number of greenhouse gas emissions from automobiles.  The California law would have forced automakers to make vehicles that achieve sharply higher gas mileage beginning in 2009.  The EPA denied the waiver on the basis that previous waivers were allowed to address local or regional pollution but climate change was not unique to California. 

The Obama administration reversed the decision in 2013 and gave California the authority to set auto emissions standards that covered greenhouse gases through model year 2025.  The waiver allowed the state to pursue its Advanced Clean Car program, which includes the regulation of greenhouse gas emissions and regulations to force the development of technology for its ZEV program. The Obama administration then developed unified standards for California and the federal government while still allowing California the authority to develop its more stringent standards.

In 2019, the Trump administration revoked California’s waiver under its Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, which established a single national program for fuel efficiency and GHG emission standards rather than a unified California and federal system that allowed California stricter emissions standards. The revocation rolled back national standards to 2020 levels, as the Trump administration’s rule required a fleet-wide average of about 40 miles per gallon by 2026, while the Obama administration’s 2012 rules would increase fleet-wide averages to 54 miles per gallon by 2025.   Officials said the decision would lead to cheaper and safer cars and provide regulatory certainty for auto manufacturers.

Auto emissions are the largest single source of greenhouse gas emissions in the United States at nearly 30%, and the revocation of the waiver was a significant challenge to the state’s ZEV program and its goal to reduce the state’s greenhouse gas emissions.  After the revocation of the waiver, Ford, Honda, BMW, Volkswagen and Volvo then signed an agreement with California to continue to follow the stricter emissions standard in the state.  California and 22 other states also challenged the ruling and demanded a federal court block the agency from revoking its long-standing authority.

The Biden administration challenged the Trump administration’s legal reasoning to withdraw the waiver, and in December 2021, the National Highway Traffic Safety Administration repealed its legal interpretation that the waiver system cannot be used for greenhouse gases.  In March 2022, the EPA reinstated California’s authority under the Clean Air Act to implement its own emissions standards, a decision that will allow the state to set and enforce its greenhouse gas emission standards and its zero emission vehicle mandate.  The decision restored California’s authority to regulate tailpipe emissions through model year 2025 vehicles, but the state will need a new waiver to regulate post-2025 vehicles.  “The restoration of our state’s Clean Air Act waiver is a major victory for the environment, our economy, and the health of families across the country that comes at a pivotal moment underscoring the need to end our reliance on fossil fuels,” Newsom said.

The last installment of the introduction will discuss California’s increasing reliance on executive power in its developing role as a global energy and climate leader.

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In March 2017, Trump issued Executive Order 13783, which directed federal agencies to ease regulations that “potentially burden the development or use of domestically produced energy resources” on federal lands.  A month later, Trump issued Executive Order 13795, which stated that it would be U.S. policy to encourage energy exploration and production on the Outer Continental Shelf, the areas of U.S. continental shelf beyond the jurisdictions of individual states.  The following year, the administration proposed a new five-year plan for drilling in the Outer Continental Shelf that proposed leases in the Pacific, Arctic, and Atlantic oceans.  Coastal states opposed the plan, and a court decision ruling that only Congress, and not the administration, can repeal a ban on drilling in the Arctic Ocean put the broader five-year plan on hold.  Although the prospect of new offshore drilling was diminished, the plan prompted new efforts at both the federal and state levels to ban offshore drilling in California waters.

On the day he took office, President Biden revoked both Trump’s executive orders on drilling, and the Department of the Interior suspended all new federal oil and gas leases for 60 days.  On January 27, 2021, Biden issued Executive Order 14008, which ordered a pause in new oil and gas leases on federal lands, including offshore.  California Senator Dianne Feinstein then introduced the West Coast Ocean Protection Act, which would ban new oil and gas leases in federal waters off the coast of California, Oregon, and Washington.  The bill, however, has not advanced out of the Senate Committee on Energy and Natural Resources.  In another attempt to slow offshore oil drilling, in May 2021, Democrats introduced federal legislation to prohibit new leasing for oil or gas exploration, development, or production offshore from San Diego to the northern border of San Luis Obispo County.  The bill has also not advanced out of committee.

While legislation has proven politically difficult, Biden’s moratorium also faces obstacles through several legal challenges. In June 2021, a U.S. District Court judge in Louisiana issued a preliminary injunction to block the suspension of new oil and gas leases on federal land and water, agreeing with the 13 states that challenged the suspension that the administration did not abide by the required administrative procedures in pausing the leases.  Similar to the case that put the Trump administration plan on hold, the ruling stated that only Congress has the authority to suspend oil and gas leasing.  The conflict over the legality of the suspension remains unresolved.

