Chevron U.S.A. Inc. v. Cnty. of Monterey

15 Cal.5th 135

532 P.3d 1120

311 Cal.Rptr.3d 68

CHEVRON U.S.A. INC. et al., Plaintiffs and Respondents,

v.COUNTY OF MONTEREY, Defendant;

Protect Monterey County et al., Interveners and Appellants.

S271869

Supreme Court of California.

August 3, 2023

Robins Kaplan, Michael Geibelson, Bernice Conn, Lucas A. Messenger, Los Angeles; Environmental Law Clinic at Stanford Law School, Deborah A. Sivas, Alicia E. Thesing; Center for Biological Diversity, Hollin N. Kretzmann; Shute, Mihaly & Weinberger, Catherine Engberg, San Francisco, Kevin P. Bundy and Aaron M. Stanton, San Francisco, for Interveners and Appellants.

Katherine S. Hoff, Shana D.G. Lazerow, Oakland, Alison Hahm; Julia K. Forgie; M. Benjamin Eichenberg, Berkeley; Paulina Nicole Torres and Ingrid M. Brostrom for Communities for a Better Environment, Natural Resources Defense Council, San Francisco Baykeeper and Center on Race, Poverty & the Environment as Amici Curiae on behalf of Interveners and Appellants.

James R. Williams, County Counsel (Santa Clara), and Elizabeth Vissers, Deputy County Counsel, for County of Santa Clara as Amicus Curiae on behalf of Interveners and Appellants.

Noah Garrison for Former State Senator Fran Pavley as Amicus Curiae on behalf of Interveners and Appellants.

Frank G. Wells Environmental Law Clinic, Sean B. Hecht, Los Angeles, Benjamin Avi Harris and Gabriel F. Greif for League of California Cities, California State Association of Counties and County of Los Angeles as Amici Curiae on behalf of Interveners and Appellants.

Alston & Bird, Jeffrey D. Dintzer, Matthew Wickersham, Los Angeles; Gibson Dunn & Crutcher, Theodore J. Boutrous, William E. Thomson, Dione Garlick, Los Angeles; Ragghianti Freitas and Todd Welden Smith, Irvine, for Plaintiff and Respondent Chevron U.S.A., Inc.

Hanson Bridgett, Andrew A. Bassak, Walnut Creek, Christopher A. Rheinheimer, Gary A. Watt, Patrick Burns, San Francisco; Manatt, Phelps & Phillips, Michael M. Berger and Benjamin Shatz, Los Angeles, for Plaintiff and Respondent Aera Energy LLC.

O'Melveny & Myers, Matthew Thomas Kline, Heather A. Welles, Los Angeles, and Barton H. Thompson for Plaintiff and Respondent California Resources Corporation.

Clifford & Brown and Donald C. Oldaker, Bakersfield, for Plaintiff and Respondent Eagle Petroleum, LLC.

JRG Attorneys at Law, Johnson, Rovella, Retterer, Rosenthal & Gilles and Jason S. Retterer for Plaintiffs and Respondents Trio Petroleum, LLC, Sunset Exploration Inc., Monroe Swell Prospect, J.V., and Bradley Minderals, Inc.

Hanna and Morton, Edward S. Renwick, Los Angeles; and Jacqueline M. Zischke, Salinas, for Plaintiff and Respondent National Association of Royalty Owners—California, Inc.

Manatt, Phelps & Phillips and Michael M. Berger, Los Angeles, for Western States Petroleum Association and California Independent Petroleum Association as Amici Curiae on behalf of Plaintiffs and Respondents.

Munger, Tolles & Olson, Benjamin J. Horwich, San Francisco, and Dila Mignouna for Chamber of Commerce of the United States of America, California Chamber of Commerce, Central Valley Business Federation and Los Angeles County Business Federation as Amici Curiae on behalf of Plaintiffs and Respondents.

Opinion of the Court by Jenkins, J.

In 2016, Protect Monterey County (PMC) sponsored, and Monterey County (County) voters passed, "Measure Z," a local ordinance that bans oil and gas wastewater injection and impoundment and the drilling of new oil and gas wells throughout the County's unincorporated areas. Chevron U.S.A. Inc. (Chevron) and other oil producers and mineral rights holders, among others (collectively, plaintiffs), filed a total of six actions¹ against the County challenging Measure Z on various grounds, including state and federal preemption. PMC and its founder and spokesperson, Dr. Laura Solorio (hereinafter collectively, PMC), intervened in the action. The trial court entered judgment in favor of plaintiffs on state and federal preemption grounds. PMC appealed, and the Court of Appeal affirmed. ( Chevron U.S.A., Inc. v. County of Monterey (2021) 70 Cal.App.5th 153, 285 Cal.Rptr.3d 247 ( Chevron ).)

We granted review to decide whether Public Resources Code section 3106² preempts Measure Z. We conclude it does because Measure Z is contradictory to, and therefore conflicts with, section 3106. Accordingly, we affirm the judgment of the Court of Appeal.

