Chevron U.S.A., Inc. v. County of Monterey

IN THE SUPREME COURT OF
CALIFORNIA
CHEVRON U.S.A. INC. et al.,
Plaintiffs and Respondents,
v.
COUNTY OF MONTEREY,
Defendant;
PROTECT MONTEREY COUNTY et al.,
Interveners and Appellants.
S271869
Sixth Appellate District
H045791
Monterey County Superior Court
16CV003978
August 3, 2023
Justice Jenkins authored the opinion of the Court, in which
Chief Justice Guerrero and Justices Liu, Kruger, Groban,
Evans, and Raphael * concurred.
* Associate Justice of the Court of Appeal, Fourth
Appellate District, Division Two, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
S271869
Opinion of the Court by Jenkins, J.
In 2016, Protect Monterey County (PMC) sponsored, and
Monterey County (County) voters passed, “Measure Z,” a local
ordinance that bans oil and gas wastewater injection and
impoundment and the drilling of new oil and gas wells
throughout the County’s unincorporated areas. Chevron U.S.A.
Inc. (Chevron) and other oil producers and mineral rights
holders, among others (collectively, plaintiffs), filed a total of six
actions1 against the County challenging Measure Z on various
grounds, including state and federal preemption. PMC and its
founder and spokesperson, Dr. Laura Solorio (hereinafter
collectively, PMC), intervened in the action. The trial court
entered judgment in favor of plaintiffs on state and federal
preemption grounds. PMC appealed, and the Court of Appeal
affirmed. (Chevron U.S.A., Inc. v. County of Monterey (2021) 70
Cal.App.5th 153 (Chevron).)
1
The actions were brought by: (1) Chevron, San Ardo
Union Elementary School District, business owners, and
individual royalty owners, which we will collectively refer to as
Chevron; (2) Aera Energy LLC; (3) California Resources
Corporation; (4) National Association of Royalty Owners-
California, Inc. and various individuals and entities; (5) Eagle
Petroleum LLC; and (6) Trio Petroleum LLC and other
corporations. The trial court consolidated the six actions for
purposes of a Phase I trial in which it resolved what it described
as “Constitutional and pre-emption challenges” and “purely
legal” challenges to Measure Z, including claims of preemption
and facial takings.
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CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
We granted review to decide whether Public Resources
Code section 31062 preempts Measure Z. We conclude it does
because Measure Z is contradictory to, and therefore conflicts
with, section 3106. Accordingly, we affirm the judgment of the
Court of Appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The County’s oil fields are in the County’s inland regions
and operate under permits issued by the County and Geologic
Energy Management Division (CalGEM), 3 the state agency
tasked with overseeing the state’s drilling, operation,
maintenance, and plugging and abandonment of oil and gas
wells. (§§ 3002, 3100 et seq., 3106, subd. (a).) Because of the oil
deposits’ viscous nature, oil is extracted using steam injection,
whereby new wells are drilled and steam is injected
underground to heat the oil and make it more fluid so that it can
be pumped out of the ground.4
Measure Z was a County initiative entitled “Protect Our
Water: Ban Fracking and Limit Risky Oil Operations
Initiative.” It was sponsored by PMC and its stated purpose was
to protect the County’s “water, agricultural lands, air quality,
scenic vistas, and quality of life.” It passed with 56 percent of
2
All further undesignated statutory references are to the
Public Resources Code.
3
CalGEM is a division of the Department of Conservation
and is led by the “State Oil and Gas Supervisor.” (§§ 3001, 3002,
3004.) Before January 1, 2020, CalGEM was known as the
Division of Oil, Gas, and Geothermal Resources, DOGGR.
(Stats. 2019, ch. 771, § 8.)
4 We set forth these basic background facts relating to oil
production in the County in order to elucidate the meaning and
effect of Measure Z.
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Opinion of the Court by Jenkins, J.
the vote. The measure applies exclusively to oil and gas
operations and contains three prohibitions that apply to the
County’s unincorporated areas. The first — LU-1.21 — bans
well stimulation treatments including hydraulic fracturing
(commonly known as fracking) and is not at issue here because
none of the plaintiffs use, or have any plans to use, such
methods.5
The second — LU-1.22 — provides, “Prohibited Land
Uses: The development, construction, installation, or use of any
facility, appurtenance, or above-ground equipment, whether
temporary or permanent, mobile or fixed, accessory or principal,
in support of oil and gas wastewater injection or oil and gas
wastewater impoundment is prohibited on all lands within the
County’s unincorporated area.” For purposes of LU-1.22, “ ‘oil
and gas wastewater injection’ ” means “the injection of oil and
gas wastewater into a well for underground storage or disposal”;
“ ‘oil and gas wastewater impoundment’ ” means “the storage or
disposal of oil and gas wastewater in depressions or basins in
the ground, whether manmade or natural, lined or unlined,
including percolation ponds and evaporation ponds”; and “ ‘oil
and gas wastewater’ ” means “wastewater brought to the
surface in connection with oil or natural gas production,
including flowback fluid and produced water.”
