70 Cal.App.5th 153
Cal. Ct. App.2021Background
- Measure Z (Nov. 2016) amended Monterey County land-use policies to: ban land uses supporting wastewater injection/impoundment (LU-1.22) and ban land uses supporting drilling new oil/gas wells (LU-1.23); a third provision on well stimulation (LU-1.21) was not at issue on appeal.
- Measure Z allowed vested-right exemptions, a reasonable amortization period, and a Board exception process for takings concerns; it stated it would not be applied to violate state or federal law.
- Multiple oil companies, royalty owners, and others sued the County challenging Measure Z as preempted by state and federal law and as effecting a taking; the trial court invalidated LU-1.22 and LU-1.23 as preempted (and found a facial taking as to some plaintiffs but provided no remedy because of preemption).
- Central legal conflict: Public Resources Code § 3106 vests the State Oil and Gas Supervisor with authority to supervise and permit drilling activities and practices (including wastewater injection and methods to increase recovery); Measure Z bans some of those practices.
- On appeal, the Sixth Appellate District affirmed the trial court, holding the two Measure Z provisions are preempted by state law (§ 3106) and declined to reach federal preemption, takings, or evidentiary challenges.
Issues
| Issue | Plaintiffs' Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LU-1.22 (ban on wastewater injection/impoundment) and LU-1.23 (ban on drilling new wells) are preempted by state law (PRC § 3106) | § 3106 vests the Supervisor with exclusive authority to permit these operational methods; Measure Z conflicts and is preempted | Local police power and land-use authority permit counties to regulate/ban drilling methods and locations; state law does not fully occupy the field | Held preempted: § 3106 places permitting authority over these methods in the State; Measure Z conflicts and must yield |
| Whether Measure Z is a land‑use/location regulation (permissible local zoning) versus a ban on operational methods (preempted) | Measure Z is framed as land-use restrictions (where/whether drilling occurs) and thus within local authority | Measure Z in effect bans specific production techniques (new wells, injection) that § 3106 authorizes and entrusts to the State | Held: Measure Z regulates operational methods, not merely location; characterization supports preemption finding |
| Whether court should resolve federal preemption (SDWA) and facial takings claims | Plaintiffs argued Measure Z also conflicts with SDWA and effects a facial taking for some owners | PMC argued Measure Z was lawful and takings claims were not proved; also argued trial evidence was improper | Appellate court did not reach federal preemption or takings because state preemption disposed of the appeal |
| Whether trial court’s evidentiary and discovery rulings were reversible error | Plaintiffs relied on declarations/exhibits to show economic impact and standing | PMC and County argued denial of discovery and admission of declarations denied fair trial | Held: any evidentiary error was not prejudicial because the dispositive state preemption question is one of law; appellate court declined to remand on evidentiary grounds |
Key Cases Cited
- Sherwin-Williams Co. v. City of Los Angeles, 4 Cal.4th 893 (1993) (framework for when local legislation is preempted by general state law)
- Big Creek Lumber Co. v. County of Santa Cruz, 38 Cal.4th 1139 (2006) (burden of proving preemption and analysis distinguishing field vs. conflict preemption)
- T-Mobile West LLC v. City and County of San Francisco, 6 Cal.5th 1107 (2019) (inimical/conflict preemption requires direct contradiction between state and local law)
- Pacific Palisades Assn. v. City of Huntington Beach, 196 Cal. 211 (1925) (recognition of local police power to regulate oil operations)
- Beverly Oil Co. v. City of Los Angeles, 40 Cal.2d 552 (1953) (local ordinances limiting oil operations can be valid police-power exercises)
- Higgins v. City of Santa Monica, 62 Cal.2d 24 (1964) (preemption analysis where State vested explicit authority in local entity)
- Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach, 86 Cal.App.4th 534 (2001) (upholding city initiative banning oil exploration/production as municipal police power)
- City of Dublin v. County of Alameda, 14 Cal.App.4th 264 (1993) (state permission to engage in activity does not always preempt local bans when statute leaves discretion to localities)
- People ex rel. Deukmejian v. County of Mendocino, 36 Cal.3d 476 (1984) (analysis of field preemption where statutes preserved local discretion)
- Great Western Shows, Inc. v. County of Los Angeles, 27 Cal.4th 853 (2002) (local regulation cannot completely ban an activity that a state scheme seeks to promote)