Citadel Exploration Inc. plans to focus its legal effort in a separate challenge over oil interests in San Benito County, which still faces litigation in an appeal by the California oil company over an official approval of a local project.
Following Citadel’s dismissal of a local case directly challenging Measure J, a voter-approved ban of high-intensity petroleum operations, the California Court of Appeal for the Sixth Appellate District confirmed Wednesday in a statement to BenitoLink that the publicly-traded corporation remains active in litigation stemming from a complaint by the Center for Biological Diversity. The appeal directly concerns Citadel’s Project Indian — a Bitterwater-area pilot program previously approved by the San Benito County Board of Supervisors and shut down by a superior court.
Though San Benito County at the moment faces no direct challenge to the voter-approved initiative, Citadel CEO Armen Nahabedian said April 7 that the Newport Beach company has no expectation to legally relinquish stakes in San Benito County. The chief executive provided no comment on the active litigation.
“We will pursue a different legal option to defend our interests in San Benito County,” said Nahabedian in a statement Tuesday to BenitoLink, seeking detail on Citadel’s legal activity now in San Jose. There, the company has filed for an appeal of a ruling last year in superior court in Monterey County, which has no public interest in Project Indian and Measure J.
“In America, we have property rights, but only if we are willing to defend them,” added Nahabedian. “I am disappointed that county officials have not defended the rights of the people they represent.”
Citadel, in its statement Tuesday, did not specify the aforementioned defense and rights of the people, though the company in a previous claim alleged unconstitutional regulation.
The higher court in San Jose has set a deadline for an initial filing next month in the ongoing effort by Citadel, which disputes a ruling against San Benito County that subsequently yielded a legal fee of $262,500, officially approved for payment in February to the Center for Biological Diversity. While the county has considered such charge Citadel’s debt, according to a previous report by BenitoLink, the oil producer previously stated that that decision should be made in a courthouse.
In a statement Wednesday, the Center for Biological Diversity told BenitoLink that the recently-dropped challenge in local court was separate from the appeal concerning the county, the center and Citadel, and centering on a permit previously issued by the local government for the company’s project near the border of Monterey County. California Superior Court Judge Thomas W. Wills ordered San Benito County there last year to set aside such approval, following a court-ordered shut down of a well previously operated by Citadel at Project Indian.
“Appeals are limited to the issues raised in the lower court,” said Hollin Kretzmann, an attorney with the Center for Biological Diversity, which cast doubt but left open the possibility of an argument related to Measure J at the appellate level. “We feel very confident that the superior court decided this case correctly and that the appellate court will agree.”
The environmental organization announced in a press release April 6 that Citadel had dropped its case in San Benito County Superior Court: The statement concerned only Citadel’s local complaint over Measure J and, accordingly, included no reference to the ongoing litigation initiated by the organization against the county, naming Citadel as a real party of interest. Kretzmann noted that a response to the expected filing by Citadel is due June 12 in the appellate court.
Citadel told BenitoLink in an emailed statement Tuesday that the Newport Beach company will continue “business as usual elsewhere in the state” until resolution of issues concerning San Benito County. The lease of the mineral rights for Project Indian, a pilot-program whose environmental impact received insufficient consideration by the county before Measure J’s passage, reportedly dates back to John D. Rockefeller.
Nahabedian previously stated that Citadel’s successful extraction of oil last year on the project’s site in the southern part of the county marked the first production there in more than a century. Rockefeller, along with the former Standard Oil Co., never produced oil at the field, according to Citadel.
“Only Citadel succeeded with the recent cyclic steam test it completed on Indian’s No. 1 well,” said Nahabedian. “There is a huge amount of oil at Indian, which is very valuable.”
San Benito County voters last November overwhelmingly approved Measure J, a ban of some of the forms of well stimulation and oil extraction routinely used in California. The initiative now in effect across the county outlaws hydraulic fracturing, cyclic steam injection and matrix acidization. On the ballot, Measure J provided a hedge for the county to preemptively minimize exposure as a result of the initiative’s passage to a risk of a challenge under the United States Constitution. Days after the election, Citadel tentatively filed a $1.2 billion claim against the county: In a letter dated Nov. 6, 2014, the company alleged a regulatory taking under the Fifth Amendment, which extends from the federal level to lower government through the Fourteenth Amendment.
Andy Hsia-Coron, a co-founder of San Benito Rising, cast doubt over whether any forthcoming action by Citadel could jeopardize regulation now place as a result of Measure J, whose campaign last year received a fraction of the funding injected by the opposition.
“The people of our county decided that the water, health and future here are of greater value to them,” said Hsia-Coron in a statement Wednesday to BenitoLink. “Measure J was initiated by residents of San Benito County. The campaign had unprecedented engagement among the people here, reflected in the remarkably high voter turnout in an off-year election along with the strong support for Measure J.”
“The measure was drafted by Shute, Mihaly and Weinberger LLP, a California law firm,” added Hsia-Coron. “An initiative is a law; and one would expect it to be drafted by lawyers.”
Catherine Engberg, an attorney with Shute, Mihaly and Weinberger, was unavailable Tuesday and Wednesday for a comment on the matter.
Hsia-Coron additionally pointed to the responsibilities of local government, saying: “County officials, both elected and appointed, are responsible to the people of our county. The people spoke loudly and clearly when they passed Measure J this past November. It is to their credit that the county is working hard to defend the will of the people.”
County officials, including legal counsel consistently, have cited longstanding legal decisions and otherwise expressed confidence in support of a successful defense of Measure J. The Board of Supervisors last month placed an item on its agenda for a review of the existing litigation, originally initiated by the Center for Biological Diversity.