The third prohibition — LU-1.23 — provides, “Prohibited
Land Uses: The drilling of new oil and gas wells is prohibited
on all lands within the County’s unincorporated area. This . . .
does not affect oil and gas wells drilled prior to the Effective
5
For simplicity, we will at times refer to LU-1.22 and LU-
1.23 together as Measure Z, even though Measure Z also
includes LU-1.21, which is not at issue in this appeal.
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Opinion of the Court by Jenkins, J.
Date and which have not been abandoned.” For purposes of this
prohibition, “ ‘oil and gas wells’ ” are “wells drilled for the
purpose of exploring for, recovering, or aiding in the recovery of,
oil and gas.”
On December 14, 2016 — two days before Measure Z was
scheduled to take effect — plaintiffs filed against the County
petitions for writ of mandate and complaints for declaratory and
injunctive relief and inverse condemnation, claiming Measure Z
was preempted by state and federal law, constituted a facial
taking of their property, and violated their due process rights.
Some of the plaintiffs also claimed that Measure Z was vague,
created inconsistencies within the County’s general plan, and
violated the single-subject rule for local ordinances because,
among other things, it was misleadingly promoted to voters as
an anti-fracking initiative even though no fracking was
occurring in the County. The County stipulated to an indefinite
stay of Measure Z’s implementation.
PMC intervened in the actions. After a bench trial, the
trial court dismissed plaintiffs’ action as to LU-1.21 on ripeness
and standing grounds because no petitioner was using or
proposing to use the fracking process LU-1.21 banned. Plaintiffs
did not challenge that decision. Regarding LU-1.22 and LU-
1.23, the court found them preempted by section 3106 and the
federal Safe Drinking Water Act (42 U.S.C. § 300f et. seq.). As
to state preemption, the court determined that Measure Z is
“contradictory” to section 3106, that the “state oil and gas
regulatory scheme fully occupies the area of the manner of oil
and gas production,” and that Measure Z “seeks to regulate the
manner of oil and gas production by restricting particular oil
production techniques, namely wastewater injection and
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Opinion of the Court by Jenkins, J.
impoundment” and the drilling of new oil wells. The court
rejected PMC’s characterization of Measure Z as a “land use”
ordinance entitled to a strong presumption against preemption,
stating that the measure’s “prohibition on certain ‘land uses’ is
clearly a pretextual attempt to do indirectly what [the County]
cannot do directly,” i.e., ban certain methods of oil production in
a way that will bring oil production in the County “to a complete
halt in five years or less.” The court issued a writ of mandate
directing the County to invalidate LU-1.22 and LU-1.23.
PMC and the County appealed. The County abandoned
its appeal shortly thereafter and has not defended Measure Z on
appeal. The Court of Appeal affirmed on state preemption
grounds. (Chevron, supra, 70 Cal.App.5th 153.)
DISCUSSION
Article XI, section 7 of the California Constitution
provides that a “county or city may make and enforce within its
limits all local, police, sanitary, and other ordinances and
regulations not in conflict with general laws.” “ ‘If otherwise
valid local legislation conflicts with state law, it is preempted by
such law and is void.’ ” (Sherwin-Williams Co. v. City of Los
Angeles (1993) 4 Cal.4th 893, 897 (Sherwin-Williams), quoting
Candid Enterprises, Inc. v. Grossmont Union High School Dist.
(1985) 39 Cal.3d 878, 885.)
In Sherwin-Williams, we identified three ways in which a
preempting conflict may arise: “ ‘if the local legislation
“ ‘duplicates, contradicts, or enters an area fully occupied by
general law, either expressly or by legislative implication.’ ” ’ ”
(Sherwin-Williams, supra, 4 Cal.4th at p. 897.) First, “[l]ocal
legislation is ‘duplicative’ of general law when it is coextensive
therewith.” (Ibid.) Second, it is “ ‘contradictory’ to general law
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Opinion of the Court by Jenkins, J.
when it is inimical thereto.” (Id. at p. 898.) Third, it “enters an
area that is ‘fully occupied’ by general law when the Legislature
has expressly manifested its intent to ‘fully occupy’ the area
[citation], or when it has impliedly done so in light of one of the
following indicia of intent: ‘(1) the subject matter has been so
fully and completely covered by general law as to clearly indicate
that it has become exclusively a matter of state concern; (2) the
subject matter has been partially covered by general law
couched in such terms as to indicate clearly that a paramount
state concern will not tolerate further or additional local action;
or (3) the subject matter has been partially covered by general
law, and the subject is of such a nature that the adverse effect
of a local ordinance on the transient citizens of the state
outweighs the possible benefit to the’ locality.” (Ibid.)
