Petroleum Trade Group Challenges Ban on Fracking in Southern California City

July 22 --An ordinance prohibiting hydraulic fracturing and other oil and gas activities both in and around Compton, Calif., is unconstitutional and preempted by state law, a trade association representing petroleum companies alleged in a lawsuit.

In its July 21 complaint  filed in Los Angeles County Superior Court, the Western States Petroleum Association also claimed that the Southern California city's ordinance exceeds its police power.

The ordinance, which was adopted April 22, prohibits the use of hydraulic fracturing or any other well stimulation treatment to extract or produce oil, gas or other hydrocarbons from any surface location within the city, or outside the city limits where the subsurface bottom hole is located beneath the city.

The association asked the court to declare the ordinance null and void under the state constitution and in violation of its members' due process rights under both the federal and state constitutions. It also asked the court to bar the city from implementing and enforcing the ordinance.

Preemption, Constitutional Claims.

The association first asserted that the state has a comprehensive statutory and regulatory scheme for subsurface oil and gas operations, including a framework for hydraulic fracturing and well stimulation activities, that preempts the ordinance. This is known as field preemption.

Specifically, the association claimed that California Department of Conservation Division of Oil, Gas, and Geothermal Resources regulations, sections 3000-3965 of the Public Resources Code and S.B. 4, which became effective on Jan. 1, so thoroughly address well stimulation activities and down-hole hydraulic fracturing that there is no room for the city to regulate in this area.

In addition, the association claimed that the city's adoption of the ordinance is an ultra vires action beyond the city's police power because nothing in the municipal code, government code or state constitution allows the city to regulate oil and gas operations that occur on surface locations outside city boundaries.

Moreover, the adoption of the ordinance violated the due process rights of the association's members, the lawsuit said, claiming that the city failed to provide adequate notice of the ordinance or the right of mineral rights holders affected by the law to be heard. By doing so, the council members deprived the association and its members of their due process rights secured by the Fourteenth Amendment of the U.S. Constitution, Article I and section 7(a) of the California Constitution.

Because of the due process rights concerns, the association asked the court to prohibit the city from implementing and enforcing the ordinance until the constitutional requirements are satisfied.

Latham & Watkins LLP represents the association.