Several oil companies have filed suit against the City of Los Angeles, claiming the city’s recent ban on oil and gas drilling violates the California Environmental Quality Act.

In two different lawsuits, the oil companies also claim that the ban on oil drilling constitutes a taking of their property without compensation and that the city’s action is pre-empted by state law.

The Los Angeles City Council voted in December to require a 20-year phase-out of oil and gas drilling in the city. “Hundreds of thousands of Angelenos have had to raise their kids, go to work, prepare their meals (and) go to neighborhood parks in the shadows of oil and gas production,” Los Angeles City Council president Paul Krekorian said at the time. More than 700 oil wells remain operating in the city, many of them in the oil-rich Wilmington area.

The city prepared a mitigated negative declaration under CEQA on the drilling ban, though it was quickly amended after it was first adopted. The city also said it would prepare an amortization plan later.

One lawsuit was filed by several oil companies, led by E&B Natural Resources Corp. The other was filed by Warren Resources, which took over many of the oil wells in Wilmington originally operated by Humble Oil. The two lawsuits differ somewhat, though they are quite similar in their CEQA claims. Both run to about 50 pages.

Among the CEQA claims made by the lawsuits are the following:

  • The city impermissibly piecemealed the project under CEQA by punting on the amortization plan, saying that the amortization period might wind up being less than the 20 years specified in the ordinance.
  • The city misinterpreted CEQA’s guidance on mineral resources. The oil companies say that the loss of a valuable mineral resource is an environmental impact under CEQA requiring an environmental impact report.
  • The city should have taken into account the environmental impact of obtaining more oil and gas products from other locations once the drilling in the city has ceased, since the oil companies say the drilling ban will not affect demand for oil and gas.
  • The city did not analyze the potential environmental impacts of remediation and new uses for the land which was used for drilling.
  • The city should have recirculated the MND after making last-minute changes to it regarding mitigation of abandonment and plugging operations.

Among other things, the oil companies also challenged the city’s contention that oil and gas drilling in Los Angeles has hazardous health impacts. In particular, they cite the city’s 2019 Oil & Gas Health Report, which states: “There is a lack of empirical evidence correlating oil and gas operations within the City of Los Angeles to widespread negative health impacts.”

On non-CEQA issues, the oil companies claim that without a reasonable amortization schedule, their property has been taken without just compensation. In fact, Warren Resources argued that a taking occurs even with amortization because there is no alternative use for the mineral resources affected by the ban.

E&B and others also argued that state law pre-empts the ban. They claim the Public Resources Code gives the California Geological Energy Management Division of the Department of Conservation (CalGEM), “exclusive jurisdiction over the field of oil and gas operations, methods, and procedures to the exclusion of local legislation.”

The cases are:

E&B Natural Resources Corp. v. City of Los Angeles, L.A. Superior Court No. 23STCP00070, and Warren E&P Inc. v. City of Los Angeles, L.A. Superior Court No. 23STCP00060. Both were filed on January 10, 2023.

The lawyers for the plaintiffs are:

For E&P and others: Nicki Carlsen, Alston & Bird, Nicki.Carlsen@alston.com

For Warren Resources: Tracy K. Hunckler, Day Carter & Murphy, thunckler@daycartermurphy.com