The URL can be used to link to this page

Home My WebLink About07/27/84Tn.p "COMPROMISE MAKES A GOOD UMBRELLA, BUT A POOR ROOF." AGENDA SPECIAL MEETING OF THE HERMOSA BEACH CITY COUNCIL Monday, July , 1984 - Council Chambers, City Hall Closed Session - 6:00 p.m. Regular Session - 7:30 p.m. All Council meetings are open to the public. PLEASE ATTEND. It is requested that anyone who wishes to speak on any matter, please give their name and address for the record. Any complaints against the City Council, City Management, or depart- mental operations will be submitted in writing to the City Manager for evaluation by the appropriate department head prior to submission to the City Council. Complete agenda materials are available for public inspection in the Police Department, Public Library and the Office of the City Clerk. -------------------------------------------------------------------- PLEDGE OF ALLEGIANCE ROLL CALL 1. BALLOT MEASURES 2. REVISED SCOPE OF WORK FROM OIL CONSULTANT GLENN WATSON ADJOURNMENT e rte, AaftN Aoft* "A LIFETIME ISN'T NEARLY LONG ENOUGH TO FIGURE OUT WHAT IT'S ALL ABOUT." - Doug Larson EL"WWW'1 ADJOURNED REGULAR MEETING OF THE HERMOSA BEACH CITY COUNCIL Monday, August 6, 1984 - Council Chambers, City Hall Closed Session - 6:00 p.m. Regular Session - 7:30 p.m. All Council meetings are open to the public. PLEASE ATTEND. It is requested that anyone who wishes to speak on any matter, please give their name and address for the record. Any complaints against the City Council, City Management, or depart- mental operations will be submitted in writing to the City Manager for evaluation by the appropriate department head prior to submission to the City Council. Complete agenda materials are available for public inspection in the Police Department, Public Library and the Office of the City Clerk. -------------------------------------------------------------------- PLEDGE OF ALLEGIANCE ROLL CALL 1. PUBLIC HEARING - PROTEST HEARING FOR COMMUNITY FACILITIES DISTRICT NO. 1 (MELLO-ROOS). 2. PROPOSED RESOLUTION FOR ADOPTING LANGUAGE OF BALLOT MEASURE. (MELLO-ROOS) 3. DISCUSSION RE. PROPOSED BALLOT MEASURE FOR BILTMORE HOTEL DEVELOPMENT AGREEMENT AND SPECIFIC PLAN. ADJOURNMENT t 71 f� p 1000 r y N � 3 � 0 3 c 4 y o -4 r n r o 3 r I � tz l at �r r � U 3 r R Ax n z r ,p �C ! I m i I i 2 r r: N � S r7 _ 3 r i j A i 3 r O 2 r r: :�' ~` 'rte � -1 -3 1. r.�,£3L -• —yi" . - - - � ..: - • ___ _ � .yam.. �. �'� T� �_} +,: '�� 'Y �. •. ',r ^�� '' - rye � �.— - •{ _ - � -� fir_-'-=�:�i: - .;s• ��: rp- Wir . - --� _ 1 =-iHi�"Ar"••f' K - _ -- _ � _ -�;f - .$�_ yam.•- ~ �' - _- - - __ - - •�� ,¢� '�!' ..a _ .fir r yai tY: -. .�� t' 1 _ -- .. �F `�. " _ aZ '� `"s y` ; _. � .^`�, SSL s , � . fq.� - h-' - . �L - .i _ `�- �;rL •��--� MOW ly t � •� K (T� ti s �__ 4.q i. `— - - _1i _ --_- - +��. — — - _- - '•f - =y*•� ---- - __ �L.�t• �•y�R R- -05 — _ - - --. • r ink s, -�_ _ _ ✓ - _ - ia- _ - - _ - _-_ K - _ _ - _ _ .- . - - __ _ 63 :ar� 16 - - �, � ti; -.A �.:'=_ - - - -- �- - - -, .- _ _ _ - � _ '.�.• � ..i i 1 - , . _,ask'•,:_,, LO co ar UQN ,I � 'u W r ... ye+ 3 K� esa e: � •�'J C� -�' • •—��y" h*� rte _ .• _r._PIP;:'- _ _- - -' f. _ - - __ ?' LAR'= -•.�f __ - •-�'"-?'�.'_ = n; - 'S f _:4�'' - - -_ -- - - _ - !' — - - _w` _' - r'tf i? . _ • i - _- _ 1 y y- 'llam- "_ 1 T:= _ __ -__.. . -.c 3` .� ��-'?:'r ��i'*i.2�'_ __- -. .>= x�F S"'" T�^• _'-i.•r _�: `•c - _:x .__ - -•. -_f:"7.-, _- -_.- - - - _ __._ _ - -�'S. is '.yi __•-�.'. - --- ;. _- _-.tir �..y� a _ _!� - .. _2� - - _'.'ter .�- • _ _ . . ��_-jyq-t• - - -- �,:'- - 1 � .. ^'�''-•.- ,�: � f F Y SAF• � ' 1% _ _ zu Ave T T LP -_ - -• �=L - '�-sem _"._ _ 4' �'�-' _ -- �1 � - _ I1�- 11 J uatugo-ej jry Jo3peal(I outuutTd :gaaTO AITO :00 pT/wILID .zao-eu ell I - z0 zanai )SJo eaq -paZsod noA daaN pu-e 008 TTtg aZUuag jo Adoo -e uttlgo TTTm eg •pagoUZve aqj 10 Adoo E ui pazsa,zajui eq pTnom noA jg2nogj gosznag .zoA-eW 008-s :10argns s aooaj0 : WoHj TTouno0 put, aos-eN :OIL Ti86T `9 7,gnr ALAN CRANSTON CALIFORNIA 'Z Cnff eb Zf of ez Z onaf e WASHINGTON. D.C. 20510 June 14, 1984 The Honorable Gary L. Brutsch Mayor of the City of Hermosa Beach Civic Center Hermosa Beach, California 90254 Dear Gary, Thank you for sharing with me a copy of your letters to Cali- fornia Senator Robert Beverly and Assemblyman Gerald Felando. I appreciate your apprising me of the approach you're proposing to the problems of surplus school sites and the need for recrea- tional parklands in the City of Hermosa Beach. I'll be interested to hear more about state legislation to make available to public agencies revenues from tidelands hydrocarbon recovery for the purchase of surplus school sites which would be used as recrea- tional areas. You may be interested to know that at the federal level coastal revenue sharing legislation (S. 800) has been proposed in the U.S. Senate. S. 800 would provide for the sharing with coastal states of revenues generated by the development of the Outer Continental Shelf. Although this bill does not specify that the monies be used for parkland development, its intent is to provide funding for the onshore mitigation of OCS development. The Senate Commerce Committee approved S. 800 on May 16 of last year and the bill now awaits action by the.full Senate. It's good to hear from you, Gary. I trust you'll continue to keep in touch. With warm regards, Cord' ly, Alan CL'ston 0 July 19, 1984 .CITY OF CBAIGS4)30404 CIVIC CENTER HERM0SAA BEACH CALIFORNIA 90254 CITY HALL: ( 2 1 3) 3 7 6- 6 9 8 4 POLICE AND FIRE DEPARTMENTS: 3 7 6- 7 9 8 1 Members . Oil Recovery Investigation Committee At long last the City has a definitive consultant report re. upland oil and its many aspects. This matter will be heard.by the City Council on July 24th. Because of your involvement and interest I thought you would appreciate having a copy of the agenda item. Sincerely_, Gr e ory Meyer Cit Man ger CI°y OF HERMOSA BEACH GTM/ld 0 �h TasunoO Teioadg MeZ qe siIaulo,44V uogsja0 1 ssngAajcl 'uosgeM 'spiegotg :fig V86T '9 ATnf, QNK'I QSNMO ASID NO ONIggIHU UO NO IHOdSU 7VN I3 GRW73-1A INTRODUCTION The City Council on September 13, 1983, appointed an Oil Recovery Investigation Committee comprised of five members of the community and two members of the City Council to investigate the possibility of oil recovery within the City and to make recommendations to the City Council. The Committee in its report dated February 7, 1984, recommended favorably on drilling within the City Maintenance Yard provided that "certain issues" are resolved and the revenues derived from the operation are not restricted. The City Maintenance Yard is located at the corner of 6th Street and Valley Avenue. The Yard is approxi- mately 1.15 acres in size and according to the Committee is about 3,000 feet from the tidelands held in trust by the City of Hermosa Beach. A consulting geologist who has been engaged by the City Council notes that the yard is approx- imately 1,800 feet inland from "The Strand." Following receipt of the Committee's report the City Council authorized a Request for Proposals ("RFP") in which the City asked the following questions to be addressed by special counsel: drilling? (a) What is the applicable law pertaining to oil -1 GRW73-2A (b) Can the City rent an upland site without monetary restrictions? (c) May the fees received from the rental be expended by the City with no restrictions? (d) Can the City use the same upland site for drilling other than slant drilling and if so is that revenue restricted? (e) Would other revenue generated by the oil drilling (such as taxes, fees, licenses, permits) be restricted? The RFP directed that the laws and regulations relating to the State Division of Oil and Gas, Proposition 13 (Jarvis -Gann), Proposition 4 (Gann), Coastal Zone, CEQA and other relevant authority be considered. Richards, Watson, Dreyfuss & Gershon was engaged by the City Council as Special Counsel to respond to those questions. Our engagement was limited to consideration of issues relating to drilling in the City Maintenance Yard, in the uplands, and any matters relating to drilling into the tidelands or submerged lands* are not within the scope of our assignment or of this report.1/ * "Tidelands" are lands between the lines of mean high tide and mean low tide and "submerged" lands are those seaward of mean low tide and not uncovered in the ordinary ebb and flow of the tide. City of Berkeley v. Superior Court, 26 Cal.3d 515, 518, fnt. 1; 162 Cal.Rptr. 327, 606 P.2d 362 (1980). 1. The City's Consulting geologist has expressed the opinion that no significant drainage of oil from the tide- lands or submerged lands granted to the City of Hermosa Beach is expected to occur from wells drilled into the uplands from the City Maintenance Yard. -2- -£- -qns uogjeooapAq l ag4o 10 se6 'ITO 'sleJauiui 90 uotgonpoad aqq 6ut40ajja ao 6utonpoid 3o asodand aq4 aOJ paseaT aq Aeiu AIio Aue 3o Agjadoad agy„ :lied ur sagegs apo0 saoinosag otTgnd aqq Jo L90L uoi43aS • •siea.K S£ paaoxa 04 qou poTi ad a jog paseaT aq 'saouegsgns uogjeoojpAq i9g40 JO seb 'Ito � • 3o uoilonpoid aqq 6ui40ajja 10 6utonpoad go asodand aqq jog 'Aeui sasodand Nied aog paatnboe 40u AITTedtoiunw Niue Jo ,�gjadojd aqy • • •„ : -4aed ui sale4s apoD TTAtO ago Jo gTL uoigoaS •apoO saoinosag orlgnd aqq pue 'apoO 4uautuJano0 ago 'apo0 TTATD aqq Aq paZTj oggne si uot4onpoad se6 pue Iio JOJ spueT A4to 30 6utseaT aqy •aseaZ oqul jaquS oq AqTjoqqnv •v LONI'I' IQ qIO OS ONINIVIURd Mvq SgUVDIgdd`i SHS SI ZKHM • gaodaj s tq4 UT passedwooua suotgsanb oq sasuodsai aqq saZTjeuutns gaigM Janoo agejedas iapun paquasaid 6uiaq st gjodaj Ajeumins v K£-£ LMHO -tl- 60T 'uac,)'�44y'TeO•sd0 ZZl ('(£56T) •6utpptq aAT4Tgadwoo gnogqtM uoTIeT406au aJenizd Aq 04UT pajaqua aq pTnoo saseaT eons "4egl paTnz peq TelauaD Aaujo'4'4y etuJOJTTeD aq-4 au'T auo -4e pue aseaT se6 pue Tto ue 04UT 6uTJa4ua UT AgTo e Aq paMoTTo3 aq of ainpaoozd a saT3ioads apoo quauiu.zanoO aq4 30 £8£L£ uoi-4oag 'Ou apoD TtnTD aq4 30 8TL uotWag Jag4TaN P LSOLS apoD •sag •final •asn aoe3ans Iiag4 glTm aTgtssod se aTlITT se 9Ja3J9qut oq se os lauueut e eons UT padoTanap aq gsnw Aagq 'lanaMoq !apoD saDInosag oTTgna aqq zapun paseaT aq ueo sasodind punoiSAPTd oiTgnd ao xzed jog palTnboe 10 pa-4eoipap spueT AgTD ('VR£L£§ aPOD '4noE)l „•que.I6 a -4e -4s aq-4 ut pa43T14sal asTMlag4o ssaTun 'slea,i OS 6uTpaaoxa qou utaaq e jog paseaT aq Lieut spueT paSiaulgns jo spueTapt-4 pa-4ue.z6 a -4e-49 •saouegsgns uogzeooioAq lag4o 10 se b 'Tzo 'sTelauTut 3o uoigonpoid aqq jog szeaA anT3-Agztg4 paaoxa 04 qou jog sasodand Njed .zo3 paJTnboe qou Agaadoad AgTo aseaT Aeu A4To V„ :sapTno.zd £8£L£ uoT43ag apOD 4uaWUJanoE) •sle@A S£ paaoxa 04 qou poiiad e jog saoue-4s VVO-£LMHO GRW73-05A B. Competitive Bidding. In 1959 the Legislature enacted a competitive bidding procedure and made it applicable to general law cities with respect to all oil and gas leases and to charter cities with respect to tide and submerged lands granted in trust to them by the state. [Pub. Res. Code §7061; Higgins v. City of Santa Monica, 62 Ca1.2d 24, 32 Fnt.3, 41 Cal.Rptr. 9, 396 P.2d 41 (1946).] The procedure 2/ required to be followed by a general law city in entering into a lease (except a unit agreement 3/) for oil and gas exploration and development is as follows: 1. Resolution of intention to lease property is adopted at an open meeting of the city council. The resolu- tion must contain: a. A description of the property proposed to be leased such that it can be identified. b. A statement specifying the minimum rental, royalty or other consideration. 2. Where a statute specifies a mode for the taking of a particular action by a public agency, the mode so specified is the measure of the agency's power. Miller v. McKinnon, 20 Cal.2d 83, 88, 124 P.2d 34 (1942); Reams v. Cooley, 171 Cal. 150, 154, 152 Pac. 293 (1915). 3. See Pub. Res. Code §7058; City of Long Beach v. Vickers, 55 Ca1.2d 153, 10 Cal.Rptr. 359, 358 P.2d 657 (1961). -5- WE AjPUoTgajosTp aqq seq uoTssTWUIOD spueq agegs aqy [•6SOL§ apoD *sag •qnd] •aseaT uioij Agjadoad aqq Mejpq;TM pue spTq TTP PUP Aug goaCaJ Aeiu TTounoo aqq 'aseaT aqq go pieMe aqq oq joijd auiT4 AUe 4e 10 :TTounoo aqq go quaw6pnC aqq UT j appTq aTgTsuodsaj gsag6Tq 9q4 04 PaseaT aq jagjeajag4 Aeut ,�gjadoad aqs •panTaoal sTesodoad Pa Teas TTP 'uoTssas oTTgnd uT p103al pue allTutexa 'uado TTegs TTounoD aqq '6uT4aaut oTTgnd aqq jog uoT4Ua4UI Jo uoTgnTosag aq4 uT PaxT3 aoeTd PUP autT4 aqq qV •£ [•S•8SOL§ apoo *sag •qnd] •Pa4e3oT ST A4aadoid aqq a.aagM Aqunoo aq4 UT UOT4PTnoaTo Telaua6 _go jadedsMau a uT liadedsMau Bons ou ST alag4 3T ao 'A4To aq4 UT uoTgeTnolTo Tejaua6 go aadedsMau e UT SXaaM anTssaoons inoj jo3 xaaM e aouo PagsTTgnd aq TTegs uoTgnTosaJ 9q4 3o Adoo e 'uoT4Ua4UI 3o UoTgnTosag aq4 UT 04 Palla3al 6uT4aaW oTTgnd aql oq joTad •Z ['S•8SOLS apo0 *sag •qnd] •PaJ9PTsuo3 PUP PanraoaJ aq TTTM 43el4uoo 10 aseaT oq sTPsodoid paTeas 6UT4aaui goTqM qe TTounoo AgTo aqq go 6U14aaW oTTgnd e jog '.zagjeajag4 sAep 0£ ueg4 ssaT 4oU 'aoeTd pue auITI 'a4P P V •3 •PanTaoal aq TTTM spTq goTqM uo '1043e3 aTgeppTq 'aTgeTlen auo •a JO aseaT aqq 3o uijoj aqq go Adoo K •p •suiaa4 aseaT aq4 04 se 4uawa4e4s V •o •quawaalBe V90-£LMED GRW73-07A authority to exempt particular leases or operating agreements from the competitive bidding procedures "where by reason of the small size of the property or drainage, actual or imminent, such procedure would . . . be impractical." [Pub. Res. Code §7061, 112.] This statute appears to apply to upland sites, and under it the Commissioner could relieve the City maintenance yard from competitive bidding. C. Unit Agreements. As noted above, the competitive bidding requirements do not apply to unit;- or cooperative agreements. In addition no term restriction is placed upon the authority of a city to enter into a unit or cooperative agreement: it . . notwithstanding any competitive bidding requirements or restrictions on term contained in this chapter, or any other statute, including but not limited to Section 712 of the Civil Code, Sections 37383 and 37384 of the Government Code and Chapter 29 4. "Unit agreement" is defined in Section 3636 of the Public Resources Code as ". . . any consent agreement or other agreement entered into in connection with, and supple- mental to . . ." an agreement pursuant to Article 3 of Chapter 3.5 of Division 3 of the Code (Section 3640 et seq.) and is distinguished from a "unit operating agreement." Unit agreements provide for the management, development and operation of two or more tracts of land in the same oil and gas field as a unit without regard to separate ownerships [Pub. Res. Code §3641]. -7- WE F6 '£ •4ug 8L9 'SL9 p£•ddK•TeD ST 'lanoQ ,Jo a eTlIeN