Court Rules Oil Company Does Not Have Vested Right to Drill

The Northern District of California denied a motion filed by a Bakersfield company seeking to renew their permit to drill for oil. E&B Natural Resources argued in their motion and in the hearing on January 7 that they had a “fundamental vested right” to oil production operations on their oil fields and that the county should not be able to take away the rights.

E&B Natural Resources Management Corporation (E&B); Laurie Volm; Sharyl G. Bloom and Richard S. Bloom, co-trustees of The Lynn Bloom Trust; James C. Roth; Dolores D. Michaelson; and Michael Karpé initiated the court case against Alameda County and the county’s board of supervisors after a decision not to renew the company’s conditional use permits which allowed the petitioners to participate in oil extraction on parcels of land in the Livermore Oil Field in Liversfield, California.

The parcels of land, known as the Greenville Investment Group parcel and the Nissen parcel, are zoned as Large Parcel Agriculture, a classification that allows oil operations only by permit. They each have oil production facilities and a pipeline between the parcels for use in oil production. E&B purchased the rights to operate the oil fields between 2006 and 2009 and extended the permits through 2017.

Although the County’s Board of Zoning Adjustments recommended conditional approval when they sought a renewal in 2017, the Center for Biological Diversity appealed the approval arguing that the oil operations threaten the groundwater in the area.

“Plaintiffs, for their part, contend that they have a fundamental vested right in continuing operations at Livermore Oil Field because the County has approved such operations since 1966, and E&B and its predecessors relied on those approvals to make significant investments in the land,” the order says. The county refuted this argument citing other cases where businesses were not considered to have a “fundamental vested right.”

The ruling agrees with Alameda County citing that each of the permits for drilling and producing oil on the land came with a specific time limit. The judge also said the argument claimed denying a permit would result only in economic loss, not a significant overall business impact, and asked for more evidence on how not receiving a permit would impact E&B.

“The Court is mindful that a CUP does not bestow on the permit-holder a fundamental vested right, but rather, the burden is on plaintiffs to establish such a right based on specific facts. Here, each CUP granted by the County since 1967 contained an explicit temporal limit,” the order stated. 

The plaintiffs were represented by Stoel Rives, while the defendants retained Severson & Werson.