Vaquero Energy v. County of Kern

Filed 11/19/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
VAQUERO ENERGY, INC., et al.,
F079719
Plaintiffs and Appellants,
(Super. Ct. No. BCV-15-101645 )
v.
COUNTY OF KERN et al., OPINION
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Kern County. Eric Bradshaw,
Judge.
Horvitz & Levy, Lisa Perrochet, Robert H. Wright; Hanna and Morton, Edward S.
Renwick; and John B. Linford for Petitioners and Appellants.
Margo A. Raison, County Counsel, Andrew C. Thompson, Deputy County
Counsel; Holland & Knight, Charles L. Coleman III, Jennifer L. Hernandez and Daniel
R. Golub, for Defendants and Respondents.
-ooOoo-
In November 2015, the Board of Supervisors (Board) of the County of Kern1
approved a new zoning ordinance requiring permits for new oil and gas exploration,
1 We use the term “County” to refer to the governmental entity and “Kern County”
to refer to the geographical area. (See County of Kern v. T.C.E.F., Inc. (2016) 246
Cal. App. 4th 301, 306, fn. 1; County Sanitation Dist. No. 2 v. County of Kern (2005) 127
Cal. App. 4th 1544, 1557, fn. 1.)
drilling and production. The ordinance imposed a wide range of environmental and other
standards on permit applicants. It also adopted two procedural pathways for obtaining
permits when the proposed activity would be conducted on split-estate land (i.e., land
where the surface rights and the mineral rights are held by different owners) zoned for
agriculture. An expedited seven-day pathway is available to permit applicants who
obtain the surface owner’s written consent to the site plan submitted with the application.
In contrast, a more expensive 120-day pathway must be used when the applicant has not
obtained the surface owner’s signature. One rationale for the Board’s adoption of the two
pathways was to promote cooperation between the owners of surface rights and the
owners of mineral rights.
Plaintiffs Vaquero Energy, Inc. and Hunter Edison Oil Development Limited
Partnership (collectively, Vaquero) filed a lawsuit contending the new provisions violated
their constitutional rights to equal protection and due process. The trial court rejected the
constitutional claims and Vaquero appealed.
Vaquero’s due process claim asserts the County inappropriately delegated its
permitting authority to private interests—specifically, the owners of surface rights—who
can arbitrarily withhold their signatures unless their demands are met. Vaquero contends
the two-pathway system gives the owners of surface rights effective control over how
mineral right owners use and enjoy their property rights. Vaquero’s due process claim
requires the interpretation and application of a line of United States Supreme Court cases.
(See Seattle Title Trust Co. v. Roberge (1928) 278 U.S. 116 (Roberge); Cusack Co. v.
City of Chicago (1917) 242 U.S. 526 (Cusack); and Eubank v. Richmond (1912) 226 U.S.
137 (Eubank).) Despite their age, the meaning of these decisions is far from settled. One
commentator stated that “both courts and commentators have struggled to make sense of
the doctrine emerging from the Eubank-Cusack-Roberge line of cases.” (Stahl,
Neighborhood Empowerment and the Future of the City (2013) 161 U.Pa. L.Rev. 939,
960 (Stahl).) More recently, another commentator described the decisions as a
2.
“jurisprudential muddle.” (Davidson, Localist Administrative Law (2017) 126 Yale L.J.
564, 609, fn. 209.) Based on our interpretation of these cases, we conclude the new
ordinance does not violate Vaquero’s right to due process because the owner of the
surface rights does not have final control over how an owner of mineral rights uses those
rights. The final authority over permits is retained by the County.
Vaquero’s equal protection claim asserts the two procedural pathways specified in
the new zoning ordinance impose disparate treatment on similarly situated permit
applicants. Vaquero contends the disparate treatment of permit applicants based on
whether they obtained the surface owner’s written consent does not further a legitimate
governmental purpose. We disagree. Applying the deferential rational basis test, we
conclude the board of supervisors rationally could have decided the availability of an
expedited seven-day pathway would promote cooperation between owners of mineral
rights and owners of surface rights and reduce conflicts, which is a legitimate public
purpose.
We therefore affirm the judgment.
FACTS
Prior Regulations
Title 19 of County’s Ordinance Code addresses zoning. In November 2015,
County’s board of supervisors adopted Ordinance No. G-8605 (Ordinance), which
amended Chapter 19.98 to County’s Ordinance Code and modified other zoning
provisions. Chapter 19.98 contains procedures and standards applicable to the
exploration, drilling and production of oil and gas. (Ordinance, § 19.98.010.)
Prior to the adoption of the Ordinance, County’s zoning provisions did not require
a County permit for drilling on lands zoned for exclusive agriculture, limited agriculture,
medium industrial, heavy industrial and natural resource. County did require a permit for
drilling in certain residential and commercial districts, though few requests for such
conditional use permits were processed. In addition, oil and gas activities were subject to
3.
(1) the County’s basic standards for development, building and safety and (2) the permit
requirements of state and regional agencies such as the Division of Oil, Gas and
Geothermal Resources (DOGGR), the Department of Fish and Wildlife, and the San
Joaquin Valley Air Pollution Control District.
New Regulations
The Ordinance adopted a “Tier” system to address different land uses and the
permitting requirements were tailored to the type of land use within each Tier. Areas
where oil and gas operations are the dominant surface land use are designated as “Tier 1.”
(Ordinance, § 19.98.030(A).) Approximately 10.1 percent of the project area is
designated Tier 1 land. The County estimates that Tier 1 lands will contain
approximately 90.6 percent (4,400 acres divided by 4,856 acres) of the acreage disturbed
annually by oil and gas activities permitted under the Ordinance. “Tier 2” is agricultural
land and is distinct from “Tier 3,” where neither oil and gas nor agricultural surface
activities dominate. (Ordinance, § 19.98.030(B), (C).) “Tier 4” areas are residential,
commercial, open space and a few other categories; applicants must obtain a conditional
use permit to conduct oil and gas activities on Tier 4 lands. (Ordinance, §§ 19.98.030(D),
19.98.050 [conditional use permit].) “Tier 5” lands include special planning districts or
other areas identified in specific plans. The specific plan sets forth the provisions
governing oil and gas activities within Tier 5 areas. (Ordinance, § 19.98.030(E).) Oil
and gas activities on Tier 4 and 5 lands are rare.