FACTUAL AND PROCEDURAL BACKGROUND

The County's oil fields are in the County's inland regions and operate under permits issued by the County and Geologic Energy Management Division (CalGEM), ³ the state agency tasked with overseeing the state's drilling, operation, maintenance, and plugging and abandonment of oil and gas wells. (§§ 3002, 3100 et seq., 3106, subd. (a).) Because of the oil deposits' viscous nature, oil is extracted using steam injection, whereby new wells are drilled and steam is injected underground to heat the oil and make it more fluid so that it can be pumped out of the ground.⁴

Measure Z was a County initiative entitled "Protect Our Water: Ban Fracking and Limit Risky Oil Operations Initiative." It was sponsored by PMC and its stated purpose was to protect the County's "water, agricultural lands, air quality, scenic vistas, and quality of life." It passed with 56 percent of the vote. The measure applies exclusively to oil and gas operations and contains three prohibitions that apply to the County's unincorporated areas. The first — LU-1.21 — bans well stimulation treatments including hydraulic fracturing (commonly known as fracking) and is not at issue here because none of the plaintiffs use, or have any plans to use, such methods.⁵

The second — LU-1.22 — provides, "Prohibited Land Uses: The development, construction, installation, or use of any facility, appurtenance, or above-ground equipment, whether temporary or permanent, mobile or fixed, accessory or principal, in support of oil and gas wastewater injection or oil and gas wastewater impoundment is prohibited on all lands within the County's unincorporated area." For purposes of LU-1.22, " ‘oil and gas wastewater injection’ " means "the injection of oil and gas wastewater into a well for underground storage or disposal"; " ‘oil and gas wastewater impoundment’ " means "the storage or disposal of oil and gas wastewater in depressions or basins in the ground, whether manmade or natural, lined or unlined, including percolation ponds and evaporation ponds"; and " ‘oil and gas wastewater’ " means "wastewater brought to the surface in connection with oil or natural gas production, including flowback fluid and produced water."

The third prohibition — LU-1.23 — provides, "Prohibited Land Uses: The drilling of new oil and gas wells is prohibited on all lands within the County's unincorporated area. This ... does not affect oil and gas wells drilled prior to the Effective Date and which have not been abandoned." For purposes of this prohibition, " ‘oil and gas wells’ " are "wells drilled for the purpose of exploring for, recovering, or aiding in the recovery of, oil and gas."

On December 14, 2016 — two days before Measure Z was scheduled to take effect — plaintiffs filed against the County petitions for writ of mandate and complaints for declaratory and injunctive relief and inverse condemnation, claiming Measure Z was preempted by state and federal law, constituted a facial taking of their property, and violated their due process rights. Some of the plaintiffs also claimed that Measure Z was vague, created inconsistencies within the County's general plan, and violated the single-subject rule for local ordinances because, among other things, it was misleadingly promoted to voters as an anti-fracking initiative even though no fracking was occurring in the County. The County stipulated to an indefinite stay of Measure Z's implementation.

PMC intervened in the actions. After a bench trial, the trial court dismissed plaintiffs' action as to LU-1.21 on ripeness and standing grounds because no petitioner was using or proposing to use the fracking process LU-1.21 banned. Plaintiffs did not challenge that decision. Regarding LU-1.22 and LU-1.23, the court found them preempted by section 3106 and the federal Safe Drinking Water Act ( 42 U.S.C. § 300f et. seq. ). As to state preemption, the court determined that Measure Z is "contradictory" to section 3106, that the "state oil and gas regulatory scheme fully occupies the area of the manner of oil and gas production," and that Measure Z "seeks to regulate the manner of oil and gas production by restricting particular oil production techniques, namely wastewater injection and impoundment" and the drilling of new oil wells. The court rejected PMC's characterization of Measure Z as a "land use" ordinance entitled to a strong presumption against preemption, stating that the measure's "prohibition on certain ‘land uses’ is clearly a pretextual attempt to do indirectly what [the County] cannot do directly," i.e., ban certain methods of oil production in a way that will bring oil production in the County "to a complete halt in five years or less." The court issued a writ of mandate directing the County to invalidate LU-1.22 and LU-1.23.

PMC and the County appealed. The County abandoned its appeal shortly thereafter and has not defended Measure Z on appeal. The Court of Appeal affirmed on state preemption grounds. ( Chevron , supra , 70 Cal.App.5th 153, 285 Cal.Rptr.3d 247.)

DISCUSSION

Article XI, section 7 of the California Constitution provides that a "county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws." " ‘If otherwise valid local legislation conflicts with state law, it is preempted by such law and is void.’ " ( Sherwin-Williams Co. v. City of Los Angeles (1993) 4 Cal.4th 893, 897, 16 Cal.Rptr.2d 215, 844 P.2d 534 ( Sherwin-Williams ), quoting Candid Enterprises, Inc. v. Grossmont Union High School Dist. (1985) 39...