California Beach Community Prepares for High-Stakes Vote on Oil Drilling

[JohnDoe2]

California Beach Community Prepares for High-Stakes Vote on Oil Drilling

By ADAM NAGOURNEY MARCH 2, 2015



A building in Hermosa Beach, Calif., bearing a sign that urges residents to vote against Measure O, which would allow an energy company to begin drilling.
CreditDavid Walter Banks for The New York Times

HERMOSA BEACH, Calif. — This quaint and quirky seaside community south of Los Angeles has had a conflicted relationship with the oil industry for close to a century. It has variously approved oil drilling, banned it, approved it and prohibited it again. During one yes-on-oil stretch, it contracted with an energy company to put 34 wells on a 1.3-acre city maintenance yard a few blocks from a stretch of beach that normally bustles with surfers and swimmers.

On Tuesday, the residents of Hermosa Beach are going to vote yet again on an oil and gas drilling initiative — whether to allow a contract with the energy company E&B Natural Resources Management to proceed despite a current drilling ban.

The contract, which could mean hundreds of millions of dollars for the local government, received final approval from the City Council in 1992, but it has been in limbo ever since. A vote to block the drilling would come at an unusual cost: $17.5 million in damages to the energy company, the equivalent of about half the annual general fund budget in this city of almost 20,000 people.



The proposed oil wells would be at a site just a few blocks from the beach. CreditDavid Walter Banks for The New York Times

There have been voter initiatives to restrict oil drilling, particularly fracking, up and down the California coast, but none seem to have quite the complications and emotions associated with the one here.

Across this community on a hillside rising up from the beach, homes are blistering with signs urging a no vote on Measure O, as the drilling initiative is known: “Keep oil out of Hermosa.”

All five members of the City Council, including the mayor, have urged voters to defeat it, despite the huge penalty — part of an agreement the city signed with the company to end a lawsuit — and the loss of future oil revenue.

“It’s a little more than we probably should have paid,” Mayor Peter Tucker said, referring to the deal for potential damages.

“But if it gets us out of this constant, constant oil issue we’ve had hanging over us for 30 years, I think it’s money well spent.

It is a very polarizing issue; it has divided this community.”
“We are not an oil town,” Mr. Tucker said. “We don’t need the money. I don’t want to be living next door to something like that. It’s a quality-of-life issue.”

E&B has begun an all-out campaign to persuade voters to approve the initiative, including the kind of television commercials that seem more suited to a governor’s race. (No local cable for this campaign: E&B says it has bought time on Fox News and CNN.)

The advertisements, with a backdrop of sun-dappled beaches and comforting music, dispute claims that the project would harm the environment and note, in particular, that the method of drilling would mean no unsightly oil platforms on the horizon.

The wells would be about four blocks from the beach and would drop straight into the ground before turning toward the oil under the ocean.

Officials with the energy company said the project was being jeopardized by unfounded fears of people in a state that has long been protective of the environment and wary of oil companies.



Jim Sullivan, a commercial real estate broker and supporter of the drilling plan, says that voting down the deal will lead to higher taxes and inferior services. CreditDavid Walter Banks for The New York Times

“It’s the California coastline, and that’s always a challenge,” Michael Finch, a vice president with E&B, said. “We suffer from the ‘I don’t want it in my backyard’ syndrome. But you are talking about a 1.3-acre site that would be behind a 35-foot wall.”

He said it would be more environmentally sound to drill for the oil here and put it right into the California distribution system than to ship it from across the globe.

“California is still consuming oil,” Mr. Finch said. “If we are going to do it, we may as well do it here. You are talking not only about environmental benefits, but jobs and taxes.”

The campaign has set off fraught neighbor-versus-neighbor debates about the future of this peaceful community, while fueling pointed questions about how the city ended up in such a financially vulnerable position. (City officials noted that the energy company had originally pushed for a much higher penalty for breaking the contract.)

An environmental-impact statement commissioned by Hermosa Beach listed nine potential areas of concern that it said the company would be unable to mitigate, including air quality, aesthetics and noise.

“I’m opposed to it primarily for environmental reasons, for beach-town-feel reasons, and for economic reasons,” Hany Fangary, an environmental lawyer who is a member of the City Council, said. “Hermosa Beach is a real small beach town. We like the feeling of a beach town. If you have someone come in and putting 34 oil wells right near the beach, it changes the character of the city.”