The party alleging preemption “has the burden of
demonstrating” it. (Big Creek Lumber Co. v. County of Santa
Cruz (2006) 38 Cal.4th 1139, 1149 (Big Creek Lumber).)
“Whether state law preempts a local ordinance is a question of
law that is subject to de novo review.” (Roble Vista Associates v.
Bacon (2002) 97 Cal.App.4th 335, 339.)
California’s oil and gas operations are governed by
Division 3 of the Public Resources Code (§ 3000 et seq.) and its
implementing regulations (Cal. Code Regs., tit. 14, § 1712 et
seq.). Division 3 addresses various aspects of oil and gas
exploration and extraction, including notices of intent to drill
and abandon (§§ 3203, 3229), blowout prevention (§ 3219),
repairs (§ 3225), protection of water supplies (§§ 3222, 3228),
and well spacing (§§ 3600–3609). The implementing
regulations, in turn, address the process for oil producers and
well operators to obtain state approval of “drilling, reworking,
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Opinion of the Court by Jenkins, J.
injection, plugging, or plugging and abandonment operations”
(Cal. Code Regs., tit. 14, § 1714) and provides instructions and
timelines for filing well and safety records with CalGEM (id. at
§ 1724.1). The regulations are “statewide in application for
onshore drilling, production, and injection operations,” and “[a]ll
onshore prospect, development, and service wells shall be drilled
and operated in accordance with” them. (Id. at § 1712.)
Subdivision (a) of the statute here at issue — section
3106 — provides: “The [state oil and gas] supervisor shall so
supervise the drilling, operation, maintenance, and
abandonment of wells and the operation, maintenance, and
removal or abandonment of tanks and facilities attendant to oil
and gas production . . . so as to prevent, as far as possible,
damage to life, health, property, and natural resources; damage
to underground oil and gas deposits from infiltrating water and
other causes; loss of oil, gas, or reservoir energy, and damage to
underground and surface waters suitable for irrigation or
domestic purposes by the infiltration of, or the addition of,
detrimental substances.”
Subdivision (b) of section 3106 provides that the
supervisor “shall also supervise the drilling, operation,
maintenance, and abandonment of wells so as to permit the
owners or operators of the wells to utilize all methods and
practices known to the oil industry for the purpose of increasing
the ultimate recovery of underground hydrocarbons and which,
in the opinion of the supervisor, are suitable for this purpose in
each proposed case. To further the elimination of waste by
increasing the recovery of underground hydrocarbons, it is
hereby declared as a policy of this state that the grant in an oil
and gas lease or contract to a lessee or operator of the right or
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Opinion of the Court by Jenkins, J.
power, in substance, to explore for and remove all hydrocarbons
from any lands in the state, in the absence of an express
provision to the contrary contained in the lease or contract, is
deemed to allow the lessee or contractor, or the lessee’s or
contractor’s successors or assigns, to do what a prudent operator
using reasonable diligence would do, having in mind the best
interests of the lessor, lessee, and the state in producing and
removing hydrocarbons, including, but not limited to, the
injection of air, gas, water, or other fluids into the productive
strata, the application of pressure heat or other means for the
reduction of viscosity of the hydrocarbons, the supplying of
additional motive force, or the creating of enlarged or new
channels for the underground movement of hydrocarbons into
production wells, when these methods or processes employed
have been approved by the supervisor, except that nothing
contained in this section imposes a legal duty upon the lessee or
contractor, or the lessee’s or contractor’s successors or assigns,
to conduct these operations.”
The Legislature passed section 3106 in 1939, at the same
time it enacted the Public Resources Code and created CalGEM.
(Stats. 1939, ch. 93, § 3106, p. 1112.) As originally enacted,
section 3106 required the supervisor “to prevent, as far as
possible, damage to underground oil and gas deposits from
infiltrating water and other causes, loss of oil and gas, and
damage to underground and surface waters suitable for
irrigation or domestic purposes by the infiltration of, or the
addition of, detrimental substances, by reason of the drilling,
operation, maintenance, or abandonment of wells.” (Stats. 1939,
ch. 93, § 3106, p. 1112.) In 1961, the Legislature added
subdivision (b) of section 3106, which read then essentially as it
reads today and clarified that in order to eliminate waste and
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CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
increase recovery, oil leases and contracts that are silent about
oil production methods and practices would be “deemed” to allow
all practices approved by the supervisor. (Stats. 1961, ch. 2074,
§ 1.)
