[Editor’s Note: Continuing his aggressive, summer-long campaign to urge Los Angeles County to adopt strict oil drilling regulations in the Baldwin Hills oil field, Culver Crest resident/attorney Kenneth L. Kutcher dispatched a third exhaustively researched and detailed letter to the County Planning Commission last Friday. This followed on the heels of equally minutely detailed letters to the County, published here on July 8 and on July 30. (Keyword: Kutcher.) In the present 3,580-word letter, Mr. Kutcher criticizes claims made by the oil drilling company’s lawyer, and he proposes remedies.]
August 8, 2008
Regional Planning Commission
County of Los Angeles
Department of Regional Planning
320 West Temple Street, Room 1350
Los Angeles, CA 90012
Re: Project No. R2007-00570 (Dr. Fricano)
Baldwin Hills Community Standards District (CSD) and EIR
SCH No. 2007061133
Environmental Case No. RENVT2007-00048
Next Hearing Date: August 14, 2008
Dear Commissioners:
I am writing to comment on the July 23, 2008 letter to the Commission written by Charles Moore as the lawyer for Plains Exploration and Production Company ("PXP"). In doing so, this letter explains the breadth of the County’s power to adopt new regulations for the Inglewood Oil Field.
A. As The Applicant, PXP’s Objections About The Need For These Regulations Are Hollow.
On page two of his letter, Mr. Moore complains that "[t]he proposed new regulations will apply to the Inglewood Field only" and that "[n]ew and ongoing oil operations in other parts of the County continue to be regulated by the restrictions in the current County Code." Mr. Moore raises similar concerns on page six of his July 23 letter.
He seems to forget that PXP is the applicant. PXP has proposed that a Community Standards District ("CSD") be established. Additionally, PXP has proposed that the boundaries of the CSD be limited to the Inglewood Field. (Project No. R2007-00570.)
Moreover, the need to adopt such regulations resulted from PXP's actions in the Oil Field. PXP's drilling caused noxious air emissions in January and February 2006. Those emissions caused various residents of my neighborhood to evacuate their homes in the middle of the night on January 11, 2006. Those emissions also led to the County's adoption of urgency legislation to control drilling in the Oil Field until the CSD can be adopted.
There is no basis for PXP to complain about the focus of its own application on its own oil field. PXP brought these regulations on itself.
B. The County Has The Legal Right To Regulate The Oil Field.
On page six of his letter, Mr. Moore complains that "oil field operations are already subject to extensive federal, state, and local regulations." This is a red herring.
The County is authorized by State law to regulate this oil field. California Public Resources Code Section 3690 provides:
"This chapter [3.5 of Division 3] shall not be deemed a preemption by the state of any existing right of cities and counties to enact and enforce laws and regulations regulating the conduct and location of oil production activities, including, but not limited to, zoning, fire prevention, public safety, nuisance, appearance, noise, fencing, hours of operation, abandonment, and inspection."
See also James Longtin, Longtin's California Land Use, § 3.45[2], p. 317 (2d ed, Local Gov't Publications):
"The state has enacted extensive regulations relative to oil and gas production. However, state regulation of oil wells does not preempt reasonable local zoning regulation." (Citations omitted.)
Professor Longtin also writes:
"Zoning ordinances totally prohibiting the production of oil in designated areas have been held valid. Oil wells can certainly be prohibited if the activity generated constitutes a nuisance." Longtin, supra, at § 3.45, p. 317.
C. PXP's Vested Right Is Limited To Producing Oil From Existing Wells At Existing Depths; PXP Does Not Have A Vested Right To Drill New Wells Or To Deepen Existing Wells.
On at least four occasions in the first four pages of his letter, Mr. Moore asserts that PXP has a vested right:
"PXP has a vested right to produce the oil and gas resources at the established field, and new zoning regulations cannot diminish this vested right."
"Because oil and gas production consistent with the controlling General Plan and the implementing zoning regulations has been ongoing at the Inglewood Field for many decades, PXP has a vested right to produce the oil and gas resources at the established field."
"PXP has a vested right to produce the oil and gas resources at the established field, and new zoning restrictions cannot be applied so as to impede the ongoing production of the resources in the Inglewood Field."
It is important to note what Mr. Moore did not write. He did not write that PXP has a vested right to drill new wells. He did not write that PXP has a vested right to drill deeper wells. He wrote that PXP has a vested right to ongoing production. In other words, PXP has a vested right to produce oil from its existing wells.
While PXP may have a vested right to continue operating its existing wells, this does not mean it has a vested right to drill more wells. To the contrary, case law holds that local agencies can prohibit the drilling of new wells and the deepening of existing wells within an existing oil field. As discussed below, the County has the legal right to prohibit oil drilling on this land consistent with the vision of establishing it as a state park, making the existing wells legal non-conforming uses and prohibiting the drilling of new wells and the deepening of existing wells.