Supporters of the project say the fears voiced by opponents — declining property values, offensive odors and the potential for a spill that could spray fuel into the water, on the beach or over neighboring houses — are exaggerated.

“I’m very much in favor of it,” said Jim Sullivan, a commercial real estate broker who is one of the most vocal supporters of the project. “It’s the best thing to come down the road for Hermosa Beach in its entire history.”



George Schmeltzer, a former mayor, and Stacey Armato, a leader in the antidrilling effort, say they want to preserve the quality of life in the city.CreditDavid Walter Banks for The New York Times



“The most vocal people live closest to the site,” he said. “Voting no on this will impose on their neighbors all over the city higher taxes, worse services, deteriorating infrastructure.”

The concern is driven in no small part by the conspicuous location for the proposed wells: a maintenance yard, now used to store city vehicles, that is in the middle of the city and surrounded by homes and businesses. For months at a time, drill rigs would soar as much as 110 feet, and construction is supposed to take at least three years.

This is hardly a community of beachfront mansions. The streets are lined with small (but not inexpensive) homes where people, though able to feel the sweep of Pacific Ocean breezes, do not exactly have privacy: The entire community fills just 1.4 square miles.

“We are all kind of crammed in here,” said George Schmeltzer, 76, a former mayor who has lived here for 53 years and is a leader of the opposition. “You can hear your neighbor brush his teeth. We are off-kilter in a pleasant kind of way.”

“It’s not an atomic bomb,” he said of the project. “But doggone it, it doesn’t seem right for a residential neighborhood.”

The company anticipates that the drilling would produce 35 million barrels over the 34-year life of the project, producing a potential $500 million windfall for Hermosa. (The revenue projection was made when the price of oil was close to $100 a barrel; it is about half that now.)

But the more pressing question may be whether to pay $17.5 million to terminate the drilling contract. The initial ban on drilling was passed in 1932, about 13 years after California awarded Hermosa Beach the tidelands with the oil fields. In 1984, with the promise of much-needed revenue for the city, voters approved initiatives granting two exemptions to permit oil drilling. In 1986, the City Council approved the first version of a contract that would be repeatedly amended over the next six years, awarding drilling rights to a company that was a predecessor to E&B.

In 1995, voters reinstated the ban on oil drilling, leading the company to sue for damages. After years of litigation, the city in 2012 said it would let drilling begin only if approved by a ballot measure, and agreed to pay E&B the penalty if the initiative was defeated.

The city is in good financial shape these days, with a surplus of close to $7 million that it has put aside to help pay the penalty. The rest would be paid in roughly $800,000 annual installments.

“The city negotiated this knowing that we can afford that,” said Stacey Armato, one of the leaders of the antidrilling effort. “We have no debt right now. And an $800,000-a-year payment to preserve the quality of life and the special beach community that we have certainly seems worth it.”

http://www.nytimes.com/2015/03/03/us...ling-vote.html

[JohnDoe2]

Hermosa Beach, Calif., Voters Give Thumbs Down to Oil Drilling

By ADAM NAGOURNEYMARCH 4, 2015

LOS ANGELES — Voters of Hermosa Beach, a small community on the Pacific Ocean south of here, ended a highly contentious campaign Tuesday with an overwhelming vote to deny permission for the construction of up to 34 oil wells on a 1.3 acre municipal parking lot in the center of town. According to unofficial returns, the measure was defeated 3,799 to 1,016.

The initiative would have created an exception to what is currently a ban on oil drilling there, in order to permit E&B Natural Resources Management to proceed with a previously approved contract to do the drilling.

As a result of the vote, Hermosa Beach now owes E&B $17.5 million to terminate the contract, under the terms of an agreement ending litigation with the firm. The drilling had been opposed by the entire City Council, whose members said that the drilling posed unacceptable environmental risks to the city and was not in keeping with the aesthetics of this small beach community.

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The city has a surplus of close to $7 million that it has put aside to help pay the penalty. The rest would be paid in roughly $800,000 annual installments.

http://www.nytimes.com/2015/03/05/us....nav=RecEngine