al uil •MeT TeuoTSToap pue ,Uognjegs ggoq uT suoTSTnoid quauTgjad Jano 6uTTT014uoo pue ,STIaUa6 Tns„ 8SOL uoT-4oag 6uTxew 90 -4oajja aq-4 seq • • 'a -4n -4e -4s jag -4o Aue • • • UT pauTe-4uo3 W294 10 suoT43T14S91 10 s4uauialTnbaa 6uTppTq anT4Tgaduioo ,,iue 6uTpue,4sq,4tM-4ou •„ aben6ueT aqq 3o asn aqy • [8SOL§ apoO •sag •qna] „•s-4uawaa-i6e anTgeaado-oo 10 4Tun UT Ajewogsno aje se suoTge6TTgo pue squawlTwwoo iaggo gons inouT of pue s6uTgq jo sgoe jaggo gons op oq jaMod aqq apnlouT TTegs s4uawa@16e anTgejado-oo jo gTun oquT la4ua 01 goTJ4STp 10 ' Aqunoo pue AlTo 'Aqunoo 'i�qTo gons Niue go jamod aqy •spueT gons 01 se 43ajja UT uauj 4u9uta@JSe lag4o 10 43e.z4uoo '@seal Cue Jo a4ep uoT4euTWJa4 aq4 Jo anTgoadsaJJT 'poTjad a4TuT3apuT Jaggo AUe aoJ zo plaTJ aq4 Jo agTT aq4 Iano 6urpua4xa poTjad e jo3 ST 3oalag4 W194 aq4 zag4agM 30 @nTjoadsGJJT ' 9oalag4 ulla4 TTn3 aqq aoj quawaaa6e gTun 10 anTgeiad000 aqq oq 'spueT UT 4sala4UT Aue zo 'spueT pa6.aawgns pue apT-4 6uTpnTouT 'spueT 4Tuiutoo pue puTq oq jaMod aqq 6uTpnTouT 'quauta916e anTgejado-oo jo gTun gons Aue AJTpout 10 quautaldutT 'agengoajja 04 Alessaoau s4uaui9916e TTe agnoaxa pue ajeTJo6au XeW -4oT-IISTp -10 Iequnoo pue XgTo 'Aqunoo 'XqTo gons due 'uorssag AJeuTpJoeJ4xg 49IT3 'sagn;eqg 9S6T aq4 30 `d80-£LMED GRW73-09A Cal.Rptr. 384 (1971); California v. Superior Court, 252 Cal.App.2d 637, 639, 48 Cal.Rptr. 156 (1967).] The validity of Section 7058 was upheld in City of Long Beach v. Vickers, 55 Cal.2d 153, 10 Cal.Rptr. 359, 358 P.2d 687 (1961). In addition to holding that Section 7058 authorized cities to enter into unit operating agree- ments, the Court discussed the rationale for not requiring competitive bidding on unit agreements: it . . . Competitive bidding is a method by which a party determines with whom he will contract. In the case of unit agreements, however, the parties are necessarily the persons having rights to produce oil and gas from the common pool, and the rights and duties of such persons under a unit agreement must necessarily be determined by negotiations among them. Competitive bidding makes no sense in this context. . . ." [55 Cal.2d at 161-162.1 D. Drainage Agreement. The State Lands Commission is authorized to negotiate and enter into agreements with owners or operators of wells on public or private land that are draining or may drain oil or gas from the state-owned lands for payment of compensation. [Pub. Res. Code §6815.] This provision may come into effect if the State owns any GRW73-10A lands near the City's maintenance yard drilling site. E. Authority of Division of Oil and Gas. The administration and regulation of oil and gas operations is the responsibility of the Supervisor of the Division of Oil and Gas within the State Department of Conservation. [Pub. Res. Code §§607, 690.1 The Supervisor regulates the production of oil and gas so as to prevent waste and secure an equitable apportionment among landowners of the migratory gas and oil underlying their lands while fairly distributing among them the costs of production. [Pub. Res. Code §3106; 14 Cal. Admin. Code §§1711, 1721; Wotten v. Bush, 41 Cal.3d 460, 467-468, 261 P.2d 256 (1953.] Every person who acquires the ownership or operation of a well is required to notify the supervisor within 30 days and to file an indemnity bond. [Pub. Res. Code §3202; 14 Cal. Admin. Code §1722.1 Originally, a person who desired to drill a well was not required to obtain a permit before commencement of drilling. [Bernstein v. Bush, 29 Cal.2d 773, 781, 177 P.2d 913 (1947).] All that was required of a person who desired to drill was the filing of a Notice of Intention to commence drilling and the filing of an indemnity bond with the Supervisor of the Division of Oil and Gas. [Pub. Res. Code -10- GRW73-11A §3204.] The regulations now require that the Supervisor's approval be obtained prior to drilling. [14 Cal. Admin. Code §1714.1 The indemnity bond is conditioned on compliance with the statutory regulations and secures the State against all loss, charges and expenses incurred by it to obtain compliance. [Pub. Res. Code §§3204, 3205, 3205.1.1 The Notice of Intention must give information as to the location and elevation above sea level of the floor of the proposed derrick and drill rig, the number of other designations by which the well is to be known, the owner's or operator's estimate of the depth between which production would be attempted and such other data as the Division may require. [Pub. Res. Code §3203; 14 Cal. Admin. Code 81931.1 This notice requirement is also applicable to any deepening, redrilling or plugging of a well or any operation that permanently alters the casing of a well. [Pub. Res. Code §3203, 113.1 The owner or operator of any well is required to keep or cause to be kept, a careful and accurate log, core record, and history of the drilling of the well. [Pub. Res. Code §3210.1 The log must show the character and depths of formations passed through or encountered in the drilling in the particular location and depth of water -bearing strata together with the character of water encountered from time to time, whether or not the water was shut off and, if so, -11- GRW73-12A at what point. It must also show the amounts, kinds and sizes of casing used, depth at which the oil-bearing strata are encountered, character of such strata and whether all water overlying or underlying the strata was successfully and permanently shut off so as to prevent its percolation or penetration into the strata and whether strata -bearing water that might be suitable for irrigation or domestic purposes are properly protected from infiltration or addition of detrimental substances from the well. [Pub. Res. Code §3211; 14 Cal. Admin. Code §1724.] The log must be kept in the local office of the owner or operator, together with tour reports of the owner or operator, and is subject to inspection by the State Oil and Gas Supervisor. [Pub. Res. Code §3214.1 The Public Resources Code sets forth well -spacing requirements with respect to the drilling of oil and gas wells. Any well drilled for oil and gas within 100 feet of the outer boundary of a parcel of land or within 100 feet of a public street or highway that has been dedicated before commencement of drilling or within 150 feet of a well being drilled or of a previously drilled well producing oil or gas or capable of producing, though not presently producing, is declared a public nuisance. [Pub. Res. Code §3600.] When a parcel of land contains one acre or more, but is less than 250 feet in width, not more than one well to each acre of -12- -£T- •AOua6e oTjgnd e Aq Panojdde jo qno paTiaeo aq oq pasodoad loaCoad AJeuoTgaIOSTp Aue oq Ajdde („�aS�„) q3V A4ijeno je-4uautuoITnu;3 eTUIOJTTPD aq4 jo suoTsTAoid auy • pleA aoueuaquiew STD uo 6uTTTTIU jtp paso oad oy qoV AqTjeno jequautuOITnug PTUIOJtjeZ) Jo uOT4e3Tj K •3 ['809£§ apoD *sad •gnd] •Puej 90 a.zoe auo ueg4 Ssaj 30 S40j Jo SJauMO aq4 JO S4y6Tl PUP sIsala4UT aqq goagoad oq apoo saoinosag OTjgnd aq4 UT papnjouT a.ze suorSTAOad ageiedaS ['6'TZLT-TILT§§ aPOO 'uTWP. V 'jeD tT !609£§ apOO *sag 'gnd] 'apo auk Aq PaT3TOads -4eu-4 ueu-4 zaggo ujalled 6uzoeds jjaM e gdope AeUI 'AlaAODal oTufouooa a4eutTIjn agowojd pup alseM 4uaAGad oq IaPIO ui 10STAladnS seE) pue TTp a4PIS aq4 '6uToeds-jjaM 04 6uT4ejaJ apoD saoanosag oTjgnd aqq Jo suoTSTAOid aqq 6uTpuegsg4Tm4ON [' Z09£§ apoo *sag •qnd] 'gTwJad jjTM Puej aqq uo s4uaWano.zdwT 6uT49Tx9 PUP aoTAJas aq4 JO uOT4ejnBTJUOO aq4 se Puej aqq ;o sauTT Azepunoq jelalej aul Luoij jej se aq gsnui sjjaM aq4 Jo uoT4e3oj eoegins aqq pup PGTTTIP aq Aew eaje aqq FI£T-£LMUED GRw73-14A [Public Resources Code Section 21080.1* Section 15002(i) of the State CEQA Guidelines [Title 14, California Administrative Code] defines a discretionary project as one where the "governmental agency can use its judgment in deciding whether and how to carry out or approve a project." Unless a proposed discretionary project is exempted by the statute or the State CEQA Guidelines, CEQA requires that the public agency prepare either a negative declaration or environmental impact report. [Section 21080.1.1 Such documents are required to be prepared directly by, or under contract to, the public agency. [Section 21082.1.1 Under CEQA, the public agency which is identified as the Lead Agency shall have the responsibility for determining whether an environmental impact report or negative declaration is required after first conducting an initial study. [Section 21080.1; State CEQA Guidelines Section 15063.] The Lead Agency is defined as "the public agency which has the principal responsiblity for carrying out or approving a project which may have a significant effect upon the environment." [Section 21067.] * All references to statutory provisions are to the Public Resources Code unless otherwise specified. -14- GRW73-15A Section 21151 states that a "significant effect on the environment shall be limited to substantial, or potentially substantial, adverse changes in physical conditions which exist within the area . . ." If the Lead Agency determines that there is substantial evidence that any aspect of the project, either individually or cumulatively, may cause a significant effect on the environment, regardless of whether the overall effect of the project is adverse or beneficial, the Lead Agency must either prepare an environmental impact report or use a previously prepared environmental impact report which the Lead Agency determines would adequately analyze the project. On the other hand, the Lead Agency is required to prepare a negative declaration if the agency perceives no substantial evidence that the project or any of its aspects may cause a significant effect on the environ- ment. [Section 21151; State CEQA Guidelines Section 15063.] The proposed oil drilling project at the City maintenance yard is subject to the provisions of CEQA. The project is a discretionary one in that it involves the submission by the City Council of an oil drilling measure to the voters for approval, approval of an oil and gas lease and coastal permit and possibly other land use permits by the City if the proposed ballot measure to permit drilling in the City Maintenance Yard is adopted by the voters. Such actions involve judgmental decisions by the City Council. -15- GRW73-16A There are no exemptions in the statute or the State CEQA Guidelines that are applicable to the approval or carrying out of an oil drilling project. The Lead Agency for the project will be the City as it will have principal respon- sibility for carrying out and approving the project. We understand that as of this time environmental documentation under CEQA has not been prepared with respect to the proposed project. A document entitled Initial Environmental Study, July 1980, was prepared by Alex G. Sarad, Resources Management, with respect to the use of the Biltmore site (not the City maintenance yard) for oil drilling operations. In our opinion, this document does not constitute an initial study or environmental impact report under CEQA with respect to the proposed project. Therefore, the city staff must prepare an initial study to determine whether the proposed project may have any significant effects on the environment. If the initial study discloses that the project may have one or more such significant effects, an environmental impact report must be prepared. On the other hand, if there is no substantial evidence that there may be any significant effects on the environment, a negative declaration will be legally sufficient. The fact that an oil well has existed and has been operated on the property for many years is undoubtedly a factor that will be considered in the initial study in evaluating -16- GRW73-17A whether the proposal may have a substantial effect on the environment. Although it is clear that the project is subject to the provisions of CEQA, it is not certain that the environmental review and documentation required thereunder may be deferred until after the proposed election. The decision of the Council to place the oil drilling proposal on the ballot is a discretionary act. If an initiative petition containing the requisite number of signatures had been filed with the City, the City Council would be required to submit the ordinance to the voters as ministerial duty. There is therefore a possible issue as to whether the discretionary act of placing an ordinance on the ballot may have a significant effect on the environment and is a project subject to CEQA. However, Section 15378(b)(4) of the State CEQA Guidelines states that a project under CEQA does not include "[t]he submittal of proposals to a vote of the people of the state or of a particular community." This provision cites Stein v. City of Santa Monica, 110 Cal.App.3d 458 (1980) as its authority. In Stein, the court held that CEQA did not apply to the adoption of a rent control ordinance by the voters of Santa Monica when the ordinance was placed on the ballot after an initiative petition containing the requisite number of signitures was filed with the City. The basis for -17- cum •suoTgPjado bUTTTTJP ;O 4uauia3u9wwO3 jo slTuijad go aouenssT 'aseaT seb PUP TTO UP go uoTgnoaxe oq joTad 4Uana AUe UT pa4aTduioo aq Isnw ViDSO japun palTnbai UOTgequauinoop pue Apn4s TeT4TUT aqq uOTUTdo ano uI •40TTPq aqq uo ainseaw aqq qnd oq UOT43e sa5le4 TTounoo AgTo aqq aaogaq UOTgequauinoop TequautuOJTnua Aue PUP Apngs TeT4TUT aq4 6uTop Aq panTosaa aq pTnoo jaggeui aqq uT A4UTP41a3un Aue 'asinoo go •ggnop uioij aaa; AT9JT4Ua 4ou ST 1944eut aqq 4UTod uo aseo ou ST alagq aouTs qnq 'xoegge Te6aT pue4sggTM ATgegojd PTnoM auTTapTn6 aqq MaTn ano uI *v0so go suoTs -Tnojd aqq oq AjPjquoo ST auTT9pTn6 aqq gegq apeut aq PTnogs UOT4Ua4Uo3 aq4 3T sgjnoo aqq Aq 4g6TaM geaJ6 uanT6 aq oq PaT4T4u9 ST goTgM UOTgPgajdjalUT PUP JapJO anT4P14sTUTWpe TeToTJJO UP ST auTTapTn6 aq4 'JanaMog •40TTeq aqq uo aoue -UTPJO T014uo3 4uaJ aq4 bUToeTd UT UOT49JOSTP OU peg eoTUOW e4Ueg UT TTounoo A4To aq4 geg4 UT aTgegsTnbuT4sTp ATTengoej ST goTgM UOTsToap 4inoo e oq SJ9jal uOTsTnoid sTg4 IVO SD japun 4oaCoid e 4OU ST SJagon aqq of ainseaw 6uTTTTJP TTo UP Jo UOTssTuigns geg4 saPTnOid saUTTapTno vC)sD agegs aqq go (f,)(q)8L£ST UOTgoas 3o a6en5ueT Tela4TT aqq g6nog4TV •AgTo aqq 3o Apoq buTUlanob aq4 uag4 la44el a4eJO43aTa ago Aq uaXegaapun AgTnT40e UP seM aoUeUTPIO aqj 3o uoTgdope aqq 'snq,y •paTT3 sem uoigTgad anT4PT4TUT aq4 aouO UOT43e Bons axe4 04 PalTnbai ATTPbaT sem TTaunoD AgT0 aqq se AleuOT4 -aJosTp ueg4 Jag4ea TPT'94sTuTui seM slagon aq4 04 aoUPUTPIO aq4 6UTIgTwgns 30 We aq4 4Pg4 sem 6uTTnj s,gjnoo aq4 V8T-8LMHO GRW73-19A G. Application of the California Coastal Act and The City's Local Coastal Program To Proposed Oil Drilling On City Maintenance Yard Development projects located in the coastal zone are subject to compliance with the California Coastal Act, Public Resources Code Section 30000 et sec. Such projects require a coastal permit from the California Coastal Com- mission (the "Commission") or the city with jurisdiction over the project pursuant to Public Resources Code Sections 30600 et seg. A city which has adopted a Local Coastal Program ("LCP") and has received certification of the LCP from the Commission has the authority to issue such permits. Public Resources Code Section 30519 and 30600.