A senior executive with one of Kern County’s largest oil producers sat on stage in front of hundreds of his peers, chatting with a prominent congressman, when someone from the audience put him on the spot.
Why, he was asked at last fall’s West Kern Petroleum Summit, did his employer, California Resources Corp., sign an exclusive labor agreement with union organizations?
CRC Executive Vice President Bob Barnes fidgeted nervously and stumbled over his words as he explained the pact was intended to secure not only a quality workforce but also the “political power” labor unions bring to the table.
Although the agreement was unremarkable in some ways — it wasn’t unheard of in Kern’s oil industry, where union members have long worked alongside non-union laborers — Barnes’ visible discomfort that day was an indication of how controversial the agreement had become.
Managers at some local oil service companies have complained privately that the arrangement rolled out last year unfairly discriminates against non-union contractors and workers. Backed by a construction trade organization and at least one local politician, they say it raises labor costs and may lead to greater influence for organized labor in a generally conservative county that has not always welcomed unions.
GIVE AND TAKE
The pact has brought difficult changes, to be sure. It has shaken up local oil field service contracting and raised accusations that false promises were made to workers who ended up being laid off at a time of scarce employment opportunities.
But defenders of the arrangement say it was merely reflective of the rough-and-tumble world of oil field service contracting, where companies win or lose contracts depending on the needs of large oil producers. They say many of the layoffs that have occurred since the agreement was forged result primarily from low oil prices that have cost Kern at least 3,600 jobs since December 2014.
What’s more, the unions involved say the political influence Barnes spoke of has helped California’s oil industry as a whole. Labor leaders, joined at times by rank-and-file union members, have spoken up at several contentious public meetings to vouch for the industry’s role as a major job-creator and taxpayer.
Tracy Leach, a Bakersfield public affairs consultant who has worked closely with the local oil industry, acknowledged CRC’s project labor agreement has been a “point of contention” among oil workers and business owners. But she credits the pact for attracting supportive union members to a November hearing at which the county Board of Supervisors passed a far-ranging zoning ordinance proposed by the local oil industry.
“They showed up in force,” she said, adding that CRC’s labor agreement “just redounded to benefit the entire industry.”
Jason Ralls doesn’t see it that way. He had worked in quality control at a CRC facility at Elk Hills for more than a decade when his bosses at Bakersfield-based contractor Construction Specialty Service Inc. told him last year that he and some 60 co-workers would lose their jobs in February.
The reason he was given for the layoffs was that CSS was not union-affiliated and therefore barred by the labor agreement from bidding on a new contract.
Ralls and others who worked at CSS say they were assured all they needed to do after the layoffs was fill out an application at a Rosedale union hall and they would quickly be called back to work, albeit for a different company. But he says that call never came.
“The union took over and I got laid off,” Ralls said, adding that he has no hard feelings about the situation. He has since sought work in and outside the oil industry but remains unemployed.
CSS, along with several locally operating oil field service companies affected by the labor deal, did not return calls requesting comment. Managers at some local contractors agreed to discuss the labor deal but asked that their names not be published because they were not authorized to speak on the matter.
Union leader Robbie Hunter, who helped negotiate the project labor agreement with CRC as president of the State Building and Construction Trades Council of California, said the pact offered no employment guarantees to anyone, regardless of union membership.
“This is just what happens in the construction industry,” said Hunter, who has worked as an ironworker in Kern County.
Hunter disputed allegations unionized workers were brought in from outside the area to work at CRC facilities. Most workers affected by the labor deal got raises, he said, even as the agreement has streamlined hiring and brought in projects under budget.
He also downplayed the idea that CRC’s labor agreement was any kind of beachhead for unions seeking to unionize Kern County oil fields.
“I don’t see this being a unionization of Bakersfield, Kern County,” he said. “I think it’s an economic decision for the oil industry — skilled, trained workforce.”
But John Spaulding, executive secretary of the Building Trades Council for Kern, Inyo and Mono Counties, said he hopes the agreement leads to more union work.
