Nearly four years after California lawmakers directed state regulators to prepare oversight rules for a new kind of climate technology — permanently burying carbon dioxide underground — those rules still don’t exist, even as the state’s first commercial-scale carbon storage project is already up and running in Kern County.
The 2022 law required regulators to spell out how companies would monitor buried carbon, respond to problems, prove they could cover cleanup costs, and streamline permitting across multiple agencies. Lawmakers set a January 2025 deadline for much of that work. That deadline has now passed by more than a year and a half.
Meanwhile, in May, California Resources Corp., the state’s largest oil producer, began injecting carbon dioxide deep underground at Elk Hills, a century-old oil field west of Bakersfield. The U.S. Environmental Protection Agency approved the injections, and federal officials say there is no comparable project anywhere else in the country.
Because California hasn’t finalized its own oversight framework, the state has limited ability to impose standards beyond what federal regulators already require — or to independently verify that the injected gas, which can be dangerous in high concentrations and contributes to climate change if it escapes, stays safely underground.
“If something does go wrong, there are a lot of really important questions about who would actually address those concerns and impacts,” said Michelle Ghafar, an attorney with Earthjustice, which represents groups suing to halt the project. “And we have a history of oil companies not taking responsibility for cleaning up their messes.”
State leaders have embraced the project. Gov. Gavin Newsom praised the Elk Hills injections as proof that “innovation and ambition are the California way.” State Sen. Anna Caballero, who authored the original legislation, has said she never intended the rulemaking process to hold up projects already moving forward.
Carbon capture and storage plays a significant role in California’s long-term climate strategy. The California Air Resources Board, the agency tasked with writing the storage rules, has told CalMatters the state likely cannot reach its goal of cutting emissions 85% below 1990 levels without deploying the technology more broadly — potentially even at natural gas power plants.
Two other agencies also have a hand in overseeing the Elk Hills project: the state’s Geologic Energy Management Division, known as CalGEM, which regulates oil and gas wells, and the EPA, which issued the underground injection permits under federal drinking-water law. But it remains unclear which agency would take the lead if carbon dioxide escaped through one of the field’s many older wells. CalGEM oversees those wells, yet the company’s own emergency response plan calls for notifying the EPA if something goes wrong.
Air board officials say staffing shortages delayed the rulemaking. They point to existing safeguards, including the federal drinking-water permit and a Kern County land-use approval that is currently being challenged in court.
The financial incentives driving the project are substantial. Elk Hills could ultimately generate billions of dollars through a mix of federal tax credits and state climate programs funded largely by California drivers.
“If you’re a driver, you should care how this money is being spent,” said Danny Cullenward, a climate policy expert who serves as vice chair of an independent committee overseeing the state’s cap-and-trade market. “You are also paying a lot of money for very large oil companies to experiment with these technologies in the absence of a regulatory framework.”
Company officials describe the project as complementary to the state’s climate ambitions. “Our goal is to be a partner to the state as it transitions into the future that it envisions for itself,” said Jas Sajjan, CRC’s senior vice president of government affairs.
Elk Hills has been drilled since 1910, and the field’s long history poses its own risks. A recent analysis conducted for the advocacy group Consumer Watchdog by FracTracker Alliance identified 913 oil and gas wells within a mile of the project’s four injection wells — most of them unplugged. Even wells that have been sealed can deteriorate over time, said Kyle Ferrar, the nonprofit’s western program director, who added that incomplete historical records may mean the true well count is even higher.
The concern isn’t new. In 2024, a retired federal geoscientist reviewing the project warned that 204 wells penetrate the rock layer meant to seal the reservoir now receiving carbon dioxide, potentially creating pathways for the gas to migrate upward.
Federal rules require regular integrity testing only on the injection wells themselves, not the hundreds of older wells nearby, according to Forrest Smith, a petroleum engineer who spent six years as the National Park Service’s only engineer overseeing thousands of aging wells. That leaves much of the monitoring burden on the company itself.
“There’s not a lot of going back and checking these old wells until they become a problem,” Smith said. “It’s really making sure that the companies doing this are staying on top of it.”