* However, the grant or denial by a city of such a permit pursuant to its LCP may be appealed to the Commission in certain cir- cumstances pursuant to Section 30603, which provides: "(a) After certification of its local coastal program, an action taken by a local government on a coastal * Certain exceptions requiring Commission approval, such as projects in tidelands, submerged lands or public trusts, are set forth in Section 30519. -19- -OZ- :SUOT-4e6aTTP 6UTMOTTo3 aq4 go a.zoM jo auo 04 paITWTT aq TTegs (e) UOTSTnTpgns go (T) gdea6ezed o-4 quensind Teadde ue joj spuno.z6 aqy (q)„ •AgTTToej A6,aua joCew P jo goaCojd sxioM OTTgnd aoCeui e sagngTqsuoo goTgM quauudoTanap AuV (S)„ (OOSO£ UOTgoaS ggTM 6UTouauiwoo) 9 aagdego oq quensand panoidde deur goTjgsTp 6uTUOZ 10 aoueUTPIO 6UTUOZ aqq japun asn paggTwa ad TediouTid aqq se pageU6Tsap qOu ST gegq Ajunoo Te4seoo P �q panOjdde quawdOTanap AUV (V)„ •PaiP aoinosal TP4seoo anT4TSUas e UT pa4eOOT ale 4P44 uoTsTnTpgns STq-4 Jo (Z) 10 (T) gdej6ejed UTg4TM papnToUT qoU gUaWUJano6 TPooT aqq Aq pano.zdde quatudOTanaQ ( £) „ '33nTq Te gseoo AuP 3o aaeg pleMeas aqq go do4 aqq go 49ag 00£ UTg4TM 30 'uceajgs ',�jengsa 'pueT4aM Niue Jo 49a3 OOT uTg4TM 'spueT -4sn.7,4 oTTgnd 'spueT pa6.zawgns 'SpueTapT4 uo pa4eOOT alP lPgq UOTSTnTpgns sTgq go (T) gdejSeaed uTggTM papnTOUT qoU gUaWU.z9no6 TPOOT aqq Aq panOjdde squawdOTanaQ (Z)„ •aoue-4sTp -1a74eaJ6 aq4 ST lanagoTgM 'goeaq ou sT ajag4 ajagm Pas aq4 30 auTT apT4 g6Tq ueaut aql Jo jo goeaq due go qua4xa pueTUT aqq go ga93 00£ UTg4TM 10 eas aqq 6UTTaTTeied peoi OTTgnd 491TJ aqq pue eas aqq uaaMgaq 4uaWUJano6 TPOOT aqq Aq panoidde squawdOTanaQ (T)„ :s4uawdOTanap 3o sadAq 6uTMOTTo3 aq4 ATUO Jo,J UOTSSTUIU100 aq4 oq paTeadde aq �elu UOT-4POT Tdde gTm-iad -4uawdoj9nap `dOZ-£LMHD . -TZ- aqq oq w,oguoo lou saop quauidoTanap aq4 4egq uoT-4e6aTTe ue 04 pa4TuITT aq TTegs (e) uoTSTnTpgns go (S) 10 (V) '(C) '(Z) gdej6ejed oq quensind Teadde ue jog spunoj6 aqi, (o)„ •squawajTnbai xoeggas oT6oToa6 pue uoTsoaa auTTalOgs glTM ,iTduioo qou saop quawdoTanap aqy (S)„ •su'JOJpueT Tejngeu 6uT4sTxa Ja4Te ATqueoTJTu6Ts Aew quawdoTanap ags (V)„ • pajogsai aq 04 ease pue T4DM Te404 9q4 go quaoiad SZ uegq iageaa6 aq 'saTJTTToeJ aoTnIas gjoddns A.zeSSaoaU Niue pue 'sTauuego uoT-4e6Tneu AjeSSaoau 'suTseq buTuinq 'coeds 6uTggjaq 6uTpnTouT 'AgTTToeJ 6uTgeoq Bons jog pasn ease pueT4aM 9144 30 azTS aqI TTegs quana ou UT 4eg4 'IanaMoq 'papTnojd !OueTIaM anTgonpoid ATTeoTboToTq e se pauTe4uTsw pue 09.z04sal ST pueTlaM pape16ap aq4 go uoTgjod TeTque4sgns e 'saT4T4TT3eJ 6uTgeoq qons g4TM uoTgounCuoo UT '3T saTITTToe; 6uTgeoq jog 'TTtO£ uoT43aS 30 (q) uoTSTnTpgns oq quensind aumE) pue gsT3 go quawgjedaQ aqq Aq paT;TquapT 'pueT-4aM papea6ap e uT pue :saTITTToeJ 6uTge oq papuedxa ao Mau 10; sTauuego aoue'4ua 'ATuo seale pueT-4aM uI (C)„ •gseoo agq '6uoTe pue '04 eaae TeuoTlea.zoal e WOJJ 10 peo.z oTTgnd Niue UJOIJ SMaTn oTTgnd goagojd 04 STTe3 quauidoTanap agy (Z)„ -sash Bons ggTM saja3JaquT jo asn TeToj awwoo agenTid Jo oTTgnd jo ssaooe TeoTs,�gd alenbape apTno.zd oq sTTe3 quauidoTanap aq,I, ( T) „ VTZ-CLMMd9 GRW73-22A certified local program. "(d) Any action described in subdivision (a) shall become final after the 10th working day, unless an appeal is filed within that time." Thus, even a city which has a certified LCP does not have complete control over the approval of development in the coastal zone. Any coastal permit decision may also be challenged in superior court pursuant to Public Resources Code Sections 30801 and 30802. Accordingly, any permit issued must comply with the city's LCP and be sufficient to withstand an administrative appeal pursuant to Section 30603 quoted above. Another limitation on a city's power imposed by the Coastal Act is that it cannot amend its LCP without the approval of the Commission. Public Resources Code Section 30514. Thus, if a city wants to approve a project that is not entirely in conformity with its LCP, it must first amend the LCP and obtain Commission approval of the LCP amendment prior to approving the project. We are informed that the City of Hermosa Beach has adopted an LCP which has been certified by the Commission*. * The copy of the LCP provided to us indicates that it was adopted on April 15, 1981. Staff informs us that it has been certified by the Commission. -22- 'sanTIoaCgo asagq 3o Niue agowojd ATgoa"P pTnoM 4oaCojd 6UTTITIP TTo pasodoid aqq gegq jeadde qou saop 41 •auoz Te4seo3 aq4 UT saITTToe3 TeuoT4ealoal •S pue :auoz Tegseoo aqq uT 6uTsnoq •V 16upped paseazouT uo sTsegduta ue ggTM 'goeaq aqq oq ssaooe •£ !uoT-4Tpuoo jean-4eu sqT buTUTegal uo sTsegduia ue g4TM 'goeaq aqq •Z :sMaTn Te -49e03 •T :anaasaid pue aouequa of I{aas pue SWI94 Te.zaua6 UT pa4e4s ale jDq aq4 30 sanTIoaCgo pue satoTTod aqs, •palTnbai sTeno.zdde 10 s4TIulad iag4o Aue 04 uoTgTppe UT ,�qTD aqq woj3 gTuizad Tegseoo e aJTnbai TTTM uoalag4 6UT11T.IP 'd:)'I s,,�gTo aqq Aq Pazanoa eaae aql uTggTM ST a4Ts BUTTTTIP TTo pasodoid aqq aouTg •uoTTeTn6aa TeooT 6uTWJOJUoo sgTuuad qT gegq quagxa aqq of gdaoxe anTgduiaajd ST 43V Te-4seOD aq4 asneoaq dDI aq-4 .zo '4oV Te4seoD aq4 sa42ToTn 4eg4 uoTIeTsT6aT gdope ATPTTen 40uueo X4TO aqy •(T861) L££ '0££ p£•ddK•TeZ) 9ZT 'esaW e4SOD 30 A4TD •n •00 quant oTanaQ TaUJV •TTounoD A4TD aq4 30 gegq ueg4 Ja4ea'6 ou ST uoTgeTsT6aT gdope oq jaMod s, aIeJogoaTa aqy •quautajTnbaj sTg4 IalTe jou saop ssaooid anTgeT4TUT aqq ,�q paAOadde aq Aeut agTs 6uT -TTTIP pasodoid aqq gegq goe3 aqs, •dDq aqq of uuo3uoo gsnut doq aqq Aq palanoo ealP aq4 UTg4TM 6uTTTTJP pasodoid Auv K£Z-£LMUD GRW73-24A however, we are not aware of any information indicating that it would impede the objectives of the LCP or diminish existing views, beach access, parking, housing or recreation facilities. The project might be deemed promotive of the objectives in the LCP if the revenue from the project, or a portion thereof, were committed to implementing the LCP. Since the project site is now used as a maintenance yard and already contains an oil well it is questionable whether the proposed oil drilling project would represent a significant change in land use. There would also appear to be no reason why the project could not be designed to improve the asthetic quality of the site. The approval of a coastal permit is discretionary and is, therefore, subject to the requirements of CEQA. Although CEQA and the administrative Guidelines adopted pursuant thereto, Title 14, California Administrative Code, Sections 15000 et. seg, provide an exemption for the prepara- tion and adoption of LCP's (Guidelines Section 15625), there is no such exemption for the issuance of a coastal permit by a city. Moreover, although the program of the Commission in reviewing permit applications is deemed a certified regula- tory program (Guidelines Section 15251) with the result that it need not comply with CEQA, there is no such provision applicable to permit review by cities. -24- •aoueUTPJO 5UTUOZ pue URTd TPJauab s,A4TO aq4 ggTm AlTulJOJuoo UT Tiqun paqueuieldlUT aq ATpTTen -4ou pinoo slagon 9q4 Aq pagdope ainseaw a 'ajoJajagy '(1861) '0££ p£•ddV'TeD 9ZT 'esaW Pgsoo go AqTD 'n •oD quatu OTanaQ TauJV •�uautaztnba� sTgq JalTe 4ou saop 94Paog3aTa aq4 Aq pano.zdde aq AeW pJeA aouPua4UTPW AgTD aq4 uo 6uTTTTJP pasodoid aqq gegq 43eg aqs OOOS9 suoTgoas apo -4uaLUUJanoq] •aoueuTp.zo 6uTUOZ pue ueTd Teaaua6 s,A4TO aq4 04 wJOJuoo gsnul goaCojd pasodoid aqy uiuOZ pue ueTd TelauaD 'H •uotgeoTIddP gTwa ad Tegseoo aq4 buTMatn91 UagM paZTTT4n aq OsTe pTnoo (auiT4 gegl 4e auop Jt) 40TTeq aq4 uo 6UTTTT.zp BUT44Twaad ainseaui a aoeTd o4 iag4agM 6UTaaptsuoo uagM pagonpuoo Matn91 Te4uatuuOJTnua AuV •s4uaw -noop Matnal Te4UaUIUOJinua palTnbai aqq aiedaid oq papaau UOTIPUUOJUT aq4 apTnojd TTaM Aeut dYl aqq japun A4TTTgegdaooe s, goaCoad e 6UTUTWJaJap UT panTOnuT MaTnaz aqq pTPbaJ szq4 UI •6uTTTTJP TTO pasodoid aq4 jog 4TLujad Tegseoo a 6utnssi ajojaq vnsD ggTm ATdwoo gsnui A4TO aqq 'sngs `dSZ-£LMxD GRW73-26A II. MAY THE CITY RENT AN UPLAND SITE WITHOUT MONETARY RESTRICTIONS? Yes. There are no monetary restrictions on leasing an upland site. As pointed out above, the statute provides for competitive bidding with one variable factor which shall be the subject of the competitive bidding. Thus, the lease could fix an amount of rental to be paid for use of the surface and the percentage of royalty, leaving the amount of cash consideration or bonus to be the variable to be bid upon, or there could be other alternatives. These decisions would be made by the City Council with such consultant's assistance as it deems necessary. If the owners of the surrounding uplands within the oil field should join with the City in a unit or coopera- tive agreement, the amount of rental charged for use of the surface of the City Maintenance Yard as the drill site should be negotiated with the other owners so as to provide a fair rental or royalty to the City which would not appro- priate an unreasonable portion of the royalties which would otherwise go to the other owners. The record suggests that it would be the City Council's intention to deal fairly with the surrounding owners. Failure to do so could result in -26- GRW73-27A claims based on the theory of inverse condemnation or the theory of restraint of trade or anti-trust, which is being extended to cities amidst controversy over the propriety of its application and the current effort in the Congress to provide protection to municipalities against the doctrine's application to cities. MAY THE FEES RECEIVED FROM THE RENTAL BE EXPENDED BY THE CITY WITH NO RESTRICTIONS? We interpret this question as being directed to any surface rentals, bonus, royalties or other cash consid- erations received by the City as lessor. The answer is "Yes." Such bonus, rentals, royalties and other consideration may be deposited in the City's general fund to be used for general governmental purposes. Since the next question, considered in Section IV, is directed to "drilling other than slant drilling" we assume that this question refers to slant drilling into other upland properties, with the producing interval of the well or wells to be located within such other properties. The City has no right to authorize its lessee of the Maintenance Yard to drill into adjacent or surrounding properties and thereby to produce oil from such properties. -27- GRW73-28A Any such drilling into other properties by the operator would constitute a violation of the property rights of the owner of the property which the well invades and the offended property owner would have a claim which would include the value of all oil and gas produced from that property, among other possible claims. Thus, while any revenue received by the City from such wells would not be "restricted" within the meaning of governmental or regulatory restrictions, it would be subject to recoupment by the property owner as damages. However, the adjacent or surrounding property owners may enter into oil and gas leases, as, for example, with the lessee of the Maintenance Yard, which permit slant drilling into their properties from the Maintenance Yard. In such case the City may charge a rental or royalty for the use of the surface location in the Maintenance Yard and any such rentals or royalties could be placed in the City's general fund for general governmental purposes. As a more probable scenario, the City and other owners of property within the limited area of the oil field which extends into the City, may enter into a unit or cooperative agreement as above mentioned, whereby each owner is to receive an allocable portion of the royalties to be derived from production, with the share allocable to the City including an increment to be negotiated for use of the GRW73-29A surface of the Maintenance Yard. The revenues derived by the City under such unit or cooperative agreement would be free of any governmental or regulatory restrictions.