Before an oil and gas activity may occur in any Tier 1, 2 or 3 area, an application
for conformity review or minor activity review must be submitted to and approved by
County’s planning director as consistent with the standards contained in Chapter 19.98.
(Ordinance, § 19.98.040(A).) The Ordinance describes the planning director’s approval
of an application as “ministerial” rather than discretionary. (Ibid.)
4.
Split Estates
The constitutional issues raised in this appeal challenge how the Ordinance’s
permitting process applies to land where the surface rights and the mineral rights are held
by different owners. Such lands are referred to as “split estate” lands. A significant body
of law had developed addressing the relationship between the owner of the surface rights
and the owner of the mineral rights and their respective rights and obligations. Generally,
the owner of the mineral rights has an implied easement that burdens the surface estate
and allows the mineral owner to use the surface as is reasonably required to access the
minerals.2 A California statute provides that if a mineral rights owner intends to enter
real property and conduct surface-disturbing activities, such as drilling a new well or
constructing structures, the mineral rights owner must provide the owner of the surface
rights a minimum of 30 days’ notice. (Civ. Code, § 848, subd. (a)(2).) The owner of the
surface rights may agree to waive the notice requirement. (Civ. Code, § 848, subd. (c).)
Two Pathways for Split Estates
In Tier 1 areas, oil and gas operations are the dominant surface land use and there
is less potential for conflict between owners of the surface rights and owners of the
mineral rights. Applications for oil and gas activities within Tier 1 areas are subject to
conformity review under the procedures set forth in section 19.98.080 of the Ordinance.
For instance, the site plan presented with the application must address 12 items listed in
section 19.98.080(E) of the Ordinance, including the location of boundary lines, proposed
wells, roadways, pipelines, and other structures or facilities. The site plan must
2 “[T]he owner of the oil and mineral estate has a right to enter upon the surface of
the property and make such use thereof as is reasonably required for the enjoyment of his
estate.” (Wall v. Shell Oil Co. (1962) 209 Cal. App. 2d 504, 511; see Anderson,
Reasonable Accommodation: Split Estates, Conservation Easements, and Drilling in the
Marcellus Shale (2013) 31 Va. Envtl. L.J. 136, 140 [“mineral estate is the dominant
estate and the mineral owner has the implied right to reasonable use of the surface in
order to develop the oil and gas”; mineral owner usually has the right to choose both the
kind and location of surface uses].)
5.
“[i]dentify the proposed source of water (domestic or production), if applicable.”
(Ordinance, § 19.98.080(E)(8).) The County asserts most oil and gas activities on Tier 1
lands will qualify for a seven-day permit process—a process described in greater detail
below.
In comparison, Tier 2, 3 and 5 areas have a greater potential for conflict between
owners of the surface rights and owners of the mineral rights. Applications for oil and
gas activities within these areas are subject to conformity review pursuant to the
procedures stated in section 19.98.085 of the Ordinance. The site plan presented with the
application must address 16 items listed in section 19.98.085(F) of the Ordinance.
Applicants for County oil and gas permits for lands designated as Tier 2, 3 or 5
may obtain permits through one of two pathways. The pathway used depends upon
whether the owner of the surface rights has provided written approval of the site plan.
(Ordinance, §§ 19.98.085(G), 19.98.090 [application with surface owner signature].)
When the applicant has satisfied the conditions specified in the Ordinance, complied with
the applicable notice requirements, and obtained the surface owner’s signature on the site
plan, the permit application may be submitted under an expedited seven-day pathway.
(Ordinance, § 19.98.090.) Alternatively, where an applicant is unable to obtain the
surface owner’s signature, the only way to obtain a permit is through a 120-day pathway.
(Ordinance, § 19.98.100 [conformity review without surface owner signature].)3
The 120-day pathway has three main components, which involve a preapplication
notice, submitting the application for review by the County, and arranging for an
inspector to monitor compliance with mitigation measures and applicable law after the
application has been approved. Prior to submitting an application, the applicant must
provide the surface owner the 30-day notice required by Civil Code section 848 and must
3 County contends that under either pathway, there is no discretionary review by a
County official or board.
6.
include a copy of the proposed site plan along with an offer to meet with the surface
owner. (Ordinance, § 19.98.085(H)(1).)
After the application is submitted to the County, there are two successive 30-day
reviews. First, the application is reviewed for completeness. The County must inform
the applicant on the 30th calendar day of receipt that the application is complete or that
additional information is required. (Ordinance, § 19.98.100(B).) In addition, the County
must inform the surface owner of the option for an in-person meeting with staff of the
planning and community development department to discuss the conformity review
process and address questions about the proposed site plan. (Ordinance, § 19.98.100(B).)
During the second 30-day review period, the County schedules a mandatory
meeting with the applicant, provides the surface owner time to review any revisions to
the proposed site plan, and determines whether “the proposed use meets the
implementation standards and conditions specified” in the Ordinance. (Ordinance, §
19.98.100(C)(5).) If the County determines the application meets the Ordinance’s
standards, the permit is issued. (Ordinance, § 19.98.100(C)(5).)
