Excelaron $6 billion lawsuit appeal headed for court

May 23, 2014

After a San Luis Obispo County Superior Court judge’s dismissed a more than $6 billion lawsuit filed against the county because the suit was not served on the defendant within a 90-day deadline, oil company Excelaron filed an appeal that is slated to begin next week.

The appeal will determine if San Luis Obispo County officials should be able to have a lawsuit dismissed after their staff provided deceptive information in an apparent attempt to mislead the plaintiff. The hearing is scheduled at 9:30 a.m. in the SLO County Board of Supervisors chambers on May 30 before the state’s 2nd District Court of Appeal.

“We feel strongly that the issues in this case deserve a second look, particularly whether the county should be allowed to send out inaccurate information in its notices, and disregard its own local ordinance pertaining to judicial review,” said Sophie Treder, an attorney for Excelaron. “There is also the question of whether it is permissible to effectively impose a 90-day service requirement on constitutional takings claims of the type and magnitude at issue here.”

In August 2012, the board voted to deny an appeal of a Planning Commission rejection of the project based on the contention that oil production is incompatible with the character of the Huasna Valley.

The proposed drilling site, the Mankins Ranch, is zoned for agricultural use, and under San Luis Obispo County’s Land Use Ordinance, “petroleum extraction is allowed… subject to permit.” That law established development standards for oil projects in the county.

In the lawsuit filed in November, Treder said the county effected a regulatory taking of Excelaron’s property and failed to follow laws that require just compensation for that taking. The lawsuit requested that the San Luis Obispo County Board of Supervisors follow existing laws and set aside its decision denying the project, or compensate the company for its damages.

The ranch lies over a 720-acre pool of oil estimated to contain “approximately 208 million barrels of oil,” according to the lawsuit. “At the current price of $100 a barrel, this amounts to a gross value of $20.8 billion.”

In August, two days after the Board of Supervisors rejected the project, the county sent a letter to Exceleron explaining the rules regarding a possible appeal. In the letter, Senior Planner John McKenzie wrote that an appeal by Exclaron would fall under a code section which does not require the county to be served within 90 days.

Excelaron filed its initial complaint on Nov. 19, but did not serve the county at that time. The oil company amended its petition and served the county with the lawsuit on Dec. 28, well after the 90 days required by law to file and serve a complaint.

At a March hearing, Treder argued against the county’s request to have the lawsuit dismissed because the county’s letter misled the oil exploration company into believing the complaint only needed to be filed within the 90-day period, not also served within that time frame.

County Counsel attorney Whitney McDonald responded saying the county doesn’t usually send out letters explaining the appeal process, but they did in this case because of the high probability of a lawsuit being filed. She argued that Excelaron should have discovered the false assertions made by the county.

“The fact that the petitioners were represented by counsel all along almost dictates that they could not have detrimentally relied on the county’s notice,” McDonald said in court.

San Luis Obispo County Superior Court Judge Martin Tangeman granted the county’s request to have the case thrown out because it was not served on the county within the 90-day deadline.

If the Court of Appeal overturns Tangerman’s decision to dismiss, the case of whether the board of supervisor’s rejection of the project was a regulatory taking or a legal decision will be heard in a SLO County Superior Court.