* The question as to the applicability of the Jarvis -Gann Initiative (Proposition 13) and the Gann Initiative (Proposi- tion 4) is considered under Section V, below. IV. MAY THE CITY USE THE SAME UPLAND SITE FOR DRILLING OTHER THAN SLANT DRILLING AND, IF SO, IS THE REVENUE FROM THAT DRILLING RESTRICTED? The City may use the maintenance yard for vertical drilling with the well or wells to be bottomed within the boundaries of the maintenance yard. All royalties derived by the City from such well or wells belong to the City and may be placed in the general fund to be used for general governmental purposes. Even if oil is drained from surrounding properties, title to it is acquired by the * Based upon the June 25, 1984 report of Robert N. Hacker, Inc., the City's petroleum consultant, it is assumed that drainage of oil from the tide and submerged lands held by the City in trust would not result from such production from the uplands and accordingly it is assumed that the tide and submerged lands would not be involved in any unit or cooperative agreement. -29- -0£- uo saxe4 utalOTeA pe ueg4 lag4o 'saxel Te Toads TeuoT4TPPe asodun Aew saT4To 4eg4 sapTAojd osTe VIIIX aTO141V •Agjadoad Bons 3o anTeA aqq go quaojad auo paaoxa 4ou Aeui Agiadoad Tea.z uo saxes utaJOTeA pe TTe Jo Te4o4 aq4 4eg4 sapTAoid ATTel9ua6 ( „aATgeT4TuI uoT4egTun'I xey Agjadoid uueq -sTAler„ paTTeo-os aq-4 Jo „£T uoTgTsodoid„) uoTgn-4T-4suoO STu -Jo3TTpO age 30 EiIIIX aT3T4JV 'saxey (T) `dIIIX aToT41V '`d ,GSSOIHISSH Sg ( SSIWHSd ' SSSNSOI'I ' SSSA ' SSX` I SK HMS) ONIggIUU qIO SHZ XS Q3ZFi233N29 SnNgAg i HHH10 QNV QSAISDEU SSSnNOS GNV SSIIgVAOU ' SgVINSH Q'IQOM 'A •pung TPJ aua6 aqq of anzaae pTnoo pue pa43TJgsajun aq pTnoM 'pagou Apealle se 'ajegs s,AgTO aqy •sjauMo aqq 6uouie saT4TeAOJ aq4 Jo uoTIeaoTTe aTPJ e glTM se6 pue TTo 6uTonpoid 3o aTgedeo aje goTgM saTgjadoad spueTdn 6uTpunoians go siauMo ggTM 4uaucaa-76e aATgeaad000 ao gTun e 04UT jaqua pjnoo XgTO aqq 'III pue I iapun anoge pagou sV -pazTu600aa aq gsniu saTgjadoad JTag4 WO-Tj a6euTelp 6uT6aTTe s-laumO pueTdn 6uTpunoians Aq A4TO aqq -4suTe6e sluTeTo Jo A4TTTgegoid aqq JanamOH •peaq TTaM aq4 4e TOJ4uo3 pue uoTssassod 04uT ua3{e4 ST qT uagm jogeaado VO £-£ LMUD GRW73-01B real property, with a two-thirds voter approval. Thus, in the event a city were to levy a tax on the production of oil, Article XIIIA should have no applica- tion if (i) oil, when brought to the surface, is not real property, and (ii) the proceeds from such tax is placed in the general fund of the city to be used for general govern- mental purposes. California Revenue and Taxation Code Section 104 provides that real property includes "[a]ll ... minerals ... in the land." In Atlantic Oil Co. v. County of Los Angeles, 69 Cal.2d 585 (1968) the California Supreme Court stated that: "[F]or purposes of taxation the definition of real property in the revenue and taxation law of the state control whether they conform to definitions used for other purposes or not." (Atlantic Oil Co., at page 595.) In its discussions regarding the similar nature of royalties and rents, the Court went on to state: "The owner of land has no title to oil and gas in place but only the exclusive right to produce it from his land. When he conveys that right to a lessee in exchange for the right to receive a fraction of the oil -31- -zc- Teal go uotgexe-4 aqq uo suoTgegTUITT 6uToeld KIIIX aToT41V Jo suoTSTno.zd aqq pue Agjadoid Teal qou ST 'aoegzns aq4 oq gg6nojq uagM 'ITO 4eg4 apnTouoo Aew am 'sngy ('STV a6ed qe '•00 ITO uoTun) ('PaPPe sTsegdws) „ •sasTivaid aqq wOl; ITO Bons anotual 04 gg6TJ anTsnloxa aqj 6uTPToq aassaT aqq UT pa4san sawooaq panouuaj OS ITO 9q4 3o uoTssassod oq jg5TJ aq4 Pue 04 aT4T4 4eg4 uoTuTdo aqq 3o ale am 'PaleoTpuT anoge se 'Pue Aqjadoad TPUOSI@d sawooaq qT ' jasse saiq e JO aassaT aq4 Jag4Ta Aq punoj6 aqq wojj panotua.z ST ITO uagM„ :pies gjnoo aqq ' (L£6T) 60b PZ'ddv'Te0 6T "00 ITO Ten;nW 'n '00 ITO uoTun uT 'ATIeTTUITg a6ed qe '•00 ITO aT4ueT4V) ('T09 '(Pappe sTsegduug) „'PUeT go asn aqq JOJ uoTgesuadwoo se quay wed A4TeAO' aq4 go aangeu aqq 10 aassaT aqq ggTM dTgsuoTgeTal sTq Jo jajoe.zego aqq a6uego qou saop wTq Aq paonpoid uaaq se Pue ITO aq4 peq Pue aseaT ou uaaq ajaq,4 peq Aqaadoict TeuOslad s,JossaT aqq uaaq aneq pinoM SP6 Pue ITO aqq gegq goej aqs 'saTlied aqq go quawaal6e aqq Wolf sMoT9 'saseaT 3o spuTX lag4o 04 quensand quaff anTaoaJ 04 4g6TJ aq4 aXTT '49a'a4uT A4TeAOJ sTq 'paonpoid se6 pue RZ0-£LMUD GRW73-03B property should have no application. In City and County of San Francisco v. Farrell, 32 Cal.3d 47 (1982), the California Supreme Court held that the proceeds of a gross receipts and payroll tax which are placed into the general fund to be used for general governmental expenditures are not a "special tax" under Article XIIIA, and thus do not require a two-thirds voter approval under Article XIIIA. In Farrell, the Court said: " [W] e construe the term 'special taxes' . . . to mean taxes which are levied for a specific purpose rather than, as in the present case, a levy placed in the general fund to be utilized for general governmental purposes." (Farrell, at page 517.) Thus, although there is no direct authority regarding the matter, we may conclude that a tax on the production of oil levied by a city would not be subject to the provisions of Article XIIIA provided the proceeds of the tax were placed in the general fund of the city to be used for general governmental purposes.6/ 6. We wish to direct your attention to a proposed Inititative Constitutional Amendment to Article XIIIA of the California -33- :sasodind 6utMOTTo3 aqq 3o laggTa jo3 Aqj adoad jo suosaad uodn pasodutT ST goTqM A4T4ua Te4uaiuuJano6 TeooT e jo agegs aqq jag4Ta 30 A4TTequauinj4suT 10 Aoua6e Aue jo 'AgTqua TequauiuJano6 TeooT Aue 'a4e4s aqq Aq a6jego Aue sueaut 's9T4TTTgeTT uoTsuad Aed of qunourn Aue apnIOUT 40u TTegs goTqM ,'aa3, (T)u :uoT43as sTgq 3o sasodand j o3 (q)„ •(q) uoTsTnTpgns uT pauTgap se 'auT3 a 10 quawssasse up 'aa3 a a,4n*4T'4suo3 '4ou saop goTqM A4T4ua Te4uaut -Ulano6 TeooT a jo age4s aqq jag4Ta 3o AgTTequauinlgSUT jo Aouabe Aue 10 ' A-4T-4ua Te-4uautu.aano6 TeooT Aue ' a -4e 4s aqq Aq apem 'saT4TTTgeTT uoTsuad 6uTAed 3o asodand aqq J03 AnaT Aue 04 p94TwTT 4ou qnq 6uTpnTouT 'pa-in-4onj-4s io paTageT JanaMog '96.zego zo AnaT Aue sueaut , xe-4, weal aql 'aTO14le sTg4 uT pasn sv (e) *G'V 'OaS,, „ • pasoducT aq Aeui 'Agjadoid Te9l 30 aseaT 10 aTes aq4 UO xe4 uoTgoesuejq aO saTes jo 'Agaadoid Teal 3o dTgsJauMO aq4 uodn paseq ao uo xe4 lag4o 10 xe4 uiaJOTen pe paseaJOUT 10 Mau ou '(e)T uot43aS uT 04 p9JIa3al xe4 (%T) auaoiad auo aqq uegq aaq,4o 'gegq gdaoxa 'uoT439Ta otTgnd e qe ainseaui aqj uo 6uT40n AITW a Te,4uautuaano6 aqq 30 s1040aTa paT3TTenb aqq 3o spaTg4-OMq e Aq p6AOadde aznseaui e Aq ATuo pasodutT aq Aeuc 'xeq pons oq goaCgns sjaAedxeq aqq uT 96uego a 30 xeJ e 3O uOTgegndwoo 3o pog4aw aqq UT a6uego a 'xe-4 a 3o a*4ei aqq uT aseaJDUT ue 'xe4 Mau e 3o uoTITsodusT aqq of pagTWTT qou qnq 6uTpnTouT laaAed -xeq Aue uodn paTnaT xe-4 Aue 3o qunoue aqq saseazouT goTqM 'a4e4s aq4 3o anTsnToxa 'A4T4ua Tequauiu.zano6 Aue Aq pazTjoggne jo pa-4oeua xeq Aue uT a6ueg3 Aue 10 xe4 Mau Aue '£86T 'ST Isn6nv jag3e pue uO • ti 'Oas" :6uTMOTTo3 aqq Ppe aOeTd sqT uT pue VIIIX a13141d 30 uOT109S 3o suoTsTAOid 6uT4sTxa aq4 Teadai pTnoM quauipuawv TeuOTgngTqsuoD anTgegTqTui pasodoad aqs •uOT43aT3 TeJauaO V86T 19 jagWanoN aqq 109 paT3TTenb seg goTqM uoTgngTqsuoO ATgeuoseai urns aqq paaoxa„ qou isnui saa3 AJ04eTn6aj gegq -4Oa33a aq-4 o-4 AgTaogqne ST alag4 'saa3 jasn jo sa6jego jasn 'sasuaOTT AJ04eTn6aj A3Toads 4ou saop KIIIX aTOT4JV 30 V uoT43aS g6noglTV •SITutlaa pue sasuaoTZ (Z) EVO-£LMHO GRW73-5B necessary to cover the costs of the regulatory purpose sought" or such fees will be considered a tax. See, e.q., United Business Com. v. City of San Diego, 91 Cal.App.3d 156, 165 (1979). In the case of Mills v. County of Trinity, "(A) To pay for the direct costs of the services provided to or direct benefits conferred upon the particular persons or property subject to the charge. "(B) To pay for the direct costs of a regulatory program under which the person or property subject to the charge is regulated. "(2) 'Assessment' means a charge which is levied upon particular real property within a limited area for the payment of the cost of a local capital improvement to land which directly and specially benefits said particular real property, and which meets all of the following criteria: "(A) It is levied exclusively on land. "(B) It is based wholly on and limited in amount to direct and special benefits to the land upon which it is levied. "(C) It creates no personal liability for the person whose land is assessed. "(D) It is limited both as to time and locality by the duration and scope of application of the capital improvement. "(3) 'Fine' means an amount paid to a governmental entity as a pecuniary punishment for engaging in unlawful activity. -35- GRW73-06B 108 Cal.App.3d 656 (1980), the court of appeal concluded that a special tax under Article XIIIA does not include fees charged in connection with regulatory activities where such fees "(4) The excess of any purported fee imposed over the direct costs of the service or direct benefit conferred or provided to fee payers or the direct costs of the regulatory program for which the fee is charged, shall constitute a tax. The excess of any purported assessment levied over the costs of the capital improvement for which the assessent is levied, shall constitute a tax. If any portion of a purported fee or purported assessment constitutes a tax and such tax has not been validly imposed, any person who paid the fee or assessment shall be entitled to receive from the entity imposing the fee or assessment a refund of that portion constituting a tax, plus 13 percent interest from the date of payment. 11(5) On and after August 15, 1983, any new fee or any increase in any fee exceeding the increase if any in the cost of living during the preceding twelve-month period as shown in the Consumer Price Index of the Bureau of Labor Statistics, United States Department of Labor, under the heading "All Items," or any index substituted by the Department of Labor therefor, for the area subject to the fee, may be imposed by any governmental entity other than the state only by a measure approved by two-thirds of the qualified electors of that governmental entity voting on the measure at a public election, or if enacted or authorized by the Legislature only by an act passed by not less than two-thirds of all members elected to each of the two houses of the Legislature." If approved by the voters, the Initiative Consti- tutional Amendment would appear to require any new or increased tax levied by a city, including a tax levied on the production of oil, to be subject to two-thirds voter approval, and further would appear to require any new fee or any increase in any fee to be subject to two-thirds voter approval. -36- GRW73-07B is . . do not exceed the reasonable cost of providing services necessary to the activity for which the fee is charged and which are not levied for unrelated revenue purposes." (Mills, at pages 659-660.) Thus, to the extent that any license or fee charged by a city in connection with the production of oil does not exceed the reasonable costs of providing services to regulate the activity and is not levied for unrelated revenue purposes, such license or fee would not, under Mills, constitute a "special tax" under Article XIIIA. Furthermore, to the extent that the fees do exceed the reasonable cost of regulation, if those excess fees are placed in the general fund and are used for general governmental purposes, under Farrell, the excess fees would not be subject to the limitations of Article XIIIA in any event. 7/ 3. Royalties. Article XIIIA does not mention royalties, rents, bonuses or the proceeds from the disposi- tion of property. Although there is no direct authority on the matter, we conclude that Article XIIIA has no application to royalties received by a city from the production of oil. 7. Ibid. -37- GRW73-08B B. Article XIIIB (1) Taxes. Article XIIIB of the California Constitution ("Proposition 4" or the so-called "Gann Initia- tive") generally provides a limitation on the appropriations of the proceeds of taxes by a city. "Proceeds of taxes" is defined by Section 8(c) of Article XIIIB as follows: "'Proceeds of taxes' shall include, but not be restricted to, all tax revenues and the proceeds to an entity of government, from (i) regulatory licenses, user charges, and user fees to the extent that such proceeds exceed the costs reasonably borne by such entity in providing the regulation, product, or service, and (ii) the investment of tax revenues. With respect to any local government, 'proceeds of taxes' shall include subventions received from the state, other than pursuant to Section 6 of this Article, and, with respect to the state, proceeds of taxes shall exclude such subventions;" . . . Thus, given the wording of Section 8(c), above, in the event a city were to levy a tax upon the production of oil, the proceeds of that tax would be subject to the limitations on appropriations set forth in Article XIIIB. (2) Licenses and Permit Fees. Similar -6C- • :suoTquangns gons apnToxa TTegs saxpq 3o spaaooid 'alegs aqq oq goadsai ggTM 'Due 'aToTIJV aq4 3o g uoTgoag oq quensand uegq aaggo 'agegs aqq W0J3 panTaoal suoTquangns apnTouT TTegs ,saxe-4 3o spaaooad, 'qualUuJano6 IpooT Aue oq goadsaa ggTM •sanuanal xe4 3o quaUl4sanuT aq4 (TT) pup 'aoTnzas jo 'gonpoid 'uoT4eTn6al aqq 6uTpTnoad UT A4T4ua gons Aq auzoq ATgeuoseaj sgsoo aqq paaoxa spaaooid gons gegq quagxa aqq oq saa3 jasn pup 'sa6jego jasn 'sasuaoTT A-1o4eTn6aa (T) W0J3 'IuaWu19no6 3o A4T4ua up oq spaaooid aqq pup sanuanai xeq lie 'oq pagoTzgsal aq qou qnq 'apnTauT ITegs ,saxeq 30 spaaoo-'d,,, :saxe-4 3o spaaoo-id 3o uoTgTuT3ap aqq a4plalTaz os •saTgje og (E) •uoTjeTn6aj aqq 6uTpTnoid uT AgTo aqq Aq aujoq ATgpuoseai sIsoo aqq paaoxa qou pTp Aagq papTnojd u014egTWTT oq goaCgns aq qou pTnoM saa3 gTuijad pup sasuaoTT 3o spaaooid 3o uoTIeTadoidde aqq 'gIIIX aToT41V aapun 'sngs „•aoTnJas jo gonpoid 'uoTgeln6aa aq4 6uTptnoad UT ••• aujoq ATgeuoseaj sgsoo aqq paaoxa spaaooid gons gpgl quagxa aqq o4 ATuo saa3 jasn pup sa6ipgo jasn 'sasuaoTT AjogeTn6ai saoeaguia gIIIX aToT41V japun ,saxpq 3o spaaoold„ 3o uoTgTuT3ap aq4 'KIIIX aT3T4JV japun saa3 pup sasuaoTT AjogeTn6aj 6uTpJe6aJ anoge uoTssnosTp aqq oq 960-£LMED GRW73-10B As noted in Atlantic Oil Co., royalties are in the nature of rental revenues: "[R]oyalty return . . . is rent, or so closely analogous as to partake the incidents thereof. The words 'royalty' and 'rent' are used interchangeably to convey the same meaning; i.e., the compensation which the occupier pays the landlord for that species of occupation, which the contract between them allows." Atlantic Oil Co., at page 601. Although the definition of "proceeds of taxes" is drafted in broad terms with the all-inclusive language of "but not restricted to," royalties or rental revenues are not commonly included within the meaning of a tax or the revenue from a tax, or a user charge or user fee. A tax is generally regarded as a charge imposed by a governmental entity to raise money for public purposes. Taxes are not founded in contract and do not create a debt or credit. See, e.q., Perry v. Washburn, 20 Cal. 318, 350 (1862); San Francisco Gas Co. v. Buchwedel, 62 Cal. 641, 644 (1882); Linnell v. State Dept. of Finance, 203 Cal.App. 465, 469 (1962). User charges and user fees, in the context of the defintion of "proceeds of taxes," would not typically encompass royalties or rental revenues. Within the context -40- -T TV- •(pappe sisegdtus) ,-saxe-4 go spaaoo-id aje 'A4a.1i-4ua JTag4 UT paMatn 'aingeu stgq JO saT4TPAOJ 4egl Taal jou op slagjejp aqy •(aWT4 UT 4utod aaggo 10) u014ealD SqT qe quauiu.zano6 TeOOT aq4 04 10 a4e4S aq4 04 s43t6 of uixe ajow aae qnq 'saxeq go spaaooid ggTm paseg3j nd ATTelau96 40u aaaM spueTaptq aq4 'JanoaJOW •sanuanal xel Jo quay 4Sanut aqq jo gonpoid TequaWUJano6 a 90 aTes aqq jaggTa uegq s4asse prnbTT-uou uo uangaj 3o aingeu aql ut aaout ale saT4TeAOJ asagy •saxeq se pageajq aq oq utagq asneo Mou 04 uotquaJUT ,saaj-e-lp aq-4 -4ou seM -4I ,.saxes, 'se paga pnq jou 'aq 04 pajapisuOO AlTelaua6 uaaq .zanau aneq ain;eu sig4 JO sat4Te og •spueT TTO pauMo -quautuJano6 90 aseaT aqq WOJJ saTgTpAOJ 4uawuJano6 TeOOT pue a4e4s ale saTdwexa AjeuiTa d •uoissnosTp Te Toads 4uelJvm uoT4eOT JTSSPTO JTag4 oq se ggnop go Teap gea.a6 e pasneo aneq gegq anuanaJ 3o saoanos TPJanaS„ :6T abed -4e sai-41eAO.z 6utp.ze69.z uoTssnosTp 6utMOTTOJ aq4 Suie4UOD 'aoaawwoo go aagwego etuJO;TTeD aq4 Aq pags?Tgnd pup sjaggo pup uueq Tned Aq uaggTam 4ua4ul ,Sjaggel(j pue UOT4eTsz a7 uT4u9uiaT uiI Paso oid go Ajeunung aqs ' ATTe4uapiOuTOD „•aOin.zas 10 gonpoid aq4 6uipTAOid„ oq ageTaa saa3 pup