On Friday, LA Superior Court Judge Curtis Kin issued a ruling holding that the City of LA’s oil amortization Ordinance was preempted by state law.
On December 2, 2022, the City Council voted 12-0 to adopt the ordinance, which took effect on January 18, 2023. The ordinance made all existing oil wells citywide a nonconforming use and attempted to phase out oil production by requiring all operators to wind down their drill sites within the 20-year amortization period. The ordinance also prohibited the drilling of new wells, as well as redrilling and maintenance of existing wells in the city. Finally, the ordinance authorized the city’s zoning administrator to prohibit all maintenance and redrilling operations except to “prevent or respond to a threat to public health, safety, or the environment” and prohibited the zoning administrator from granting discretionary applications for drilling or maintenance.
At last Tuesday’s Phase 1 trial, Judge Kin heard arguments in the first phase of litigation brought by the Native Oil Producers and Employees of California (NOPEC) and several producers with wells in the City of Los Angeles, and NARO on behalf of mineral rights owners, challenging the city’s adoption of an ordinance that attempted to phase out oil drilling and production in the city. In this Phase 1, petitioners argued that the ordinance was preempted by state law, because it attempted to control the downhole “methods and practices” that producers could use to recover underground hydrocarbons, as authorized by state law. The state oil and gas administrator, acting through CalGEM, is responsible for regulation of such “methods and practices,” and therefore local jurisdictions such as the City of LA were preempted from regulating them. This is a similar argument to what was successfully used to challenge Measure Z, the voter-passed initiative in Monterey County in Chevron U.S.A. Inc. v. County of Monterey (2023) 15 Cal.5th 135.
In his tentative ruling issued prior to Tuesday’s trial, Judge Kin opined that the City of LA’s ordinance was preempted by state law, because it “bans methods of production in existing wells” because it restricts CalGEM’s “express, statutorily-conferred authority to decide what oil production methods are suitable in each case” and because the restrictions on redrilling and maintenance give the city and the zoning administrator “authority to make decisions over which oil production methods an oil operator can use on any existing well,” decisions which are legally within the authority of CalGEM.
In his order on Friday, September 6, Judge Kin granted petitioners’ requests for a writ of mandate holding that the city’s ordinance is preempted by state law. The judge issued a full written decision today which is line with the tentative decision released last week.
Notably, Judge Kin did not wait to see whether Governor Newsom signs into law AB 3233, a bill by Assemblymember Addis seeking to grant local jurisdictions the express authority to regulate downhole “methods and practices” in a direct effort to reverse the Monterey decision. If the governor signs the bill, it may be the basis for the city to appeal Judge Kin’s decision, although it is not clear that AB 3233 would save the city’s ordinance as that legislation does not contain any retroactivity provisions.
In his Friday order, Judge Kin instructed the parties to appear at a status conference on October 10, 2024. At that hearing, we will hopefully learn more about where this case is going. While the judge’s order effectively voids the city’s ordinance, several producers who filed claims as part of the case have damages claims against the city for temporary takings and other impacts stemming from the ordinance’s prohibitions on maintenance and related activities, which caused significant reductions in production for drill sites within the city.