After issuance of the permit, the applicant must wait an additional 30 days before
starting construction. (Ordinance, § 19.98.100(H).) The post-issuance “period shall be
used to coordinate deposits and inspections pursuant to 19.98.140 (Inspection
Compliance).” (Ordinance, § 19.98.100(H).) The applicant must contact the planning
and community development department and “provide a signed Cost Recovery
Agreement, and schedule an inspector to be present during all activities related to the Oil
and Gas Conformity Review.” (Ordinance, § 19.98.140.) The inspector, either from the
County or a third-party retained by the County, shall confirm compliance with all
requirements of the Ordinance, adopted mitigation measures, and other federal and state
laws. The cost of on-site monitoring is to be paid by the permit applicant. (Ordinance,
§ 19.98.140.)
7.
Under the expedited process of the seven-day pathway, the surface owner can
waive the initial 30-day preapplication notice requirement. (Ordinance,
§ 19.98.085(H)(1).) If the surface owner also signs the site plan submitted with the
application and affirms the surface owner and the applicant have agreed on the terms
contained in the site plan, the permit is to be issued within seven days. (Ordinance
§ 19.98.085(G), 19.98.090(A), (B).) If the applicant and surface owner reach an
agreement during the 120-day pathway, the permit application is processed under the
seven-day pathway. (Ordinance § 19.98.100(F).) When a surface owner agrees to the
site plan, no post-permit monitoring period is required and, thus, no arrangements need to
be made for an inspector. As a result, the activities described in the permit can begin
immediately.
PROCEEDINGS
In December 2015, Vaquero filed a petition for writ of mandate and complaint for
declaratory and injunctive relief against the County and three real parties in interest.
Vaquero’s lawsuit was assigned case No. BCV-15-101645 by the Kern County Superior
Court. The real parties in interest were California Independent Petroleum Association, a
California nonprofit mutual benefit corporation; Independent Oil Producers’ Agency, a
California corporation; and Western States Petroleum Association, a California nonprofit
mutual benefit corporation (collectively, Oil Associations). The Oil Associations were
listed as the proponents of the Ordinance in the environmental review documents
prepared for the project.4
4 Oil Associations’ stated objectives in proposing the zoning ordinance amendment
were to (1) create an effective regulatory and permitting process for oil and gas
exploration and production, which could be relied upon by the County, DOGGR and
other agencies; (2) achieve an efficient and streamlined environmental review and
permitting process for all oil and gas operations covered by the proposed amendment;
and (3) develop industry-wide best practices, performance standards, and mitigation
measures to ensure adequate protection of public health and safety and the environment.
If these efficiencies were attained, Oil Associations believed it would increase oil and gas
8.
Vaquero’s operative pleading is a first amended petition and complaint filed in
August 2016. It named the County and County’s board of supervisors as defendants and
omitted the Oil Associations. Vaquero’s action challenged the new ordinance provisions
as unconstitutional violations of Vaquero’s equal protection and due process rights.
Based on a stipulation of the parties, Vaquero’s lawsuit was consolidated with two
actions alleging the new ordinance provisions were adopted in violation of the California
Environmental Quality Act (CEQA; Pub. Resources Code, § 21000 et seq.). The CEQA
actions were assigned case Nos. BCV-15-101666 and BCV-15-101679. The
consolidation of the three matters achieved several efficiencies for the court and the
parties, including the preparation and lodging with the court of a single administrative
record.
The trial of the consolidated matters was conducted in June, August and December
of 2017. In March 2018, the trial court issued its written ruling resolving all claims and
issues. The ruling stated Vaquero had failed to prove the Ordinance was
unconstitutional. On April 20, 2018, the court entered a separate judgment in case No.
BCV-15-101645, stating Vaquero’s claims for relief were denied. That same day,
another judgment was entered in the consolidated CEQA actions.
In June 2018, Vaquero filed a notice of appeal. Earlier in the month, the plaintiffs
in the CEQA matters filed notices of appeals. The three appeals were assigned case No.
F077656 by this court. In August 2019, we bifurcated Vaquero’s constitutional claims
from the CEQA claims and assigned Vaquero’s appeal case No. F079719.
exploration and production in Kern County, which in turn would benefit the local
economy.
9.
DISCUSSION
I. EQUAL PROTECTION
A. General Principles
Both the federal and state constitutions include equal protection guarantees. “No
State shall … deny to any person within its jurisdiction the equal protection of the laws.”
(U.S. Const., 14th Amend., § 1.) Similarly, article I, section 7, subdivision (a) of the
California Constitution provides: “A person may not be … denied equal protection of the
laws .…” The equal protection clause has been summarized as “essentially a direction
that all persons similarly situated should be treated alike.” (Cleburne v. Cleburne Living
Center, Inc. (1985) 473 U.S. 432, 439.) An equal protection claim has two essential
elements:
“‘The first prerequisite to a meritorious claim under the equal protection
clause is a showing that the state has adopted a classification that affects
two or more similarly situated groups in an unequal manner.’ [Citations.]
This initial inquiry is not whether persons are similarly situated for all
purposes, but ‘whether they are similarly situated for purposes of the law
challenged.’ [Citation.]” (Cooley v. Superior Court (2002) 29 Cal. 4th 228,
253.)
When a showing has been made that two similarly situated groups are treated
disparately, the next element of a meritorious equal protection claim addresses whether
the government had a sufficient reason for distinguishing between the two groups. (In re
Brian J. (2007) 150 Cal. App. 4th 97, 125.) Different levels of scrutiny exist, but here the
parties agree that the rational basis test applies to the question whether the County had a
sufficient reason to subject the groups to different treatment. That test requires a
“rational relationship between a disparity in treatment and some legitimate government
purpose.” (People v. Chatman (2018) 4 Cal.5th 277, 289.) Under this test, a statute,
regulation or ordinance will be upheld if there is any reasonably conceivable set of facts
that provides a rational basis for the classification. (FCC v. Beach Communications, Inc.
10.
(1993) 508 U.S. 307, 313; People v. Turnage (2012) 55 Cal. 4th 62, 74.) In Chatman, our
Supreme Court provided an overview of the rational basis test, stating it
“sets a high bar before a law is deemed to lack even the minimal rationality
necessary for it to survive constitutional scrutiny. Coupled with a
rebuttable presumption that legislation is constitutional, this high bar helps
ensure that democratically enacted laws are not invalidated merely based on
a court’s cursory conclusion that a statute’s tradeoffs seem unwise or
unfair.” (Chatman, supra, 4 Cal.5th at p. 289.)