sa6.zego ,,saxe-4 3o spaaoozd„ 3o not-4Tut3ap aq-4 3o STT-£LMHO -Z Dl- *RIIIX aTaT41K UT u-4103 qas suotgeiadoadde uo suoT4e4TLUTj aqq of jaaCgns qou aie saTgleAoi uoTutdo ano uI SZT-CLMHO w, aw TasunoD Tetoadg Meq qe sAauaoggv uousjaO 1 ssn3Aaa(i 'uosgeM 'spleuOtg :AS V86T '9 ATnf QNVq QRNMO )UID NO JHIggIHG 'IIO NO sxodax xavwwns -T- L6uTTITIP TTo 04 6uTuTeq.zad MET aTgeoTTdde aqq sT 4egM (e) :Tasunoo Te Toads Aq passaippe aq oq suoTgsanb 6uTMOTTOJ ago paxse AgTO aq4 goTgM UT („dig„) sTesodozd .zoj -4sanbag e paZTzoq-4ne TTounoO A-4TO aqq jjoda.z s, aaggTuiuioO aqq 3o gdTaoaJ 6uTMOTTOd ,,-PueJ49 aqs,, UIOJJ pueTuT laaJ 008'T ATa4ewT -xojdde ST PJSA 9q4 leg4 s940u TTounoo AgTO aq4 Aq pa6e6ua uaaq seq oqM 4sT60Toa6 6uT4Tnsuoo K •goeag esouu ag 90 A4TO aqq Aq Isniq UT PTaq spueT9PT4 aq4 wOJJ 4aag 0001E 4noge ST aa44TUIWOO aq4 04 6uTpao33e pue aZTs UT sa.zoe ST' T ATa4eut -Txoadde ST p.ze7, aqy •anuanv AaTTeA pue hall; q49 30 Jau.zoo 9q4 qe pa4eooT ST pjQX aoueua4UTeW A4TO aqy •pa43TJ4saJ qou ale uoT4PJado aq4 WOJ; panTJap sanuanai aqq pue panTOsa-' ale ,sanssT uTe-4.zao„ -4egq papTno.zd paex a3ueua4UTeW A4TO aq4 uTgITM 6uTTTTIP uo ATgeIonej papuaututo391 'D,861 'L Ajenjga3 pagep j.zodaj sqT UT aa4jTWU1OD ags 'TTounoO AgTO aqq 04 suoT4epuauru0391 axeur 04 pue A4T3 aq4 urgITM AlaA0oal TTo 30 AgTTTgTssod aqq 9ge6T4sanuT 04 TTounoO AITO aqq go sjagwaw oMq pue A4Tunwuioo aqq go siagwaw anTJ 3O pasTadwoo aajjTWWOD uoT4e6T4sanul Alanooag TTO ue pa4UTodde 'E86T '£T jagwagdas uo TTounoO AgTO aqy BI0I1Of]Q0U1NI .I VT T -Z LMHE) GRW72-12A (b) Can the City rent an upland site without monetary restrictions? (c) May the fees received from the rental be expended by the City with no restrictions ? (d) Can the City use the same upland site for drilling other than slant drilling and if so is that revenue restricted? (e) Would other revenue generated by the oil drilling (such as taxes, fees, licenses, permits) be restricted? The RFP directed that the laws and regulations relating to the State Division of Oil and Gas, Proposition 13 (Jarvis -Gann), Proposition 4 (Gann), Coastal Zone, CEQA and other relevant authority be considered. Richards, Watson, Dreyfuss & Gershon was engaged by the City Council as Special Counsel to respond to those questions. Our engagement was limited to consideration of issues relating to drilling in the City Maintenance Yard, in the uplands, and any matters relating to drilling into the tidelands are not within the scope of our assignment or of this report.l 1 The City's Consulting geologist has expressed the opinion that no significant drainage of oil from the tide and submerged lands granted to the City of Hermosa Beach is expected to occur from wells drilled into the uplands from the City Maintenance Yard. MOM a= sAep 0£ uegq ssaT qou awTq e xT3 TTegs uoTgnTosaj agy •uodn pTq aq 04 J043eg aTgeTlen auo A;toads pup 'A4TeAOJ 10 TP4ual wnwTuTw aq4 pue aseaT jo waoJ aq4 Agtoads 'paseaT aq oq Agjadoad aqq agTjosap 'Telaua6 UT 'TTegs goTqM aseaT se6 pup TTo up oquT laqua 04 uoT4ua4ul Jo uoTgnTosag e gdope TTounoo A-4To aq-4 salTnbai aseaT se6 pue TTo up 04UT 6uTlaqua UT 09MoTTo3 aq oq ainpaooid Aiogngeqs aqj •saTITo MeT Te.zaua6 Aq saseaT se6 pue TTo og goadsai ggTM ainpaooid 6uTppTq anT4 -Tgadwoo e pagoeua seq ajngeTsT6aq aqy ('£8£L£§ apo0 JuawuJano0 !LSOL§ apo0 saoinosag oTTgnd 18TLS apo0 TTnTO) •SISeA anTJ-AglTq-4 paaoxa -4ou dew aseaT aqs •agngeqs Aq pazT.zoggne ATssa.zdxa ST uoTgonpoid se6 pue TTo ao� spueT pauMo-��To 30 6uTseaT aqs, •saanpaooi d pue suoTsTnoid Ajogngeqs ure4190 04 goalgns '.zauMo agenTid e se TTo 10; TTT.zp 04 sgg6T.z awes aqq seq TTo e - auMo pueT e sV • sainpaooia pue AqTjoqqnV BuTspaq • T L uTTTTJa TTO oy BUTUTe4lad Meq aTgeoTT v aqs sI gegM (e) S NOI ZS SaO 01 S SNOBS SU 30 XHVWWn S 'II •gaoda.z sTg4 UT passnosTp suoT4sanb aq4 g4dap Jage9.z6 UT sassalppe goTqM lanoo agejedas aapun paquasaid 6uTaq ST gjodal TpuT9 K V£T-ZLPAUD -tl- gxagUoo aqq UT gegj pazTu6o3aa seg janoo awaadns eTuaOJTTeD aqy •waaq 91TUTJapUT aaggo Aue log ao pTaT3 aq4 90 a3TT aql nano puagxa Aew goTgM 4uawa9a6e anTleaado-oo ao gTun gons Aue agenjoajja 04 Aaessaoau squawnoop TTe agnoaxa 04 A4T3 aqq sazTaoggne ATssaadxa UOT40aS aqy •a4seM aTgeuoseaaun woaj se6 pue TTO go UOTgoagoad ago ao se6 JO TTO 30 AaaAooaa agewTgTn aqq 6UTSe9aouT go jSaaagUT aq4 UT PTaT3 se6 ao TTO aq4 UT spueT aaglo 3o saauMo g4TM squawaaa6e anTgeaado-oo ao gTun OJUT aa4Ua 04 A4To e sazTaoggne ATTeoTgToads 8SOL UOT4099 apoo saoanosag oTTgnd 'SUOT43as paouaaajaa anoge aqq Aq pagTaosead aanpaooad 6uTppTq anT4TIadwoo aq4 pue waa4 uo UOTjoTagsaa aeaA S£ aqq 6UTpue4Sg4TMlON „•TeoTgoeadwT aq • 'quauTwwT aO Ten4Oe 'a6euTeap ao pTnoM aanpaooad gons Agaadoad aqq 30 azTs Trews aq4 go uoseaa Aq aaagM„ saanpaooad 6UTppTq anT-4T-4adwo3 w019 squawaaa6e 6utgeaado aO saseaT aeTnoTlaed Idwaxa oq AgTaogqne AaeuOT4aaosTp seq uOTSsTwwO3 spueq agegs aqq gegq sapTnoad agnleis aqy •(6SOL 'S'8SOLS§ 'apo saoanosag oTTgnd) aappTq aTgTsuodsaa gSag6Tq aq4 04 paseaT aq TTegs Alaadoad aqq pue TTounoo aqq go UOTssas oTTgnd UT pauado aq TTTM sTesodoad aqs •sxaaM ano3 aog pagsTTgnd aq TTegs UOTjnTOsaa aqs •paaapTsuoo pue panTaoaa aq TTTM sTesodoad pa Teas goTgM le TTounoo A -4T0 aq-4 JO 6uT'4aaw a a04 aa�3eaaaq� V6T-ZLMU9 -S- pue SquaW9JTnbaj VOSD 6uTpnTouT 'PTUJO3TTe3 3o agej9 aqq Aq pagsiTgegsa squawaiTnbai TequaWUOJTnua pue TOJ4uo3 uoTgnTTod TTP go 4uaulTTTJTn3 aqq uodn qua6UT4uo3 ST suoT-4 -Pjado 6uTTTTJP 3o TPnojdde s,uoTsTnTQ aqy [T£61§ apoO anT4RJ4STUTUIpV •TeO VT] •puoq AITuU19puT UP PUP 6uTTTTIP aouaWWoo 04 uoTjuajUT Jo 93T4ou e JosTnjadnS aq4 g4TM 9TT3 gsnui jogejado J0 19UMO aq4 6uTTTTAP 04 aoTad 'uoTgTppe uI [fTLT§ apoO 9nTgel4STUTWP'V'TPO 6T] '6uTTTTIP oq joTjd pajTnbai ST JosTnaadnS aqq Aq Tenoadde uaggTjM •suoT4eTn6aj aqq ggTM aoueTTdLuoo g4TM pa6JPgo ST TTaM se6 PUP TTo UP go jojejado PUP aassaT aqs 'uoT4Pn19suoO go quawlaedaQ a4e4S aq4 UTg4TM seO PUP TTO 90 uoTSTnTQ aq4 Jo JoSTnaadnS aqq Aq pageTn6aj ale suoTgejado SP6 PUP TTO •SPO PUP TTO 90 uoTSTntq •Z •panTonuT aq �eUl gaTgM SaT;jadoid puPTdn aqj 6uTAJTIuapT UT gsTsse ueo queglnsuoo wnaToagad s,AgTO aqs •uoT4P4TwTT ulla4 JeaA S£ aqq gnog4TM PUP 6uTpptq anT-4Tgaduioo gnogqTM PIaTJ TTo aq4 Jano all gOTgM spueTdn 3o siauMo �gjeau g4TM 4uau1aaj6e anTgejad000 io gTun P 04UT iaqua XPw X4TO aq4 AT6uTPJO33V '((T96T) EST PZ'TPO SS 's-1a3(3TA •n goeag uoZ -4o ,74T:)) •paaTnbai IOU ST 6uTppTq anTITgadwoo uoT43aS STg4 Jo VST-ZLM'dO GRW72-16A associated regulations of the Resources Agency and Depart- ment of Conservation. [14 Cal. Administrative Code §1722(a)] The Public Resources Code sets forth various well -spacing requirements. The Division of Oil and Gas may, however, adopt a well -spacing pattern other than that specified in the Code in order to prevent waste and promote maximum economic recovery. [Public Resources Code §3609.] 3. California Environmental Quality Act. An oil drilling project at the City Maintenance Yard would be subject to the provisions of the California Environmental Quality Act ("CEQA"), which apply to any "discretionary" project proposed to be carried out or approved by a public agency. In our opinion the proposed oil drilling would be a discretionary project because it involves judgmental decisions by the City Council. These include the approval of an oil and gas lease, coastal permit, and possibly other land use permits if a measure authorizing drilling is adopted by the voters. Further, there are no exemptions set forth in the statute or the State CEQA Guidelines that are applicable to the approval or carrying out of an oil drilling project. Under CEQA an initial study must be prepared to determine whether the proposed project may ash -L- UT �T91T4ua you sT gegg goaCoad e anojdde og lapl o uI •doq aqg ggTM ITdmoo gsnut gTuuad Tegseoo aqy •g.anoD joTiadns aqg uT pa6u9TTeg3 aq Aeui 10 UOTSsTWWOD TegseOD eTUIOJTTSO aqg Og paTeadde aq Aeiu dyI sgT og guensand gTuuad e qons 3o AgTo agg Aq TeTuap jo gupl6 aqj, •gTwjad a qons anssT og AgTjoggne seq uiejbojd TegseOO TeOOI S4T 3o UOTgeoT3TglaO paATaoal 6UTAeq 'AgTo aqs •gTuuad IegseoO a sazTnbai goaCojd 6uTTTT-Ip pasodoid aqg 'auoz Tegseoo aqg uT pageOOT ST pleA aoueuagUTew A4TO aqg @OUTS •UeTd TegseOD TeOoZ *V •SUOTgejado 6uTTITIp Aue pue aseaT se6 pue ITO Aue 30 UOTgnoaxa aqg og JOTjd pagaldwoo aq gsnw Vogo japun palTnbai UOTgeguaumoop pue MaTAaa Teguaw -UOJTAua aqg janaMog •VbgD japun goaCoad e agngtgsuoo you saop A4Tunwwoo e 30 aTdoad aqg 3O agoA e Og Tesodoad e 3o UOTSSTwgns aqg gegg apTAojd SauTTapTnq agegs aqy •paaaprsuOO aq og j ogoe3 e ST sleaA Auew jo3 Agjadoid aqg uo pagejado uaaq seq pue pagsTxa seq ITaM ITo ue gegg g3e3 aqs •guaTOT33ns ,ITTeBaT aq TTTM UOTgeaeTOap aATge69u e 'guaWUOaTAua aqg uo s43a33a gueOT3TU6TS Aue aq Aeui ajagg gegg aoUapTAa TeTguegsgns ou sT alagg 3T 'pueq J9g4O aqg up •paiedaid aq gsnui gjodai goeduil TeguauiuOJTAua ue 'sg3a339 qons aJOlU Jo auo aneq AeW goaCoad aq-4 gegg sasOTOSTp Apngs TeTgTUT aqg 31 •gUauiuojTAua aqg uo sgoa33a gueOT3TU6TS aneq `dL T -Z LMH J GRW72-18A conformity with its LCP, the City must first amend the LCP and obtain Coastal Commission approval of the LCP amendment prior to approving the project. 5. General Plan and Zoning. The project must conform to the requirements of the City's general plan and zoning ordinance. Approval of the proposed project by the electorate does not alter this requirement. Thus, a measure adopted by the voters authorizing the project could not be carried out until in conformity with the City's general plan, zoning and the LCP. (b) May the City Rent an Upland Site Without Monetary Restrictions? Yes. There are no monetary restrictions on leasing an upland site. As pointed out above the statute provides for competitive bidding with one variable factor which shall be the subject of the competitive bidding. Thus, the lease could fix an amount of rental to be paid for use of the surface and the percentage of royalty leaving the amount of cash consideration or bonus to be the variable to be bid upon, or there could be other alternatives. These decisions would be made by the City Council with such consultant's assistance as it deems necessary. If the surrounding uplands within the drainage area should join in a unit or cooperative agreement, GRW72-19A the amount of rental charged for use of the surface of the City Maintenance Yard as the drill site would presumably be negotiated with the other owners so as to provide a fair rental or royalty to the City which would not appropriate an unreasonable portion of the royalties which would otherwise go to the other owners. (c) May The Fees Received From The Rental Be Expended By The City With No Restrictions? We interpret this question as being directed to any surface rentals, bonus, royalties or other cash consid- erations received by the City as lessor. The answer is yes. Such bonus, rentals, royalties and other consideration may be deposited in the City's general fund to be used for general governmental purposes. Since the next question, (d), is directed to "drilling other than slant drilling" we assume that this question refers to slant drilling into other upland properties, with the producing interval of the well or wells to be located within such other properties. The City has no right to authorize its lessee of the Maintenance Yard to drill into adjacent or surrounding properties and thereby to produce oil from such properties. Any such drilling into other properties by the operator -9- -OT- ,eiq panT19p sanuanal aqy •pjpX aoueuaquTeW aqq go aoejjns aqq go asn jog pageT4o6au aq oq 4uaui913uT ue 6uTpnTouT AlTo aq4 04 aTgeooTTe alegs aqq ggTM 'uoTlonpoid wojj paAllap aq oq saTgleAol aq4 3o uoTgjod aTgeooTTe ue antaoal 04 ST jauMo goea z�gajagM 'pauoTquaut anoge se quautaaJbe anTgejad000 jo gTun e oquT laqua Lieut 'A4TO aq4 04UT spua4" goTqM PTaT3 TTo aqq go ease pagTUITT aqq uiggTM Agjadojd 3o sjauMo laggo pue AITO aq4 'oTJeuaos aTgegojd aj oui a sv •sasodand Te-4u9utu:Iano6 Teaaua6 jog punt Teaau96 s, AgTD aq4 UT paoeTd aq pTnoo saTgTeAOJ 10 sTe4ual qons Aue pue pae7, a0ueua4UTeW 9q4 UT uoT4e3oT aoejjns aqq 3o asn 9q4 JOJ A4TeAOJ JO Te4uaJ a a6aego Aeut AgTD aqq aseo qons uI •pje7, 93ueua4UTeW aq4 WOJJ saTgjadoid jTag4 oquT 6uTTTT.zp 4ueTs gTutzad goTqM 'pje7, aoueua4uTeW aql 30 aassaT 9q4 g4TM 'aTdutexa jog 'se 'saseaT se6 pue TTo 04UT Ja4u9 Aeut SJauMo Agjadojd 6uTpunojjns jo queoeCpe aq4 'JanaMog •sa6eurep se jauMo Agjadojd aqq Aq quautdnooai of goaCgns aq pTnoM qT 'suoTg3TJ4SaJ AjogeTn6aj zo Tequautu.z9no6 30 6uTueaut aq4 uTg4TM „pa:43TJ-4SaJ, aq -4ou pTnoM sTTaM qons wojg AgTD aqq Aq panTaoaJ anuanaJ Niue aTTgM 'sngy-Agjadoid geg4 woj3 paonpoid se6 pue TTo TTe go anTen aqq apnTouT pTnoM goTqM WTeTo a aneq pTnoM jauMo Ali adoad papuaggo aqJ pue sapenuT TTaM aq4 goTqM Agj9dojd aqq 3o jauMo aqq 3o SJg6TJ Agjadoad aqq Jo uoT4eToTn e agngTqsuoo pTnoM VOZ-ZLMHO GRW72-21A the City under such unit or cooperative agreement would be free of any governmental or regulatory restrictions.2 (d) May the City Use the Same Upland Site for Drilling Other than Slant Drilling and, If So, Is the Revenue From that Drilling Restricted? The City may use the maintenance yard for vertical drilling with the well or wells to be bottomed within the boundaries of the maintenance yard. All royalties derived by the City from such well or wells belong to the City and may be placed in the general fund to be used for general governmental purposes. Even if oil is drained from surrounding properties title to it is acquired by the operator when it is taken into possession and control at the well head. However the probability of claims against the City by surrounding upland owners alleging drainage from their properties must be recognized. As noted above under (c), the City could enter into a unit or cooperative agreement with owners of surrounding uplands properties which are 2 Based upon the June 25, 1984 report of Robert N. Hacker, Inc., the City's petroleum consultant, it is assumed that drainage of oil from the tide and submerged lands held by the City in trust would not result from such production from the uplands and accordingly it is assumed that the tide and submerged lands would not be involved in any unit or cooperative agreement. -11- -Z T- quagxa aqq oq 'aaggan3 -VIIIX aToTgaV aapun ,xe-4 teToads„ e agngTqsuoo 4ou saop aag ao asuaoTT Bans 'sasodand anuanaa p94eTaaun log paTAaT qou ST pue A4TAT43e ago a4eTn6aa 04 saOTAaas buTpTAoad 3o sgsoo aTgeuoseaa aqq paaoxa 4ou saop ITO 3o uoTgonpoad aqq g4TM uOT43auuo3 uT AgTO aqq Aq pabaego aag gTwaad ao asuaoTT ,IUe 3I 'q •sasodand Te4uawuaano6 Teaaua6 109 pasn aq oq punt Teaauab aq4 UT paoeTd ale xeq aqq go spaaooad aqq gegq papTAoad VIIIX aToT41V 3o SUOTSTAoad aqq o4 goalgns aq 40u pTnoM UOTgonpoad ITO uo A4TO aq4 Aq paTAaT x12-4 V •P :apnTouOo am '(,aAT-4PT4TUI UOT-4P-4TUITrj xel Xgaadoaa uuPO-STnaer„ paTTeo-os aq4 ao „£T UOT-4Tsodoad„) VIIIX aToT'4JV 04 4oadsaa g4TM 'T -V 10 CI UOT4 -Tsodoaa Liq pa-4oaige aq qou ale sanuanaa asag4 'Mojaq pagou suoTgeoTjTTenb aqq ggTM •sasodand TejuaWua9no6 Teaaua6 ao3 pasn aq oq punt Teaauab aql uT paoeTd aq Aew sanuanaa asag4 'MOTaq pagou SUOTgdaoxa 9q4 g4TM 'ON ,�pajoTagsau aq (S4TWIad 'sasuaOVI 'saa3 'saxey sv gons) BuTTITIG ITO 9q4 Ag paleaaua0 anuanau aag40 pTnoM (a) -punt Teaaua6 aqj oq anaooP pTnoa pue pagoTagsaaun aq pTnoM 'pagou FpPaaTe se 'aaegs s,AgTO aqy •saauMo aqq 6uome saTgleAoa aqq go uOT4e3oTTe aTe3 P g4TM SP6 pue ITO buTonpoad Jo aTgedeo `dZ Z -Z LM2i9 GRW72-23A that the license or fee exceeds the reasonable costs of regulation, if those excess fees are placed in the general fund and used for general governmental purposes, the excess fees would not be subject to the limitations of Article XIIIA in any event. c. Article XIIIA would have no application to royalties received by the city from the production of oil. 2. With respect to Article XIIIB of the California Constitution ("Proposition 4" or the so-called "Gann Initiative" we conclude: a. If the City were to levy a tax upon the production of oil, the proceeds of that tax would be subject to the limitations on appropriations set forth in Article XIIIB as in the case of other taxes. b. The proceeds of licenses and permit fees would not be subject to the appropriations limitation, provided they did not exceed the costs reasonably borne by the city in providing the regulation. On the other hand, if the proceeds of the licenses and permit fees did exceed the costs of regulation, such proceeds would be subject to the approprations limitation. C. Royalties would not be subject to the limitations on appropriations set forth in Article XIIIB. -13- -T7T- 'paIlTwgns ATTnjgoadsag •agep siyq 3o giodal Teat; TTn; aye oq apew si aoualajaj uoissnosip paTie4ap ajoiu e jo3 Vt,Z.