ExxonMobil drops lawsuit challenging denial of trucking operation

ExxonMobil is dropping a lawsuit challenging Santa Barbara County’s denial of a proposed oil trucking operation, effectively putting an end to the plan.

In a recent filing, ExxonMobil notified a federal district court for the Central District of California of its intent to dismiss a lawsuit it filed against the Santa Barbara County Board of Supervisors. The oil company sued the county in May 2022 after the Board of Supervisors denied a permit application to haul oil by truck on Highways 101 and 166.

By dismissing its lawsuit, ExxonMobil is conceding to Santa Barbara County’s decision to ban its proposed trucking operations for hauling oil through the county.

At the center of the lawsuit is ExxonMobil’s Santa Ynez Unit, which includes three offshore platforms off the coast of Santa Barbara County and an onshore processing center in Las Flores Canyon. Formed in 1970, oil was transported from the platforms to the processing center via pipeline.

However, operations came to an end nearly a decade ago. In 2015, both pipelines were shut down after one of them ruptured. Remaining inventories of 400,000 barrels of oil were hauled to a Phillips 66 Santa Maria pump station via trucks, totaling about 2,500 truckloads. That temporary trucking operation was executed without incident. After the shutdown, ExxonMobil has spent about $100 million a year to maintain the Santa Ynez Unit.

In September 2017, ExxonMobil filed a permit application with Santa Barbara County to resume operations at the Santa Ynez Unit. Plans called for temporary trucking operations to haul oil for up to seven years or until a new pipeline was built.

During the time trucks were used to transport the oil, the company would produce only 39% of its baseline capacity. The 24/7 operation would include no more than 70 truck trips in a 24-hour period.

After several years working with ExxonMobil, the Santa Barbara County Planning and Development staff issued a report in September 2021 finding that the trucking project complied with California state environmental laws and recommended approving the plan.

Despite the recommendation, the county’s Planning and Development Commission voted 3-2 to not recommend the project. The commission found that the benefits did not outweigh the risks of oil spills, that state Route 166 was not adequate and that the project would pose risks to the general welfare, health and safety of the neighborhood. ExxonMobil claimed those conclusions were based on unsupported public comments and “pure conjecture” and were directly contradicted by the county’s own staff report.

In March 2022, the Santa Barbara County Board of Supervisors voted 3-2 to follow the commission’s recommendation and denied ExxonMobil’s permit application. The oil company’s federal lawsuit soon followed.

The complaint alleged the county committed the following:

• Prejudicial abuse of discretion and misapplication of the California Environmental Quality Act
• Issuance of a de facto ban on trucking oil in violation of Santa Barbara County’s land use regulations
• Violation of the Takings Clauses of the U.S. and state Constitutions “by substantially impairing ExxonMobil’s property rights without just compensation”
• Violation of the Commerce Clauses “by unjustifiably discriminating against commerce of oil”
• Illegal exercise of its “police powers by affecting residents outside of Santa Barbara County without due consideration of the regional welfare”

Last September, the California federal district court ruled that the county did not abuse its discretion or act contrary to law when it denied ExxonMobil’s application.

The ruling upheld only the county’s application denial while leaving ExxonMobil’s other claims open. The oil company is abandoning the remaining claims by dismissing the case.

ExxonMobil’s notice to dismiss the case came just one day after Sable Offshore Corp. filed documents with the Securities and Exchange Commission to finalize its acquisition of the Santa Ynez Unit. Announced in November 2022, Sable Offshore is buying the oil operation for more than $600 million. LL