APPEAL
from a judgment of the Superior Court of Kern County No.
BCV-15-101645. 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.
OPINION
FRANSON, ACTING P. J.
In
November 2015, the Board of Supervisors (Board) of the County
of Kern[1] approved a new zoning ordinance
requiring permits for new oil and gas exploration, 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');">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');">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 “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 (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.)
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 “[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
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.)
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]
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 ...