A more detailed explanation of the rational basis test was provided by our
Supreme Court in Johnson v. Department of Justice (2015) 60 Cal. 4th 871:
“ ‘This standard of rationality does not depend upon whether lawmakers
ever actually articulated the purpose they sought to achieve. Nor must the
underlying rationale be empirically substantiated. [Citation.] While the
realities of the subject matter cannot be completely ignored [citation], a
court may engage in “ ‘rational speculation’ ” as to the justifications for the
legislative choice [citation]. It is immaterial for rational basis review
“whether or not” any such speculation has “a foundation in the record.” ’
[Citation.] To mount a successful rational basis challenge, a party must
‘ “negative every conceivable basis” ’ that might support the disputed
statutory disparity. [Citations.] If a plausible basis exists for the disparity,
courts may not second-guess its ‘ “wisdom, fairness, or logic.” ’
[Citations.]” (Id. at p. 881.)
In Blumenthal v. Board of Medical Examiners (1962) 57 Cal. 2d 228, Justice
Traynor described the equal protection test by stating: “A discrimination, however, that
bears no reasonable relation to a proper legislative objective is invalid.” (Id. at p. 233,
italics added.) We conclude the “reasonable relation” and “rational relationship” are the
same test. In Blumenthal, the presumption and burden placed on the party claiming a
classification was unconstitutional was described as follows: “ ‘When a legislative
classification is questioned, if any state of facts reasonably can be conceived that would
sustain it, there is a presumption of existence of that state of facts, and the burden of
showing arbitrary action rests on the one who assails the classification.’” (Ibid.) The
11.
evaluation of whether a classification is reasonable or arbitrary considers the difference
between the classes and how that difference relates to the object of the regulation. (Ibid.)
Here, the parties dispute whether Vaquero overcame the rebuttable presumption of
validity and negated every conceivable basis that supports the ordinance’s disparate
treatment or otherwise established the classification was arbitrary.
B. Application of Principles
1. Similarly Situated Groups Subject to Disparate Treatment
Vaquero contends the Ordinance creates two groups of split-estate mineral
owners. One group consists of mineral owners who have obtained their surface owner’s
signatures on permit applications. The other group contains mineral owners who have
not obtained the surface owner’s signatures.
We conclude that Vaquero has demonstrated the two groups of mineral owners are
similarly situated and the Ordinance subjects the two groups to disparate treatment in the
form of different pathways. The group with surface owner signatures may proceed under
the expedited seven-day pathway. The group without surface owner signatures must
proceed under the 120-day pathway. Therefore, Vaquero has established the first element
of its equal protection claim—the Ordinance subjects similarly situated groups to
disparate treatment.
2. Legitimate Public Purpose
County contends multiple legitimate public purposes support the adoption of the
two pathways in Ordinance, including (1) promoting cooperation between oil and gas
operators and surface owners, (2) protecting agricultural and other surface land uses from
avoidable interference by oil and gas operations, and (3) minimizing land use conflicts.
The trial court found the Ordinance’s purposes also included “protecting health, safety
and the environment.”
12.
Vaquero’s opening brief acknowledges that these “policies are certainly legitimate
public purposes.”5 However, Vaquero contends the chosen classifications do not
rationally advance these public purposes. Thus, Vaquero’s claim of an equal protection
violation focuses on the link between the classifications and those public purposes and
whether the classifications advance the public purposes.
3. Rationality and Promoting Cooperation
We begin by considering whether the two-pathway procedure and the two groups
of mineral owners it creates promotes cooperation between oil and gas operators and
surface owners. In our view, promoting cooperation overlaps with minimizing land use
conflicts.
First, when an operator qualifies for the seven-day pathway, there exists a strong
basis for concluding the operator and the surface owner have cooperated. Specifically,
the qualification for the seven-day pathway requires the operator to submit an application
that includes a site plan and the surface owner’s signature on a required statement that
includes the following: “The Land/Surface Owner and the Mineral Owner and/or the
Operator or Lessee have come to an agreement regarding the use of the surface of the
property in connection with the Kern County permit that is being issued with this site
plan.” (Ordinance § 19.98.085(F), (G).) Based on this provision, it is rational to
conclude that when an operator qualifies for the seven-day pathway, there has been
cooperation—specifically, an agreement about the site plan—between the operator and
the surface owner.
Second, we consider the incentives created for cooperating and whether they are
rationally related to promoting cooperation. The incentives for the operator are obvious.
The seven-day pathway is faster and avoids the cost to the operator of inspectors to
5 Consequently, this opinion does not set forth the historical facts showing the lack
of cooperation between oil and gas operators and surface owners was a legitimate
concern in Kern County.
13.
monitor compliance. Therefore, the classifications rationally incentivize an operator to
attempt to reach an agreement with the surface owner about the specific details contained
in the site plan. In comparison, the incentives for the surface owner to cooperate are not
as strong, but they appear to exist. A surface owner who successfully negotiates an
agreement with the operator will be assured his or her specific concerns are addressed in
the agreement with the operator. In contrast, the 120-day pathway may result in a permit
that is less favorable to the surface owner on points of special concern to the owner.
Although Ordinance section 19.98.100 allows the surface owner to have input at the
various stages of review, there is no assurance the surface owner will be satisfied with the
way the permit ultimately addresses a particular matter. Consequently, it was rational for
the Board to conclude that surface owners have incentives to cooperate with mineral
owners in negotiating an approval of a site plan. Because the Board rationally
determined the Ordinance would provide incentives to each side, it logically follows that
the Ordinance (and the incentives it provides) would promote the legitimate purpose of
cooperation between surface owners and mineral owners.