This approach would be consistent with the One Big Park Concept outlined in the Baldwin Hills Park Master Plan (Cal. Dep't of Parks & Rec and Baldwin Hills Conservancy, May 2002). (See Fig. 18.)
The Greater Baldwin Hills Alliance ("GBHA" or sometimes "the Alliance") has not suggested that this prohibition occur, although others in the community have urged that the County do just exactly this and prohibit all new drilling.
The seminal vested rights case in California is Avco Community Dev., Inc. v. South Coast Reg'l Comm'n, 17 Cal. 3d 785, 132 Cal. Rptr. 386 (1976). In Avco, the California Supreme Court held:
"It has long been the rule in this state and in other jurisdictions that if a property owner has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government, he acquires a vested right to complete construction in accordance with the terms of the permit. Once a landowner has secured a vested right the government may not, by virtue of a change in the zoning laws, prohibit construction authorized by the permit upon which he relied." 17 Cal. 3d at 791 (citations omitted).
This is commonly referred to as a "late vesting rule." In Avco the developer asserted that because it had obtained a grading permit (but not a building permit) for new homes, and because it had spent over $2 million dollars (and incurred additional liabilities of almost $750,000) constructing street improvements, utilities, and similar facilities for a new tract of homes, and because the county had zoned the land for a planned community, they had acquired a vested right to complete the development and build the homes for which building permits had not yet been issued. Id. at 789-790.
The Supreme Court disagreed: "A landowner which has not even applied for a permit cannot be in a better position merely because it had previously received permission to subdivide its property and made certain improvements on the land." Id. at 795. The Court found that "although . . . Avco had a detailed plan for the buildings to be erected on the tract, the county was not aware of and had not approved such a plan, and the preliminary approvals which it did grant did not refer to any identifiable buildings." Id. at 797. The Court held "Avco has not acquired a vested right":
"[The fact that] Avco reasonably expected that it would be allowed to construct 'buildings' on the tract 'without further discretionary governmental approval' and that by granting the preliminary approvals the county represented to Avco that it would be permitted to construct 'buildings upon obtaining building permits' are not sufficient to sustain a conclusion that Avco had secured a vested right to building structures which the county did not approve and as to which it had no detailed information." Id.
Lest the County be concerned about applying this common law vested rights doctrine to oil fields, the California Supreme Court has already upheld that right. This occurred in Beverly Oil Company v. City of Los Angeles, 40 Cal. 2d 552, 254 P.2d 865 (1953). The facts of Beverly Oil are instructive. The oil company owned eleven acres of land at San Vicente and La Cienega Boulevards in Los Angeles. The first producing oil well on this property was drilled in 1908. Thereafter a total of at least ten wells were established. The land was annexed to the City of Los Angeles in 1924. The following year, the City of Los Angeles passed its first zoning ordinance. The use for drilling and production was prohibited; however, the operation of existing wells was expressly permitted as a nonconforming use. Twenty years later only seven wells remained, yielding approximately 6,000 barrels per month. Beyond the immediately surrounding streets there was dense residential development in every direction. The City re-codified its zoning ordinance. In so doing, it expressly prohibited new oil wells and also prohibited deepening the existing wells. Id. at 554-55.
The Court wrote:
"[T]he plaintiff [oil company]'s only objections to its enactment are that it cannot drill new wells, or redrill old wells to depths beyond the present level. It may redrill existing wells to their present level to improve their production. Furthermore, it requested and was granted a variance under which it may concentrate all of its oil production operations in a triangular 2-acre parcel, and may drill from within that area wells at such angles as to reach any presently producing deposit underlying the tract provided it abandons one of four existing wells for each new well drilled." Id. at 559.
The Court recognized, "The policy in this state favors the conservation of oil deposits through statutory regulation" and "The people have a 'primary and supreme interest' in oil deposits" and "oil production is a business which must operate, if at all, where the resources are found." Id. at 558. "Nevertheless city zoning ordinances prohibiting the production of oil in designated areas have been held valid." Id.
The Court further recognized, "Comprehensive zoning has long been established as being a legitimate exercise of the police power." Id. at 557 (citations omitted). And the Court cited the United States Supreme Court:
"In its opinion the Supreme Court of the Unites States stated: . . . 'A vested interest cannot be asserted against it because of conditions once obtaining. To so hold would . . . fix a city forever in its primitive conditions. There must be progress, and if in its march private interests are in the way they must yield to the good of the community.' " Id. at 557; quoting from Hadacheck v. Sebastian, 239 U.S. 394, 36 S.Ct. 143.
