LA Tries Again to Ban Oil Production and Royalty Owners Get Hit Too

The City of Los Angeles is once again trying to phase out oil and gas production within city limits. On Tuesday, the Los Angeles City Council unanimously advanced a proposed ordinance to prohibit new oil and gas extraction, classify existing operations as nonconforming uses, and require existing production to cease within 20 years, according to the Los Angeles Times. The measure still requires a second vote before final adoption later this summer.

This is not the City’s first trip around the same legal racetrack. Los Angeles previously adopted a similar oil and gas phase-out ordinance in 2022, only to have the effort knocked sideways after the Sept. 6, 2024, trial court ruling in Warren E&P, Inc. v. City of Los Angeles. Following that ruling, the City moved to rescind Ordinance No. 187,709, as Los Angeles City Planning explains on its Oil and Gas Drilling Ordinance page. Now the City is trying again through Council File No. 17-0447-S2, which was scheduled for the June 23 Council meeting after approval by the Planning and Land Use Management Committee.

The new ordinance is not merely a ban on new wells.

The City’s draft ordinance would prohibit new oil wells, bar existing wells from being “maintained, drilled, re-drilled, or deepened,” restrict operators from expanding or intensifying existing operations, and require all oil well sites to cease operations within 20 years. Even that 20-year period is unstable. The City expressly reserves discretion to “alter or shorten” the period, “otherwise abolish uses,” and declares that nothing in the ordinance grants vested rights to continue operations for the full 20 years.

That matters. Operators, mineral owners, royalty owners, working-interest owners, surface owners, employees and local service companies all made economic decisions based on lawful production. The City cannot wave a wand, call the result “amortization,” and pretend constitutional property rights evaporated. A calendar does not cure a taking.

Legal counsel for WSPA and NOPEC, Manatt, Phelps & Phillips, submitted detailed comments warning that the proposal remains legally defective. The comments argue that the ordinance would result in an unconstitutional taking of private property without just compensation, impair vested rights, violate due process, and expose the City to significant damages. The ordinance may be dressed up as land-use policy, but its practical effect is to strip value from lawful mineral assets and strand private property interests.

Royalty owners deserve special mention because they are often ignored in these debates. These are not faceless corporations. Many are families, retirees, trusts, small investors, estates and descendants of property owners who rely on lawful royalty income from minerals they own. When Los Angeles or the State of California treats hydrocarbon production as a moral offense instead of a regulated industrial activity, royalty owners lose real income. In plain English: people who own lawful property are being punished because state and local officials have developed an almost religious hostility toward oil and gas.

That is not environmental policy. It is confiscation by attitude.

The City is relying heavily on AB 3233, which added Public Resources Code Section 3106.1 and authorizes local governments to limit or prohibit oil and gas operations under certain circumstances. The chaptered bill text says local entities may impose prohibitions more protective of public health, climate or the environment, and that operators remain responsible for plugging and abandoning wells and decommissioning facilities. But Manatt’s comments make the central point: AB 3233 does not erase the Constitution. It does not extinguish vested rights. It does not eliminate due process. And it does not exempt Los Angeles from CEQA.

The environmental review is another obvious weak point. The City is proceeding with a Mitigated Negative Declaration (MND) rather than a full Environmental Impact Report. Manatt’s comments argue that the City unlawfully piecemealed the project by failing to analyze the full consequences of the ordinance, including plugging and abandonment, remediation, future site conditions, maintenance restrictions, subsidence risk, noise, wildfire risk, cumulative impacts, and the real-world emissions consequences of replacing local production with imported oil. The City’s own PLUM Committee report recommends adopting the MND, mitigation program, CEQA findings, and moving the ordinance forward for Council consideration.

For California energy policy, the practical problem is brutally simple: banning local production does not ban demand. It only changes where the barrel comes from.

The California Energy Commission’s Annual Oil Supply Sources to California Refineries shows that in 2025, only 22.9 percent of crude supplied to California refineries came from California, while 61.1 percent came from foreign sources. The CEC’s foreign crude import data shows California imported crude in 2024 from countries including Iraq, Brazil, Guyana, Ecuador, Canada, Saudi Arabia and the United Arab Emirates.

That is the shell game. Los Angeles can claim progress by forcing out local production, but California will still need transportation fuels for cars, trucks, ships, planes, agriculture, construction, emergency response and daily commerce. When California suppresses its own production, it becomes more dependent on foreign crude moved by tanker, produced under standards California does not control, and priced in a global market that does not care what the Los Angeles City Council prefers.

This is also how local anti-production policy becomes statewide economic policy. Less local production means less royalty income, fewer jobs, less tax revenue, fewer service contracts, more pressure on refineries, greater import dependence and a weaker California energy supply chain. The barrel still gets burned. It just arrives with a passport.

CIPA’s perspective is straightforward: Los Angeles should abandon or substantially rework this ordinance before it creates another round of costly litigation, regulatory uncertainty and energy supply risk. California needs lawful, technically competent policy that protects communities while recognizing the state’s continuing demand for reliable transportation fuels. What it does not need is another symbolic ordinance that exports production, imports risk, harms royalty owners, and pretends the hard questions vanished somewhere over the Pacific.