Vaquero disagrees with this analysis of the incentives and the behavior those
incentives will promote. Vaquero frames its argument about cooperation as follows:
“Punishing a mineral owner financially to the point where he or she has to capitulate does
not promote ‘cooperation.’ Cooperation connotes a mutual give-and-take, and even-
handed compromise. The ordinance undermines rather than enhancing even-
handedness.” To support this argument, Vaquero refers to a statement made by the
planning director at the November 9, 2015, Board meeting about the cost of the
monitoring or site inspection required by the 120-day pathway. The director stated many
oil companies had informed her department “that they may drill for as long as 42 days
straight, 24 hours a day.” The director stated the monitoring or code compliance officers
“could cost half a million dollars for an oil company.”
14.
We reject this argument because it is based on a legally incorrect view of how the
rational basis test is applied when an enactment is subject to a facial challenge. In Heller
v. Doe (1993) 509 U.S. 312, the United States Supreme Court stated “courts are
compelled under rational-basis review to accept a legislature’s generalizations even when
there is an imperfect fit between means and ends. A classification does not fail rational-
basis review because it ‘ “is not made with mathematical nicety or because in practice it
results in some inequality.” ’ ” (Id. at p. 321.) Based on these principles, we conclude
the incentives created by the Ordinance need not be balanced to create an even playing
field between surface owners and oil and gas operators. The rational basis test for equal
protection allows some inequality or unevenness in the playing field. Consequently, the
fact that the Ordinance appears to provide more bargaining power to surface owners does
not support the conclusion that the classifications are not rationally related to promoting
cooperation between surface owners and operators. Furthermore, based on the common
law principles that establish the mineral owner as the dominant estate, the Board could
rationally conclude providing surface owners with more bargaining power offset
imbalances that existed under the common law and thereby increased the probability of
cooperation between the two owners of rights in split estate lands.
Vaquero restates its argument about cooperation by asserting: “Fostering
cooperation among competing commercial interests may be a legitimate governmental
goal, through meet-and-confer requirements and the like. But ‘cooperation’ is not the
same as coerced capitulation. The ordinance here goes too far in setting up a significant
burden that falls solely on one class of property owners (mineral owners whose surface
owners will not sign off on permit applications) to the undue benefit of another class of
property owners (the surface owners who wield the power over the permitting process).”
We reject this argument about forced capitulation because it is simply one
prediction of what will occur in the future and applicable law does not make Vaquero’s
prediction binding on the Board or this court. Legislative bodies may make choices
15.
“ ‘based on rational speculation unsupported by evidence or empirical data.’ ” (Heller v.
Doe, supra, 509 U.S. at p. 320.) The fact the legislative body’s view of how its
enactment will operate in the future is subject to dispute is not, without more, sufficient
to establish the groups created by the enactment are not rationally related to legitimate
governmental purposes. Whether in fact the Ordinance will promote the legislative
objectives is not the question because the equal protection clause is satisfied when a court
concludes the legislative body rationally could have decided the Ordinance might do so.
(American Bank & Trust Co. v. Community Hospital (1984) 36 Cal. 3d 359, 374.) In
short, Vaquero’s speculations about what might occur in the future are not sufficient to
establish the irrationality of the Ordinance.
Based on the foregoing, we conclude the classifications created by the two
pathways provided by the Ordinance are rationally related to promoting cooperation
between surface owners and oil and gas operators. As a result, we need not analyze
whether the classifications rationally promoted the Ordinance’s other legitimate public
purposes.
II. DUE PROCESS
A. Contentions of the Parties
Vaquero contends the Ordinance violates procedural due process by improperly
delegating local government authority over land use permits to surface owners of split-
estate lands. The authority delegated relates to whether the applicant for a permit may
use the seven-day pathway or must use the 120-day pathway to obtain a permit. In
Vaquero’s view, the delegation is improper because no constraints or standards were
placed on the surface owners and no procedure is provided to oil and gas operators for
obtaining relief against surface owners who act arbitrarily or capriciously in refusing to
sign a site plan.
16.
In response, County argues the procedural due process claim is meritless because
the Ordinance does not give any private party veto power over oil and gas operations and
because a private party may agree to waive a zoning regulation intended to protect that
private party. Conceptually, County views a surface owner’s signature on a site plan as a
waiver of the protections contained in the 120-day pathway and not as the power to veto
oil and gas activities on the land.
The parties disagree about how to interpret and apply the line of cases decided by
the United States Supreme Court addressing the validity of zoning ordinances. (See
Eubank, supra, 226 U.S. 137; Cusack, supra, 242 U.S. 526; Roberge, supra, 278 U.S.
116.) Despite the age of these cases, their meaning and application remains unsettled. In
2013, Professor Kenneth Stahl wrote: “Making sense of this trio of cases proves
exceedingly difficult.” (Stahl, supra, 161 U.Pa. L.Rev. at p. 960.)
B. General Legal Principles
1. Due Process Clauses
Both the federal and state constitutions include a due process clause. Section 1 of
the Fourteenth Amendment to the United States Constitution provides that no state shall
“deprive any person of … property, without due process of law .…” Article I, section 7,
subdivision (a) of the California Constitution states in relevant part: “A person may not
be deprived of … property without due process of law .…” These requirements for due
process impose a variety of constraints on governmental actions. For example, every
governmental deprivation of a person’s “property” within the purview of the due process
clause requires some form of notice and a hearing. (Beaudreau v. Superior Court (1975)
14 Cal. 3d 448, 458.) Also, as demonstrated by Eubank, Cusack and Roberge, the
requirements of due process act as “a potential limit on the private exercise of regulatory
power.” (Volokh, The New Private-Regulation Skepticism: Due Process, Non-
Delegation, and Antitrust Challenges (2014) 37 Harv. J.L. & Pub. Pol’y 931, 933
17.
(Volokh) [urging courts to distinguish between due process requirements and non-
delegation doctrine].)
