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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`E&B NATURAL RESOURCES MANAGEMENT
`CORPORATION, ET AL.,
`Plaintiffs and Petitioners,
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`vs.
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`COUNTY OF ALAMEDA, ET AL.,
`Defendants and Respondents.
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`CASE NO. 18-cv-05857-YGR
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`
`ORDER DENYING MOTION FOR PARTIAL
`SUMMARY JUDGMENT
`Re: Dkt. Nos. 59, 66
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`Plaintiffs and petitioners E&B Natural Resources Management Corporation (“E&B”);
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`Laurie Volm; Sharyl G. Bloom and Richard S. Bloom, co-trustees of The Lynn Bloom Trust;
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`James C. Roth; Dolores D. Michaelson; and Michael Karpé initiated this action against defendants
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`and respondents County of Alameda (the “County”) and Alameda County Board of Supervisors
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`(the “Board”) seeking to overturn the Board’s July 24, 2018 decision not to renew two conditional
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`use permits (“CUPs”) which are predicates to E&B’s continued operation of an oil extraction and
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`production facility on two parcels of land in Livermore, California.
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`Now before the Court is plaintiffs’ motion for partial summary judgment pursuant to
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`Federal Rule of Civil Procedural 56 and Local Rule 7-2 related to the fourth cause of action for
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`declaratory relief. Specifically, plaintiffs move for summary judgment on whether they have a
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`fundamental vested right in oil production operations at the Livermore Oil Field and whether
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`defendants are estopped to extinguish plaintiffs’ rights through the CUP renewal process.
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`Plaintiffs also seek a finding that the Court will exercise independent judgment in reviewing
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`plaintiffs’ fifth cause of action for a writ of administrative mandamus.
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`The motion came on for hearing on January 7, 2020. Having carefully considered the
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`papers submitted, the arguments of the parties at the hearing, the admissible evidence, and the
`pleadings in this action, and for the reasons set forth below, plaintiffs’ motion is hereby DENIED.1
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`1 The Center for Biological Diversity, the appellant in the underlying administrative
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 2 of 10
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`I.
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`BACKGROUND2
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`E&B is an independent oil and gas company headquartered in Bakersfield, California that
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`conducts oil and gas operations at the Livermore Oil Field in Alameda County. The Livermore
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`Oil Field consists of three parcels within a state-recognized field with boundaries established by
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`the California Department of Conservation, Division of Oil Gas & Geothermal Resources: (1) the
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`Greenville Investment Group (“GIG”) parcel, (2) the Nissen parcel, and (3) the Schenone parcel.
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`The parcels are zoned as “Large Parcel Agriculture,” and oil operations are allowed only by
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`permit.
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`The GIG parcel is 55.8 acres, primarily consisting of agricultural land. The GIG parcel
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`also has an oil production site consisting of two oil production wells that occupy a 100-foot by
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`200-foot fenced-in area on the land. Oil production is conveyed by pipeline to the adjacent Nissen
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`parcel. The Nissen parcel is 143.75 acres of flat grassland with fenced-in oil production facilities
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`consisting of five wells and storage and production equipment. The Schenone parcel also has a
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`production area with two fenced-in production wells and a pipeline that conveys the production to
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`the Nissen parcel. The Schenone parcel’s permit is not at issue in this litigation.
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`In 1965, E&B’s predecessor, McCulloch Oil Corporation (“McCulloch Oil”), entered into
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`process, filed a motion for leave to file an amicus curiae brief in support of defendants’
`opposition. (Dkt. No. 66.) “The district court has broad discretion to appoint amici curiae.”
`Hoptowit v. Ray, 682 F.2d 1237, 1260 (9th Cir. 1982), abrogated on other grounds by Sandin v.
`Conner, 515 U.S. 472 (1995). Here, in light of the Center for Biological Diversity’s historical
`involvement in this case, the motion for leave to file the amicus curiae brief is GRANTED,
`although the Court notes the brief is of limited value as to this motion.
