With a single vote, Los Angeles City Council has made history -- and also opened up a hornet's nest. The Council's 10-0 vote to authorize a moratorium on fracking and acidizing is dramatic evidence that the anti-fracking movement has arrived. Let's hope it has good lawyers.
The Council's Feb. 28 resolution authorizes the city attorney's office to write an ordinance prohibiting "all activity associated with well stimulation" until additional environmental safeguards are adopted by the state and federal governments. It's unclear when the vote on the ordinance will take place, but it's clear indeed that it will be historic. By taking that final step, Los Angeles would become the first major oil-producing jurisdiction in the nation to severely restrict oil production for the purpose of protecting the environment and public health.
It's also clear that the oil industry's real political pushback has not yet happened and will focus on the final vote. When the oil companies get into gear, they will tap deep webs of support throughout the city. What's not widely understood is that beneath the glitz and power of the entertainment industry and finance, Los Angeles has been an oil town ever since the days when Upton Sinclair wrote his epic novel Oil!. The city of Los Angeles includes 1,880 active oil wells that produce a total of about 15,000 barrels per day. Neighboring areas of Los Angeles County -- primarily Long Beach, Inglewood and Beverly Hills -- produce about three times as much again, for a countywide total of 66,000 barrels per day. State regulators say they do not know how many of these wells involve fracking or acidizing.
About 10,000 residents of Los Angeles own the mineral rights to oil underneath their properties and thus receive regular royalty payments. These people included Mayor Eric Garcetti, at least until the issue became too hot in last year's mayoral election and he handed off his shares to a friend.
Rock Zierman, CEO of the California Independent Petroleum Association, issued a statement threatening to mobilize this sprawling constituency against the L.A. ordinance. He said that because fracking and acidizing are such routine techniques in local oilfields, the Council's move would essentially ban all oil production in the city. It's an outcome that was not stipulated explicitly in the Council's action, but surely would be celebrated by many local environmental advocates.
If regulation does become a de facto ban, watch out. Zierman threatened a regulatory takings lawsuit that, he said, would force the city to pay oil companies billions of dollars for lost earnings on valid oil production contracts. That's no empty threat. In the U.S. and California systems it has powerful legal support. The road of progressive good intentions in recent decades has been littered with good laws withdrawn under threat of court rulings with potentially huge fines.
Oil production in Los Angeles brings significant dangers for the environment and public health, as documented in the preamble of the Council's resolution. But whether activists and the city's lawyers are able to craft a viable moratorium ordinance that withstands political and legal attack is a huge challenge, one that will have major ramifications nationwide. To understand just why this is so tricky, after the jump I compare the operative clauses of the Council's motion with the most relevant section of state law governing oil production.