“I’d like to think” it is a step toward more oil field work for union workers, he said. “Everybody’s going to be watching how well we’re performing out there, and I think they’re going to be pleasantly surprised.”
SCOPE AND HISTORY
The 39-page labor agreement, a copy of which was obtained by The Californian, says it applies to CRC construction, maintenance and repair contracts statewide, but not to drilling, engineering and other production-related activities.
During the agreement’s five-year term, which is to be renewed automatically on a year-to-year basis until either party serves notice to terminate it, construction companies contracted by CRC must pay their employees no less than the wages set forth in what it refers to as the Teamsters Master Labor Agreement.
Los Angeles-based CRC says its predecessor, Occidental Petroleum Corp., forged a similar labor agreement in 2000 covering construction and maintenance work at its 550-megawatt Elk Hills Power Plant.
In public statements, CRC executives have lauded the company’s partnerships with organized labor, businesses and community groups. Officials have credited such alliances with helping overcome opposition to a drilling project the company proposed — and later withdrew — in the City of Carson. The company has also said its strong relationship with unions helped defeat state legislation that would have banned the oil well stimulation technique known as hydraulic fracturing, or fracking.
“We’re working with like-minded individuals in the state who have similar and common goals about working people in the state,” CRC’s president and CEO, Todd Stevens, said at CRC’s first-ever earnings conference call on Oct. 31, 2014, according to a transcript by Seeking Alpha. “Organized labor has started to work with us, nonprofits, public service unions.”
CRC’s 2014 report to shareholders said about 80 percent of its employees were represented by labor unions. It did not address union membership among the companies it contracted with.
In a written statement for this story, CRC said it is pleased with the quality and safety of the workforce covered by last year’s project labor agreement, which it says will help the company meet increased demand for energy — safely and in an environmentally friendly manner — once commodity prices improve.
“The heart of the project labor agreement is positioning CRC to build high-quality projects that will sustain our substantial investments in California for the long term,” the company wrote.
The company’s statement did not address questions regarding contract-related costs and whether the labor agreement was related to state permitting of oil projects, as some contractors have alleged.
Hunter said the office of Gov. Jerry Brown, which in recent years has taken an interest in oil permitting, was in no way involved in the project labor agreement. Hunter said CRC’s alliance with unions has prompted organized labor representatives to speak in support of the industry when oil field wastewater disposal questions have arisen at the regional level.
Project labor agreements are not uncommon in the oil industry. Chevron said it has similar accords governing labor at its refineries in Northern and Southern California, but none covering its operations in the Central Valley or Central Coast.
A Chevron spokeswoman added that the company has not discussed a labor agreement with the State Building and Construction Trades Council regarding work in Kern County.
Another locally prominent oil producer, Bakersfield-based Aera Energy LLC, said it has a long history of working with labor unions representing its employees. A spokeswoman said Aera contracts with union and non-union companies alike.
The trade group Associated Builders and Contractors Inc., which opposes project labor agreements in general, has raised questions about what effect CRC’s pact will have on the timing and costs of the company’s projects.
“Bottom line, PLAs (project labor agreements) stifle competition, raise project costs and prevent local skilled workers from working on local construction jobs,” ABC said last year in a news release about CRC’s union deal.
Among the pact’s most vocal opponents in Kern County is Assemblywoman Shannon Grove, R-Bakersfield. She was present for the comments Barnes made at last year’s oil summit in Taft, and said they “did not sit well” with her.
To her, the labor agreement unfairly excludes contractors, even those with longstanding relationships with CRC and Occidental. She said many local contractors have called to her complaining about the arrangement.
State Sen. Andy Vidak, R-Hanford, was less adamant when asked for his thoughts on CRC’s labor agreement.
“Senator Vidak believes private businesses have the right to contract with whomever they want so long as all parties follow the law,” Vidak’s communicators director, Jann Taber, said by email.