In 1970, the Legislature amended subdivision (a) of
section 3106 to require the supervisor to “prevent, as far as
possible, damage to life, health, property, and natural
resources . . . .” (Stats. 1970, ch. 799, § 1.) Two years later, the
Legislature added subdivision (d) of section 3106, which
provides: “To best meet oil and gas needs in this state, the
supervisor shall administer this division so as to encourage the
wise development of oil and gas resources.” (Stats. 1972, ch.
898, § 7; see Resources Agency, Enrolled Bill Rep. on Sen. Bill
No. 1022 (1972 Reg. Sess.) August 11, 1972 [the 1972
amendment was meant to “strengthen the role” of the supervisor
in overseeing oil and gas production].) As a result of these
amendments, the current version of the statute directs the
supervisor to administer the state’s regulations in a way that
serves the dual purpose of ensuring the state has adequate oil
and gas resources, while protecting the environment. (§ 3106,
subds. (a), (b), (d).)
Plaintiffs argue — as the trial court and the Court of
Appeal determined — that Measure Z’s ban on “[r]isky [o]il
[o]perations” — i.e., wastewater injection and impoundment
and the drilling of new oil wells — contradicts section 3106,
subdivision (b). As earlier noted, preemption based on
contradiction applies when the local law is “inimical” to state
law. (Sherwin-Williams, supra, 4 Cal.4th at p. 898.) We have
also stated that local law is preempted as “contradictory” when
it “cannot be reconciled with state law.” (O’Connell v. City of
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CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
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Stockton (2007) 41 Cal.4th 1068.) Applying these definitions, we
conclude Measure Z contradicts — and thus is preempted by —
section 3106.
As set forth above, section 3106, subdivision (b) provides
that the state oil and gas supervisor “shall . . . supervise” oil
production “so as to permit” well owners and operators to “utilize
all methods and practices” that, “in the opinion of the
supervisor, are suitable for th[e] purpose” of “increasing the
ultimate recovery of underground hydrocarbons . . . in each
proposed case.” The subdivision also provides that, in order “[t]o
further the elimination of waste by increasing the recovery of
underground hydrocarbons,” “it is . . . declared as a policy of this
state that” all oil leases and contracts are deemed to give well
operators the authority to use all methods and practices the
supervisor has approved, including specifically, the water and
steam injection methods that Measure Z bans. (§ 3106, subd.
(b).)
By providing that certain oil production methods may
never be used by anyone, anywhere, in the County, Measure Z
nullifies — and therefore contradicts — section 3106’s mandate
that the state “shall” supervise oil operation in a way that
permits well operators to “utilize all methods and practices” the
supervisor has approved. In other words, whereas section 3106
directs the supervisor to make decisions about the use of all oil
production methods — inclusive of those methods Measure Z
identifies — Measure Z authorizes the County to make decisions
regarding some of those methods. Thus, were any oil producer
to ask the state to decide whether those methods are authorized
for use in the County, Measure Z, by banning those methods,
has made that decision for — and in lieu of — the supervisor; it
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Opinion of the Court by Jenkins, J.
has, in all cases, usurped the supervisor’s statutorily granted
authority to decide whether those methods are “suitable . . . in
each proposed case.” (§ 3106, subd. (b).)
As we stated in California Fed. Savings & Loan Assn. v.
City of Los Angeles (1991) 54 Cal.3d 1, 17, a conflict is “a genuine
one” where it is “unresolvable short of choosing between one
enactment and the other.” Here, a “genuine” conflict exists in
the sense that the state and local laws provide conflicting
instructions as to which entity has the authority to decide what
production methods are permissible. We agree with the Court
of Appeal’s statement that “[i]t is not possible for the authority
to permit these methods and practices to rest in the state’s
hands if the local ordinance forbids these methods and practices.
As the two laws conflict with respect to who controls the use of
these methods and practices, the local ordinance must yield to
the supreme state law.” (Chevron, supra, 70 Cal.App.5th at p.
171.) Because Measure Z “cannot be reconciled with state law”
(O’Connell v. City of Stockton, supra, 41 Cal.4th at p. 1068) and
is “inimical thereto” (Sherwin-Williams, supra, 4 Cal.4th at
p. 898), it is preempted.