2. United States Supreme Court Cases
In Eubank, the United States Supreme Court evaluated a city ordinance allowing
owners of two-thirds of the property abutting a street to determine the setback line
beyond which construction would be illegal. (Eubank, supra, 226 U.S. at pp. 141–142.)
Under the ordinance, if owners submitted a written request to the city’s committee on
streets, the committee was required to establish the setback line, provided it was not
“ ‘less than five feet nor more than thirty feet from the street line.’ ” (Id. at p. 141.)
Thus, the ordinance left “no discretion in the committee on streets as to whether the
[setback] line shall or shall not be established in a given case.” (Id. at p. 143.) The court
concluded the ordinance violated due process, stating:
“The action of the committee is determined by two-thirds of the property
owners. In other words, part of the property owners fronting on the block
determine the extent of use that other owners shall make of their lots, and
against the restriction they are impotent.… The statute and ordinance,
while conferring the power on some property holders to virtually control
and dispose of the proper[ty] rights of others, creates no standard by which
the power thus given is to be exercised; in other words, the property holders
who desire and have the authority to establish the line may do so solely for
their own interest, or even capriciously.” (Id. at pp. 143–144.)
In Cusack, the court examined a municipal ordinance prohibiting the erection of a
billboard in any predominantly residential district without the written consent of the
owners of a majority of frontage on both sides of the street in the block where the
billboard was to be located. (Cusack, supra, 242 U.S. at pp. 527–528.) The court upheld
the ordinance. (Id. at p. 531.) The court distinguished Eubank, stating the Richmond
ordinance left the establishment of the setback line untouched until the lot owners acted
and then gave the lot owners’ choice the effect of law, making the street committee
merely the automatic register of that choice. (Cusack, supra, at p. 531.) In contrast, the
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ordinance in Cusack “absolutely prohibits the erection of any billboards in the blocks
designated, but permits this prohibition to be modified with the consent of the persons
who are to be most affected by such modification.” (Ibid.) Thus, one ordinance allowed
private parties to impose restrictions on the property of others, while the other allowed
private parties “to remove a restriction from other property owners.” (Ibid.) The court
concluded the ordinance in Cusack was “not a delegation of legislative power, but is, as
we have seen, a familiar provision affecting the enforcement of laws and ordinances.”
(Ibid.)
In Roberge, a comprehensive zoning ordinance divided the city into six use
districts and designated a “ ‘First Residence District’ ” that allowed single-family
dwellings, schools, churches, parks and playgrounds, and certain other uses. (Roberge,
supra, 278 U.S. at p. 117.) In 1925, the ordinance was amended as follows: “ ‘A
philanthropic home for children or for old people shall be permitted in First Residence
District when the written consent shall have been obtained of the owners of two-thirds of
the property within four hundred (400) feet of the proposed building.’ ” (Id. at p. 118.)
The court concluded the ordinance was a delegation of power “repugnant to the due
process clause.” (Id. at p. 122.) The court explained this conclusion by stating:
“The [ordinance] purports to give the owners of less than one-half the land
within 400 feet of the proposed building authority—uncontrolled by any
standard or rule prescribed by legislative action—to prevent the [permit
applicant] from using its land for the proposed home. The superintendent is
bound by the decision or inaction of such owners. There is no provision for
review under the ordinance; their failure to give consent is final. They are
not bound by any official duty, but are free to withhold consent for selfish
reasons or arbitrarily and may subject the trustee to their will or caprice.”
(Id. at pp. 121–122.)
The court in Roberge distinguished Cusack on the ground the facts in Cusack were
sufficient to show the billboards would or were likely to endanger the safety and decency
of the district, while it was “not suggested that the proposed new home for aged poor
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would be a nuisance.” (Roberge, supra, 278 U.S. at p. 122.) The court then turned to the
facts before it, which included the legislative determination that such group homes were
in harmony with the public interest and the general scope and plan of the zoning
ordinance, and stated:
“We find nothing in the record reasonably tending to show that [the
proposed home’s] construction or maintenance is liable to work any injury,
inconvenience or annoyance to the community, the district or any person.
The facts shown clearly distinguish the proposed building and use from
such billboards or other uses which by reason of their nature are liable to be
offensive.” (Roberge, supra, 278 U.S. at p. 122.)
The voting scheme in Roberge shares similarities with the scheme in Cusack. For
this and other reasons, “both courts and commentators have struggled to make sense of
the doctrine emerging from the Eubank-Cusack-Roberge line of cases.” (Stahl, supra,
161 U.Pa. L.Rev. at p. 960; see Michelman, Political Markets and Community Self-
Determination: Competing Judicial Models and Local Government Legitimacy (1977–
1978) 53 Ind. L.J. 145, 164–187.) Professor Volokh analyzed the three cases and stated,
“What emerges thus look like a general rule that property owners can’t regulate other
property owners—with an exception if, as in Thomas Cusack, they’re actually
deregulating against the baseline of a general prohibition of a nuisance.” (Volokh, supra,
37 Harv. J.L. & Pub. Pol’y at p. 943.)
Two more United States Supreme Court cases addressing due process and
delegation issues are worth noting. In Carter v. Carter Coal Co. (1936) 298 U.S. 238,
the court examined a statute that “allowed the producers of two thirds of the coal in any
‘coal district,’ negotiating with unions representing a majority of mine workers, to set
wages and hours for all coal producers in the district.” (Volokh, supra, 37 Harv. J.L. &
Pub. Pol’y at p. 943.) The court stated the legislation conferred power on private parties
“to regulate the affairs of an unwilling minority.” (Carter, supra, at p. 311.) The court
concluded the regulation of wages and hours in the production of coal was a
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governmental function and a statute conferring this function to private parties, especially
in regulating the business of competitors, “undertakes an intolerable and unconstitutional
interference with personal liberty and private property.” (Ibid.) The court characterized
the delegation as “clearly arbitrary” and “clearly a denial of rights safeguarded by the due
process clause.” (Ibid.)
