Proposed California 2023-24 Budget Prioritizes Health Buffer Commitment to Oil Drilling Communities Despite Some Cuts to Climate Programs


SACRAMENTO, CA — Governor Newsom’s proposed 2023-24 budget, released today, includes $54.2 million over two years to continue the implementation of Senate Bill 1137, the law that will prevent new oil drilling in neighborhoods and apply strict pollution controls to existing neighborhood oil drilling sites. This follows Friday’s approval of state oil regulator CalGEM’s emergency rule, allowing the agency to move forward with implementation of SB 1137 even amid the oil industry’s referendum effort to overturn the law.


The $54.2 million allocated for SB 1137 implementation includes a $14.6 million Oil, Gas, and Geothermal Administrative Fund in 2023-24, $20 million in 2024-25 and $19.6 million ongoing across state agencies CalGEM, CARB and the Water Board.


The shortfall has led to some cuts in the climate work, with 89% of last year’s budget being continued. Most of the reductions will be spread over a multi-year period. 


The $100 million committed in 2022 to be spent over 2 years for plugging and abandonment of oil wells will continue. However, according to a report commissioned by CalGEM in 2020, the cost of cleaning up and plugging the more than 100,000 orphaned wells across California is estimated at a staggering $9.2 Billion, if the costs fell to the state. Due to California’s lax bonding requirements, oil companies have put up financial assurances worth $107 million — about 1% of the conservative estimates to remediate the wells in California. CalGEM has the authority to require operators to pay for the cost of plugging and abandoning a well, but has been failing to use that authority. 


Below please find quotes from member organizations of the Last Chance Alliance


“Despite the budget shortfall, we’re seeing major investment by the Newsom administration to continue the state’s important work of protecting people from fossil fuel hazards. It’s a clear message to Big Oil not to mess with our democracy. The oil industry may be throwing every dirty tactic from their playbook to undo policies that protect public health, but this budget is one step closer to a permanent statewide setback.” – Kobi Naseck, VISION, a statewide coalition of frontline and environmental justice groups


“It’s encouraging that even with a budget deficit, the governor is committing tens of millions to cracking down on fossil fuel polluters and ending neighborhood drilling once and for all. But the latest climate-fueled deadly storms show the danger of every new drilling permit that fuels the climate crisis. Newsom can protect our climate and our health, and help save billions in disaster spending by ending new oil and gas drilling approvals starting today.” – Hollin Kretzmann, attorney at the Center for Biological Diversity’s Climate Law Institute


“Despite a budget shortfall, Governor Newsom has rightly prioritized the health and safety of his constituents living on the frontlines of oil and gas drilling in this proposed budget.” “These multimillion dollar investments will help further the vital mission of ending the state’s reliance on oil and gas, and will help protect important legislation like SB 1137 from the attacks of Big Oil.


However, instead of holding oil operators accountable for the cleanup of California’s 100,000 abandoned and idle wells, Newsom allocated $100 million for oil well remediation. The real price tag for this cleanup is billions of dollars, and the oil industry should foot the bill.” –  Brandon Dawson, Director of Sierra Club California


“Earlier today, Governor Newsom unveiled his 2023 budget proposal. I applaud the Governor’s commitment to implementing climate pillar legislation like SB 1137 and SB 1020. But it’s ironic that his proposal cuts statewide climate investments by $6 billion only days after the Legislative Analyst’s Office warned that California is on track to miss our 2030 climate targets. And it’s tragic that these cuts come at a time when California’s big five oil refiners recorded profits of close to $70 billion during the first three quarters of 2022. That’s more than our state’s entire budget allocation for climate and energy!


“Two things are clear. First, the legislature should move forward in implementing a price gouging penalty to curb Big Oil’s obscene profits. Second, when CARB evaluates its Cap-and-Trade policy later this year, it should recommend an overhaul, so that the program not only helps us reach our emissions reduction goals but also fully funds all of our state’s climate priorities, especially those centered on environmental justice and equity.” – Heidi Harmon, Senior Public Affairs Director, Let’s Green CA!


“The entire state of California is experiencing a deadly climate disaster right now. This is no time to be walking back investments in a climate-safe future. Governor Newsom and his administration have a choice — hold the line on critical climate investments today or pay the price in lives and dollars for years to come.” – Ellie Cohen, CEO, The Climate Center