On Friday, February 27, 2015, Citadel Exploration, Inc. (“Citadel”) filed suit against San Benito County in the County’s Superior Court, arguing that state law preempts Measure J, a county ordinance that prohibits hydraulic fracturing.  Hydraulic fracturing, included in the definition of well stimulation treatment, is being regulated by California’s Senate Bill 4 (“SB 4”).  Also known as the San Benito County Fracking Ban Initiative, Measure J bans “high-intensity petroleum operations,” which includes fracking, acid well stimulation, and cyclic steam injection.  Additionally, it bans any new gas or oil drilling activity in residential and rural areas in the County.

Citadel’s suit comes just months after Citadel filed a claim seeking $1.2 billion in damages for lost oil extraction revenue due to Measure J.  The claim argued that Measure J constituted a regulatory taking, in violation of the Fifth Amendment of the Constitution, but Citadel did not file a lawsuit based on this claim.

Measure J was voted into law on Election Day, November 4, 2014, passing 57% to 43%.  There were two other counties with fracking prohibitions on their ballots on Nov. 4: Santa Barbara County rejected the measure, while Mendocino County passed the measure.

By Mike Mills (michael.mills@stoel.com) and Shannon Morrissey.  Ms. Morrissey is a Law Clerk with Stoel Rives LLP and is not currently licensed to practice law in California.

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