-ZLM 9 RICHARDRICHARDS RICHARDS, WATSON, DREYFUSS & GERSHON GLENN R, WATSON ROBERT G. BEVERLY ATTORNEYS AT LAW HARRY L. GERSHON J. R. VAUGHAN A PROFESSIONAL CORPORATION DOUGLAS W. ARGUE MARK L. LAMKEN ARNOLD SIMON PATRICK C. COUGHLAN LEE T. PATERSON RICHARD H. DINEL DAROLD D. PIEPER July 12, 1984 FRED A. FENSTER ALLEN E. RENNETT STEVEN L. DORSEY WILLIAM L. STRAUSZ ROBERT M. GOLDFRIED ANTHONY B. DREWRY MITCHELL E. ABBOTT TIMOTHY L. NEUFELD STEVEN A. BROILES GREGORY W. STEPANICICH ROCHELLE BROWNE DONALD STERN MARY JO MCGRATH MICHAEL JENKINS BURTON MARK SENKFOR MARIANNE GOODWIN TERESA R. TRACY OUINN M. BARROW DEBORAH S. GERSHON COLEMAN J. WALSH, JR. JOHN F. P'LAM B CAROL W. LYNCH LAUREN SEYMOUR RONALD F. GARRITY Mayor Gary Brutsch Members of the City Council City of Hermosa Beach Civic Center Hermosa Beach, California 90250 Re: City Yard - Title Dear Mayor and Members of City Council: THIRTY-EIGHTH FLOOR 333 SOUTH HOPE STREET LOS ANGELES, CALIFORNIA 90071 (213) 626-8464 CABLEADDRESS RICHWAT OF COUNSEL GILBERT DREYFUSS, INC. RONALD M. GREENBERG A "Mp SWCORPORATION JAMES K. HERBERT Following up our letter to you dated July 10, 1984 regarding the covenant against oil operations in the City Yard, we are now enclosing a copy of California Land Title Company's letter dated July 10, 1984 in which the company states that it will issue an endorsement against loss by reason of the covenant against oil operations, as a part of a title insurance policy. A speciman form of their endorsement form 100.6 is also enclosed. The company's liability under it is limited to the face amount of the policy, which, presumably, would be the market value of the property. We recommend that the City estimate the value of the property and order a policy of title insurance at this time. You may wish to talk to Mr. Hacker, petroleum consultant, regarding the estimated cost of drilling an oil well. (I have the impression (un- verified) that it may run in excess of $300,000.) If the value of the property equals or exceeds that figure, the endorsement would cover the cost of a well. Mayor Gary Brutsch Members of the City Council City of Hermosa Beach July 12, 1984 Page Two We are also enclosing a copy of the deed which excepted and reserved the mineral rights below 200 feet under lots 11 and 12 in Block U (and the westerly half of Bard Street). It supports the preliminary title report's finding that the City does not have the mineral rights under these lots and that the owner of the mineral rights does not have the right to enter upon the surface, which is owned by the City. This completes the documentation which we were to send to you on the title. We assume that the Staff will order the title insurance if the Council directs that it be obtained, but, of course, we would be pleased to be of assistance if you will call on us to do so. Very truly yours, Glenn R. Watson GRW:dma Enclosures cc: Gregory T. Meyer, City Manager Pamela Sapetto, Planning Director C A L I F O R N I A L A N D T I T L E C O M P A N Y A DIVISION OF CONTINENTAL LAND TITLE COMPANY July 10, 1984 Richards, Watson, Dreyfuss and Gershon 333 South Hope Street 38th Floor Los Angeles, California Attn: Mr. Glenn Watson RE: The City of Hermosa Beach Our Order No. 3849566 Dear Mr. Watson: With respect to the above referenced project and our revised preliminary title report dated as of June 5, 1984, we have reviewed the "Conversant Not To Drill'.' document shown as item number 2 of Schedule "B" of said report. It is our understanding that we will be requested to issue our C.L.T.A. form leasehold policy of title insurance in connection the above referenced project. Upon request, we will attach C.L.T.A. indorsement form 100.6 to such policy of title insurance with respect to said item number 2 of Schedule "B" of the above referenced preliminary title report. A sample copy of said indorsement is attached for your review and consideration. The attachment of said indorsement to a policy of title insurance for said project is conditioned on nothing adverse being disclosed to our company either as a matter of public record or otherwise between the date hereof and the date of issuance of said policy and indorsement. If I may be of further service to you regarding this or any other matter, please don't hesitate to call me personally. Sincerely, Art Cheyne Vice Presid nt Corporate Sales CC: Dennis McKim Roque Garces 60 UNIVERSAL CITY PLAZA 0 UNIVERSAL CIN, CALIFORNIA 91608 • AREA CODE 213 9 760-2700 ENDORSEMENT CODE NAME Lars Title Insurance Corporation NUMBER A Stock Company EB 147983 100. 6 Ho,nw Office - R"n%oM AArpnw Attached to and made a part of Lawyers Title Insurance Corporation No. The Company hereby insures the Insured against loss which the Insured shall sustain by reason of any final judgment enforcing the covenants, conditions, a d restrictions referred to in paragraph f Part Two of Schedule B, based up a vi lation thereof on said land, pres��fu ure . The total liability of the Company and r said kolicy `end any indorsements therein shall not exceed, in the _ reg te,a face � ount of said policy and costs which the Cor: ny is b ated under the conditions and stipulations thereof to y. This indorser+ent is >Ta e a pa t of said poI'icy and is subject to the schedules, conditions and sti lations therein, except as modified by the provisions hereof. The total liability of the Company under said policy, binder or commitment and under this and any prior endorse- ments thereto shall not exceed, in the aggregate, the amount of liability stated on the face of said policy, binder or commitment, as the some maybe specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated to pay under the Conditions and Stipulations of the policy. This endorsement is made a part of said policy, binder or commitment and is subject to all the terms and provisions thereof, except as modified by the provisions hereof. Nothing herein contained shall be construed as extending or changing the effective date of the aforesaid policy, binder or commitment unless otherwise expressly stated. IN WITNESS WHEREOF, the Company has caused this Endorsement to be signed and sealed as of the day of 19 , to be valid when countersigned by an authorized officer or agent of the Company, all in accordance with its By -Laws. Issued at COUNTERSIGNED: i/ �j Authorized Officer or 4gent/ b3vu rs Title i Grpomnon �1--c'�.,�,a6,,. President Attest: Secretary. FORM 91-11A (REV. 4/76) LITHO IN U.S.A. 035-2-011-0040 EXTPI., ,.r,,,... S336Vf-'-71006 d3OI330 Tiii [ ] 8 N803 AOI -10d S,63NMO NOIiHI00SSV 311I1 GNV-1 NV3Ib3WH [] A3I-10d 33Nv6nSNI 3ilIl-idI1N34IS38 NOIiVIOOSSH 3-I1I1 GNHI NHOId3WH [ ] AOI10d NHO1 NOIiVIOOSSH 311I1 0NH1 NH3Id3WH 'Z [ X] AOI10d 3SVa3A00 G6V(JNH1S NOIidIOOSSH 311I1 0NH I VIN603I-iVO -T :SI i8Od3d SIHl A8 031H1dW3iNOO 33NV6nSNI 311I1 30 AJI10d 30 W603 3H1 '031S3nD38 38 01nOHS 1N3WIIWWOO 60 630NI8 V `33Nv6nSNI 311I1 30 AOI10d V 30 33NVASSI 3HI 01 60i6d 03WnSSd 38 AiI1IGVI1 IHHI 036IS30 SI lI 3I *A8383H 03WnSSH SI AIIIIBHI_i ON 0NH 30NH6nSNI 311I1 30 AOI10d H 30 30NvnSSI 3Hi ONIiViI1IOH3 30 3SOdand 3H1 80A A-i310S 03nSSI SI (01363H SIN3W0N3WH 60 S1N3W31ddnS ANd 0NH) i8Od3d SIHI *i8Od36 SIHl 03nSSI HOIHM 33I330 3H1 W06-3 319V-IIHAH 3dV A3H1 '0H3d 38 01nOHS SW603 AJI10d 3H1 30 S3Id00 'iSI-i 03HOHIIH 3HI NI HIdOA 13S 366 S3IJI10d 60 AOI10d QIHS 30 39Vd3AO3 3HI W08A SNOISn-10X3 (INV SNOI1d3OX3 031NI8d 3H1 'SW603 AJI10d QIHS 30 SNOIiv-indI1S ONV SNOIlICN0O `S31003HOS 031NI6d 3H1 01 1NHnsdnd 3SV83AOD WO?J3 030ni3X3 ION 60 8 31n03HOS NI NOI1d30X3 Nd SV 01 03863336 60 NMOHS ION 33NH68WnON3 60 N31 -i `103330 INH 30 NOSH36 A8 03NIHISnS 38 AHW HOIHM SS01 1SNIVSV ONIdnSNI `Hi6Od 13S 831AVNI363H NI383Hi 1S383INI 60 31ViS3 3H1 ONH ONH1 3H1 SNIBI?IOS30 33NV6nSNI 311I1 30 S3IJI10d do AOI10d H `J0363H 31H0 3H1 30 SH 03nSSI 38 01 3Snv3 do `3nSSI 01 036Vd36d SI II 1HH1 Si60d38 A8383H ANHdHOO 3-I1I1 aNb-i -IVAINIA00 30 NOISIAIa 3III1 MN dINd03IiH0 30Nv8nSNI 3 -Il Il AO A3I10d d 60A NOIiV3I1ddH 030N363A38 3AO8H 3HI 01 3SNOdS38 NI 9956 98 'ON 6n0 HOd38 dSOWa3H/SNI1100 'ON anoA 'W'H U:L id �96T `5 3Nnc 3o SV 031Ha AdM380 '8 ANOHINH :NOI1N3iiV TL006 do `S3130Nd SO -1 '-IJ H18£ 'IS 3dOH 'S � MOHS830 q SSnAA360 `NOSIHM `SG6VH0Id 909T6 VIN80AI-iVO `AiIO IVS83AINn HZV-ld Ai IO 1HS63AINn 09 OOLZ-09L (DTZ) NOISIAIa ONd-I VIN80JI-IHO :33I330 9NI(1SSI ANHdWO:D 31111 dNV1 1b1NMIN00 lMr%J7A1 I %IV\IIIAII1w I - 'A1Nn0O S3-130NH SO -1 d0 S(180336 _iVIOIddO d0 T�'ON 1N3Wn81SNI SH T96T `OZ H36HW C3C80336 0330 NI ANddWOO 3-11I1 XI -lend AB 03A63S36 CNH G31d3JX3 SV `031d33X3 60 (13A83S38 lON A-iSS36dX3 SI CNH -I CIVS d0 3OHd6nS 3H1 NOdn 831N3 01 1HOI8 3H1 1HH1 83Hl8n2 03CIA -06d CNH :MV -1 3H1 d0 S1N3W36In036 N3H1 3H1 HlIM 3ONVI-Id WOO NI 38 -1-IHHS SNOIiV83dO ONINIW CNH 9NI-1-IIH -i-IH `63A3MOH `(13CIA06d !(INV -1 CIHS d0 3OHd6nS 3H1 NOdn 60 HOn06H1 lON (1NV CNH -I CIHS d0 33vAansenS 3H1 O1NI A-INO N3H1 CNV (1NH-1 63H10 NO A"INO 3CHW SONIN3dO 60 03-I-iIa(l S -1-13M d0 SNd3W A8 (1Nd71 63H10 (INV CNV_l (1IHS W08A S-iV83NIW d3H10 ONV S3ONH1s8nS N086t13O8GAH wnl-VHdSV `Wn3-10813d `SVS `-IIO 9NIl3H61X3 CNV 9NIAOW36 `9NIdO-13A3a `ONINIW `9NI-i-II8G `HOnOdHl 9NI-I-IId4 (INV ONISSHd `603 9NIi33dSO8d d0 3SOd6nd 3H1 603 (1NH-I CIdS d0 3O'dd8nS 3H1 MO -138 1333 OOZ S3I-1 HOIHM CNN -I CIVS d0 NOIl8Od Kvf 8nS-ens 1HH1 01 SN A -ANO 1N3W3SV3 Nd HlIM 63H13901 W08d363H1 C3A63S36 d0 C3OnC -Odd 38 AHW 1dHl CNH A163d06d QIHS d0 33Hd6nS 3H1 MO -138 1333 OOZ 9NIA-1 S-IH63NIW 83H10 CNH S33Nd1S8nS N086H3Od(1AH Wnl-IVHdSV `Wn3i -0613d `SHO 17II0 -1-iH `Z "1338dd d0 ZT CNH TT S107I W06d363H1 1d3OX3 '1SH3 3H1 NO S10 -I CIdS ONINIOCGV `C3IHOHA 13361S (16H8 d0 d-iHH A-1631S3M 3H1 HlIM 83H13O01 `A1Nn03 CIHS d0 63C6033d A1Nn0O 3H1 d0 33I2d0 3H1 NI `SdHW d0 SST CNV +QST S39Hd ZZ X1008 NI (13(160036 dHW 63d SH `HINH.dI-SHO d0 31H1S `S3-i39NH SO -1 d0 A1Nn0O 3H1 NI `HOH38 HSOW -63H dO AlIO 3H1 NI `ZOOZ 1OH61 `n X100-18 `3AISn-1ONI 9T 01 TT S10 -I :Z -1336Hd '1S3M 3H1 NO S10"1 CIHS ONINIOC(1H `G31H3HA 13361S (16H8 d0 d-iHH A-1631SH3 3H1 HlIM d3H13801 `A1Nn00 CIHS d0 63(160036 A1Nn00 3H1 d0 33Idd0 3H1 NI `SdHW d0 SST (1NH i) T S30Hd ZZ >1008 NI C3C60036 dHW 63d SH `HIN60dI_IVO d0 31HiS `S3-130NH SO -1 JO A1Nn03 3H1 NI `H3V38 HSOW63H d0 AlIO 3H1 NI `ZOOZ i3V61 `6 X100-18 `3AISn-IONI 9T 01 6 S10 -I : T-1306Hd :SMO-I-IOd SH (138I63S30 SI 0NH S3330NV SOI 30 A1Nn0O `HIN803IlHO 30 31HiS 3H1 NI 031Hn1IS SI 160d3d SIHl NI 01 (13663336 ONH-1 3H1 NOIlH60dd0O-iHdI3INnW d `HJV3,8 HSOW63H d0 AlIO 3H1 :NI 031S3A SI A0383H 31H0 3H1 1H 1S3831NI 80 31HiS3 CIHS 01 3llIl 33d H :SI 18Od38 SIH1 A8 0383A00 01 C38d3338 80 038I6OS30 831JVNI383H 0NH-I 3H1 NI 1S3831NI 80 31HiS3 3H1 9956 28 'ON 630de v i1na]HOS -G3nNIlN00- 3SH371 GINS NI 33SS3-1 60 6OSS3-1 3H1 30 1S3631NI NO S1HOI8 3H1 9NIlO3d3H Sd311HW 63HiG 01 SH 6ON `3SH3-1 GIBS A8 031H360 0-IOH3SH3-1 3H1 30 dIHS63NMO 1N3S3dd 3H1 01 SH 3GHW SI 30NH6nSSH ON SGN0036-iHIOI330 `SLS 30Hd OSTOT XOOG NI :03G6003d 'G1I ANHdWOO -IIO Hbn1N3A-HIN?JOAI-iH0 MON `NOIiV6Od600 H `ANHdW00 _IIO Vdn1N3A-VIN603IIHO :33SS3I HOH38 VSOV463H 30 ALIO 3H1 :6OSS3_1 U6T `OT AHn883.