Santa Fee Springs Weighs Imposing Fee for Oil Field Cleanup

One way or another, city officials say they want oil companies here to pay for the environmental mess left behind from the boom days of the 1920s, when scores of oil barons flooded this once-isolated community to reap the benefits of the mineral-rich soil.

The City Council on Thursday night will consider a proposal to charge oil companies and two local refineries about $898,000 a year in fire protection fees. The money would go into the Fire Department’s budget, allowing more money in the general fund to be used to clean up about 400 deserted oil wells and redevelop the land for commercial use.

The fee is a roundabout way of getting money for costly cleanups--and at the same time helping pay for fire protection, City Manager Don Powell said.

In August, the city staff asked the council to consider a more direct method of raising funds: increasing the annual oil well fee from $1,000 to $3,000. But a lawyer with Mobil Oil Corp., the largest oil company in the city, said such an increase would constitute an illegal tax on the oil companies. Instead, the city came up with the idea for the Fire Department fee, which officials say is legally defensible.

According to Powell, 22% of the Fire Department’s $6.5-million budget is allocated for special equipment, training and other services needed to battle a fire or hazardous chemical leak on the oil fields and refineries. “Basically, we’re looking at extraordinary costs for fire protection,” Powell said.

Powell often has said that the oil industry has not contributed its fair share to the city. “The day of judgment has arrived,” Powell said several months ago. “The oil companies have not done anything for the city except create problems.”

City officials estimate it will cost at least $50,000 to clean up each well. On large parcels with many abandoned wells, the costs can total millions of dollars. Recently, Santa Fe Springs spent $4.1 million to clean up 61 acres on an abandoned oil field before the Heritage Corporate Center was built.

If the council passes the proposal, oil companies will be required to pay an annual fire fee of about $1,885 per well, in addition to the city’s annual fee of $1,000 per well. There are about 400 operating wells in the city. The two refineries, Powerine and Golden West Refining Co., each would pay an annual fee of $81,500.

Oil officials say they are being treated unfairly.

“It’s not our sole burden,” said Jack Rathbone, operations manager for Mobil’s coastal district. “They’ve gone from one hidden tax to another. We pay our share of taxes and the additional tax burden is unnecessary.” Mobil operates about 300 wells in the city’s 1,000-acre oil field.

Some smaller, independent oil producers have threatened to pull out of Santa Fe Springs. It simply would become too costly for them to stay, some company officials say.

According to Ed Malmgreen, assistant vice president of the California Independent Producers Assn., the companies do not produce enough oil to support the increase.

The strife between Santa Fe Springs and the oil companies began about a year ago when the city voted to increase annual oil well fees from $250 to $1,000, the boldest step so far in restricting oil field operations.

City officials have been eager to change the image of Santa Fe Springs from that of an aging oil town to a community with attractive shopping centers and office buildings, but have been hampered by contaminated soil and sumps left over from the oil-boom days.