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`2 The facts cited herein are undisputed and derive from the parties’ separate statements of
`undisputed material facts, exhibits 59 and 60 of plaintiffs’ request for judicial notice, and the
`hearing on the motion. (Dkt. Nos. 59-6, 64.) With respect to judicial notice, both parties request
`that the Court take notice of legislative enactments and official governmental documents and
`records. (Dkt. Nos. 59-6, 63.) Such documents are “not subject to reasonable dispute” and “can
`be accurately and readily determined from sources whose accuracy cannot reasonably be
`questioned.” Fed. R. Evid. 201(b); see also Citizens for Free Speech, LLC v. County of Alameda,
`62 F.Supp.3d 1129, 1136 (N.D. Cal. 2014) (taking notice of County zoning ordinance); Gardner
`v. Am. Home Mortg. Servicing, Inc., 691 F.Supp.2d 1192, 1196 (E.D. Cal. 2010) (“The
`documents submitted by Defendants are public[ly] recorded documents of which judicial notice
`may properly be taken, and accordingly, those documents may be considered in deciding
`Defendants’ dismissal motion.”). As such, the parties’ requests for judicial notice is GRANTED.
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 3 of 10
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`leases with property owners to develop oil production on the GIG and Nissen parcels. In
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`December 1966, the County granted McCulloch Oil a one-year permit to drill an exploratory well
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`on the GIG parcel.
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`A few days later, the County adopted an interim ordinance permitting oil extractions on
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`certain land, including on the parcels at issue here, subject to issuance of a “use permit.” On
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`March 9, 1967, the County adopted a permanent ordinance to the same effect. Then, on June 13,
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`1967, the County adopted the “Regulation of Exploratory and Production Oil Wells in Alameda
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`County,” which formalized the conditions to be included in use permits issued for oil and gas
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`exploration and production. The regulation set expiration dates of two years for exploratory well
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`permits and 20 years for production well permits. Thereafter, the County approved McCullough
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`Oil’s applications for CUPs for exploratory wells and production facilities on the GIG and Nissen
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`parcels. Upon expiration of the use permits in 1987, McCullough Oil applied and obtained
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`approval from the County for CUPs to allow continued oil production operations on the parcels for
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`a renewed 20-year term.
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`Between 2006 and 2009, E&B purchased the rights to operate and produce oil from the
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`Livermore Oil Field for $2.5 million. When the use permits expired in 2007, the County approved
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`McCullough Oil’s applications for CUPs to continue oil operations at Livermore Oil Field for an
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`additional 10-year term. Along with its purchase of the rights to Livermore Oil Field, E&B
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`understood that it was acquiring use permits that were subject to renewal.
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`From 2015 to 2018, E&B invested approximately $1 million at the Livermore Oil Field,
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`installing fencing to enclose the operational areas, replacing aging storage tanks, rebuilding the
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`secondary containment, replacing the flow lines, painting the pump jacks, and investing in new
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`tanks with modern leak detection equipment. E&B also purchased fee title (surface and mineral
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`rights) to the Nissen parcel for $1.4 million. More recently, in 2019, E&B acquired a small
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`surface parcel within the Nissen parcel from the U.S. government for $30,000.
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`In 2017, E&B submitted applications to renew the use permits for operations on the GIG
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`and Nissen parcels. The County’s Board of Zoning Adjustments (“BZA”) held an initial public
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`hearing on February 22, 2018 to consider jointly the two CUP renewal applications for the
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`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 4 of 10
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`Livermore Oil Field. The BZA heard public comment and continued consideration of the CUP
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`applications in order for staff to obtain information from the Environmental Health Department.
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`The County held a second public hearing on May 24, 2018. After again hearing public comment,
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`the BZA recommended conditional approval of the CUPs.
