Shield Feature in Palisades Oil Pact Hit as Meaningless

A key provision in the Pacific Palisades oil drilling agreement between Occidental Petroleum Corp and Los Angeles has erupted as an issue in the campaigning for city attorney and also could create political headaches for Mayor Tom Bradley.

At issue is a provision designed to shield the city from damage suits that could result from landslides on the bluffs overlooking the Palisades drilling sites.

Bradley has cited the provision as a key reason for his signing the controversial Occidental Petroleum Corp. agreement, saying that it would assure the city of adequate legal protection.

Candidate Opposes Plan

But city attorney candidate Murray Kane is saying in campaign speeches, television ads and a lawsuit that the shield provision is so weak that Occidental should be blocked from extracting a single drop of oil from the Palisades. Kane promises that, if elected, he would do just that.

Kane is using the issue to gain public attention in an uphill election battle against his two principal opponents, front-runner James Hahn and Lisa Specht, a West Los Angeles attorney. Although both Hahn and Specht say they oppose the oil drilling, the issue has been touchy for Specht because she is a partner in a law firm that represented Occidental in its dealings with the city.

Kane is not the only one raising questions about shield provisions in the city’s agreement with Occidental. City Councilman Marvin Braude describes the controversial provision as “the great myth” and legal experts familiar with the reimbursement plan also dismiss it as either unenforceable or highly vulnerable to complex legal attacks.

The shield provision is primarily intended to protect the city from lawsuits in the event of property damage or injury resulting from landslides caused by a drainage system in the bluffs overlooking the drilling site. Occidental has agreed to install a water drainage system on the city-owned bluffs in exchange for permission to drill for oil on its Palisades site across from Will Rogers State Beach.

The company’s agreement with the city requires Occidental to include the city on a $100-million insurance policy protecting taxpayers from any court judgments resulting from a landslide caused by the drainage system.

Even defenders of the agreement, including lawyers in the city attorney’s office and from Occidental, have conceded in testimony and documents that the plan cannot fully protect the city’s interests in the event of a disaster. But they say a partial guarantee is better than nothing.

Deputy City Atty. Julie Downey, in a memorandum recommending the agreement, expressed confidence that Occidental would not try to get out of an agreement it was proposing. But she added that in the event of suits against the city and Occidental, “our interests would likely be adverse in that the city will want to show that Occidental’s activities caused the injury and the city’s improvements did not, while Occidental will want to show the opposite.”

Prominent Santa Monica attorney Jerrold Fadem, who has represented homeowners for years in landslide litigation, said the issue is even simpler.

Examined Agreement

“My general reaction was that it is a useless indemnification,” said Fadem, who examined the agreement. “If I were representing a homeowner damaged by a landslide, I wouldn’t sue Oxy (Occidental). . . . All we would have to prove is there was a dangerous condition on public property that damaged my client’s home” and sue the city.

“(The city) could be innocent as new-fallen snow and I could win,” Fadem said. “A dangerous condition of public property cannot be indemnified against.”

Critics say the shield provision and Occidental’s agreement to install the drainage system in the landslide-prone bluffs were mainly intended to help City Council members who once opposed the drilling plan to justify changing their position.

Despite the fact that Bradley cited the shield provision as a major reason for dropping his opposition to Palisades drilling, Deputy Mayor Tom Houston, who tried to persuade the mayor to veto the plan, said the provision “doesn’t cover much as a practical matter.”

Braude, the council’s leading drilling opponent, said in an interview about the indemnification plan: “I don’t think it protects the city one iota.” He added, “It’s a gross illusion and it’s a tribute to the tremendous lobbying effort (by Occidental) that went on.”

At issue is whether California law allows the city to be indemnified--or reimbursed--by Occidental for property or personal injury damages caused by a landslide that is triggered by the drainage system. Critics say that because the city owns the land, it would ultimately be responsible for the drainage system and thus liable. The oil company, they add, cannot legally shield the city from liability.

Even if the courts uphold the indemnification plan, these critics add, Occidental would have to pay damages only if it could be proven that the drainage system caused a landslide. Proving the cause of a future landslide, on a bluff with a history of landslides, would be very difficult, and thus the city would have to pay, these critics claim.