Oil Well Settlement Spurs Threat of Citizens’ Suit in Huntington Beach

Residents vowed Tuesday to sue the city of Huntington Beach and Angus Petroleum Corp. over a surprise, out-of-court settlement that allows the oil company to drill 60 new wells within 100 feet of some of their homes.

The settlement, announced at the City Council’s Monday night meeting, is the latest chapter in a yearlong controversy pitting neighborhood residents surrounding the 3.2-acre site against Angus Petroleum and, at times, the city itself. Along the way, Huntington Beach has been sued by both the residents and Angus.

Residents dropped their lawsuit against the city last spring because, they said, the council had told both them and a judge hearing their case that the $25-million drilling project was dead.

So Monday night’s announcement left them “staggered and stunned,” one resident said.

“I’m pretty upset about it,” said Pamela Steele, vice president of the residents group. “And I’ve talked to our attorney, and he has said the city has engaged in a very serious reneging with the court.

“(Angus) told the judge the project was basically a dead issue, and based on that, we dismissed our lawsuit,” said Steele, 26, a resident whose home faces the proposed drilling site.

“We are now going to file another lawsuit, and it is going to cost a lot of money to prove what the city had admitted: The whole (agreement) is void.”

Based in Colorado

The agreement announced Monday night is a settlement to the lawsuit against Huntington Beach filed last month by Angus, a firm based in Golden, Colo., alleging that the city illegally refused to issue construction permits to begin drilling work.

Mayor Jack Kelly and council members Tom Mays and Peter Green voted for the agreement. Council members Ruth Finley and Grace Winchell opposed it. Councilman John Erskine was on vacation and Councilman Wes Bannister, who has sold insurance to one of the Angus owners, abstained from voting.

The agreement also effectively made moot the issue of whether the council was correct in rescinding its Oct. 10, 1986, approval of Angus Petroleum’s request to drill the wells.

In a January closed session, the council was told by City Atty. Gail Clifford Hutton that a former councilman may have had a conflict of interest in voting in favor of the Angus drilling proposal, Council member Winchell said Tuesday. She said Hutton advised the council to rescind its approval of the project because the former councilman may have done subcontracting work for Angus. The seven-member council--four of them elected two months earlier--did.

Angus announced that it would submit a new application to the Planning Commission but never did. Members of the residents’ group, Concerned Citizens, who claim that the city and Angus told them that the drilling project was “dead in the water,” dismissed their lawsuit to avoid spending unnecessary funds, their attorney, John B. Murdock, said Tuesday.

On Aug. 26, Angus filed suit against the city, seeking a court order forcing the issuance of construction permits and maintaining that the council did not follow due process of law in rescinding its initial approval last October.

The terms of the settlement, hammered out in closed session in the weeks since the Angus lawsuit was filed, are identical to the oil firm’s original construction proposal, with only one addition: Angus will indemnify the city in any future legal action that results from the drilling.

The agreement allows Angus to drill up to 60 wells on two square blocks in the middle of an area of condominiums, duplexes and apartments in the Old Towne part of Huntington Beach. One area is bounded by Toronto Avenue, California Street, Springfield Avenue and Huntington Street, the second by Springfield, California, Delaware Street and Rochester Avenue.

“If everything goes well and we don’t have a real bad winter, probably the first of July we will break ground,” Angus Vice President John C. Carmichael said.

To Clean Up Old Wells

In return, Angus will clean up 35 old wells it operated elsewhere in the city, some dating back to 1922. Other parts of the settlement include establishment of a $1-million trust fund for residents whose homes may be devalued by the drilling at the site, and 57 stipulations Angus must comply with, including construction of noise-buffering retaining walls, street improvements, landscaping and even specifics on truck deliveries.

“We do need to consolidate these oil sites, and we are going to face this problem more in the future,” said Winchell, who opposed the Angus agreement. “But this really was shoved down these (residents’) throats, and I really do take exception to that.”

Said Mayor Kelly: “I sympathize with those residents, who are definitely going to be discomforted for at least 18 months of drilling and noise and smell. But this problem of consolidating oil drilling sites isn’t going to go away. Somebody had to bite the bullet.”