Los Angeles well stimulation ban questioned

Earlier this year, the Los Angeles City Council passed a motion to ban any oil and gas well stimulation or the use of wells for waste disposal injection. After passing the motion, the City Council authorized the city attorney to write the ordinance with the assistance of the Department of City Planning (DCP).

Similar to other proposed drilling bans, however, the implementation process for the prohibition has not gone smoothly. In fact, the DCP has advised the City Council against prohibiting oil and gas operations. According to the DCP, the City Council should hire an expert and merely update the city’s zoning and land use ordinances.

The DCP expressed concern over the passage of the city ban in light of statewide legislation regulating oil and gas operations—SB 4—and the city’s lack of experience in this field. In support of its argument, the DCP cited the lawsuit filed against the Compton City Council regarding a prohibition similar to the one envisioned by the Los Angeles City Council.

Several commentators have spoken out in support of the DCP. Some commentators have pointed to the severe economic consequences of enacting the proposed ban—specifically, the loss of tax revenue. Moreover, Los Angeles would likely face multiple lawsuits similar to those filed against the city of Denton.

For instance, the proposed prohibition could be preempted by state law. In addition, a number of residents in the city would lose a significant amount of revenue and could therefore sue Los Angeles alleging unconstitutional takings under state and federal law. Commentators have also highlighted the overly broad language in the city council’s motion.

Read the DCP’s report.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.