Developer’s Lease Agreement With City Not Protected By Vested Rights Doctrine

In a decision underscoring the importance of development agreements and vested rights, a California Court of Appeal has held that an oil developer’s oil and gas lease with a city was not protected under the vested rights doctrine from a subsequent voter initiative banning oil drilling.

In Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach, an oil exploration company had entered into an oil and gas lease with the City of Hermosa Beach to allow the company to develop an oil drilling and production site on a parcel owned by and located in the City. The lease required the developer to comply with all applicable laws and expressly stated that the developer was required to obtain all necessary permits and approvals prior to construction and drilling. At the time of lease execution, applicable City ordinances allowed oil and gas operations on the leased parcel under a City permit system. The developer proceeded to secure entitlements for its project, completing an environmental