In November 2021, the Department of the Interior offered 80 million acres in the Gulf of Mexico and auctioned off more than 1.7 million acres in what was the largest offshore oil and gas lease sale in the U.S. history.  In defending the decision to offer the leases, Biden administration officials said they could have been held in contempt of court if they did not hold the auction.  In January 2022, before the leases became effective, a federal judge invalidated them based on a Trump administration environmental-impact determination that miscalculated greenhouse gas emissions from future oil and gas drilling in the Gulf of Mexico.

In February 2022, the Interior Department delayed future federal oil and gas lease sales after a federal judge in Louisiana prohibited the administration from using its “social cost of carbon” value in determining the impact of climate change on federal decision-making on permitting and regulatory issues.  The Biden administration had valued the social cost of carbon at $50 per ton of greenhouse gases, the value that was used during the Obama administration and that was higher than the $10 per ton value used by the Trump administration.  In March 2022, a court ruling temporarily restored the use of the measure, and the Biden administration said it would resume plans for oil and gas development on federal lands.  The Interior Department then said it would open roughly 144,000 acres up for lease on federal land at higher royalties.  The acreage was 80% lower than the original plan. In May 2022, the Biden administration canceled the planned auction of offshore drilling rights in two regions in the Gulf of Mexico and one in coast of Alaska.  The administration announced that it will propose a new five-year plan for offshore lease sales by June 30, 2022, when the current plan expires.

In June 2022, the U.S. 9th Circuit Court of Appeals ruled that the federal government must complete a full environmental review before approving permits for offshore oil drilling platforms. The decision prevents the Interior Department and other federal agencies from issuing permits for “well stimulation” through hydraulic fracturing until a complete environmental impact statement is issued “rather than the inadequate [environmental assessment] on which they had relied.” The decision is from a 2016 lawsuit brought by California, the California Coastal Commission, and environmental groups alleging that “federal agencies violated environmental laws when they authorized unconventional oil drilling methods on offshore platforms in the Pacific Outer Continental Shelf off the coast of California.”

While federal action faces difficulty, there has been more progress at the state level. In September 2018, Governor Jerry Brown signed into law SB 834 and AB 1775 to prohibit new construction of infrastructure related to oil and gas off the coast of California. Brown also signed AB 2864, which requires the California Coastal Commission or the San Francisco Bay Conservation and Development Commission to participate in damage assessment after an oil spill. In early 2022, California state senator Dave Min introduced SB 953, which would end all drilling in California state waters, including under existing leases.  The bill, introduced in response to the 2021 Orange County oil spill in which almost 25,000 gallons of crude oil leaked from a pipeline off the coast of Huntington Beach, passed out of the state Senate Committee on Natural Resources and Water in April 2022. It then failed to advance out of the Senate Appropriations Committee in May 2022 amid opposition from the oil industry and trade unions as well as concerns over the financial liability from terminating oil leases.

Part four of the introduction will discuss California’s recent battle with the Trump administration over the regulation of auto emissions.

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In April 2021, in response to Newsom’s request, the legislature considered SB 467, a bill that went beyond a fracking ban and included several issues that lawmakers had previously attempted to address. SB 467 would have prohibited new or renewed fracking permits, acid well stimulation, cyclic steaming, and water and steam flooding after January 1, 2022 with a ban after 2027.  It would have also implemented a 2,500-foot buffer zone, known as a setback, between drilling sites and schools, homes, and playgrounds.  (Previous legislative attempts to require a 2,500-foot setback failed. ) Additionally, it would have established a state program to encourage companies to hire laid off oil and gas workers to help clean up shut wells.  The bill, however, failed to pass out of the Senate Committee on Natural Resources and Water.

Legislative Failure to Executive Action

Within a week of the bill’s failure, on April 23, 2021, Newsom issued an executive order that directed the Department of Conservation’s Geologic Energy Management Division (CalGEM), the state’s main oil regulator, to initiate regulatory action to end the issuance of new fracking permits by January 2024.  In a far-reaching expansion of the aims of his earlier executive order, Newsom also requested that CARB analyze ways to phase out oil extraction across the state by no later than 2045 as part of the Climate Change Scoping Plan.  “The climate crisis is real, and we continue to see the signs every day,” he said in a press release.  “As we move to swiftly decarbonize our transportation sector and create a healthier future for our children, I’ve made it clear I don’t see a role for fracking in that future and, similarly, believe that California needs to move beyond oil.”  The following month, CalGEM issued a draft regulation to ban all new fracking and other well stimulation permits starting in 2024.

