Hanson Bridgett Secures CA Supreme Court Win for Aera Energy

August 28, 2023 (San Francisco, CA) – On August 3, 2023, the California Supreme Court issued its opinion in Chevron, et al. v. County of Monterey, et al. in which the Court unanimously affirmed the prior Sixth District Court of Appeal and Monterey Superior Court decisions finding that Monterey County Measure Z is preempted by superior state law and is invalid. A team from Hanson Bridgett represented Aera Energy LLC in this case.

"We were very pleased to see that the court’s opinion directly adopted some of our core arguments as to why Measure Z should be preempted," said Hanson Bridgett lead partner Andrew Bassak. "This will be an important decision in the area of implied preemption for years to come, in that it reaffirms the state’s ability to enact uniform regulation on matters of statewide concern, and that those regulations cannot be contradicted by local ordinances. It also clarifies that local zoning regulations can be used to regulate whether and where certain land uses are appropriate, but land use regulations cannot be used as a proxy to regulate methods and practices of otherwise permissible activities."

The Hanson Bridgett team, led by partner Andrew Bassak, included partner Gary Watt and senior counsel Patrick Burns.

Background on the Case

Measure Z was a ballot initiative ostensibly to protect Monterey County resident’s drinking water from contamination from hydraulic fracturing (“fracking”), where the purpose, effect, and actual intent of the initiative was to end longstanding and legal oil and gas production in an arid unincorporated area of the county, without liability for a taking. The first prong of the initiative would have prohibited fracking. The second and third prongs directly targeted technical operational aspects of oil and gas production, including prohibiting the drilling of any new oil and gas wells, and prohibiting the practice of returning to the subsurface the large quantity of water that comes to the surface with petroleum hydrocarbons. California Public Resources Code section 3106 grants exclusive authority to permit these technical practices to the Director of the California Geologic Energy Management Division of the State Department of Conservation. The enactment of either of the two latter prongs would have interfered with the Director’s authority and would have brought an end to oil and gas production in Monterey County.

After the Monterey County Council refused to enact the “Protect Our Water: Ban Fracking and Limit Risky Oil Operations Initiative,” it was put on the 2016 fall ballot as Measure Z. The non-resident proponents of Measure Z marketed Measure Z by focusing on purported risks to domestic water supplies from fracking in Monterey County, and voters passed the measure.

Aera Energy and Chevron, along with other oil producers and royalty owners, sued immediately to invalidate the measure on Constitutional and other grounds (including preemption), and obtained an injunction preventing Measure Z from going into effect pending the outcome of the legal challenge.

The trial court and the Sixth District Court of Appeal agreed with Aera Energy and the other plaintiffs’ position that the anti-fracking aspect of Measure Z was merely a pretext, as the subsurface of the oil producing areas in Monterey County are entirely sand, and there is no fracking occurring in Monterey County. Those courts also found that the prohibitions of the second and third prongs, despite being framed as land use measures, which carry a presumption against preemption, nevertheless conflicted with section 3106, and were preempted. [Chevron U.S.A., Inc. v. County of Monterey, 70 Cal.App.5th 153 (2021).]

The California Supreme Court granted review in January 2022, with a focus order directing the parties to brief whether Public Resources Code section 3106 impliedly preempts the operative provisions of Measure Z. In addition to the 12 represented parties, the case drew friend of the court briefs from 15 amici, on both sides of the issue. Ultimately, the California Supreme Court agreed with Aera Energy and the other plaintiffs’ position that Measure Z is preempted because it conflicts with superior state law. As the court of appeal previously limited the preemption issue to state law, the California Supreme Court's opinion will not be subject to review by the U.S. Supreme Court.

About Hanson Bridgett

Hanson Bridgett LLP is a full service AmLaw 200 law firm with more than 200 attorneys across California. Creating a diverse workforce by fostering an atmosphere of belonging and intentional support has been a priority at Hanson Bridgett since its founding in 1958. We are dedicated to creating an environment that provides opportunities for people with varied backgrounds, both for attorneys and administrative professionals. As the first law firm recognized as a certified B Corp, we are committed to the communities where our employees live and work and consider it part of our professional obligation to serve justice by encouraging and supporting pro bono and social impact work.