The California Supreme Court also cited a Federal Court of Appeals opinion for which certiorari was denied by the U.S. Supreme Court, upholding zoning prohibitions against oil well drilling:
"In Marblehead Land Co. v. City of Los Angeles, 47 F.2d 528 (cert. denied, 284 U.S. 634), the Circuit Court of Appeals affirmed a judgment of the district court denying an injunction against the enforcement of the Los Angeles zoning ordinance in its prohibition of oil well drilling operations in an area zoned for other uses. The argument raised the question of the right of the property owner to extract natural resources. The court stated: 'there can be no question of the inherent right of the city to control or prohibit such production, provided it is done reasonably and not arbitrarily. In that event the loss must fall upon the owner whether it prevents him from erecting structures or establishing industries which he desires to erect or establish, or whether it prevents him from developing the inherent potentialities of his land.' The court decided that the particular ordinance was not arbitrary or unreasonable, even though the city council had once amended the ordinance to permit oil drilling operations and had then repealed the amendment, while in the meanwhile the land had been leased for oil drilling purposes and a considerable sum of money had been spent in preliminary work." 40 Cal. 2d at 558.
Accordingly, in Beverly Oil, the California Supreme Court held:
"In must be deemed to be well settled that the enactment of an ordinance which limits the owner's property interest in oil bearing lands located within the city is not of itself an unreasonable means of accomplishing a legitimate objective within the police power of the city." Id.
Even Mr. Moore inadvertently acknowledged that PXP has no vested rights as to new oil wells when he wrote at pages 7-8:
"Monitoring of oil and gas operations at the Inglewood Field under new regulations will continue, of course, and appropriate revisions can always be made to the adopted ordinance."
Thus, PXP may have vested rights to produce oil from its existing wells, subject to nuisance law protections for the community. But there is no legal authority for the proposition that PXP has a vested right to drill additional wells (or to deepen existing wells). Even Mr. Moore declined to make such an assertion in his letter. Instead, he carefully worded his letter to give the County the impression of that argument without ever stating it.
D. The "Diminishing Asset Doctrine" Does Not Undermine The County's Right To Prohibit New Oil Drilling And Deeper Oil Drilling.
In the more recent case of Hansen Bros Enters. v. Board of Supervisors, 12 Cal. 4th 533, 48 Cal. Rptr. 2d 778 (1996), the California Supreme Court discussed the concept of the so-called "diminishing-asset doctrine" in the context of rock quarries, not oil fields. There, the Court cited with approval the Beverly Oil holding on at least three occasions. 12 Cal. 4th at 551, 552 & 553.
The Court held: "In general, the [government] has the same power to prohibit the extraction or removal of natural products from the land as it does to prohibit other uses." 12 Cal. 4th at 553, citing Beverly Oil Co. v. City of Los Angeles, supra.
E. PXP Is Blatantly Wrong In Its Assertion That Its Initial Draft Ordinance Incorporates The Best Of Modern Oil Regulations.
In his letter, Mr. Moore asserts at page five:
"The initial draft ordinance, which was prepared by PXP and filed with the County, is a synthesis of the best of the modern Southern California regulations surveyed."
It is difficult to believe he made this statement. PXP's draft CSD is nothing more than wishful thinking by an entity that was drafting the very regulations by which its own activities and operations would be regulated. Why would PXP ever draft rigorous regulations — let alone state-of-the-art regulations? Since the County's comments speak for themselves, a chart listing some of the deficiencies of PXP's initial draft (virtually none of which were addressed in PXP's final draft) is enclosed with this letter.
Because PXP's draft CSD fails to include so many state-of-the art provisions found in the zoning codes of neighboring jurisdictions, the Alliance prepared and submitted an alternative draft CSD, which does incorporate the "best of the modern Southern California regulations."
F. PXP Is Attempting To Understate The Scope Of Its Contemplated Future Operations.
Mr. Moore writes at page five: "Future operations will be consistent with the past eighty-four years of drilling, pumping, and well abandonment." He also writes: "No expansion is proposed."
This is untrue. Indeed, in the following paragraph, Mr. Moore himself writes:
"For example, from 2000 to 2005, the number of new wells drilled averaged 28 per year, as opposed to the approximately 53 new wells per year for the next 20 years assumed in the DEIR."
The County's Draft Environmental Impact Report ("EIR") states:
"In development the description of potential future drilling and operational activities, a number of data requests were submitted to PXP regarding potential development in the Inglewood Oil Field over the next 20 years. The data provided by PXP have served as the basis for developing the description of potential future drilling and operational activities . . . Future drilling could increase the production of oil and gas from the field."
The EIR projects that PXP may drill almost as many new wells (1,065) in the next 20 years as have been drilled in the 82-year history of the Oil Field (1,463). (DEIR at p. 2-15.)
