CA Supreme Court Strikes Local Voter-Approved Ban on Oil & Gas Drilling, Extraction
By James I. Anderson, Esq.
In brief
The California Supreme Court in Chevron U.S.A. Inc. v. County of Monterey (“Chevron”) recently held that a local voter-approved ordinance that would have banned certain types of oil drilling and wastewater injection throughout Monterey County was invalid because it conflicts with state law that gives California state regulators, rather than local jurisdictions, oversight over what “methods and practices” can be used to extract fossil fuels.
In detail
In 2016, voters in Monterey County passed “Measure Z” to ban oil and gas wastewater injection and impoundment and the drilling of new oil and gas wells within the County. Oil producers and other mineral rights holders brought actions arguing that the measure conflicted with state law that gives California regulators oversight over what “methods and practices” can be used to extract fossil fuels. These groups further argued that only state regulators could prohibit certain well drilling and the use of certain extraction methods. The trial court and the court of appeals both determined that state law preempted Measure Z, as did the California Supreme Court.
The California Constitution, Article XI, section 7 states that local legislation is preempted and void if it conflicts with state law. In Chevron, the California Supreme Court analyzed the local Measure Z to determine whether it conflicted with California Public Resources Code section 3106. California Public Resources Code section 3106 states that the state oil and gas supervisor shall supervise the “drilling, operation, maintenance, and abandonment of wells so as to permit the owners or operators of the wells to utilize all methods and practices known to the oil industry for the purpose of increasing the ultimate recovery of underground hydrocarbons and which, in the opinion of the supervisor, are suitable for this purpose in each proposed case.”
In Chevron, the Court found that Measure Z’s prohibition on certain methods of oil production directly conflicted with the above-cited provision and was therefore void. As stated bluntly by the Court “[b]y banning some oil production methods altogether, Measure Z takes those methods off the table and nullifies the [state oil and gas] supervisor's express, statutorily-conferred authority to decide what oil production methods are suitable in each case.”
Although the Appellants brought several arguments regarding preemption law, the Court ultimately concluded that state law preempted Measure Z. This case is a reminder that local measures will not stand where they conflict with state laws that may occupy the field.