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`On June 1, 2018, the Center for Biological Diversity (“CBD”) appealed the BZA’s
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`conditional approval of the CUPs to the County’s Board, arguing in part that E&B’s operations
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`raised a threat of groundwater contamination. The Board heard CBD’s appeal on July 24, 2018,
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`and subsequently voted to grant CBD’s appeal, thereby denying E&B’s CUP renewal
`applications.3
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`II.
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`LEGAL STANDARD
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`Summary judgment is appropriate when “there is no genuine dispute as to any material fact
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`and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Summary
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`judgment is mandated “against a party who fails to make a showing sufficient to establish the
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`existence of an element essential to that party’s case, and on which that party will bear the burden
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`of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A moving party bears the
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`burden of specifying the basis for the motion and the elements of the causes of action upon which
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`the plaintiff will be unable to establish a genuine issue of material fact. Id. at 323. The burden
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`then shifts to the non-moving party to establish the existence of a material fact that may affect the
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`outcome of the case under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477
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`U.S. 242, 248 (1986).
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`III. DISCUSSION
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`The Court begins by considering whether plaintiffs possess a fundamental vested right to
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`continue operations at the Livermore Oil Field.
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`“The grant or denial of a conditional use permit is an administrative or quasi-judicial act.
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`Judicial review must be in accordance with [California] Code of Civil Procedure section 1094.5.”
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`3 Concurrent with the appeal proceedings before the Board, E&B raised the issue of its
`vested rights on July 5, 2018. (Dkt. No. 59-2, ¶ 14.) The County did not address plaintiff’s vested
`rights in either its hearing or decision to deny the CUPs. (Id.)
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 5 of 10
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`Goat Hill Tavern v. City of Costa Mesa, 6 Cal.App.4th 1519, 1525, 8 Cal.Rptr.2d 385 (1992)
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`(internal citations omitted). “If [an administrative] decision does not substantially affect a
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`fundamental vested right, the trial court considers only whether the findings are supported by
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`substantial evidence in light of the whole record.” Id. at 1525-1526. If, however, “an
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`administrative decision substantially affects a fundamental vested right, the trial court must
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`exercise its independent judgment on the evidence and find an abuse of discretion if the findings
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`are not supported by the weight of the evidence.” Id. at 1525.
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`Whether an administrative decision substantially affects a fundamental vested right “must
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`be decided on a case-by-case basis.” 301 Ocean Ave. Corp. v. Santa Monica Rent Control Bd.,
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`228 Cal.App.3d 1548, 1556, 279 Cal.Rptr. 636 (1991). Thus, “no exact formula exists by which
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`to make this determination,” but “courts are less sensitive to the preservation of purely economic
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`interests.” Id. Further, an entity acquires vested rights to continue its existing land use if it
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`performs substantial work and incurs substantial liabilities in good-faith reliance upon a permit
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`issued by a government agency. Avco Cmty. Developers, Inc. v. S. Coast Reg’l Comm’n, 17
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`Cal.3d 785, 791 (1976). “The ultimate question in each case is whether the affected right is
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`deemed to be of sufficient significance to preclude its extinction or abridgment by a body lacking
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`judicial power.” Whaler’s Vill. Club v. California Coastal Com., 173 Cal.App.3d 240, 252, 220
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`Cal.Rptr. 2 (1985) (citation omitted, emphasis in original).
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`Each party cites to cases that support their positions in certain respects, but all are
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`distinguishable from this case. Plaintiffs, for their part, contend that they have a fundamental
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`vested right in continuing operations at Livermore Oil Field because the County has approved
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`such operations since 1966, and E&B and its predecessors relied on those approvals to make
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`significant investments in the land. In support of this claim, plaintiffs primarily rely on Goat Hill
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`Tavern. There, a local tavern operated for over 35 years as a legal nonconforming use, during
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`which time the owner invested more than $1.75 million on refurbishments. Goat Hill Tavern, 6
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`Cal.App.4th at 1522-23. In 1988, the owner expanded the tavern to add a game room. Id. at 1523.
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`Four years after the fact, the owner applied for and obtained a six-month CUP for the expansion.
