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Big Oil’s grip on California

‘Governor Moonbeam’

In the 1970s, Jerry Brown cemented his place in the national imagination as “Governor Moonbeam,” a liberal dreamer who embodied California cool — or California kook, depending on where one stood. He drove a Plymouth Satellite, spurned the governor’s mansion for a mattress on an apartment floor and dated singer Linda Ronstadt. But beneath that caricature lay a policy wonk who embraced the environmental movement like no politician had before. Confronted with California’s booming population and stifling pollution — smog alerts regularly forced schools to cancel recess — he enacted the nation’s first energy-efficiency standards, signed strict clean-air laws, and blocked offshore oil drilling.

Brown’s worldview, however, was tempered by a 28-year odyssey after he left Sacramento, one that took him from charity work with Mother Teresa in Calcutta to another failed presidential campaign (there were three in all) to the mayor’s office in Oakland beginning in 1999. Friends say Brown’s time in Oakland was seminal. Keen to jump-start redevelopment in the struggling city, he had to deal with a patchwork of state agencies and a thicket of environmental regulations, some of which he had championed as governor.

Re-elected to the state’s top office in 2010, Brown was singularly focused on the economy: with recession still rippling through the state, California faced a $27 billion deficit and a record unemployment rate of 12.1 percent. Brown barely mentioned the environment during his first State of the State address, a speech so focused on fiscal discipline it could have been delivered at a Republican fundraiser. “At a time when more than two million Californians are out of work,” Brown told the Legislature, “we must search out and strip away any accumulated burdens or unreasonable regulations that stand in the way of investment and job creation.” The message was clear: If ideology had dominated Brown’s first stay in the governor’s office, pragmatism would dominate the second.

Having campaigned on a promise not to raise taxes without voter approval, Brown moved quickly to lay the groundwork for a ballot measure that would hike levies on the wealthy. It was a risky move. Brown had just spent $36 million to get elected, and now he had to go back to his affluent donors, as well as the business community, and ask for more — all for an initiative that would target people like them. With its deep pockets, the oil industry could help pass or kill the measure, Proposition 30. And, at that particular moment, it wanted no-fuss drilling permits from state regulators. According to memos and emails obtained by the Center for Public Integrity, Brown’s office began pushing for a shortcut, one that would allow drilling to proceed without full environmental reviews.

Chernow was astounded. A former legislative aide and conservation advocate, he believed in his department’s mission.

In October of 2011, four months after Taylor’s death, he and Miller pushed back. “This approach is simply contrary to law,” Chernow wrote in a memo to his superiors. The U.S. EPA had asked the state to tighten its standards, not relax them, he said, warning that the proposed shortcut would likely draw legal challenges from environmental groups.

The following day, the regulators were summoned to the governor’s office. There, Chernow alleged in court filings, one of Brown’s senior advisors told them to fast-track the permits. The aide then handed Chernow a proposal modeled on the one WSPA had presented earlier. The regulators were incensed. In a follow-up call, tensions flared. According to a declaration by Chernow, Miller told Brown’s advisor that the proposal would break the law. The aide shot back: This is an order from the governor. The next day, Brown fired Chernow and Miller — a move the oil industry applauded.

Brown’s decision to relax regulations turned on “making sure all these people didn’t come after Prop 30 with a knife,” said a source familiar with the governor’s thinking. There was ample cause for concern. In 2006, the oil industry had outspent environmentalists to kill an initiative that sought to place a tax on crude oil. The $154 million fight had set a new spending record for ballot-measure battles in California. Brown and his top aides declined to be interviewed for this story, but spokesman Gareth Lacey dismissed as “ridiculous” any claim that the governor’s actions were influenced by his tax campaign. He also disputed Chernow’s characterization of events. “The expectation — clearly communicated — was and always has been full compliance with the Safe Drinking Water Act,” he said.

Nonetheless, Brown replaced Chernow and Miller — who declined interview requests — with appointees more sympathetic to the oil industry. The new oil and gas supervisor was a longtime DOGGR manager who’d worked in the agency’s Bakersfield office. In the months after the firings, regulators approved nearly 80 permits that had been on hold. Stephen Chazen, president and CEO of Occidental, told investors during an earnings call that Brown had prompted the “change in attitude.” “We’re pleased with the governor’s involvement,” he said.

Brown himself began using the firings as evidence of his commitment to pare regulations — and made clear that oil was still vital to California’s economy. In January of 2012, at a press conference intended to showcase the state’s commitment to solar energy, Brown veered from his prepared remarks to note “the oil rigs are moving in Kern County” and affirm the state’s status as an energy leader. “It’s not easy,” he said. “There are going to be screw-ups. There are going to be bankruptcies. There will be indictments, and there will be deaths. But we’re going to keep going.” That day, Occidental gave $250,000 to Brown’s tax campaign. Not long after, it gave another $100,000, this time to the Oakland Military Institute, a charter school Brown had founded as the city’s mayor. That November, Brown’s tax measure, Proposition 30, passed easily. Oil companies had contributed more than $1 million to the campaign. More important, they hadn’t opposed it.

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