Town Lot Owners ‘Satisfied’ : Panel Backs Bill to Ease Cuts in L.B. Oil Royalties

A state Assembly committee has approved a bill that would help alleviate recent cuts in oil royalty payments that go to more than 8,000 Long Beach landowners.

The Assembly Committee on Natural Resources approved the bill 13-0 on Tuesday.

Leaders of the Long Beach Oil Royalty Owners Inc., a nonprofit group fighting the royalty cuts, said the decision is a step in the right direction.

“We didn’t get exactly what we asked for, but we’re satisfied,” said Rose Buchholz, president of the group.

In recent months, Long Beach residents living over a pool of oil known as the Town Lot have seen their monthly royalty payments plummet by as much as 75% because of a complex re-evaluation of the crude beneath their land by state officials.

Reduced Shares

The re-evaluation came after state geologists determined that both the quality and the quantity of the oil was less than originally thought. Because of that, the percentage of profits going to Town Lot landowners from the oil field was reduced.

Although the percentage change in profits amounted to a drop of only about 2%, the reduction was applied retroactively over the last 20 years of oil operations at the Town Lot field, causing a hefty drop in monthly royalties.

Those reductions hit many landowners hard. A sizable percentage of the royalty owners are elderly persons living on fixed incomes. Some say they are dependent on the monthly checks.

The legislation approved by the Assembly committee would limit reductions in royalty payments to 15%.

As an example, if a property owner had been receiving $1 in royalties during the past 20 years, when the correct royalty should have been 80 cents, then the legislation would permit a 15% or 12-cent reduction (from 80 cents to 68 cents) for as long as it takes to make up the overpayment. Under existing law, the same 80-cent royalty could be reduced by 50%--or up to 40 cents--to make up the overpayment sooner.

Ways and Means

Sponsored by Assemblyman Dave Elder (D-Long Beach), the bill now goes on to the Ways and Means Committee. Elder said the bill could be before the Assembly by late August.

Originally, Elder had attempted to push through legislation that would have frozen the percentage of profits going to Town Lot landowners at 11.27%. Prior to the state re-evaluation of the Town Lot oil field, the landowners had received profits ranging between 11% and 12%. The re-evaluation, however, dropped the share of profits going to Town Lot landowners to about 9%.

Elder said he abandoned his bid to freeze the profits because of staunch opposition by the state Lands Commission. That opposition threatened to kill the legislation, he said.

Leonard Putnam, an attorney working with the Town Lot landowners, said the group had hoped that Elder’s original bill would be supported, but is happy to see some legislation win approval.

“We would have wanted more, but half a loaf is better than none,” he said.

Putnam said it would have been “a disaster” if no legislation had gotten out of committee and expressed hope that the bill might be amended to provide even more relief for the oil royalty owners.

The Town Lot is a section of the so-called Long Beach Unit, an oil production area operated jointly by the state, the City of Long Beach and oil companies.