As I have written previously, California environmental activists' attempts to enact local bans on fracking can run into tough legal problems -- mainly because municipal and county governments apparently don't have sufficient legal authority to prohibit the activity. Any attempt to impose a ban could trigger a "takings" lawsuit that could force the local government to pay huge sums to the oil companies for lost earnings.
A perfect case study is Los Angeles, where the City Council voted 10-0 in February to instruct City staff to draft an ordinance to "prohibit activity associated with well stimulation and hydraulic fracturing in the City of Los Angeles until safety and reliability of Los Angeles water supplies are assured." It seemed like a big victory for the anti-fracking movement.
Last week, however, City staff took the extraordinary step of refusing to obey the Council's decision. A report to Council by the Department of City Planning suggested a fracking ban might be illegal under state law. "There remains legal uncertainty around the extent of local government authority to regulate or prohibit well stimulation treatments," the report said. "As such, the Department recommends against pursuing interim or permanent regulations governing well stimulation at this time." The report doesn't say so explicitly, but it's fair to assume this language was dictated word for word by L.A. City Attorney Mike Feuer.
Instead of a fracking ban, the staff report recommended a tightening of land-use rules and requiring mitigation of any environmental damage caused by oil drilling. However, the report said city staff lacked technical expertise to draw up those rules and recommended hiring a technical expert "to provide the scientific perspective and analysis from which new performance standards can be established."
Which sounds a lot like SB4, the fracking regulatory law authored by Sen. Fran Pavley and enacted in 2013. It was pilloried by fractivists as a sellout, but it has ushered in a powerful package of regulations that is proving to be a big success story, as I noted in a previous post.
The L.A. legal pushback carries echoes from the nearby city of Compton. As the staff report pointedly states on its page 2:
Although a number of Federal regulations govern well stimulation processes, States have regulatory primacy. Now that well stimulation treatments have been brought to public attention, issues surrounding State preemption over local authority are being determined. For example, on July 21, 2014, Western States Petroleum Association ("WSPA") — through the law firm of Latham & Watkins LLP – sued the City of Compton, the City Council, and the Mayor for declaratory and injunctive relief challenging an ordinance prohibiting hydraulic fracturing, acidizing, and other well stimulation activities. WSPA alleges that the ordinance is unconstitutional because it purports to regulate a field that is fully occupied by state law — i.e., the method and manner of oil and gas extraction – and therefore, is preempted. "By banning only the well stimulation activities set forth in the Ordinance while continuing to allow oil production activities themselves, the City has purported to regulate the method and manner of oil and gas extraction in the City."(Compl. ¶53.) On September 23, 2014 the City Council of Compton withdrew the moratorium. The Los Angeles City Attorney's Office is actively monitoring the outcome of this action.
Around California, fracking fights got mixed results on Election Day. Bans on fracking were approved in San Benito County, which has little oil activity, by 57.4 percent to 42.6 percent, and in Mendocino County, with zero oil activity, by 67.2 percent to 32.8 percent. But in Santa Barbara County, where a signficant amount of oil production takes place, a fracking ban lost badly, 37.4 percent to 62.6 percent, after the oil industry spent $7 million against it. Oil industry groups had threatened to file suit in Santa Barbara County if that ban had passed, but they appear to have remained mum in the other two counties -- presumably because they have no skin in the game there. Maybe they'll sue anyway, or maybe they won't bother.
As I wrote in a post mentioned above:
Because fracking and acidizing are often carried out in existing, vested fields as well as new fields, it's likely that most if not all existing fields will be excluded from local and state fracking bans in the future. If they're not excluded -- as some environmental groups seem to prefer -- it could be very profitable for the oil companies. Why actually pump oil when you can just sue the local or state government and get paid megabucks for not producing a drop?
If Venoco, Plains Exploration, Occidental, Chevron and other oil companies active in California were really thinking smart, they would secretly funnel some generous contributions to the environmental groups that are trying to shut them down.
Elsewhere in the nation, however, the legal situation is not so clean cut. In New York (which currently has a fracking moratorium) and Pennsylvania, courts have ruled that communities do have the right to ban fracking. In Colorado, Gov. John Hickenlooper and the Legislature made a controversial agreement this year to allow local communities to enact land-use regulations on fracking but to keep in state hands the authority over any potential ban. In other states, communities have enacted fracking bans with uncertain legal authority.
Whoever eventually wins all these fracking fights, one thing is certain -- the lawyers will get rich.