(Bloomberg) — Governor Gavin Newsom is seeking to impose further restrictions on California’s offshore oil industry, a setback to Sable Offshore Corp. and its controversial project off the coast of Santa Barbara County.
Calif. Governor Gavin Newsom
The legislative package Newsom is proposing would see California demand stricter testing for restarting inactive intrastate oil pipelines, according to people familiar with the negotiations, who asked not to be identified discussing private deliberations.
Such a move would directly impact Houston-based Sable’s efforts to reactivate a pipeline that once carried crude north of Santa Barbara. The conduit was shuttered in 2015 while owned and operated by Plains All American Pipeline after a rupture spilled over 140,000 gallons, devastating the local shoreline. Sable’s shares fell as much as 37% in trading after the market close Monday and were down as much as 14.7% in Tuesday trading.
The regulation is seen by Newsom’s office as a way to alleviate the environmental blowback from another proposal championed by the governor that would ease drilling permits in the state’s interior. Both proposals, which are still under negotiation, are expected to be included in legislative text this week. Onshore producers in the state include California Resources Corp., Berry Corp. and Chevron Corp.
A spokesperson for Newsom declined to comment on specific changes. No one at Sable could immediately be reached for comment.
“We continue to work with the legislature on policy that will help stabilize California’s petroleum market while ensuring a safe, reliable, and affordable supply of transportation fuels,” governor spokesperson Daniel Villaseñor said.
The efforts mark the latest in a series of recent shifts Newsom has made in the way he approaches the oil and gas industry. Years of intense regulatory scrutiny have squeezed oil production and spurred refinery closures, threatening to send California’s gasoline prices — already the most expensive in the country — even higher. His recent proposals have also made Newsom a target for environmental groups, in particular after a draft bill in July pitched streamlining permitting for new oil wells.
Senator Monique Limon, who represents Santa Barbara County, said Newsom is drawing from other legislation she authored to regulate offshore oil.
“I welcome the ability to safeguard our communities from the public health, financial, and environmental impacts of pollution,” she said.