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`Id. Another year passed when, following citizen complaints, the city discovered that the permit
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 6 of 10
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`had expired. Id. The city approved two back-to-back requests for three-month renewals of the
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`permit before denying the third request. Id. at 1523. On review, the court of appeal held that
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`owner had a fundamental vested right in the tavern’s continued operation, which would cease
`absent renewal of the permit. Id. at 1529.4
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`Goat Hill Tavern, however, was decided based on “the unique facts presented.” Id. at
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`1529. This Court finds it distinguishable from the case at hand on at least three grounds. First,
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`Goat Hill Tavern involved a CUP for expansion of a legal nonconforming use that had existed for
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`over 35 years. This posture highlighted the “utter[] implaus[ibility] that [the tavern owner]
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`knowingly gave up all rights to continue operating Goat Hill Tavern in exchange for the
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`opportunity to keep his game room expansion open for six months.” Id. at 1529, n.4. Said
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`differently, “had Goat Hill Tavern never built its game room expansion, it would still be operating
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`as a legal nonconforming use.” Id. at 1531, n.5. Here, all of E&B’s and its predecessors’ oil and
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`gas operations on Livermore Oil Field were performed pursuant to limited-term permits. There
`was no other legal nonconforming use of the land.5
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`Second, in Goat Hill Tavern, the court noted that the city had a “practice” of “do[ing]
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`nothing about ‘expired’ conditional use permits and [] allow[ing] businesses to continue.” Id. at
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`1530. Under those circumstances, businesses reasonably may have believed that permit renewal
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`was not required or important and may have invested in their businesses, with or without a permit,
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`accordingly. Said differently, the city’s past inaction rendered Goat Hill Tavern’s reliance
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`reasonable. The same cannot be said here, where defendants’ permit renewal process appears to
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`have been enforced consistently.
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`Third, a portion of the $1.75 million investment made by the tavern owner was made “at
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`the city’s behest.” Id. at 1529. In contrast, there is no evidence that the County required or even
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`4 Although the CUP technically applied to the game room expansion only, the parties and
`the court operated under the premise that denying renewal of the permit would put the tavern out
`of business. Id. at 1529, n.3.
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`5 In its reply, plaintiffs contend that they are not claiming a fundamental vested right based
`on a prior nonconforming use.
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 7 of 10
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`suggested that E&B make investments in Livermore Oil Field. Instead, plaintiffs’ investments
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`appear to have been voluntary, and knowing, business decisions.
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`Defendants counter by citing to several cases that, while different in terms of scale, found
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`no fundamental vested right where business owners were granted limited CUPs. For example, in
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`Metropolitan Outdoor Advertising Corp. v. City of Santa Ana, 23 Cal.App.4th 1401, 1403, 28
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`Cal.Rptr.2d 664 (1994), a billboard owner received a CUP allowing it to erect a billboard. After
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`the city denied the owner’s application for a subsequent CUP, the owner sued, claiming it
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`possessed a fundamental vested right in the continued use and maintenance of the billboard. Id.
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`The court rejected the claim, emphasizing that the owner agreed to be bound by the permit’s
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`terms. Id. at 1404. The court reasoned that, given those terms, the owner must have “balanced the
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`costs of erecting, maintaining and removing the billboard against the economic benefits derived
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`from the sign over the life of the conditional use permit.” Id. n.1. Similarly, in Am. Tower Corp.
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`v. City of San Diego, 763 F.3d 1035, 1057 (9th Cir. 2014), the Ninth Circuit found that a plaintiff
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`did not have a fundamental vested right to continued use of three cell tower facilities. The court
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`focused on the “plain language” of the original CUPs issued to the plaintiff, which “explicitly
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`required ceasing all activity at [plaintiff]’s facilities and returning the sites to their original
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`condition ten years after the permit was issued if new CUP applications were not timely submitted
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`and ultimately approved.” Id. at 1057-58.