� :031HG ' NI363Hi HidO_3 13S SH `ANH 3I S1N3W3SH3 HlIM 63H13001 `SNOISIA06d (INVSNOIlIGN00 `S1NHN -3600 NIVi830 H1IM G3GIA06d NI363Hl W631 3H1 2103 3SH3I SH0 GNH -IIO NH s6v-In0I16Hd -iin.l aOJ 3GHW A83d3H SI 30N363336 G6003�J HOIHM 01 `SG33G 30 T5 3SVd 05�q 6008 NI 03G80316 '-IV 13 833d000 '1 1638023 01 ANHB SONIAHS (INV iSndl SN3Z -ILIO H062 G33G 3H1 NI GNH `SG33G 30 9�T 30Hd T06T AGOG NI G3G60036 `ANHdHO3 KIN8 3NOlSGNHS-OI3I3dd 01 ANHdW00 631HM GNH GNHI H0H38 VSOV463H W063 033G 3H1 NI G3NIH1N00 SNOIl0I6i1S36 CNV SNOIlIGN00 83H10 GNH S30NH1S8nS GIBS zJO ANH GNHI GIBS 83GNn W06=1 60 W083 3AVi b3NNHW ANH NI 60 GNHI GIBS NOdn S30NHiS8nS NO86H306GAH 63H10 810 WniIHHdSH ao Wn3I06i3d `_IIO 8103 3608 80 31HAH0X3 01 lON 1NHN3A00 H 'z 'G60338J 30 03SOI3SIC lON SI 1N3W3SH3 GIBS 30 1N31X3 GNH NOIlH00I i3VX3 3H1 'SG33G 30 TS 30Hd O5�9 X1008 NI G3GH336 G330 NI G3A63S36 SH GNH GNH"1 GIBS :S10333H S0330 30 `L� 30Hd LT9T >f008 NI :G3G60036 S3NII 3dId :3SOd2jnd ANHdW00 631HM GNH GNHI HOH38 HSOW61H :01 031NV80 1N3Wn000 H NI Hi H0 13S SH 01383Hi IHIN3GI0NI S1HSI6 (INV MO -138 NMOHS 3SOd6nd 3H1 203 1N3W3SH3 NH 'T 'HINNO_IIIH3 30 31HiS 3H1 30 �86T 30 S31niviS `80 831dVHO 30 SNOISIA -Oad 3H1 01 1NHnsdnd G3SS3SSH `ANH 3I `S3XH1 IH1N3W3IddnS 30 N3II 3H1 '8 ' 3-i8HAHd 13A lON N3I-1 H 366 HOIHM 596T - �96T 6V3A _ IHOSIA 3H1 80A G3IA3I 38 01 `S3XH1 H1IM G3133II03 S1N3WSS3SSH ANH ONIGnIONI `S3XH1 AlL3d06d 'H :SMO -i-103 SH 38 GInOM i60d36 SIHl 30 30Hd 30H3 3FIi NO G3IHNSIS30 Wd103 AOIIOd 3H1 NI SNOISnI0X3 (INV SNOI1d30X3 G31NI8id 3H1 01 NOIlIGGH NI 30V63AOO 01 SNOI1d30X3 303�J3H 31HG 3H1 1H 995OH -ON 8i3GK 9 3 ina3HOS '3146 30NH60SNI 3-11I1 (W631-16OHS lON) OISVO 3H1 NO 03SH8 38 -I`IIM `63460 3-11I1 SIH1 HOOOdHJ 430SSI N3HM `30Nd60SNI 3-11 11 30 AOI -10d H 603 306HHO 3H1 :'Z 'ON 310N '160d38 SIHl 30 31VG 3H1 30 SHINOW (9) XIS NIHIIM 43460036 `CNV -1 QIVS 9NI10333H S33NVAIANOJ ON 38H 363H1 :'j 'ON 310N S310N 9980 H *ON 63060 Z 30Hd 1 1%.j a •VA o -"L o U� ZLZ OW oR //SZ 'JV /Z Fll S'Z. 99Y,� g pf 20%F F2%f .6%f l %f O \ • !s%F 'V -/ T ^ \ �1►� Oaf \\ N� 'nN C�,\ �N lqv v b. 1 Q0 To \ Nn hO\ pfl \ ^i a Z SZ N / sz /z of z /z o6 z of /z of z'oF o /;,OF / ) �) SZ SZ SZ N � O 31 H,b/1- — (72l b/ - o vi SZ h of gz " hell tt4 _ _ �� s� Z qz SZ 6/LZ /'SZ /1 -Of' 2 OF OF /Z OF /Z'OF /Z OF /Z'OF /Z "OF U V OF BZ s SZ stt ^ a0 m 4 Q— p ^ ^ h O l9 ^\ T o �� N ") of Z t OF OF 1 C N OF of OF of v nl CIV o l IZ sZ w _ O l`y O tt •� BZ Sz O ca \ N No SZ SZ S7 SZ 5Z' LC p� o -a4d CONTINENTAL LAND TITLE COMPANY ISSUING OFFICE: 60 Universal City Plaza Universal City, CA 91608 818 760-2700 D7/ =_S50,^- Or LOAN NUMSE�: 1 LE OFFICERORDER0/84 HERMOSA BEACH ROQUE GARCES NUMBER 3849566 '-'ECEIVED F .RICHARDS, WATSON, DREYFUSS & GERSHow JUL 11 1984 •333 S. Hope St., 38th Floor *Los Angeles, CA L ATTN: Glen R. Watson J ENCLOSURES: ❑ Policy of Title Insurance ❑ Certified copy of C.C. & R. ❑ Copy of Policy of Title Insurance ❑ Deed from I-, Fire Insurance Policy El Deed of Trust ` Tax Bill XX Maps ` Recorded document returned to us by the County Recorder, Other: C Preliminary Report COPY OF EXCEPTION TO ELGAL DESCRIPTION T2 (10) -•8 a a '�k Wler—, 7 fir. ?kf2 , sss r 't sO fl ' r *..f T96t �6. F.STt1.2gQ,� p�geq s o � '°, = : . : � ._. ° �' " .. , - � . • p'azxao:�-ane -� �°,, . LT-rp r0-jLThQSQtxa P'ue F.q. PQgn�QrQ ,e .�ts4oq ,�uesFr%rgacl� gTt{q�T og ;jq ParP'3s; aq oq Teas ataa a ra agsjodao4p':Q�x,PQsnv-3 set; .t1o�gR a �Te6 `7021�ai . SS2'.1J, N a , � -- -�. - •a.roa.Q.i-3R-E>s�.3A ea4�TS:_,- � r P UV 94t431.1 'sgttevroseo 'sJo"ansasa.z 6stlRjg0jslsa.z :•suoTgIP'lna 's,gaeilaAo ,' . •7 �., s r.'`y 'gtiatibQegttb`_Ptie Zq-09fiT 1BaS Tess; O _ a , ::.: ;;•TBtr .gu��as aqq".:o3-`s�ti-atIIssassT :p'z'R'sayr;;,. .� :�o� �.��r�:';� -. ':�• :. ._ -sub;s>�e .zo saeBo'[eiwa _�s�ua?e :•s,zossao�tls-s�� '.:ogcxs? akq` oq"ao''Sq pequaaxa :.zo Pa T U STesa.zdla sT pt:e.T gaa_kgns g. -Ot;q 30 `oos3.zns a,4,4 uodn aawe oa aati� �'3 PopTR -osd Pae ��►aT ,at;q ,o sguauasT__baz ua;z"Q,; UITr a Lle.TTct�a:,`.,:zl aq TTTge suPTIva a o ?UI Ul-m .cus `?uTT _T ' PS - -'� �.:anar �t� . �pap4e% pasZ_pogtn.�-sTt(1 3P'-ate3.zns st:.` uo_:3-'::0 �3r_-szu� ,,u pPa pueT "pQgxii' B WT q-4 .'jo :ooel isgns a42 0-4ti rTzo aul pu-n pa-q-, .:a*.Iqc tzn � o 'sapeaII sQ'a 0d0 so.;'paT*T,= .sT-.r 10 etrR4d`Sq PUTT-:zac12c PUT paTT pias mos sTe.ta , .Ia ao ;sau>,sr.qzruao 'Mdev 'mnaToIp4ry?Ui..zPRc{ 'trA s7'Tto2a0Qp :e u;uTuz: 43u;TTTap `�3nascia=f?'F4P -pun 3u,sse .'.:o;, 9a-FaPaLso.Id- �, dsndy�. eY MoTaq aa3 . jo asoCC�..sbiT. tioTGr PmeL Pres �o ,uo;:.zoc adp�sr.sgrs .e ti: 'z s� r?uo Zcamasea u'i i{gTa .zQy Q�oY 'mo..z3ose4;- aq m'ez `qr2 U-E C�sodoad.:PTTs So Qas;.zns:aq,4 M, qaa: f7 yI T s-Fse� _�-sa*;Ta �.:�'.caaa7gsgrc�t;oq.za: �.Ipr `;,.� : `e.� s?r ,•�aTg.zged •s~3� .-�o rp •st ;ss�f paT 6.IOS6Q�0's S,' ` ��.13" ? yR, _f.^s'" -. y� LE Z)2 V l�� S Ura, PTT6 o sap.Io�a� �Cauno� at;1 30. a:) a' T , `scn-i JO+CCT DGE zcT sailed nOOQ TITQP.zoae z -dw-I aad sU . `?art+7°':013, J.. r0 j683 3:j: LTO - rgot p;Te 3u; � •�pegTaa� `.laa r s 'p.rea `0 3'[194 :SOIL agZ 30 uoja.zod,.j qj'-3;,,", -sa3 g_. `fi QTd i4 .ZZ :eTuso;; "red `'o eaeaS a ;" 6Ol ;;o Si 4 33� aFi 3o SgTO ac{q 'c_: S!jaado Id :Leas peq ..IOsap au oTTe3 q j '400.2-st2O"�;1iTptm UY -oq BV sgeeuaq ,a Or -eta a, -j AL Pt p.uvgsnu `SaaaatiY ' � 7,1,10d PUN 6AR 7h� tl : Q oq `q s ese uT '� JTst;-Quo PGPIATPun tzs oq ram .19'1usua,4 gtrIpc -se Tr •pale :puaq -meq `8x�?CTZLS "I saony2i3 pule. 'uojge.zod400 eTu.zo.ITTe0 'A XI :laj `PDaTrnuKcs $ga.2et;. sT t�6Ttir►. 3o gdTaoQ.z '2tOTIFanQZS_:OO a'In �T$ LI Q :lard x -W I S IV t96i° OZ iii r u V 30rrVW a AW3 "Nnao MlWV sol da r 9011D03N '11f10w0 NI O;(AlO03Y 69 .,. .r i ROBERT N. HACKER, INC. `��-lrr.�r•ran f a/r�rrrrlinn 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS. CA. 91364 OFFICE (8 18) 884-4071 RESIDENCE (818) 348-2115 PRELIMINARY EVALUATION CITY OF HERMOSA BEACH MAINTENANCE YARD OIL POTENTIAL i The purpose of this report is to make a preliminary evaluation of the feasibility of drilling for oil from the Hermosa Beach City Maintenance Yard as well as S preliminary assessment of what drainage might occur vis- a-vis the tidelands as well as from neighboring prop- erties. I have visited the files of the California Division of Oil and Gas in Long Beach where I examined records of several old wells that had been drilled in the vicinity of the City yard. In addition, I have referred to State publications of nearby oil fields as well as referencing data I had in my own files and files of associates. The conclusions expressed in this report represent a preliminary evaluation but are supported by sufficient factual information to make these conclusions valid. GEOLOGIC SETTING: The City of Hermosa Beach lies on the northwestern end of the Wilmington -Torrance -Redondo Beach structural trend. This trend consists of a southeast -plunging anti- clinal feature which is more than 20 miles in length and as much as 3 miles in width at its maximum in the (1) ld) a ROBERT N. HACKER, INC. ' / �r�ni�rum �/a��lo ru Sinn 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE )818) 348.2115 Wilmington Field area. (See Regional Map: Belmont to Hermosa Beach) The productive sedimentary section present on this structural trend in the vicinity of Hermosa Beach are, from youngest to oldest is as follows: -x U. Main Zone (Puente formation) Miocene, Fractured shales, thin oil sands. L. Main Zone (Puente formation) Miocene, Fractured shales, few thin oil sands. Del Amo Zone (Puente formation) Miocene, Dense, fractured shales, probably not productive. Basement Franciscan or Catalina Schist Not productive. These Miocene sediments lap out from south and east to northwest on the Basement schist high. This basement high runs from southeast to northwest against which the above sediments are buttressed. This buttressing forms the closure for and thus the entrapment of oil in the fractures in the fine-grained sediments. The structurally highest point of this feature is reached under the City of Hermosa Beach and its adjacent tidelands. (See Regional Cross Section) Oil on this trend was discovered in the 1920's and cumulative pro- duction on this trend exceeds 2 billion barrels of oil. HERMOSA BEACH ONSHORE PRODUCTION: The history of the old wells drilled onshore in (2) f ROBERT N. HACKER, INC. 3 (• I'f/ ('/1 Ill 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE (818) 348-2115 i 4 Hermosa Beach in the early 1930's is not encouraging. Initial production was generally less than 100 barrels of oil per day with a rapid decline in a few months to 10 barrels of oil per day or less. However, after the initial rapid decline, the small,.settled production maintained for numbers of years. More modern drilling and completion techniques using non -formation damaging drilling muds would probably improve these production histories. In any case, present day on shore completions, even with advanced technology would probably not result in high volume wells. At best, settled production rates would likely be marginally commercial. The principal reason that wells in the northwestern end of the Wilmington -Torrance trend in the onshore Hermosa Beach area were not as prolific as those in the Wilmington and Torrance oil fields lies in the change in the nature of the sediments from which the oil is produced. In the Wilmington -Torrance fields the producing Miocene Puente sediments have a high percentage of sands, whereas, in the Redondo -Hermosa Beach onshore area, these same sediments have changed to predominantly shales and siltstones. The producibility of these finer grained (3) ROBERT N. HACKER, INC. t•lro �iv�m % a�r�n ru Sinn 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE (818) 348-2115 sediments depends on the extent of natural fracturing of the rocks. The more the rocks are fractured due to faulting and/or folding of the sediments, the greater } their ability to give up fluids. As an example of the oil producing capabilities of the sediments in the Hermosa Beach area, I have included s with this report the annual production records on the Stinnett #1 well located in the City Maintenance Yard. These records were obtained from the California Division of Oil and Gas. 3 This well was originally drilled and completed in 1930. The well was redrilled and recompleted in 1955 and has been producing since that date with only occasional down-time due to mechanical problems. The perforated interval is 2765/3305 feet in the Lower (?) Main Zone of the Puente formation. The bottom hole location of this well is not knowul. This well, which is probably the best well in the Hermosa Beach onshore has averaged 2 to 7 barrels per day for the past 7 years. During this time the well produced 17,460 barrels of oil. No production has been reported to the Division of Oil and Gas for 1984. I do not have the records of the production from the initial completion to 1977. (4) ROBERT N. HACKER, INC. �r•(roirnm %a(r�uru(inn 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE (818) 346-2115 Based on the above figures and assuming $20.00 per barrel for the oil less 30% of this gross as the cost for operating, royalty anj taxes, this volume of production would generate approximately $35,000.00 per year in net revenue. Assuming that a well drilled today would, as the history of the field indicates, decline rapidly to the current rate of the Stinnett #1, at today's cost of drilling and completing wells at this depth, such a well would have a 6 to 10 year payout. Such a lengthy payout would not be considered very comercially attractive. DRAINAGE, ON -SHORE HERMOSA BEACH: The adjacent fields, which include Torrance and Redondo Beach, were developed on 10 acre spacing for each producing zone. That is to say, the wells were drilled such that the producing zones were approximately 660 feet apart. With this "standard" well spacing it can be assumed that each well adequately drains 10 acres. Therefore, if a development program were begun in the onshore Hermosa Beach lands, each well would drain the surrounding 10 acres. Consideration would have to be given to ob- taining community -type or pooled leases on surrounding properties such that property owners within each 10 acre (5) ROBERT// N. HACKER, INC. elnilivun (al�ltiru lion 4907 TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE (818) 348-2115 _ community lease would participate proportionally in royalties fromproduction. Assuming that modern drilling and completion tech- niques would result in more attractive commercial pro- duction than evidenced by the Stinnett #1 well cited above, there would conceivably be room for 8 to 12 wells on the more favorable part of the structure under the City of Hermosa Beach. HERMOSA BEACH TIDELANDS(OFFSHORE) POTENTIAL: Based on the production history of the Redondo Beach offshore, there appears to be improvement of reservoir sediments in the Hermosa Beach offshore. 7 This improvement in reservoir properties is probably due principally to the increase in faulting and fract- uring in the Redondo offshore. It is reasonable to assume that this fracture pattern will continue into the Hermosa Beach offshore. If so, then the Hermosa Beach tidelands area would have a potential on the order of 20 wells. As shown on the portion of the Hermosa Beach City Map included with this report, the Maintenance Yard lies approximately 1800 feet in -land from the strand line. All potential offshore bottom hole locations could be reached from the site by slant drilling. (6) i ROBERT N. HACKER, INC. /� %rv�(i•iun � a��i�nu Sinn 4907 TOPANGA CANYON BOULEVARD i WOODLAND HILLS, CA. 91364 OFFICE (818) 884-4071 RESIDENCE (818) 348-2115 As for example, at the nearby Redondo Beach drill site more than 50 wells have been directionally drilled to both onshore and offshore bot-om hole locations. Several of these offshore wells were bottomed as much as 5000 feet from the surface location. There would be no great problems involved in reaching all presently known target areas in the offshore Hermosa Beach from the City Maintenance Yard. Based on wells in the adjacent Redondo offshore area, Hermosa Beach offshore production should have cumulative production of from 100,000 to 3007000 barrels per well. DRAINAGE, OFFSHORE HERMOSA BEACH: There are at least 8 wells drilled in the Redondo Beach offshore which have producing intervals within 660 feet (10 acre spacing) of the Hermosa Grant Line. There is no question that these 8 wells have drained some oil from the Hermosa Beach offshore. The cumulative production from these 8 wells vary from 507000 to as much as 300,000 barrels of oil per well. These 8 wells have declined during their producing life and it is doubtful that much drainage is occuring from Hermosa Beach to Redondo at the present time because the production rate of the Redondo wells is now quite low. During the flush initial production of these wells some drainage undoubtedly (7) ROBERT N. HACKER, INC. /�r(rolru in %a��Iirulinn 4907TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884.4071 RESIDENCE (818) 348-2115 did occur. SUMMARY: 1. The onshore portion of Hermosa Beach has a potential of 8 to 12 wells drilled on 10 acre spacing, the normal drainage area for each well. Because of the nature of the fine grained sediments and the lack of sufficient fracturing of the reservoir rocks, high volume, highly commercial wells could not be expected. 2. The offshore portion of the Hermosa Beach Grant Lands have a potential of up to 20 wells drilled on 10 acre spacing, the normal drainage area for -each well. Because of the projection of the fracture pattern from Redondo to Hermosa Beach offshore, these 20 wells should have cumulative production (10 years) of between 100,000 and 3007000 barrels of oil per well. 3. The approximate 1.15 acre Maintenance Yard is probably large enough to drill all the wells necessary to adequately develop both the onshore and offshore portions of Hermosa Beach. However, in the event 25 or even 30 wells were drilled from this site, it is doubtful that the site would be large enough to accomodate the necessary on-site equipment such as tanks, gas traps and the like together with the space required for the pumping units. If this many wells were required to develop the property, it would (8) ROBERT N. HACKER, INC. wlru�rrtm / r��r�urulinn 4907TOPANGA CANYON BOULEVARD WOODLAND HILLS, CA. 91364 OFFICE (818) 884.4071 RESIDENCE (818) 348.2115 become necessary to acquire near -by property for a tank farm as is the case at Redondo Beach. ate/ Robert N. Hacker Registered Geologist California #443 June 25, 1984 (9) Y¢ N < O W N O Z 1- N J OC •• •-• < w � Y 3 a. W O O H Q W¢ N'1 y �QQQ.1 V W < zat 8N CD ¢.0 zy 0411 (no «+a $.