Feds rip California law regulating oil and gas drilling

SACRAMENTO, Calif. (CN) — The United States government on Friday argued that a California law improperly prohibits oil and gas drilling on federal land.

Adam Gustafson, principal deputy assistant attorney general, asked U.S. District Judge Dena Coggins for a preliminary injunction against Senate Bill 1137, arguing the state law is hurting government revenue and unlawfully infringing on federal sovereignty.

The law, passed in 2022, prohibits the approval of new oil or gas wells, or reworking existing wells, within health protection zones. In practice, that excludes wells from being within 3,200 feet of residences, schools and hospitals.

Gustafson said the state has no land-use power over the federal government.

“The federal government has a pocketbook injury,” Gustafson said, adding later: “We think the financial effects are immediate as well.”

But an attorney for California argued it instead has an environmental and public health purpose, which the state can regulate.

Coggins made no decision Friday on the preliminary injunction.

The Bureau of Land Management is tasked with identifying and leasing federal land to operators who will drill for minerals, including oil and gas. The state law casts a shadow over its interests, as prospective operators are wary of leasing land that could become unusable, Gustafson said. He argued the state could create new health protection zones where none currently exist.

Gustafson waved aside arguments that exemptions exist that would keep the state law intact. The power to grant those exemptions lies with a state agency, which he said delays acting on approving permits.

“CalGEM is enforcing this as a ban,” he said of the state Geologic Energy Management Division. “It’s provided nothing to the contrary. They intend to prohibit drilling.”

One exemption allows operators to have a drill outside of a health protection zone and drill into it horizontally, as opposed to sitting within the zone and drilling vertically.

Gustafson argued that exemption proved the law focused on land use, not environmental concerns. Also, he said horizontal drilling isn’t viable.

Coggins questioned how a preliminary injunction, essentially a pause on the state law, could help. Gustafson said it would provide operators an indication the federal government could win the case.

Operators who receive leases from Bureau of Land Management are obligated to produce a certain amount of product — oil and gas they can’t reach without a permit, Gustafson argued.

“California knows that what it’s suggesting is not viable,” he added.

Arguing for the state, attorney Jerry Yen said the federal government doesn’t dispute the law was designed to protect public health. That means its characterization of it as a land-use law is incorrect.

Yen said Congress has not barred states from regulating federal land for environmental purposes. Additionally, the law doesn’t target federal land and doesn’t affect all federal land in California. Instead, it creates a buffer of about a half-mile between drilling sites and homes.

“SB 1137 is not a complete ban, so it doesn’t conflict,” he said.

Pivoting to Gustafson’s argument of irreparable harm, Yen questioned why the federal government waited years to file suit over the issue. It should have asked for a preliminary injunction when it was passed.

Attorney Colin O’Brien — representing proposed intervenors, which include the Center for Biological Diversity — asked the judge to consider the irreparable harm communities would face by having oil and gas wells nearby.

The federal government’s lawsuit is similar to one filed in January in the Central District of California. In that suit, two siblings argue the prohibition on new oil and gas wells is an uncompensated taking of their private property. That suit remains pending.