The operator of the Inglewood Oil Field in Los Angeles County has filed a lawsuit challenging a new state law that would phase out low-production wells at the site by the end of 2030 and potentially subject the company to “unlimited penalties.”
Sentinel Peak Resources California LLP filed the lawsuit on Nov. 25 in Los Angeles County Superior Court against the state government and the California Department of Conservation. The new law, Assembly Bill 2716, which was signed by Gov. Gavin Newsom in September, illegally tries “to coerce an individual company to stop operation of its legal business,” according to the complaint.
The bill’s author, Assemblyman Isaac Bryan (D-Ladera Heights), said the bill was designed to target wells that produce less than 15 barrels per day, which he said pose substantial environmental and health impacts on surrounding communities without providing much in the way of energy production.
“Our community has stood strong for decades to close this dangerous low-producing oil field, and we will stand strong in court to protect those frontline communities who have long deserved the right to live a full and healthy life,” Bryan said in a prepared statement. “The people of California spoke through their Legislature that dangerous oil wells have no business right next to the community. It is the right and prerogative of the government to protect its people.”
Sentinel Peak, however, argues in its lawsuit that the measure violates the plaintiff’s due process rights under both the California Constitution and the 14th Amendment of the U.S. Constitution. The law is also preempted by federal law and represents a violation of the takings clause of the Fifth Amendment, according to the complaint.
“Sentinel Peak has filed a lawsuit to challenge the state's adoption of a new law that unfairly targets one business,” attorney Matt Wickersham, who represents Sentinel Peak in the litigation, told the Southern California Record. “AB 2716 was adopted this year to penalize a lawful business that operates under the most stringent regulations in the world.”
The full impact of the law is that it will hurt a company that is providing energy resiliency to California’s economy, according to Wickersham. Shutting down the Inglewood Oil Field would cause the state to import more oil from foreign countries with weaker environmental standards, leading to the creation of a larger carbon footprint, he said.
“And by singling out one business for punishment, AB 2716 undermines the rule of law and raises fundamental concerns about fairness, impartiality and equal treatment under the law,” Wickersham said.
The Greater Bakersfield Chamber of Commerce was among the opponents of AB 2716 when the bill was written more broadly to apply to all low-production oil wells in California, including Kern County. The bill arbitrarily defines “low-producing wells” as generating fewer than 15 barrels of petroleum daily, according to the chamber president and CEO, Janelle Capra.
“In California … wells producing fewer than 15 barrels of oil per day are common and vital to sustaining jobs, families and revenue to the private and public sectors,” Capra said in an email to the Record. “... The recent lawsuit in Los Angeles County Superior Court highlights significant constitutional concerns surrounding AB 2716, particularly its potential to strip property rights without due compensation.”
Jamie Court, president and chairman of Consumer Watchdog, which sponsored AB 2716, called the drilling activities at the Inglewood field hazardous and lacking an economic justification.
“Sentinel Peak can still develop the land, but it cannot poison the community with wells that produce, on average, less than 3 barrels per day,” Court said in a statement. “The state has a right to set limits on wells that have big environmental impact and little economic benefits. There is a compelling state interest in closing these wells to protect the community.”
Rock Zierman, CEO of the California Independent Petroleum Association, said the new law would hurt Sentinel Peak’s plans to redevelop the property in a way that is sustainable.
“This bill unfairly singles out the Inglewood Oil Field, violating constitutional protections like equal protection and prohibitions on single target legislation,” Zierman said in an email to the Record. “It strips property owners, including families and charities holding royalty interests, of their rights without compensation and jeopardizes Sentinel Peak Resources’ plan to transform the field into a vibrant residential community, advancing state energy and housing goals.”
The Inglewood Oil Field contains 835 unplugged wells, including 441 that are low-production and 180 that are idle, according to the Legislature’s analysis of AB 2716. The measure also imposes $10,000-per-month penalties on wells if the provisions of the new law are not carried out.