Over 40 years later, the United States Supreme Court decided New Motor Vehicle
Bd. of Cal. v. Orrin W. Fox Co. (1978) 439 U.S. 96 (New Motor Vehicle Bd.), which
involved a California statute that required car manufacturers to secure the approval of the
New Motor Vehicle Board before opening a new dealership when an existing dealership
in the marketing area lodged a protest. (Id. at p. 98.) The court addressed the argument
“that the California scheme constitutes an impermissible delegation of state power to
private citizens because the [statute] requires the Board to delay franchise establishments
and relocations only when protested by existing franchisees who have unfettered
discretion whether or not to protest.” (Id. at pp. 108-109.) The court rejected the
argument, stating: “Almost any system of private or quasi-private law could be subject to
the same objection. Court approval of an eviction, for example, becomes necessary only
when the tenant protests his eviction, and he alone decides whether he will protest. An
otherwise valid regulation is not rendered invalid simply because those whom the
regulation is designed to safeguard may elect to forgo its protection. See Cusack Co. v.
Chicago, 242 U.S. 526 (1917).” (New Motor Vehicle Bd., supra, at p. 109.)
3. California Cases
In April 1958, the Second District considered the relationship between due
process, the reasonable exercise of the police power, and the delegation of authority in
the context of a section of the Probate Code giving a spouse the right to devise by will
one-half of the separate property of the surviving spouse. (Paley v. Bank of America
(1958) 159 Cal. App. 2d 500, 502 (Paley).) The court stated:
21.
“There are as many cases in which the court recognizes the principle that,
however exercised, even the police power is subject to the constitutional
limitation that it may not be exerted arbitrarily or unreasonably.
[Citations.] Statutes which operate in a manner to give one person power
over the property of another have been declared clearly arbitrary and a
denial of due process, the police power notwithstanding (Carter v. Carter
Coal Co., 298 U.S. 238 [56 S. Ct. 855, 80 L. Ed. 1160]; State Board of Dry
Cleaners v. Thrift-D-Lux Cleaners, 40 Cal. 2d 436 [254 P.2d 29];
Washington ex rel. Seattle Title Tr. Co. v. Roberge, 278 U.S. 116 [49 S. Ct.
50, 73 L. Ed. 210]; Eubank v. Richmond, 226 U.S. 137 [33 S. Ct. 76, 57
L. Ed. 156 42 L.R.A.N.S. 1123]). These cases involved various statutes
which delegated the power to curtail or limit rights of ownership in
property held by another. In the instant case [the statute], if applied in the
manner sought by appellant, delegates the power to take another’s property
away completely.” (Paley, supra, 159 Cal.App.2d at p. 511.)
Consequently, the court determined the statute was unconstitutional and void if
applied to dispose of the surviving spouse’s property in the circumstances presented by
that case. (Paley, supra, 159 Cal.App.2d at p. 511.)
In Weiner v. City of Los Angeles (1968) 68 Cal. 2d 697, the California Supreme
Court considered a municipal ordinance that established the front yard requirements for
undeveloped lots based on the average of the depth of front yards of developed lots along
the frontage. The owners of an unimproved lot were attempting to build a residence on
their lot. They contended an order by the superintendent of building stopping their
proposed construction violated “due process by subjecting the use of their lot to the
control of other private persons who are not subject to any governmental supervision or
standards.” (Id. at p. 705.) The court stated the ordinance involved in Eubank had “no
front yard requirement unless and until other property owners, for whom no guiding
standard was provided, petitioned the committee on streets, which was without authority
to reject the petition.” (Weiner, supra, at p. 705.) In contrast, the court described the
ordinance in Roberge as permitting “a particular use of property only upon written
consent of the owners of two-thirds of the property within 400 feet, for whom no standard
of action was provided.” (Weiner, supra, at p. 705.) The court distinguished Eubank and
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Roberge from the municipal ordinance in question because the ordinance itself set forth
the formula for determining the front yard requirement and did not provide for control by
other property owners. (Weiner, supra, at p. 705.) As to control, the ordinance did not
make the consent or objections of neighborhood property owners a factor in approving
proposed construction. As a result, the court rejected the due process claim. (Ibid.)
The foregoing California cases are not directly on point with the facts of the
present appeal. They demonstrate, however, that California is not among the states, like
Texas, that have interpreted their state constitutions as containing “vibrant non-delegation
doctrines that not only are stricter than the federal one but also strongly distinguish
between public and private delegates.” (Volokh, supra, 37 Harv. J.L. & Pub. Pol’y at p.
933.) Consequently, we conclude the federal and state due process clauses provide the
same level of protection.
C. Application of Precedent
Based on our review of the California cases, the Eubank-Cusack-Roberge trilogy,
and the subsequent decisions of the United States Supreme Court, we conclude the most
important factors in analyzing the constitutionality of a land use ordinance that transfers
some authority to private property owners are (1) the amount and type of control
transferred, (2) whether the private property owners’ action or inaction produces results
that are binding on the other property owner, and (3) the presence or absence of standards
dictating how that control must be exercised.
Here, the parties agree that the surface owners are not subject to any standards
when they decide whether or not to sign a site plan. Thus, they “are free to withhold
consent for selfish reasons or arbitrarily.” (Roberge, supra, 278 U.S. at p. 122.) That
factor, by itself, is not determinative. If it were, the billboard ordinance in Cusack would
not have been upheld. Therefore, we conclude the resolution of Vaquero’s due process
claim turns on the amount and type of control given to surface owners under the
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Ordinance and whether “their failure to give consent is final.” (Roberge, supra, 278 U.S.
at p. 122.)