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`Defendants also identify several cases in which courts found no fundamental vested right
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`where the loss of use of a particular asset was purely economic, rather than a loss which would
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`have resulted in the inability to continue operating a business. In Hardesty v. Sacramento Metro.
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`Air Quality Mgmt. Dist., 202 Cal.App.4th 404, 416, 136 Cal.Rptr.3d 132 (2011), the court found
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`that requiring a permit for mining operations in a designated area did not implicate a fundamental
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`vested right because there was “nothing in the administrative record to indicate that [plaintiff]
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`w[ould] be driven out of business by the requirement[.]” Likewise, in Standard Oil Co. v.
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`Feldstein, 105 Cal.App.3d 590, 604 164 Cal. Rptr. 403 (1980), the court held a decision to require
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`Standard Oil Company to shut down certain refinery units did not affect a fundamental vested
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`right because there was “no contention that Standard [would] be driven to financial ruin,” nor “a
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`Northern District of California
`United States District Court
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 8 of 10
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`contention that this particular facility [would] be forced to operate at a loss and close.” In Mobil
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`Oil Corp. v. Superior Court, 59 Cal.App.3d 293, 305, 130 Cal.Rptr. 814 (1976), the decision to
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`require two oil companies to install gasoline vapor recovery systems at their gas stations did not
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`affect a fundamental vested right where the court was “not presented with the enforcement of a
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`rule which effectively drives the Oil Companies out of business. At most it puts an economic
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`burden on them increasing the cost of doing business.” See also Am. Tower Corp., 763 F.3d at
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`1058 (three cell phone towers comprised a portion of plaintiff’s telecommunications network, and
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`thus, the financial loss to plaintiff from denial of its permits were “purely economic interests that
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`d[id] not rise to the level of a fundamental vested right under California law”); Metropolitan
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`Outdoor Advertising Corp., 23 Cal.App.4th at 1401 (permit denial required the owner to remove
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`only one of its many billboards, which would not significantly injure the owner’s business).
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`It is within this framework of authorities that the Court considers the evidence proffered in
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`this case. In doing so, the Court is mindful that a CUP does not bestow on the permit-holder a
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`fundamental vested right, but rather, the burden is on plaintiffs to establish such a right based on
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`specific facts. Here, each CUP granted by the County since 1967 contained an explicit temporal
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`limit. The 10- and 20-year terms were consistent with long-term use of the Livermore Oil Field
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`for oil and gas operations, but not necessarily permanent use. Although the CUPs did not require
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`the termination of oil production or the removal of production facilities at the end of the permit
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`period, they did require the cessation of oil operations on designated land. Plaintiffs cannot now
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`claim to be surprised that these permits, which were, by definition, limited in term, have now
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`expired.
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`Nor can plaintiffs claim that past permit renewals were equivalent to a guaranty that the
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`permits would be renewed in perpetuity. “[A] conditional use permit . . . is, by definition,
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`discretionary.” Smith v. Cty. of Los Angeles, 211 Cal.App.3d 188, 197, 259 Cal.Rptr. 231 (1989).
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`Record evidence offered by both parties shows that the administrative process for renewing CUPs
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`was anything but pro forma. Rather, the process involved, at a minimum, analysis and review by
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`the County’s Planning Department, the County’s Environmental Health Department, and the BZA,
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`as well as public hearings. Many opinions and recommendations were offered during the process.
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`Northern District of California
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 9 of 10
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`If renewal of the CUPs was automatic, no need would exist for the County to enforce the permit
`renewal process at all, let alone impose such a rigorous process.6 Moreover, it is notable that these
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`CUPs implicate sensitive and evolving issues related to the environment, public welfare, and
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`public need. Under the circumstances, the Court is especially reluctant to tie the hands of the
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`municipal government by finding that plaintiffs possess a fundamental vested right based on past
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`acts and conditions.
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`In addition, defendants have not proffered sufficient evidence to persuade the Court that
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`denial of the CUP renewal in this case will result in anything more than a “purely economic loss.”
