Stop Oil v. City of Hermosa Beach
| Citation | 86 Cal.App.4th 534,103 Cal.Rptr.2d 447 |
| Decision Date | 24 January 2001 |
| Docket Number | No. B138557.,B138557. |
| Court | California Court of Appeals |
| Parties | HERMOSA BEACH STOP OIL COALITION et al., Plaintiffs and Appellants, v. CITY OF HERMOSA BEACH et al., Defendants and Respondents. Windward Associates et al., Real Parties in Interest. |
Plaintiffs and appellants Hermosa Beach Stop Oil Coalition, Heal the Bay, Santa Monica Baykeeper and American Oceans Campaign (hereafter collectively referred to as "Stop Oil") appeal from a judgment after a bench trial entered in favor of defendants and respondents City of Hermosa Beach and City Council of the City of Hermosa Beach (the City) and real parties in interest and respondents Windward Associates and Macpherson Oil Company (Macpherson). The judgment denied Stop Oil's request for injunctive and declaratory relief. Macpherson has filed a cross-appeal, asserting additional grounds to support the trial court's judgment.
The essential question presented is whether reinstatement of a total ban on oil drilling within the City of Hermosa Beach, adopted through the initiative process in November 1995 (Proposition E), constitutes an unconstitutional impairment of the 1992 lease agreement between Macpherson and the City for oil and gas exploration and production on city-owned property.
The trial court ruled that application of Proposition E to the Macpherson oil drilling project would constitute an unconstitutional impairment of the lease agreement between Macpherson and the City. We reverse.
In 1932 the voters of the City enacted a ban on all oil and gas operations within Hermosa Beach, declaring such activity to be both unlawful and a public nuisance.2 (Hermosa Beach Mun.Code, § 21-10.)
In 1984, to generate the funds needed to acquire open space and parklands within the City, the voters adopted Propositions P and Q, council-sponsored ballot measures creating exceptions to the ban on oil exploration and production for two publicly-owned sites within the City: the City Yard Site, a parcel owned by the City and being used as its maintenance yard; and the School Site, a parcel owned by the local school district. (Hermosa Beach Mun.Code, § 21-10, subds.(a) & (b).)
In 1985 the City Council adopted an ordinance establishing the Hermosa Beach Oil Code, regulating the development and design of oil recovery projects and establishing a permit system for drilling and oil recovery operations in the City. (Hermosa Beach Ord. No. 85-803.) The ordinance recited the City Council's intent to allow for oil production "in a manner that protects the health, safety and welfare of the citizens of Hermosa Beach." (Hermosa Beach Ord. No. 85-803.) Section 21A-2.3 of the code provides, "No person shall be issued a drilling permit until the same has been approved by the Building and Safety Director with concurrence by the Planning Director, and found to be in compliance with all applicable laws, ordinances and regulations." (Hermosa Beach Mun.Code, § 21A.2.3.)
In June 1986 the City published a request for proposals for oil exploration and production at the two sites. Macpherson Oil Company, which had in 1976 proposed developing oil resources in the tidelands of Hermosa Beach and had been a leading force in placing the 1984 ballot measures before the voters, was the only company to respond to the City's request.
Negotiations ensued between the City and Macpherson and resulted in an agreement, Oil and Gas Lease No. I.3 The initial, 1986 lease with the City involved the City Yard Site and related only to the onshore mineral rights acreage owned by the City, referred to as the "uplands." That lease was amended later in 1986 and again in 1988 and 1991. In January 1992 the parties entered into a second lease, Oil and Gas Lease No. 2, which superseded the initial lease and its various amendments. Oil and Gas Lease No. 2, which again involves only the City Yard Site, covers not only the uplands but also the submerged mineral rights acreage owned by the City, known as the "tidelands." The 1992 lease remains the operative agreement between the City and Macpherson.4
Under the lease Macpherson obtained the right to conduct oil and gas operations within the City. The City was obligated to deliver the City Yard Site to Macpherson for use as a drill site and to obtain State Lands Commission (SLC) approval to allow drilling for oil in the tidelands. The lease requires Macpherson to obtain all necessary permits and regulatory authorizations before proceeding to construct the drill site and begin drilling, including a conditional use permit (CUP) for the project from the City and a coastal development permit from the California Coastal Commission.
