Court OKs Local Ban on Oil Drilling

In a victory for opponents of coastal oil drilling, the California Court of Appeal ruled Wednesday that Hermosa Beach may ban ocean-tapping wells within city limits.

The court overturned a 1998 trial court decision that the city had breached a contract with Macpherson Oil Co. that allowed it to sink slant wells a few blocks from the beach to tap undersea oil pockets.

The decision marks a significant turn in a debate that stretches back almost 70 years. It has been widely watched by environmental activists and legal experts since the mid-1990s, when a local coalition first sued to keep slant-drilling out of town.

“This is an important case in Santa Monica Bay,” said an elated Jan Chatten-Brown, attorney for the coalition of residents and environmental groups that brought the appeal. Had Macpherson been allowed to go forward, it would have been the first slant oil drilling project in the bay since the 1950s, she said.

Chatten-Brown said the case sets a significant precedent for governments to exercise police power to protect their residents’ welfare--even when such action may affect a preexisting contract.

“This goes beyond environment and even land use issues,” she said.

But in sending the case back to the lower court, the appeals court did not address whether the city can be held liable for damages to Macpherson. The company is seeking city restitution for losses it estimates to be more than $100 million.

Don MacPherson Jr., president of the Santa Monica-based company, said he had not been briefed on the 53-page ruling and would not comment on it. His lawyers did not return phone calls.

Hermosa Beach City Atty. Michael Jenkins said he would reserve detailed comment on the ruling until he had a chance to analyze it. But he said the main issue now before the trial court is whether the city can be held liable for the costs incurred by Macpherson during the years it has tried to get the project underway.

The city first banned oil drilling in 1932. Half a century later, in 1984, voters in the then-cash-strapped city voted to lift the ban, hoping to generate funds to buy parkland. Negotiations with Macpherson began soon after, and in 1986, the city and Macpherson signed a lease. The project called for nearly three dozen wells at the city’s maintenance yard, several blocks from the beach. Company officials estimated the firm could extract as much as 30 million barrels of oil, generating $12 million annually for about 25 years.

Macpherson began a lengthy permit-seeking process from various regulatory agencies, and won approval from the California Coastal Commission in 1998.

In the meantime, a coalition calling itself Hermosa Beach Stop Oil battled the project on political and legal fronts. In 1995, the group convinced voters to approve a new oil drilling ban in the city. The coalition also repeatedly sued the city over the lease, and in 1998 the City Council killed the project.

Macpherson promptly went to court, where Superior Court Judge Kurt J. Lewin ruled that the voter-approved ban could not apply retroactively, because drilling opponents had not produced new evidence of environmental and safety concerns.

But the appellate court found that voters did have significant new evidence when they approved the ban and that Macpherson never had a binding agreement because it had not received its city permit.

Stop Oil leader and Hermosa Beach resident Rosamond said Wednesday, “Ecstatic almost describes how I feel at the moment.”

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Times staff writer Jean Merl contributed to this story.