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Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach

Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach

Court of Appeal of California, Second Appellate District, Division Three

January 24, 2001, Decided

No. B138557.

Opinion

 [*540]  [**452]   PERLUSS, J.  3 --Plaintiffs and appellants Hermosa Beach Stop Oil Coalition, Heal the Bay, Santa Monica Baykeeper and American Oceans Campaign (hereafter collectively referred to as Stop Oil) appeal from a judgment after a bench trial entered in favor of defendants and respondents City of Hermosa Beach and City Council of the City of Hermosa Beach (the City) and real parties in interest and respondents Windward Associates and Macpherson Oil Company (Macpherson). The judgment denied Stop Oil's request for injunctive and declaratory relief. Macpherson has filed a cross-appeal, asserting additional grounds to support the trial court's judgment.

 [***3]  The essential question presented is whether reinstatement of a total ban on oil drilling within the City, adopted through the initiative process in November 1995 (Proposition E), constitutes an unconstitutional impairment of the 1992 lease agreement between Macpherson and the City for oil and gas exploration and production on City-owned property.

The trial court ruled that application of Proposition E to the Macpherson oil drilling project would constitute an unconstitutional impairment of the lease agreement between Macpherson and the City. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

1. Facts.4

 [***4]  a. Authorization of oil exploration within the City. 

In 1932 the voters of the City enacted a ban on all oil and gas operations within the City, declaring such activity to be both unlawful and a public nuisance. 5 (Hermosa Beach Mun. Code, § 21-10.)

In 1984, to generate the funds needed to acquire open space and parklands within the City, the voters adopted Propositions P and Q, council-sponsored ballot measures creating exceptions to the ban on oil exploration and production for two publicly owned sites within the City: the City Yard Site, a  [*541]  parcel owned by the City and being used as its maintenance yard; and the School Site, a parcel owned by the local school district. (Hermosa Beach Mun. Code, § 21-10, subds. (a) & (b).)

In 1985 the City adopted an ordinance establishing the Hermosa Beach Oil Code, regulating the development and design of oil recovery [***5]  projects and establishing a permit system for drilling and oil recovery operations in the City. (Hermosa Beach Ord. No. 85-803.) The ordinance recited the City's intent to allow for oil production "in a manner that protects the health, safety and welfare of the citizens of Hermosa Beach." (Hermosa Beach Ord. No. 85-803.) Section 21A-2.3 of the code provides, "No person shall be issued a drilling permit until the same has been approved by the Building and Safety Director with concurrence by the Planning Director, and found to be in compliance with all applicable laws, ordinances and regulations." (Hermosa Beach Mun. Code, § 21A.2.3.)

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86 Cal. App. 4th 534 *; 103 Cal. Rptr. 2d 447 **; 2001 Cal. App. LEXIS 37 ***; 2001 Daily Journal DAR 913; 2001 Cal. Daily Op. Service 722; 151 Oil & Gas Rep. 161

HERMOSA BEACH STOP OIL COALITION et al., Plaintiffs and Appellants, v. CITY OF HERMOSA BEACH et al., Defendants and Respondents; WINDWARD ASSOCIATES et al., Real Parties in Interest.

Subsequent History:  [***1]  Rehearing Denied Febuary 23, 2001.

Review Denied May 2, 2001, Reported at: 2001 Cal. LEXIS 3153.

Prior History: APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. BC 172546. Kurt J. Lewin, Judge.

Disposition: The judgment is reversed. The case is remanded to the trial court for further proceedings consistent with this opinion, including a declaration that Proposition E was intended to and does apply to the Macpherson project and that application of Proposition E to the Macpherson project is a valid exercise of the City's police power that does not constitute an unconstitutional impairment of contract. Stop Oil is to recover its costs on appeal.

CORE TERMS

oil, Beach, lease, police power, contract clause, impairment, drilling, Site, trial court, lease agreement, ordinance, voters, oil drilling, regulation, exploration, ban, permits, hazard, Yard, reserved power, vested right, conditions, deference, risks, proceedings, parties, contracts, rights, unconstitutional impairment, financial obligation

Governments, Local Governments, Police Power, Civil Procedure, Appeals, Standards of Review, De Novo Review, Ordinances & Regulations, Legislation, Effect & Operation, Retrospective Operation, Contracts Law, Contract Interpretation, Parol Evidence, General Overview, Real Property Law, Landlord & Tenant, Lease Agreements, Parol Evidence, Types of Contracts, Commercial Law (UCC), Sales (Article 2), Form, Formation & Readjustment, Initiative & Referendum, Interpretation, Prospective Operation, Consideration, Enforcement of Promises, Rent Regulation, Estoppel, Equitable Estoppel, State & Territorial Governments, Licenses, Contract Formation, Constitutional Law, Congressional Duties & Powers, Contracts Clause, Police Powers, Energy & Utilities Law, Oil & Petroleum Products, Discovery, Exploration & Recovery, Exploration Obligations & Rights, Oil, Gas & Mineral Interests, Personalty & Realty Interests, Ownership & Transfer, Public Entities, Leases & Licenses, Legislatures, Scope, Public Contracts Law, Contract Provisions, Public Improvements