1. Finality of Control Over Land Use
Here, the Ordinance authorizes surface owners to give their written approval to a
site plan, which allows the oil and gas operator to qualify for the seven-day pathway and
avoid the 120-day pathway. This control over which pathway applies—a procedural
question—is qualitatively different from allowing surface owners to “determine the
extent of use that other owners shall make of their [property rights.]” (Eubank, supra,
226 U.S. at p. 143.) For instance, when a surface owner does not agree to a site plan, the
details of how an oil and gas operator will conduct its operations on the land in question
have not been determined. Instead, the details of the operations will be resolved by the
County when it decides the permit application complies with applicable law and issues
the permit. Thus, the type of control given to private parties by the Ordinance does not
allow private parties to control how the owners of mineral rights use and enjoy those
rights. Instead, the control given determines the procedural mechanism by which the
owner of mineral rights obtains a permit. Thus, the type and amount of control given to
private parties by the Ordinance distinguish it from the ordinances considered in Eubank,
Cusack and Roberge.
In addition, the fact County ultimately decides whether the site plan proposed by
the applicant complies with applicable law, including the mitigation measures, and is
eligible for approval, demonstrates the surface owner’s failure to agree to a site plan is
not a final, binding decision with respect to how the land is used. This factor
distinguishes the Ordinance from the ordinances invalidated in Eubank and Roberge.
Consequently, we conclude the Ordinance does not violate due process because
the County’s delegation of some control to the surface owners does not give them the
final authority to determine how the oil and gas operator will use its mineral rights.
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Stated another way, the Ordinance avoids the due process problem of enabling surface
owners “to force an alteration in the legal regime without any discretion remaining in
government and without any protection against their personal biases.” (Volokh, supra, 37
Harv. J.L. & Pub. Pol’y at p. 946.) Here, the County retains the authority to issue a
permit under the 120-day pathway, which provides permit applicants some protection
against the personal biases of surface owners.
2. Coercive Power and Exploitation
Vaquero contends the Ordinance gives surface owners the power to withhold their
signatures and exploit monetary compensation from the permit applicant. If the permit
applicant does not pay the asking price, the applicant is forced to (1) delay the proposed
oil and gas activity for an additional 90 days6 and (2) incur significant monitoring or
inspection costs. Vaquero refers to the planning director’s statement to the Board that the
cost of onsite inspection could reach $500,000.
The County argues the burden of delay and additional expense does not render the
Ordinance unconstitutional because it could have enacted only the 120-day pathway
(without the alternative provided by the seven-day pathway) and the burdens of delay and
expense would have been upheld. In addition, the County relies on New Motor Vehicle
Bd., supra, 439 U.S. 96 and argues the delay imposed on applicants who have not
obtained surface owner signatures is not an unconstitutional burden. In that case, the
United States Supreme Court stated: “The narrow question before us, then, is whether
California may, by rule or statute, temporarily delay the establishment or relocation of
automobile dealerships pending the Board’s adjudication of the protests of existing
dealers.” (Id. at p. 106.) The court upheld the statute. The County argues the temporary
6 A mineral rights holder is required by Civil Code section 848 to give 30 days’
notice to the surface owner unless the surface owner agrees to waive the notice
requirement. Consequently, the incremental delay attributable to the Ordinance’s 120-
day pathway is 90 days.
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delay occasioned by the 120-day pathway is similar to the delay associated with the
regulatory agency’s adjudication of a protest made by an existing car dealer to the
opening of a new dealership.
Based on New Motor Vehicle Bd., supra, 439 U.S. 96, we agree the incremental
delay experienced by completing the 120-day pathway is not such an onerous burden that
it offends the due process clause by delegating too much power to a private party. As the
delay is temporary, it does not involve an exercise of final control by the owner of
surface rights, and is rationally related to the goal of cooperation because it provides
additional time for the parties to reach an agreement.
Vaquero’s challenges to the additional costs imposed by the 120-day pathway are
not as easily resolved, primarily because that burden is difficult to quantify. In contrast,
the delay was calculated simply by subtracting the statutory notice period of 30 days from
the 120 days required by the longer pathway. The additional costs were addressed during
oral argument by counsel for the County, who argued the planning director’s statement
about costs of $500,000 was hyperbole and a more reasonable estimate would be
$50,000.7 The parties’ arguments about the costs of monitoring raise questions of fact
about what will happen in the future. Those questions of fact include, without limitation,
what the cost of monitoring might be for an applicant, whether surface owners will
demand payment in exchange for their signatures, what amounts would be demanded,
and what amounts would be paid.
As a court of review evaluating a facial challenge to the Ordinance, we are not
well situated to make findings to resolve these questions. As a general rule, legislative
findings are given great weight by the judiciary and will be upheld unless the reviewing
court determines the findings are unreasonable and arbitrary. (Amwest Surety Ins. Co. v.
7 Counsel arrived at this estimate by multiplying 42 days times 24 hours per day
time $50.00 per hour, which equals $50,400.
26.
Wilson (1995) 11 Cal. 4th 1243, 1252.) Lacking information about the actual impact of
the Ordinance on the relationship between the owners of surface rights and the owners of
mineral interests, we defer to the implied findings of the legislative body and conclude
the monetary burden imposed is not unreasonable or arbitrary.8
In summary, we join the trial court in rejecting Vaquero’s claims that the
Ordinance violated the constitutional protections provided by the equal protection clause
or the due process clause.
DISPOSITION
The judgment entered in case No. BCV-15-101645 on April 20, 2018, is affirmed.
Respondents shall recover their costs on appeal to the extent that the costs relate to case
No. BCV-15-101645 and do not overlap with the costs incurred in case Nos. BCV-15-
101666 and BCV-15-101679. (Cal. Rules of Court, rule 8.278.)
_____________________
FRANSON, Acting P. J.
WE CONCUR:
_____________________
PEÑA, J.
_____________________
SNAUFFER, J.
8 Our resolution of Vaquero’s facial challenges should not be interpreted as
expressing any opinion on the merits of any “as applied” challenge based on due process
or equal protection grounds.
27.