In urging us to conclude otherwise, PMC argues that
several statutes that allow local control over some aspects of oil
extraction reflect the Legislature’s intent not to preempt local
oil-related ordinances. PMC cites to our decision in Big Creek
Lumber that “ ‘[p]reemption by implication of legislative intent
may not be found when the Legislature has expressed its intent
to permit local regulations’ ” or “ ‘when the statutory scheme
recognizes local regulations.’ ” (Big Creek Lumber, supra, 38
Cal.4th at p. 1157.)
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PMC’s argument fails because the statutes it cites only
address the authority of local entities to determine whether and
where oil production may occur within their boundaries based
on local zoning laws; they do not address oil production methods
at existing wells. For example, PMC cites section 3203.5,
subdivision (a), which provides that “[CalGEM] shall require a
copy of the local land use authorization that supports the
installation of a well at the time an operator submits the notice
of intention for the well . . . .” PMC also cites section 3012,
which references a city’s ability to “prohibit[] . . . [oil] wells.”
And PMC cites recently enacted section 3289, subdivision (b),
which limits oil and gas exploration in certain “health protection
zones” such as in residential areas but “does not prohibit . . .
more stringent regulations, limits, or prohibitions on oil and gas
development” by localities. Although these statutes may be
potentially relevant to whether the Legislature intended to
preempt ordinances that restrict the location at which oil may
be extracted — a proper concern of zoning measures — they do
not impact our analysis of the preemption question before us,
which concerns a local ordinance that regulates certain methods
and practices of oil extraction in areas where oil production has
already been approved and is ongoing.6
6 PMC also cites to section 3690, which provides: “This
chapter [(chapter 3.5)] shall not be deemed a preemption by the
state of any existing right of cities and counties to enact and
enforce laws and regulations regulating the conduct and
location of oil production activities, including, but not limited to,
zoning, fire prevention, public safety, nuisance, appearance,
noise, fencing, hours of operation, abandonment, and
inspection.” Chapter 3.5, however, is limited to “unit
operations” and does not include section 3106. Similarly, PMC’s
(Footnote continued on next page.)
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PMC seeks to evade this problem by asserting that
Measure Z does in fact “regulate[] where and whether certain
operations may occur.” Having described Measure Z as placing
locational restrictions, PMC argues that our decision in Big
Creek Lumber precludes a finding of implied preemption here.
A review of Big Creek Lumber reveals that it is factually
distinct from the issues posed by Measure Z, and is therefore
inapplicable. In Big Creek Lumber, we addressed two local land
use ordinances that restricted timber harvesting and certain
types of timber operations to specified zone districts and parcels.
(Big Creek Lumber, supra, 38 Cal.4th at pp. 1145, 1162.) We
held that these locational ordinances, which regulated only
where commercial logging could occur, were not expressly
preempted by a state law that regulated — and prohibited
counties from also regulating — “the conduct of timber
operations” because “an ordinance that avoids speaking to how
timber operations may be conducted and addresses only where
they may take place falls short of being ‘a clear attempt to
regulate the conduct’ thereof.” (Id. at pp. 1158, 1152–1153.)
Unlike in Big Creek Lumber, where the state and local
laws addressed different subjects — “how” (state) and “where”
reliance on sections 3160 and 3161 is misplaced because the
statutes relate to well stimulation, which is also not at issue
here. At most, section 3160, which provides that CalGEM and
other agencies must comply with existing environmental laws,
and section 3161, which provides that a local entity may conduct
its own environmental review (in addition to CalGEM’s required
environmental review), may reflect a legislative intent to carve
out well stimulation as an area of shared regulatory authority.
There is no similar language relating to “methods and practices”
generally (§ 3106, subd. (b)) that would preclude a finding of
implied preemption as to Measure Z’s prohibitions.
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(local) timber operations could take place — here, both section
3106 and Measure Z address the same topic of how oil producers
and well operators should be permitted to extract oil. By its
plain language, LU-1.22 is a ban on oil production methods —
i.e., activities in support of “oil and gas wastewater injection or
oil and gas wastewater impoundment” — not a locational
restriction. Regarding LU-1.23, its ban on the drilling of all new
wells, at first glance, appears to regulate where oil production
can take place, i.e., nowhere in the County. But the language of
LU-1.23 broadly defines “oil and gas wells” to include any type
of well “drilled for the purpose of . . . aiding in the recovery of[]
oil and gas.” Thus, the language of LU-1.23 sweeps broadly and
extends its ban to any oil production method that requires the
drilling of new wells — such as wastewater and steam injection
wells — in order to continue extracting oil from existing oil
fields. In addition, Measure Z describes water injection and
impoundment and the drilling of new oil wells as “[r]isky [o]il
[o]perations,” i.e., methods of oil production that should be
banned. LU-1.23 therefore constitutes a ban on certain oil
production methods in existing oil fields. Accordingly, we reject
PMC’s attempt to characterize Measure Z as a zoning ordinance
that restricts the location of oil production. Because Measure Z
regulates the same conduct that section 3106 addresses — i.e.,
oil production methods — our decision in Big Creek Lumber is
inapposite.