CRC declined to respond directly to the well analysis or the geoscientist’s earlier warnings, but noted that before injections began, the EPA required roughly 200 wells in the area to be plugged or replugged, relying on records supplied by CalGEM.
The air board released a preliminary outline of its proposed storage rules in May, drawing criticism from environmental groups who say it falls short of what the 2022 law envisioned. The agency says it expects to finalize the rules later this year.
The draft framework would require companies to monitor storage sites, publicly disclose results, and demonstrate financial capacity to address leaks or plug wells for up to a century after injections stop. But because the rules aren’t finished, it’s unclear whether that 100-year standard currently applies at Elk Hills, or whether a shorter federal requirement governs in the interim. The outline also doesn’t specify whether independent verification of company monitoring will be required, or under what circumstances residents would be notified of a leak or seismic event.
CRC has told the EPA it plans to monitor groundwater and track the underground carbon plume for 50 years after injections cease. The company has posted a $9.1 million letter of credit for well-plugging and site maintenance, along with a separate $24.6 million insurance policy to cover emergency response costs. It has asked regulators to clarify what additional coverage, if any, should be required for a second 50-year period, arguing that risk diminishes once the underground plume stabilizes.
Industry representatives, including the California Chamber of Commerce, have urged the air board to avoid layering new state requirements on top of existing federal rules. CRC has made similar requests in written comments to the agency.
Katie Valenzuela, an environmental justice advocate, has criticized the draft rules for relying too heavily on self-reporting by the companies involved. “What’s the point of having standards and rules if there’s no mechanism in place to ensure those things are being met?” she asked at a recent public meeting.
Matthew Botill, a division chief at the air board, has said the 2022 law never gave his agency authority to override other agencies already permitting such projects, and that budget constraints delayed the rulemaking. Even with rules in place, he said, the air board would not have power to approve or block individual projects — that responsibility falls outside its jurisdiction.
That limitation was intentional. While the legislation was being debated, Caballero sent a letter instructing agencies not to let the forthcoming rules delay projects already underway. In a statement to CalMatters, she said the law was designed to coordinate existing regulatory authority, not create a new veto power, and that California needs projects like Elk Hills to meet its climate targets and support jobs.
“We want to encourage the kind of investment that helps California meet its climate goals while creating and protecting jobs,” she said.
The technology’s footprint could expand well beyond Elk Hills. CRC currently captures carbon from its cryogenic gas processing plant on-site, but the company also plans to draw emissions from a nearby natural gas power plant and is lobbying state utility regulators to classify gas-fired electricity paired with carbon capture as clean power — a shift that could open new long-term supply contracts. CRC’s chief executive, Francisco Leon, called the prospect “a game changer” and “an incredible opportunity” during an earnings call earlier this year.
The company has also signed agreements to store carbon dioxide generated by other businesses, part of a broader strategy to position its statewide storage sites as regional hubs for industrial emissions.
Such expansion would likely require new pipeline infrastructure to move captured carbon to injection sites. California lifted a moratorium on carbon dioxide pipelines last year, and new safety rules from the state fire marshal’s office took effect last month. Those rules don’t require the gas to carry a detectable odor, meaning nearby residents would have no way to smell a leak, according to Liza Tucker, a researcher with Consumer Watchdog.
In a recent report, Tucker argued that carbon storage functions as a lifeline for an industry the state is otherwise trying to phase out. “All it does is entrench us and invest us in keeping fossil fuels alive far longer than we ought to be,” she said.
Injections continue at Elk Hills even as a legal challenge moves through the courts. The lawsuit, filed by a coalition of Kern County community and environmental groups, contends that the project’s environmental review failed to adequately consider where all the carbon dioxide will ultimately come from — including emissions piped in from industrial sources in a region already burdened with some of the worst air quality in the nation.
Ghafar said no single regulatory body is evaluating the full scope of the project’s risks. Federal officials are focused primarily on protecting drinking water, while state agencies oversee separate components, leaving open the question of who would respond if carbon dioxide reached the surface.
“It’s really alarming that they’ve started injection when we don’t have a decision yet from the court on these really important questions about whether the risk of leaks, disasters and proper regulation have been fully addressed,” Ghafar said. “There really is no one agency or one entity that is looking at the full scope.”
Original source: CalMatters
