May 9, 2021 | Category: News

On April 20, 2021, the Los Angeles City Council’s Planning and Land Use Management Committee held a hearing and voted unanimously to support a proposal to ban all oil and gas operations in the City of Los Angeles.  The proposal came to the committee after the Council’s Energy, Climate Change, and Environmental Justice Committee proposed last year to not only ban new oil and gas operations in the City, but to also ban existing operations.  Specifically, the proposal includes recommendations that: (1) the City Council adopt an interim zoning ordinance to declare new oil and gas wells as a nonconforming use in all zoning districts; and (2) planning and legal staff should prepare a draft zoning amendment with an amortization period for existing wells to shut down, i.e. existing wells would be phased out over a certain time period, which would be determined based on legal review in an attempt to avoid liability for taking valuable property rights away from oil and gas operators and mineral owners.

The proposal will now be considered by the Council’s Budget and Finance Committee and the Arts, Parks, Health, Education, and Neighborhoods Committee.

While other jurisdictions have sought to limit new oil and gas operations, this proposal by the City of Los Angeles is by far the most aggressive proposal because it would ban existing operations.  A ban on existing operations includes a significant risk that the City will owe operators and mineral owners compensation for taking property rights.  In fact, the City’s former Petroleum Administrator acknowledged this risk (to the tune of $1.2 billion to $97.6 billion in potential liability) when the City previously considered imposing increased buffers surrounding new oil and gas wells (which would have effectively banned new operations throughout the City).  It is unclear how the City would pay for even potentially greater takings liability from banning new and existing operations but that will likely be discussed when the Council’s Budget and Finance Committee considers the proposal.

California oil and gas attorney Michael Sherman contributed to this article.