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`Plaintiffs emphasize that as of November 2019, they had invested nearly $5 million in acquiring
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`and operating Livermore Oil Field, with an estimated profit of approximately $11 million still to
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`be recovered. Plaintiffs have not, however, proffered any evidence that the County’s prior denial
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`of the CUP renewal itself would have destroyed or even significantly impacted its overall
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`business. Nor have plaintiffs demonstrated that $5 million in investments is significant in the
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`specific context of the capital-intensive oil and gas industry or relative to returns on investments
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`already earned during the permit period, especially in light of the knowledge of term limitations.
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`Without additional evidence regarding plaintiffs’ purported losses, the Court finds plaintiffs have
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`failed in their burden to show harm to their economic interests sufficient to confer a fundamental
`vested right.7
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`6 The Court notes that this case involves non-renewal of CUPs, not revocation of an active
`permit, and thus can be distinguished from cases like Malibu Mountains Recreation, Inc. v.
`County Of Los Angeles, 67 Cal.App.4th 359 (1998) and Trans-Oceanic Oil Corporation v. City Of
`Santa Barbara, 85 Cal.App.2d 776 (1948).
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`7 The Termo Co. v. Luther, 169 Cal.App.4th 394, 86 Cal.Rptr.3d 687 (2008), another case
`on which plaintiffs rely, also fails to persuade. In Termo, an owner and operator of 28
`unabandoned oil wells in Huntington Beach, California sought to set aside a state order directing
`the plugging and abandonment of those wells. 169 Cal.App.4th at 398-99. In holding that a
`fundamental vested right existed, the court emphasized that oil was “an extraordinarily valuable
`resource, especially in the current economic era,” and thus, the right to extract oil was
`“fundamental considering its potentially massive economic aspect and its considerable effect in
`human terms.” Id. at 407-08. Today, the economics of oil production are much different, and
`moreover, at issue are seven wells rather than 28. As explained, plaintiffs have not proffered
`evidence that denial of the permit renewal will have significant macro or microeconomic effects.
`9
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`Northern District of California
`United States District Court
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`
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`Case 4:18-cv-05857-YGR Document 89 Filed 06/08/20 Page 10 of 10
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`In sum, plaintiffs have not shown that they have a fundamental vested right in continued
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`oil operations at Livermore Oil Field. Moreover, because no fundamental vested right exists, the
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`Court need not reach the other issues raised in plaintiffs’ motion, namely, whether the County is
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`estopped to deny plaintiffs’ vested right to operate the Livermore Oil Field and whether the Court
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`must apply an independent judgment standard when reviewing the County’s denial of the CUPs
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`renewal. On the latter issue, absent a fundamental vested right, the substantial evidence test,
`rather than the independent judgment test, applies.8
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`IV. CONCLUSION
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`For the foregoing reasons, plaintiffs’ motion for partial summary judgment is DENIED.
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`Further, a Case Management Conference shall be set for Monday, July 20, 2020 at 2:00 p.m. in
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`the Federal Building, 1301 Clay Street, Oakland in Courtroom 1. In light of the uncertainties with
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`the ongoing coronavirus disease (COVID-19) pandemic, the parties are instructed to check the
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`Court’s scheduling notes to determine whether the conference will be held in person or by some
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`alternate platform.
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`This Order terminates Docket Numbers 59 and 66.
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`IT IS SO ORDERED.
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`Dated:
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`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT COURT JUDGE
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`Moreover, Termo did not involve a CUP denial.
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`8 Plaintiffs have filed objections to portions of the administrative record prepared by the
`County, arguing that it is, at various points, disorganized, improperly catalogued, incomplete, and
`incorrect. (Dkt. No. 70.) The issues identified by plaintiffs, however, do not impact the Court’s
`decision on the instant motion. As such, the Court defers any decision on whether defendants
`must revise the administrative record to a later date when any such revisions may be necessary.
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`Northern District of California
`United States District Court
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`June 8, 2020
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