Other cases on which PMC relies are inapposite for similar
reasons. (E.g., Higgins v. City of Santa Monica (1964) 62 Cal.2d
24, 28–29; Beverly Oil Co. City of Los Angeles (1953) 40 Cal.2d
552, 558; Pacific Palisades Assoc. v. City of Huntington Beach
(1925) 196 Cal.211, 216–217.) Other than Higgins — which
discussed whether the state occupies the field of oil production
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on tidelands — none of these decisions discusses state
preemption principles. Instead, they address a local entity’s
police power and authority to restrict or ban oil production based
on reasonable zoning restrictions. Here, we do not decide, or
express any opinion on, whether local entities may restrict or
ban oil production within their boundaries based on proper
zoning restrictions. As the Court of Appeal stated, “Our narrow
holding does not in any respect call into question the well-
recognized authority of local entities to regulate the location of
oil drilling operations, a matter not addressed by section 3106
or Measure Z.” (Chevron, supra, 70 Cal.App.5th at p. 159, italics
added.) “Nothing in this opinion should be construed to cast any
doubt on the validity of local regulations requiring permits for
oil drilling operations or restricting oil drilling operations to
particular zoning districts” because “[t]his case involves no such
regulations.” (Id. at p. 172, fn. 16.) Thus, we find no support for
PMC’s argument in this line of cases, which deals with
locational restrictions or prohibitions on oil production based on
zoning laws.
Next, PMC argues that language from City of Riverside v.
Inland Empire Patients Health & Wellness Center, Inc. (2013)
56 Cal.4th 729, 743 (City of Riverside) supports a
nonpreemption finding. PMC’s reliance on City of Riverside is
also misplaced. In that case, we held that a local regulation
banning medical marijuana dispensaries within city limits did
not contradict the Compassionate Use Act (CUA; Health & Saf.
Code, § 11362.5) and the Medical Marijuana Program (MMP;
id., § 11362.7 et seq.). (City of Riverside, at p. 742.) As PMC
notes, we stated in our opinion that a local ordinance does not
contradict state law “unless the ordinance . . . prohibits what
the state enactment demands.” (City of Riverside, at p. 743; T-
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Mobile West LLC v. City and County of San Francisco (2019) 6
Cal.5th 1107, 1121 [quoting the same language and concluding
there was no contradiction preemption because it was
reasonably possible to comply with both state and local law
where the state statute did not address the same subject matter
addressed by the local ordinance].) PMC asserts there is no
contradiction preemption here because the oil production
methods Measure Z prohibits are methods that the supervisor,
pursuant to section 3106, may permit or authorize.
However, as Justice Liu observed in his concurring
opinion in City of Riverside, the demands/prohibits language
“should not be misunderstood to improperly limit the scope of
the preemption inquiry.” (City of Riverside, supra, 56 Cal.4th at
p. 763 (conc. opn. of Liu, J.).) As Justice Liu also noted in his
concurring opinion, other statements in our City of Riverside
opinion “make[] clear” that “state law may preempt local law
when local law prohibits not only what a state statute ‘demands’
but also what the statute permits or authorizes.” (Ibid., italics
added, citing maj. opn.’s discussion of Cohen v. Board of
Supervisors (1985) 40 Cal.3d 277, 293 and Great Western Shows
v. County of Los Angeles (2002) 27 Cal.4th 853, 867–868.) For
example, in City of Riverside, we acknowledged prior case law
stating that if a local ordinance “attempted to prohibit conduct
proscribed or permitted by state law[,] either explicitly or
implicitly, it would be preempted.’ ” (City of Riverside, at p. 758,
quoting Cohen, at p. 293, italics added.) In Great Western
Shows, at page 866, we cited with approval Northern Cal.
Psychiatric Society v. City of Berkeley (1986) 178 Cal.App.3d
104, 106 (Northern Cal. Psychiatric Society), which held that a
local ban on electroconvulsive therapy contradicted a state law
that permits it “in cases which meet . . . stringent regulations”
16
CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
and ensures mentally ill persons the “ ‘right to treatment
services which promote the potential of the person to function
independently.’ ”
Of significance to our analysis here, in City of Riverside,
we reiterated that a state law does not “ ‘authorize’ activities, to
the exclusion of local bans, simply by exempting those activities
from otherwise applicable state prohibitions.” (City of Riverside,
supra, 56 Cal.4th at p. 758.) We held that the CUA and MMP
did not “ ‘authorize’ activities . . . to the exclusion of local bans”
because they were “limited and circumscribed” state laws that
“merely declare that” certain medical marijuana activities are
no longer subject to criminal and nuisance sanctions. (City of
Riverside, at pp. 758, 738; id. at p. 760.) They “create[] no
comprehensive scheme for the protection or promotion of
facilities that dispense medical marijuana” and contain no
implied limitations on a local entity’s authority to restrict or
prohibit marijuana-related activities within their boundaries.