Reflecting the limits of executive action, unlike SB 467, the proposed regulatory ban on well stimulation treatments did not apply to cyclic steaming, a method similar to fracking by which high-pressure steam is used to break subsurface oil formations and allow thick crude to flow more easily.  The process is controversial, as it has caused oil leaks, often called “surface expressions,” in Kern County, and it requires natural gas for power.  In January 2020, CalGEM put a moratorium on the approval of new high pressure cyclic steam projects and wells, pending a safety review with the Lawrence Livermore National Laboratory.  A total ban on cyclic steaming, however, would bring a rapid decline in California oil production, as it accounts for more than half of oil output in the San Joaquin Valley and has kept many older California oil fields producing. 

Earlier Legislative Efforts

The regulatory moves to end fracking in 2021 followed legislative efforts that began in 2011 and, after a number of failed bills, achieved limited success in 2013. In September 2013, Governor Brown signed into law SB 4, which imposed restrictions on fracking beginning on January 1, 2014 and implemented a regulatory structure over fracking and other well stimulation treatments.  The bill required well operators to obtain a one-year permit for well stimulation treatments and provide a list of chemicals to be used as well as a plan to monitor the groundwater. The bill also required the California Natural Resources Agency to conduct a study on the health and safety impacts of well stimulation treatments.

The following year, in 2014, state lawmakers introduced SB 1132, which would have imposed a moratorium on fracking and other extraction methods until the completion of a multi-agency review of the economic, environmental, and public health impacts.  The bill failed to pass the Senate. Notably, between 2006 and 2016, the oil industry spent more than $150 million on political campaigns and more than $130 million on lobbying in California.

In 2015, the Division of Oil, Gas, and Geothermal Resources (DOGGR) released the environmental impact report required under SB 4, which concluded that fracking could have “significant and unavoidable impacts” on air quality, greenhouse gas emissions, and public safety.  DOGGR also formally adopted the bill’s fracking regulations, which became effective in 2016.

Shale Counter-Revolution

Overall, with a combination of environmental opposition and significant overestimations of California’s shale oil potential, California largely missed the so-called shale revolution that began during the mid-2000s. As high oil prices and low interest rates made the costly process of hydraulic fracking economic, U.S. oil reserves increased during this time and a number of states increased oil production through fracking.  California’s share of national oil production, however, has fallen significantly since 2010.

The political attention and efforts to ban fracking took hold in 2011, when initial reports estimated that the 1,750-square-mile Monterey Shale Formation potentially held 13.7 billion barrels of oil.  Those estimates were revised significantly downward in 2014 to only 600 million barrels of recoverable oil.  Along with this lower estimation of reserves, fracking has accounted for only a small amount of California oil production. The California Department of Conservation states that fracking produces about 2% of total in-state oil production.  In 2019, for example, fracking produced 2.3 million barrels of oil, or 1.5% of California's oil production, while cyclic steam produced 21% and traditional drilling produced 77%.  Other estimates put the share of oil production from fracking at around 20% up to 25%.  Nonetheless, while overall production is low, one report indicated that fracking activity is relatively high, accounting for about half of all the new oil wells drilled in California during 2005-2015.

Local efforts to regulate oil have been more successful where statewide legislation has failed. These include local prohibitions against fracking and cyclic steam production and initiatives, notably in Los Angeles County, to end oil production within jurisdictions.  Highlighting regional differences within the state, counties that are more dependent on the oil industry for employment, such as Kern County in the San Joaquin Valley, continued to support both conventional oil drilling and fracking. While some farming communities in the San Joaquin Valley opposed fracking due to concerns over environmental impact and water use, the opposition was focused on practices that conflicted with agriculture rather than on the industry’s right to extract oil.

Part three of the introduction will discuss California’s opposition to the Trump administration’s plan to promote offshore drilling.

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Not many people think of California as an oil state. Oil, nonetheless, has been a central factor in the state’s political history and economic development. The state has not only been a leading oil producer since the 19th century, but it has also contributed to the growth of oil consumption, most famously in the growing demand for gasoline with the development of U.S. “car culture.” The state has also been a leader in environmental issues, particularly around oil. It is where efforts to reduce air pollution from auto emissions began in the 1960s in response to Los Angeles smog and where the opposition to offshore oil drilling gained support after the 1969 Santa Barbara oil spill. More recently, California has led the efforts for more than a decade to restrict hydraulic fracturing, known as “fracking,” a controversial extraction method that increased U.S. oil and gas production and made it the world’s top oil producer.