The proposed oil exploration and production project was to begin with three exploratory wells, with up to 27 additional wells (30 total) to be drilled if the initial exploration proved successful. The Macpherson-City lease and the CUP obtained by Macpherson authorized construction of a 135-foot-high oil derrick (equivalent to a 15-story building), which would operate during the 4-1/2 year exploratory and drilling phase of the project. Thereafter, workover rigs up to 110 feet high could operate on the property up to 90 days a year for 35 years. Project plans called for construction of a pipeline to transport the crude oil product to a nearby refinery outside the city limits.
Between 1986 and 1990 Macpherson developed three different proposed project descriptions. In addition, in connection with the SLC application filed by the City on behalf of Macpherson, Macpherson prepared an environmental impact report (EIR) pursuant to the California Environmental Quality Act (CEQA). (Pub. Resources Code, §§ 21000 et seq.)
The EIR. The first draft of an EIR was circulated for public review and comment in May 1989. On May 8, 1990 the City Council certified a revised EIR and adopted a Statement of Overriding Conditions for the project pursuant to the requirements of CEQA. At the same time the City approved a general land use plan and the zoning code amendments needed for Macpherson to proceed with the project.
The CUP. On August 10, 1993, after an extended review process, the City approved a CUP for the Macpherson project. The CUP contained 140 conditions, requiring submission to and approval by the City of a number of additional reports, plans and analyses prior to the issuance of any permit for commencing work. For example, both an oil spill prevention control plan and an oil drilling contingency plan needed to be approved by the state Division of Oil and Gas and the City's fire and building and safety departments. In addition, the CUP specifically required the property to be "developed, maintained and operated in full compliance with the conditions of this grant and any law, statute, ordinance or other regulation applicable to any development or activity on the subject property."
An addendum to the EIR was approved by the City at the same time it approved the CUP.
Hermosa Beach Stop Oil Coalition, Santa Monica Baykeeper and American Oceans Campaign, three of the plaintiffs in this action, filed a challenge to the adequacy of the EIR and the approval of the CUP by the City in September 1993. (Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach (Super. Ct. L.A.County, 1993, No. BS025250).) The trial court initially determined that the project as proposed violated the size restrictions in the 1984 referendum approving the exception to the oil drilling ban and thus invalidated the CUP. That decision was reversed by the court of appeal in an unpublished decision in June 1996, and the case returned to the trial court for further proceedings on CEQA issues. (Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach (June 24, 1996, No. B090473).) The lawsuit was finally concluded in September 1997 when Hermosa Beach Stop Oil Coalition and the other petitioners abandoned their appeal of the trial court's judgment denying a writ of mandate on the CEQA issues on the ground that the challenge was untimely.
The SLC. Concurrently with the processing of the CUP, the City and Macpherson jointly proceeded before the SLC to obtain approval for the project's proposed development of oil reserves in the tidelands, as required by the 1992 lease. The SLC approved the lease on April 28, 1993. As a result of another lawsuit initiated by the Hermosa Beach Stop Oil Coalition in August 1993 (Hermosa Beach Stop Oil Coalition v. State Lands Commission, (Super. Ct. L.A.County, 1993, No. BS024656)), the matter was returned to the SLC in January 1994 with directions that it specifically determine whether the project was in the best interests of the state. A second approval from the SLC was obtained in March 1994.
The Coastal Development Permit. In September 1993 Macpherson submitted an application for a coastal development permit to the California Coastal Commission for the proposed project. That application was withdrawn in January 1995. A new application for a coastal development permit was...
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