(Id. at p. 760.)
In contrast, section 3106 implicitly limits a local entity’s
authority by expressly providing that the state supervisor shall
approve all production methods that are, “in the opinion of the
supervisor,” “suitable for th[e] purpose” “of increasing the
ultimate recovery of underground hydrocarbons.” (§ 3106,
subd. (b).) By banning some oil production methods altogether,
Measure Z takes those methods off the table and nullifies the
supervisor’s express, statutorily-conferred authority to decide
what oil production methods are suitable in each case. (See
Northern Cal. Psychiatric Society, supra, 178 Cal.App.3d at p.
106 [contradiction preemption where the state law authorized
treatment in appropriate cases and the local ordinance
17
CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
completely banned it].) Accordingly, the mandate/prohibits
language from City or Riverside does not preclude a finding of
implied preemption here.
Last, PMC relies on our statement in City of Riverside that
“no inimical conflict will be found where it is reasonably possible
to comply with both the state and local laws.” (City of Riverside,
supra, 56 Cal.4th at p. 743.) Seizing upon this language, PMC
asserts there is no contradiction preemption here because well
operators can comply with both Measure Z and section 3106 by
not using the oil production methods Measure Z bans, or by
ceasing to produce oil in the County altogether. 7 In essence,
PMC argues that the theoretical possibility of compliance with
both state and local law is sufficient to overcome preemption.
PMC’s argument fails because, as noted above, compliance
with both laws must be “reasonably possible.” (City of Riverside,
supra, 56 Cal.4th at p. 743, italics added.) Here, we cannot say
it is “reasonably possible” for well operators “to comply with both
the state and local laws” (ibid.) by requiring them to curb their
conduct in a way that conforms to a local ban, without regard to
what the state law permits. Carried to its logical extension,
PMC’s argument would mean that a local law that contradicts
state law would never be preempted, because in almost every
case, it is theoretically possible for a party to comply with state
and local laws that contradict each other, simply by not
7 As noted, the trial court found that oil production would
cease in five years or less were oil producers in the County
banned from using the methods specified in Measure Z. PMC
denies that Measure Z is “about ending oil and gas operations in
the [C]ounty,” but PMC does not identify any methods other
than the ones Measure Z bans that oil producers in the County
would be able to use to continue producing oil in the County.
18
CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
engaging in the conduct prohibited by local law. 8 Our statement
in City of Riverside does not narrow the scope of contradiction
preemption in this manner.
Accordingly, we conclude Measure Z contradicts, and
therefore conflicts with and is preempted by, section 3106. 9
8 Take, for example, our conclusion in Ex Parte Daniels
(1920) 183 Cal. 636, 647–648, that contradiction preemption
applies to a local ordinance setting the maximum speed limit
lower than that set by state law. (See O’Connell v. City of
Stockton, supra, 41 Cal.4th at p. 1068 [characterizing Ex Parte
Daniels as a “ ‘ “contradiction” ’ ” preemption case].) It may be
possible for a local resident to comply with both laws by driving
at or below the lower, local speed limit, or by not driving at all,
but this does not mean that compliance with both laws is
“reasonably possible” (City of Riverside, supra, 56 Cal.4th at
p. 758) such that the local law is not preempted.
9 PMC argues a strong presumption against preemption
applies because Measure Z is a “land use ordinance.” Regardless
of whether Measure Z qualifies as a “land use ordinance,” we
conclude that any presumption that might apply (see Big Creek
Lumber, supra, 38 Cal.4th at p. 1151) is amply rebutted by the
fact that the measure clearly contradicts section 3106.
Given our finding of contradiction preemption, we need
not address whether the doctrine of field preemption also
applies, which would require us to define a “field” and determine
whether state law, in light of its purpose and scope, has “fully
occupied” that field. (Sherwin-Williams, supra, 4 Cal.4th at
p. 898 [field preemption considerations include whether the
subject matter is “ ‘exclusively a matter of state concern,’ ”
indicates a “ ‘paramount state concern,’ ” or “ ‘is of such a nature
that the adverse effect of a local ordinance on the transient
citizens of the state outweighs the possible benefit to the’
locality”].) Nor need we address the parties’ conflicting views on
whether and how to apply the federal “obstacle preemption”
doctrine.