The state’s opposition to oil production and its efforts to reduce auto emissions grew out of concerns about the local environment and have since widened into the state becoming a “global leader in combating the climate crisis.”  As part of this increasing policy ambition, long-term efforts to ban offshore drilling, mitigate the impact of oil production, and regulate auto emissions have evolved into a policy to reduce and ultimately eliminate the use of oil altogether. The question remains, however, if it is possible, or even desirable, to phase out an industry that has been integral to California’s growth as a state and a resource that has more than any other—even gold—shaped its history.

Oil and Climate Change

Increasing concerns over global climate change in recent years have accelerated California’s efforts to reduce and ultimately eliminate the use of fossil fuels. Notably, California has initiated a climate change strategy that involves not only the phase-out of oil, but also includes spending billions of dollars on zero-emissions vehicles (ZEVs), climate resilience, carbon sequestration, and land conservation.  As part of these accelerating efforts, in May 2022, the California Air Resources Board (CARB) released its most “comprehensive, far reaching, and transformative” plan to fight climate change. Its draft 2022 Climate Change Scoping Plan, the third update to the initial 2008 Scoping Plan, outlines different scenarios to achieve “carbon neutrality” by 2045 or earlier with a proposed scenario that would reduce oil use by 91% from 2022 levels by 2045.  The plan envisions achieving this by “rapidly moving to zero-emission transportation,” phasing out the use of natural gas for heating, accelerating the move toward renewable energy for electricity generation, and increasing the use of hydrogen and renewable gas. 

A Renewed Urgency

California’s climate change policies gained new urgency in response to President Donald Trump’s decision to withdrawal the United States from the Paris Climate Accord, an international agreement to reduce carbon emissions.  With Trump pulling the United States back from its climate commitments, California became the nation’s climate policy leader.  Governor Jerry Brown represented the opposition to the Trump administration’s direction on climate change by helping to lead state-level and international efforts to uphold the Paris Accord commitments.  He also signed into law SB 100, which set a goal for the state to reach 100% clean electricity by 2045, and issued Executive Order B-55-18, which set a new target for the state to achieve carbon neutrality by 2045.

In addition to the reversal in U.S. climate change policy, the Trump administration also pursued an energy policy that aimed to increase both conventional drilling and fracking on federal lands, including on more than a million acres of California land and in the waters off the California coast.  The plan threatened the decades-long efforts to restrict oil production in California and to ban offshore drilling.  Additionally, Trump’s revocation of California’s waiver from the Clean Air Act in 2019 directly opposed the state’s climate goals.  The waiver allowed the state to set its own, stricter auto emissions standards.

California elected officials, meanwhile, pursued policies to accelerate the state’s transition to ZEVs, ban fracking, oppose oil drilling, and regulate auto emissions. The most direct of these actions came in September 2020, when, as the state was battling historical wildfires, Governor Gavin Newsom exclaimed that the state was experiencing “a climate damn emergency” that required accelerated efforts on climate change.  He then issued Executive Order N 79-20, which called for dramatic actions to respond to climate change and outlined the state’s goals to achieve a carbon-neutral economy.

Executive Order N 79-20 outlined a policy that aimed at shutting down the oil industry. For transportation, it ordered a full transition of passenger cars and trucks to ZEVs, including deployment of ZEV infrastructure, and ordered CARB to develop strategies for the continuation of the state’s plan to reduce the carbon intensity of fuels. For oil production, the executive order required CARB to expedite regulation “to repurpose and transition upstream and downstream oil production facilities.” It also required state agencies to develop strategies, recommendations, and actions to manage and expedite the closure and remediation of former oil extraction sites, and it required strict enforcement of bonding requirements and other regulations to hold oil producers responsible for site closures and remediation.  In a separate statement, Newsom asked the legislature to end the issuance of new hydraulic fracturing permits by 2024.

The recent history of California’s ongoing energy transition raises questions over how and if the state can achieve these policy goals. The issues around oil production, offshore oil development, and the regulation of auto emissions each have a long history that demonstrates the conflict between state and federal policy, the competition among regional and economic interests, and in the economic and political challenges that an energy transition will bring.

The next parts of this introduction will explore these challenges with the issues of fracking, offshore oil development, and the regulation of auto emissions.

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