Although this oil field has been in operation since 1924, the greatest volume of oil production occurred in 1927 and dropped precipitously thereafter. (DEIR Fig. 2-7 at p. 2-11.) Over its more than 80 year history, there have been approximately 1400 wells established in this Oil Field. (NOP at p. 2.) Currently there are 436 active producing wells. (DEIR at p. 2-15.)
In year 2009, PXP contemplates drilling 85 new wells in this Oil Field. (DEIR Table 3-1 at p. 3 3.) Except for the year 1925, no oil operator has ever drilled that many new wells in the Oil Field in any single year. (DEIR Figure 2-8 at p. 2-12.)
Over the following four years — 2010, 2011, 2012 and 2013 — PXP contemplates drilling 75 new wells in this Oil Field each year. (DEIR at Table 3.1 at p. 3-3.) Only once — in 1965 — were 75 new wells ever drilled in a single year in this Oil Field. (DEIR Figure 2-8 at p. 2-12.)
G. PXP Is Also Attempting To Understate The Significance Of The EIR's Evaluation Of 1,065 Potential New Wells Over The Next 20 Years.
PXP likes to point out that there are no applications pending for any new wells. Mr. Moore writes at page six: "No permits for new drilling are proposed with this application."
This is technically true. But once again it is misleading.
PXP pretends that the EIR's evaluation of a maximum of 1,065 new wells is merely a "worst case" projection intended to protect the public by ensuring more dramatic mitigation. For example at page five, Mr. Moore writes:
"The DEIR provides information regarding a maximum growth and disturbance scenario for potential future operations at the Inglewood Field for the next twenty years, as regulated by PXP's initial draft ordinance. This upper limit assumption insures that the mitigation measures will mitigate fully any future operational scenario…"
But he does not point out the implications of this study of maximum growth potential in the EIR. Once the EIR has been certified and if PXP's proposal for processing future drilling permits is adopted per its draft CSD, then PXP would file an application for administrative review process that would result in County approvals for new wells (and deeper wells) within 30 days after each application is submitted. (DEIR at pp. 2-51 through 2-53.) PXP is sure to assert during the permit application process that no new mitigation measures are required and no new CEQA analysis is required because the maximum potential impact was already studied in the EIR.
Unless the CSD is revised to make clear that individual permits will trigger further discretionary review — including evaluation under CEQA — then PXP is clearly delighted that the EIR purports to study the potential impact of drilling up to 1,065 new wells over the next 20 years.
They are hoping that no one will notice this flaw in the process.
H. PXP Has Already Agreed To Accept The Mitigation Measures In The EIR.
At page six, Mr. Moore writes:
"Urban oil production is occurring throughout California in a safe and environmentally compatible manner. The DEIR assures that oil and gas production at the Inglewood Field will be conducted in the same manner."
And also at page six, Mr. Moore writes:
"The DEIR recommends additional mitigation measures to be incorporated into the initial draft ordinance. Although these measures are costly, PXP anticipates supporting the mitigation measures identified by the environmental studies and surveys in the DEIR."
Thus, it came as a surprise when PXP Vice-President Steve Rusch testified on August 2 that he was not sure he could support all of the mitigation measures reflected in the DEIR.
PXP cannot have it both ways.
PXP cannot first claim that the DEIR confirms its future operations will not cause any significant adverse environmental impacts ("After careful study and more than 1,400 pages of analysis, the DEIR finds that future oil operations at the Inglewood Field will not cause any significant impacts after mitigation") and then object to some of the required mitigation measures.
CONCLUSION
PXP has no vested right to drill new wells or deepen existing wells. Under its police powers, the County can prohibit or restrict such proposed future operations in the interest of public health, safety and welfare. Cal. Const., art. XI, § 7 ("A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws"). Furthermore, the County can close down the oil field if it finds the operation constitutes a public nuisance.
Very truly yours,
Kenneth L. Kutcher
Enclosure
KLK:snk
cc: Supervisor Yvonne B. Burke (w/ encl.)
Supervisor Gloria Molina (w/ encl.)
Supervisor Zev Yaroslavsky (w/ encl.)
Supervisor Don Knabe (w/ encl.)
Supervisor Michael D. Antonovich (w/ encl.)
Mike Bohlke (w/ encl.)
Councilmember Bernard Parks (w/ encl.)
Senator Mark Ridley-Thomas (w/ encl.)
Speaker Karen Bass (w/ encl.)
Mayor Scott Malsin (w/ encl.)
Bruce McClendon (w/ encl.)
Jon Sanabria (w/ encl.)
Rose Hamilton (w/ encl.)
Russell J. Fricano (w/ encl.)
Susana Franco-Rogan (w/ encl.)
Elaine Lemke (w/ encl.)
Hal Bopp, State Oil and Gas Supervisor (w/ encl.)
Steve Rusch (w/ encl.)
Charles Moore (w/ encl.)
9065/Cor/LAPlanningComm.2003.KLK