19
CHEVRON U.S.A. INC. v. COUNTY OF MONTEREY
Opinion of the Court by Jenkins, J.
DISPOSITION
We affirm the Court of Appeal’s judgment.
JENKINS, J.
We Concur:
GUERRERO, C. J.
LIU, J.
KRUGER, J.
GROBAN, J.
EVANS, J.
RAPHAEL, J. *
* Associate Justice of the Court of Appeal, Fourth
Appellate District, Division Two, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
20
See next page for addresses and telephone numbers for counsel who
argued in Supreme Court.
Name of Opinion Chevron U.S.A. Inc. v. County of Monterey
__________________________________________________________
Procedural Posture (see XX below)
Original Appeal
Original Proceeding
Review Granted (published) XX 70 Cal.App.5th 153Review Granted (unpublished)
Rehearing Granted
__________________________________________________________
Opinion No. S271869
Date Filed: August 3, 2023
__________________________________________________________
Court: Superior
County: Monterey
Judge: Thomas W. Wills
__________________________________________________________
Counsel:
Robins Kaplan, Michael Geibelson, Bernice Conn, Lucas A. Messenger;
Environmental Law Clinic at Stanford Law School, Deborah A. Sivas,
Alicia E. Thesing; Center for Biological Diversity, Hollin N.
Kretzmann; Shute, Mihaly & Weinberger, Catherine Engberg, Kevin
P. Bundy and Aaron M. Stanton for Interveners and Appellants.
Katherine S. Hoff, Shana D.G. Lazerow, Alison Hahm; Julia K. Forgie;
M. Benjamin Eichenberg; Paulina Nicole Torres and Ingrid M.
Brostrom for Communities for a Better Environment, Natural
Resources Defense Council, San Francisco Baykeeper and Center on
Race, Poverty & the Environment as Amici Curiae on behalf of
Interveners and Appellants.
James R. Williams, County Counsel (Santa Clara), and Elizabeth
Vissers, Deputy County Counsel, for County of Santa Clara as Amicus
Curiae on behalf of Interveners and Appellants.
Noah Garrison for Former State Senator Fran Pavley as Amicus
Curiae on behalf of Interveners and Appellants.
Frank G. Wells Environmental Law Clinic, Sean B. Hecht, Benjamin
Avi Harris and Gabriel F. Greif for League of California Cities,
California State Association of Counties and County of Los Angeles as
Amici Curiae on behalf of Interveners and Appellants.
Alston & Bird, Jeffrey D. Dintzer, Matthew Wickersham; Gibson Dunn
& Crutcher, Theodore J. Boutrous, William E. Thomson, Dione
Garlick; Ragghianti Freitas and Todd Welden Smith for Plaintiff and
Respondent Chevron U.S.A., Inc.
Hanson Bridgett, Andrew A. Bassak, Christopher A. Rheinheimer,
Gary A. Watt, Patrick Burns; Manatt, Phelps & Phillips, Michael M.
Berger and Benjamin Shatz for Plaintiff and Respondent Aera Energy
LLC.
O'Melveny & Myers, Matthew Thomas Kline, Heather A. Welles and
Barton H. Thompson for Plaintiff and Respondent California Resources
Corporation.
Clifford & Brown and Donald C. Oldaker for Plaintiff and Respondent
Eagle Petroleum, LLC.
JRG Attorneys at Law, Johnson, Rovella, Retterer, Rosenthal & Gilles
and Jason S. Retterer for Plaintiffs and Respondents Trio Petroleum,
LLC, Sunset Exploration Inc., Monroe Swell Prospect, J.V., and
Bradley Minderals, Inc.
Hanna and Morton, Edward S. Renwick; and Jacqueline M. Zischke for
Plaintiff and Respondent National Association of Royalty Owners—
California, Inc.
Manatt, Phelps & Phillips and Michael M. Berger for Western States
Petroleum Association and California Independent Petroleum
Association as Amici Curiae on behalf of Plaintiffs and Respondents.
Munger, Tolles & Olson, Benjamin J. Horwich and Dila Mignouna for
Chamber of Commerce of the United States of America, California
Chamber of Commerce, Central Valley Business Federation and Los
Angeles County Business Federation as Amici Curiae on behalf of
Plaintiffs and Respondents.
Counsel who argued in Supreme Court (not intended for
publication with opinion):
Kevin P. Bundy
Shute, Mihaly & Weinberger LLP
396 Hayes Street
San Francisco, CA 94102
(415) 552-7272
Theodore J. Boutrous
Gibson Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, CA 90071
(213) 229-7804