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2012

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Background. The Department of Conservation’s (DOC) Division of Oil, Gas, and Geothermal Resources (DOGGR) is responsible for regulating all onshore and offshore hydrocarbon field operations in California in order to prevent damage to state resources and provide adequate protection for oil field workers and surrounding communities. The DOGGR evaluates permit applications to drill, rework, and plug oil and gas operations in the state, including abandoned wells. It also provides expertise to local planning agencies and building developers when new developments are proposed over historic oil field operations.

Governor’s Proposal. The Governor’s 2012-13 budget requests an increase of 18 permanent positions and $2.5 million ($2.3 million ongoing) from the Oil, Gas, and Geothermal Administrative Fund to “enhance the onshore and offshore regulatory programs of the Division of Oil, Gas, and Geothermal Resources (DOGGR) by improving its construction site review, environmental compliance, and underground injection control (UIC) programs, and strengthening the division’s support staff.”

The oil and gas industry has changed significantly over the past three decades with many technological advancements having been made in drilling and recovery techniques. However, according to DOGGR, the division has not kept up with the changing industrial landscape, and, therefore, they argue it is currently understaffed to meet current workload demands, as well as an ongoing backlog in workload that has developed in recent years. According to the administration, prior to 2010, DOGGR last requested new positions in 1987. 

LAO Concerns. We raise three concerns with the Governor’s proposal for additional DOGGR positions. Specifically, (1) the administration has not done a workload analysis to justify the positions requested, (2) many of the positions recently approved for this division are still vacant, and (3) the department is currently developing a new “roadmap” for the division that may significantly change its workload and staffing needs. We discuss each of these issues below.

• No Analysis of Permitting Backlog. In recent years, DOGGR has testified that new positions are needed to address the division’s backlog in drilling permits. According to the division, recently approved positions have enabled it to increase the rate at which it is processing permits, resulting in a 17 percent increase in the number of permits processed in 2011. The backlog nonetheless still persists according to the division and the regulated industry. However, to date DOGGR has not provided a detailed workload analysis that assesses the specific positions  necessary to eliminate the backlog. The division has also not provided adequate data to determine the impact of the recently added positions and the degree to which those position could, if filled, address the current backlog.

• Many Recently Approved Positions Remain Unfilled. During the 2010-11 budget year, the Legislature approved a request by the administration for 17 positions that were intended to enhance and strengthen the regulatory oversight of new technologies including shallow thermal diatomite injection wells, hydraulic fracturing, steam injection, and CO₂ injection wells. During the 2011-12 budget year, the Legislature approved a request by the administration for an additional 18 positions that were intended to augment current permitting, environmental protection and construction site review, and UIC staff within the division. Of the 35 positions added in the past two years, 13 positions remain vacant, including 10 engineer positions. It is unclear that new positions are necessary when this many newly established positions remain vacant.

• Department Developing “Road Map” to Establish Priorities. Industry growth over the past three decades has created the need to potentially update many of the division’s regulations. New leadership at DOC is currently developing what it has described as a “roadmap" designed to set new priorities for DOGGR, as well as address various problems such as the current permitting backlog. The roadmap may result in significant operational changes, potentially including changes to the division’s regulations for its UIC program which covers oil recovery techniques such as hydraulic fracturing. Consequently, implementation of the roadmap could have significant impacts on the division’s workload, including the permitting backlog, as well was the division’s overall staffing needs.

LAO Recommendations. We recommend the Legislature deny the Governor’s proposal for additional DOGGR positions. The administration has not provided the Legislature with adequate information regarding the position authority necessary to reduce the current workload. In addition, we believe it would be appropriate for the department to prioritize filling the high number of vacant positions recently authorized by the Legislature before new positions are authorized.

Additionally, the new roadmap currently being developed by the department may provide new direction and priorities to the division which could result in changes in workload and staffing needs. Therefore, it may be premature to authorize any new positions for the division until the DOGGR roadmap has been completed and an evaluation of the ongoing position need of the department is done. Given the policy implications of the new roadmap, we expect that legislative policy committees, as well as the budget committees, will want to review the plan. Thus, we also recommend that the Legislature direct DOC to submit a workload analysis in conjunction with its completed roadmap to the appropriate policy and budget committees. This workload analysis should provide details on the division’s existing positions, how workload and responsibilities would change under the roadmap, and how the division’s staffing needs would be affected by the roadmap. To the extent that the roadmap is consistent with legislative priorities, this workload analysis could then serve as the basis for future adjustments to the division’s position and funding authority.