August 14, 2008
Lieu Revisits HB Oil-Damages Bill
By Andrea Woodhouse
A state legislator has stepped back into the saga swirling between Hermosa Beach and a jilted oil company.
Assemblyman Ted Lieu, D-El Segundo, reintroduced a modified bill this week that could limit how much Macpherson Oil could recover in lost profit damages from Hermosa Beach for backing out of a drilling deal in 1998, several years after voters banned oil drilling in town.
In April, Lieu introduced a bill that would have completely relieved public entities of liability for lost company profits when a contract was broken following a valid, voter-approved initiative.
But two months later, Lieu pulled the proposal, hoping to encourage talks between Hermosa and Macpherson, but also pledging to reintroduce the legislation if an agreement wasn't reached by this month.
With no deal made, the bill is back, but this time with a few changes.
Paired with an identical Senate bill from Sen. Jenny Oropeza, D- Redondo Beach, AB 88 now applies just to coastal cities, and only in situations when a citizens' initiative focuses on oil drilling contracts.
"If residents in coastal zones want to ban drilling, that's something we want to encourage," Lieu said.
And the bill's language could grow even more narrow, possibly applying only to Hermosa Beach, Lieu said.
The new bill is more fair than its original version, he added, now giving Macpherson Oil an opportunity to collect lost profits up to the date the voter initiative was enacted - about three years in Macpherson's case.
"In all fairness, we think that they should be able to get some compensation for what happened to them," said Lieu, calling Macpherson's $500 million request "ridiculous."
But Jim Bright, attorney for Macpherson Oil, didn't agree. "It's still horribly ill-conceived, and this one more unconstitutional on its face than its former version," he said. "I just think it would have no chance of holding up in court."
As written, the bill could jeopardize "hundreds of billions" of dollars worth of oil drilling leases arranged along the California coast, Bright said.
"I think there's quite a bit of opposition to the bill," he said. "It was intended to be limiting, but I think it's just the opposite."
Progress on the two bills must move quickly as the state Senate and Assembly sessions end this month.
Meantime, attorneys for Macpherson Oil and Hermosa Beach are awaiting a judge to set a trial date to determine how much Hermosa must pay in damages.
The California Supreme Court last month opted not to hear Hermosa's appeal of a February lower court decision that the city indeed broke its drilling agreement with Macpherson Oil and is liable for damages.
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