South Bay lawmaker to reveal Hermosa Beach oil drilling bill

A South Bay lawmaker is expected to unveil legislation Friday addressing a looming ballot question in the city of Hermosa Beach, in which voters will decide whether to once again allow new oil drilling in the city for the first time since 1932.

Assemblyman Al Muratsuchi (D-Torrance) will make the announcement at an 11 a.m. press conference, flanked by representatives of two community groups that have been staunchly opposed to the return of oil drilling.

The debate over the oil question has divided the quaint, beachside town, in part due to residents’ concerns over health and safety and the high financial stakes for the city.

If voters approve the ballot measure, oil company E&B Natural Resources would gain the right to drill as many as 30 diagonal wells from a city maintenance yard just blocks from the beach.

According to a city-commissioned economic analysis, the project could bring $118 million-$270 million into the city’s treasury and an additional $1 million-$2 million for local schools.

But if they reject the proposal, the city will have to pay a $17.5-million penalty, the vestige of a multimillion-dollar legal settlement reached in 2012.

Muratsuchi did not offer any details about what his proposed bill would do, but a source familiar with the discussions said it could help alleviate the financial pressure Hermosa Beach might face due to the penalty, should voters reject the deal.

This is the latest controversy in Hermosa Beach’s long, complicated history with oil drilling, and some hope it will put an end to a years-long legal battle that has hung over the city’s head.

Much of the South Bay underwent an oil boom that started in the 1920s, but Hermosa Beach banned all new drilling in 1932.

Fifty years later, Santa Monica-based Macpherson Oil dangled the prospect of tens of millions of dollars in royalties, and voters in then-cash-strapped Hermosa Beach voted to lift the ban.

But the drilling rigs never came.

Voters changed their minds and reinstated the ban, and the city council eventually halted the project, deeming it unsafe.

Macpherson sued, claiming as much as $750 million in damages, more than 20 times Hermosa Beach’s annual budget and enough, city leaders feared, to bankrupt it.

The city settled the suit in 2012, allowing Bakersfield-based E&B to buy out Macpherson’s stake in the deal and limiting the city’s liability to $17.5 million.

In return, E&B will have a shot at asking Hermosa Beach voters to exempt their project from the ban.

E&B’s project proposal is currently undergoing environmental, health impacts and cost benefit reviews, and city leaders are trying to meet a summer deadline to place the measure on the ballot in November.

The oil question has become somewhat of a campaign issue this year.

Muratsuchi is facing a Republican challenger, and his seat is one of a handful that political analysts consider up for grabs.

Congressional candidate Wendy Greuel, who is running in a crowded field to replace Rep. Henry Waxman (D-Beverly Hills) in a district that hugs the South Bay coastline, came out against the oil proposal Thursday.

Twitter: @cmaiduc

christine.maiduc@latimes.com