- yZv E ¢ W ¢ W W O n z •-• U C O P O « O U ¢ \ 1 v < z 1 Q �+ N W -i -C 00 z< cc "i 1- ¢O ..p 3 V) Oo _O 0 L y 1 O XO WN O fm O F- -j p8 y W y m m Z \ m < O ¢ I W 3 •LLA 8z cr ix1 F- Z < z y cx CL O p u Opz F •-• Y Y Y Y J Y J Y Y Y Y Y 08 3 yl y M V O J 1 O O y u r` ¢ O = < W tD < z n w D W l- W O H n ¢ M V O O m < CS y 1 1 1 V• J O ,8 J O X O O WmN z 00 W Dd w 0 O 2 Y F- O •r i- - O K H. .• pQ N n < n U• ON =N z Of 2 z y WN �¢ OO V ¢— NN N OJ J O U « .-• W ¢ J .� Q V •+ .+ 0 3 > O O O O O O O O O O O O p Q < J J W O ¢ ••� d •O Z 4 'O Z A d •O h •O A < J 00 G I %D O r- — — e- r — e- — •- — r e - .w DO ¢O 0 In ¢ .rp^ Wy V8 O Q O O O O O O O O 0 O O O ►- O X W 1 COQ cr < N < J I► CV J Q z W \_ J W OO v l7 Q y < u r2 O I < < Z O ¢ Q �N V ON ¢ z O O 1 Q^ O r •- e0 •-- O P O O AD O O VJ XC C ¢< M N M M N M M M M M N M C O t7 N w A •O OD 41 V� N Y Y N A M A 4 O ¢ J Or N �- P W J M �a < m H Z O Y N W y O 0 •" X ep z < O U v f• Y ON O M0 M dD O Y O• J V1 A 2 m v C O O N 10 M •® O O tl'e N W M .-� W N u J N N N N N N N N N N N N P- ►- C, \ m N w y J_ m p y Y O W •• y A O V y W W N Q <Z ¢ O ZA J JZz `-' In � Zy o r v p z O !+ J N z « C W O < C> 0 X t- P 1•- ¢ y p uln¢ 0<•- O d .p W y LJ,Z •..• M M M M M M M M M M M M T� J J N J W /D CO <A 00 W IID b 40 O 00 O W 4 O M Z O r oc .r ` N M Y Yl .q f` cop� O •- N cl u JO Owl O p O Co O O O Q O O O �- w W oC►- C M Z J y ¢ 3 O r- J "J < luzZZ JW.. J JW P.- w �+ -� •-• o - c z w m •+ O O co O J a to tD t, 0 Q t7 0 0 47 cD %D t7 O v dZJv ¢ ZI--<J 00— 0 Wr O O O O O O O O O O O O 1- 0 p� < w CV— a 3K ¢ a 1-< o a 0 y P¢ ....,. .. ` ..... ..,.,...�,„ wy..w.-.. �.....+,,,..a. �..wnr.w ,..,..,.,w+. ..•.,...w.-. r........,.� .•«.a.u.ru., .+a,:....,,. �„�.,.�.•n:.,., .,.,....•,...., ..,r�.._i ,.�,.o,.., •. , *** A01 *** PROCESSED CALIFORNIADIVISIONTOF IL AND GAS PAGE 13/82 WELL ION 125" DISTRICT: 1 FIELD CODE: 782 FIELD: TORRANCE AREA CODE: O6 AREA: ONSHORE (1) l2) API WELL LEASE OPR SEC T - R B&M WELL OPERATOR OPER NO.: 03716902 NAME: STINNETI WELL NO: 1 31 03S 14W SB STAT: A CODE: 56300 STAT: A (4) (5) (6) (7) (8) (9) OPERATOR NAME AND ADDRESS BASIN REGIONO LATTIITUUDDEco.a� IITUDE GENERAL LOCATION 0 000 00,.1r STINNETT OIL CO (10) (11) (12) (13) ATTEN ROY L STINMeTT 9 CABALLEROS ROAD COUNTY COUNTY NAME CCS -ZONE X -CORD Y -CORD UTM-ZONE X -CORD Y -CORD MCI ROLLING HILLS CA CODE: 19 LOS ANGELES 0 0000000E OOOOOOON 00 0000000E OOOOOOON NO.: 00000 90274 (14) LOS ANGELES (15) (16) (17) POOL COMPLETION DEP N X- RD r CORD REMARKS: 1- CODE:30 DATE: 01/76 00000 00000-0 OOOOQ-0 (22) (18) (19) (20) 21) 2 - POOL NAME: OTHERS 3 - HELL PROD/INJ OIL/COND WATER PROD GAS/PROD GRAV CASING TUBING WATER MATER/STEAM INJ GAS/AIR INJ SOURCE KIND TY+'E DATE STATUS BELS OILS DAYS MCF OIL PSI PSI OTU M-0 DISP INJ-BELS DAYS INJ-MCF PSI NATER WATER ore 01/82 00 211 20 31 0 16.0 4 4 OG 02/82 00 191 20 26 0 16.0 4 4 OG 03/82 00 211 20 31 0 16.0 4 4 OG 04/82 00 200 15 30 0 16.0 4 4 OG 05/82 00 211 15 30 0 15.0 4 4 OG 06/82 00 200 1s 30 0 16.0 4 4 OG 07/82 00 211 15 31 0 16.0 4 4 06 06/82 00 211 1S 31 0 16.0 4 4 OG 09/82 00 200 15 30 0 16.0 4 4 OG 10/82 00 211 b 31 0 16.0 4 4 OG 11/82 00 200 : 30 0 16.0 4 4 OG 12/82 00 211 15 31 0 16.0 4 4 TOIAI. 24" 195 w ♦a• A01 •*r PROCESSED CALIFORNIA DIVISION OF OIL AND GAS PAGE 12466 13/81 WELL INFORMATION LIST CM510140 DISTRICT: iFIELD CODE: 782 FIELD: TORRANCE AREA CODES 06 AREA: ONSHORE 0) ' API WELL LEASE OPR _ SEC T — R 89M _ WELLOPERATOR I _j OPER NO.: 03716902 NAME. STINNETT WELL NOS 1 31 03S 14M $6 STAT: A CODE: 56300 $TAT: A c4) (5) (6) c7> ca) (9) OPERATOR NAME AND ADDRESS BASIN O REGIONO `ATITUDE(r. _L,QMGIR01 GENERAL LOCATION 0 00. UW 00 00. STINNETT OIL CO (10) (I1) (0120)0 (t3) ATTEN ROY L STINNETT 9 CASMq(ROS ROAD COUNTY COUNTY NAME CCS -ZONE ROLLIN6 MILLS CA CODE: 19 LOS ANGELES X-4�4Q11l1QQ_��r--��ppRD UTM-ZONE X -CORD Y -CORD SWRC6 0 OOlxx)WE (14)-^� - OOOOOODa 00 0000000E OOOOOOON NO.: 00000 - ---- -----90274 POOL POOL. COMPLETION DATE: 01/76 DEPTH 00000 .� _ _ _(1S) - 1 (16)y _T.------ D D REMARK!: I- (22) (18) (19) (20) 21) 2 - POOL NAl1E: OTHER! ^� -��- WELL PROD/INJ OIL/GOND WATER PROD GAS/MIOD GRAY CASING TUBI" WATER MATER/STEAM INJ GAS/AIR INJ SOURCE KIND TYPE DATE STATUS out OOL! DAY! MCF OIL PSI PSI OTU M-0 DIS► INJ-WS DAYS INJ-MCF PSI WATER MATER OG 01/91 00 164 20 31 0 16.0 4 4 OG 02/81 00 17o 17 28 0 16.0 4 4 OG 03/81 00 184 20 31 0 16.0 4 4 OG 04/81 00 179 17 30 0 16.0 4 4 06 05/81 00 184 20 31 0 16.0 4 4 06 06/91 00 179 17 30 0 16.0 4 4 04 07/91 00 194 20 31 0 16.0 4 4 04 08/91 00 194 20 31 0 16.0 4 4 OG 09/91 00 179 17 30 0 16.0 4 4 OG 10/91 00 194 20 31 0 16.0 4 4 OG 11/91 00 179 17 30 0 16.0 4 4 04 12/91 00 194 20 31 0 16.0 4 4 TOTAL 2174 225 .•w«w.u�� .w1.., � *** A01 *** PROCESSED 13/80 CALIFORNIA DIVISION OF OIL AND GAS PAGE 12222 WELL INFORMATION LIST CM510140 DISTRICT: 1 FIELD CODE: (1) (2) 782 I FIELD: TORRANCE I AREA CODE: 06 1 AREA: ONSHORE ...... ._. L I (3) . API WELL LEASE NO.: 03716902 NAME: STINNETT OPR WELL NO: 1 SEC T - R B&M I WELL 31 03S 14W SB i OPERATOR OPER (4) ( (5) (6) (7) STAT: A CODE: 56300 STAT: A (8) (9) OPERATOR NAME AND ADDRESS BASIN REGION LATITUDE LONGITUDE GENERAL LOCATION STINNETT OIL CO I(10) 0 1 0 00 00'00.0" 000 00'00.0" 1(11) (12) (13) ATTEN ROY L STINNETT ----- -- 9 9 CABALLEROS ROAD ROLLING HILLS CA COUNTY CODE• 19 COUNTY NAME LOS ANGELES CCS -ZONE X -CORD Y-CORO UTM-ZONE X -CORD Y -CORD SWRCi 0 0000000E 0000000N 90274 _ .. - -- , -- -_- - - _ - - (14)� -_ -_ --- - ------ (15) - OU 0000000E 1 (16) 000000011 NO.: 00000 (17) POOL COMPLETION DEPTH X -CORD Y -CORD REMARKS: 1- CODE:30 DATE- 01/76 00000 00000-0 00000-0 (22) (18) (19) (20) 21) 2_ POOL NAME: OTHERS 3_ WELL TYPE DATE PSTTATUSJ OIudLSND WATER BBLS DAYS GAS/PROD GRAOILY CASING TUBING WATER WATER/STEAM WATER BTU M-0 DISP DAYS INJ-MCF PSI WATER OG 01/80 00 250 22 31 0 17.0 4 4 OG 02/80 00 224 20 28 160 4 4 OG 03/80 00 248 20 31 0 16.0 4 4 OG 04/80 00 240 20 30 0 16.0 4 4 OG 05/80 00 248 20 31 0 16.0 4 4 OG 06/80 00 240 20 30 0 16.0 4 4 OG 07/80 00 248 20 31 0 16.0 4 4 OG 08/80 00 248 20 31 0 16.0 4 4 OG 09/80 00 240 20 30 0 16.0 4 4 oG 10/80 00 184 20 31 0 16.7 4 4 04 11/80 00 178 19 30 0 16.4 4 4 OG 12/80 co 164 20 31 0 16.2 4 4 TOTAL 2732 241 160 a t .. Z ►. � � QO _ ado =49 L31 u - -----� � •' 888 f � 8i r as M jj4.0 ' '~ 040 Z I t w M=v EL t W j I 4w f 40P p I / I < Z 1 < I � V y 1 j W J-40 y = =No 3 N � i O =m x ILag N • SON W I 0.- 1 Nm < m I z t W O o- m 9 p v <y D era. O WN u LJ hu W*pn Op < 1 Vlot i t « I ti t - • Zt yp I V. I c70 ♦ O=O .' 1 Oen Z SN = mov y� I zQ ' Nwewyy !I iN L O ` J QO ccO O O O O .O O O O O O O I ! ta0 r r r r r �= I �O I Opc� y0i O p r r r 40 .�- J 0 0 0 0 0 0 C O O <J JQO^ y du W W O O O t v� I Az V :� N V Z --- i < O < rte- c v I z oc z0 I =31N i w pN O 4D 00 i x N I ! t7 .. I< p n n H n vn h +rl M Mf ,'—�� N I h h or. N N I N N N 06 N r rJy P LN N N N N N r M _ W J W I OZ 39 W W O 00.— I S A H m v j qj i< O Oh h $ N O O N .p h v N N N N O N O N M G N I O l `m N N /~y N ti N N N _ O N J N A I y .9 <L... " N `O O Ant of WtN p O ZA JZv.Q POS < y� I Zan Z WO (L Wv p Z p I W $ 8 8 8 8 _ or-o� C>` I N 8 8 8 8 8 8 8 ro ' '� �N O L O I cOinv ! N J I Cl P t a ^ .yJ W W A J.+1 p ti Z (_ F- ^ A P P P A ! Lai 3rO I= p O p 1 r C v� A O ►I-atJ h .• JO O O O O S W N — , nn p ,� ~ W Z -C Z -J UI Z : �= tZ. 0O^� d a ►.+-iVJ du... ,.. --- -- - O 4n p, r N < j r 1 K •. ! O 4 d W F t9 N_ b � d z IL u i S i M I u •... K10 CK 0W 'M OC W 'L 0P B our' ac O j < � Y W = v y 1 z x O IZm •� y W CD z d O W i Z •N� w < 1 I O 1-- y I.p ~ O 1 t O u Li O ¢ W I yM U G 4J 1 l ti ac r ` v W ^ .D i < Z M W W .. f--� W r t t— < —J" y OJ I Wb• I x Z I I p0 W O O O "+ �-Q I pW O Z O I t90 e1 Oen •-e ¢ Z Z y �-- yO J OJQ tj v H W } Z D_ W p l B J W < J I p •tiW O8 3 CK uj co, W OLLA Z W J W O < V u Z H H t oc t K z0 00 � I •O-. .-. I U J UJ W � K v I J B z M < le 319 Ws U W Y N s 1 M H K W .+ u \ 1 GOD 1 < Z tD H N zY Z < .r B UAW CA m \m or 1 W ►- Z < ►r 1 oc d W y ►- " .f .f J .f .t .f t 1 .f 1 < B s .f .f 1 .f •I .f ♦ J .f .e► r •1 B W I H W I p I O en r N M $ W H M y y W y 10 < S r. Y --� r z Z N ►T- w .. = Wry K v 1� ry sd y y B W I H W I p I O en I y l 0 W I O W •• y W y W A N 10 < S r. Y --� r z ►T- w .. W H N p 1� H .� J N W I W O �O— S z < V v T �WyN jdD A H I m `,' u IL O Z. I p 2 B I J .• y<j W N T ►.dd I el LU;;: p vJ I I W I p I O en I y l J ! V I W •• y W y W A N 10 < S r. Y p ZO B I W H N p 1-- p. ! J JZv p e- II ` y �WyN Z WO Z. I p 2 B I J .• y<j N z ►.dd I el LU;;: S --� O d OF -OU XI. -I T W V y O: y V G v ! O eP�- L V) -j I .. JM 12 OT 9C — W O IWO O WS W\! rA o< f-- OC J M I Z y p� 13•• N••! wi 0 H n : <_Z! I O d - WZ4c YWBi •r ze-aJ JW�I 0G<IyI C rl I v I'm: W •+HUJ I dv.. I d l I O a - --- y P I I ! i CL u t J O .0 O O O O Oa O O O e9 O r e- — — — — — r r r dm O O O O O O O O O O O 0 0 Cc ei a u 3t to h < tD p N OTM N n .O Co — O r ¢< N M M M M M M M M r, CL B r- O O N M N O O M N N .- .- M M M M en M nt M pn h K y W J < m 3 O Oy a — .0 w -APO eN O .N.pp Vol N N PIN Wt U J M M M M M M M M Irl M \ eD J O O z Q Q Q Q Q Q Q Q Q Q Q 00 CL y OD b OD b IID aD b b O p e4 B O O O O Cl O OO S O -- N ��oO tl�� c� r � 3/T- O O O O O O O S O 10 N .► i O H 444 101 #4* 68 869 lvlol 1 0'SL 0 if Sl 6lL 00 LL/2L 90 + O'SL 0 if Sl Ell 00 LL/OL 90 � 1 1 0'9L 0 0£ SL SLL 00 11/60 90 v OIL 0 if SL Ell 00 L1/80 90 v 0'SL 0 if Sl Ell 00 LL/LO 90 b O'SL 0 82 7L LOL 00 LL/ZO 90 100d SIH1 NI 3dA1 113M 90 W31VA V31VA ISd ONIM 33vm$ fNI 13W-fNI bIV/Sv9 SAVO Slas-fNI fNI WV31S/831VM dSIO N31VA o -w ni8 ISd ISd 1I0 13W SAVO Slee Slag SnlvlS 31WO 34A1 9NI8n1 9NISV3 AVa9 Ooad/SV9 aObd 831VA ONO3/1I0 rN /OOad 113M —£ Sa3H10 :3WVN 100d i (02) (22) 0-00000 0-00000 00000 (60 (9 0 91/LO :31VI Of:300) -L :SNVVW38 ONO3-A Oa03-x Hld3O N01131dWO3 100d �� (LL) 638ms (90 N08��O 3OH03-XO3N01-win GO S3139NV Naao3`)A 3pON0003-X Sol 6L i ![Z06 SIITH 3NOZ-S33 A1Nn03 6 6 (f L) .Z l) (ll) L 113;tNI1S l A08 N311V 03 110 113NNTIS 110900��00( 0NOI1V301 1Va3N39 l 3an1NO3n1V N0193N NISVS SS30aaV ONV 3WVN a01V43dO V :1V1S OOf9S :3003 V :lyes 8s Mhl SO if (L) L :ON 113M(5) (N) 93dO a01Va3d0 113A WIS a - 1 33S tld0 113NNI1S :3WVN 206911£0 :'ON 3SV31 113n IdY Sao►+sNo :v3av 90 :3003 v38v 33NVNNOI :a13I1 (Z) (L) ZBL :3003 a-i3I3 L :13181S1O N3 OILMit 39Yd Mitll 39 1SI1 NOIIVW80ANI 113A L Sv9 aNV 1I0 10 NOISIAIO VINSOJIlV3 OISS 03S5330ad LOW ««. � , .. '..w -toren 1.,.,,a,�, '�o-wm �»nwM.,n. �+iermnnn •�nw,e... ..hee.m. .,,.�w.».. ,.r.. .,....,., ..., _. � � + " A _ - / - �.. _ i _ter -� _ a . .� r f - /t � `� � �' ` -1 - • � � • 11 _.. is ,`••�-.. Nt_� Z_: 't .<• � 1 �• � 1 1� � ~� - /�" r �� Ll ..^.. � - Ley ' f t 1 \ '\•~ , . • 17 If..yry a�� i• i �i F. ;: -f+ J-', .r: _�_.�� ,' ,. �..' :.:fir_ . .-- ., •'D -• : -,� ^ ...� -.. iT r ..� 1 ��. - , 4> �.�••7 ' iA,i 7- •�-` t 1tzz=.� 1, �'f`� -a w_",//,,;;_ _ - _ l �"ar� i • 'F•• -f �! ~� j�.. 1 `r:t •� ,' J Lam' �t� r`{ ��` i` ��; x .� _-l• - � i�_C nc.��, 'y�l • - _ _ 4, i ti ,-_...�. � r ' , -• L��1� ' 1�7-''-ifv 4 / �� ./, v t. j[�f��l�. _}-L �7�G• r I _ lav ••M { i �• ` / ,, �'' . _-��' - ��r S•a.o••t?�tQ�. , :l ".-41 � .,•��' - _ -J. �a= _ - i.j •' !• . ,f r J17 f i-M7.'1r -; � � _ - ___ _ _ _ _ •.,:1 r j cow_ .�.� f�•� .- r _ t #��tTt:; ;- �� .-:•�- - ._. � _ -_ _ ''_ :-."' _,_ _:�� - e , a. � �`� � t�.r'..r�6_>-fir ; t � -. -..1.^'O - •;•,- q- n, J ._ _Q rte. -+•'sT _ - -_ - ti•►: �.r1�� til. •�, i_ t • ��.. J -_ - - • ) i _ 1 IJP..'•% �� +�_ .f ~ � _ �` _ R .j i •. r"._� -�o;� - _�-.� �"�.a•`:.i�f6VUJ67�1 .�'i f i id • - - - ,i _ ! jar _ � '1?� F -_ r " � �� -n � � �• s • ' � � i + 11h f •��f�'1ar� 7 !aj` ve:ir;t;�sr r •v• i f f it r 1 Ir ze ......... =� jr •• a" - +';-' �. r.: .r• _- •�--. .�.,,7 1 __7-.-rr-'��.1 r t �j� ..rj_ y �•'a��4 _ i 7�=-_-...-ice_"i t['-�_' -= --�__ "- .'•__ :.r _ -T .,= - �;�, ~ •:,� %1i ��]�. J�.q- �yJ-~' •; � •„J -- :rte^ - r??z-1 _ ' - 1 - r .: ! - i - • 1. .i;-�� ia7 •-�-i. "-•F'. -' - :ALJ: �: L` =.,. �_-•r--J9�� . :. 7 . y)ae.. ♦ . '.17 -� - +. ;7 �' ,.n ' i � � r •� i "+ ,!7c-�� . .6•t •� 1�-, `• 9 F._ Vii: .S" = ,7 f + •_-_--'�F' E r_•-"� •�_� � 'i'.i .,s t�^/� �_f�•!��. '��- y!� .t -�r C r, HERMOSA BEACH CITY I�IAINTENANCE YARD SCALE: 111=200' vi ` Q 1 � N o , N• 1 �. 1 34.434 N N ro ro 1 /55 , 1 •O, O 1 O1 P3G ��j7asp'�• i 30 2 1 v1 ,S 30 O D30 �l0 20 0 °° 01 20 45 �SO�D� 60 5 f //0 Z7 ti rn 1/0 40 cr /o747 m N N � O � i N nn oNo V N � //p �, .w � O 98•j3 � � D !� /. 7 o 7 w w � ni � lGG `" O - o g4.11 N •' N � — W � o w � . w W A w Un` gl. /3 Ln v 38 O� O 75.2 7 (1 x w 90 g 68.63 H C'7 i{ 3 J O Go Ln H > o /OG 611,16� 35 30 o w r , 40ON� v � B3 6G� 40 N of o o ro 52.°4 zn �__J /��° (PN z S � n PI o ST m 40 o n s a Tl � d o 6T N o �a t� H Y H r _ -- 03 OD- ROBERT N. HACKER, INC. l�e(ro�iv�irz f �(r�oi•u(ion 4907TOPANGA CANYON BOULEVARD WOODLAND HILLS. CA, 91364 OFFICE (818) 884-4071 RESIDENCE (818) 348-2115 July 10, 1984. City of Hermosa Beach Civic Center Hermosa Beach, CA. 90254 ATTN: Glenn R. Watson Richards, Watson, Dreyfuss & Gershon Thirty Eighth Floor 333 South Hope Street Los Angeles, CA. 90071 Gentlemen: As a clarifying supplement to my report, "Preliminary Evaluation City of Hermosa Beach Maintenance Yard Potential" dated June 25, 1984, the following is submitted: 1. The normal drainage area for wells in the Wilmington -Hermosa Beach Trend is 10 acres, i.e., 660 feet between wells. 2. A minimal amount of oil would migrate to a well bore from a distance greater than 660 feet. It is my opinion that wells drilled from the Hermosa Beach Maintenance Yard and bottomed 660 feet or more inland from the strand line would effect minimal to negligible drainage from the offshore tidelands area to those wells within their economic productive life. A well thus located would produce the initial oil from immediately surrounding the well bore. As production continues,, the daily rates gradually de- cline as the oil is required to migrate to the well bore from progressively greater distances. By the time the oil migration moves from as great a distance as 660 feet, the production rate would be so low that it would not be economic to continue producing the well. Thus, drainage would be minimal. Ve y tly yours, L' Robert N. Hacker Registered Geologist California #443 ZHARD RICHARDS RICHARDS, WATSON, DREYFUSS & GERSHON QLENN R. WATSON ROBERT G. BEVERLY HARRY L. GERSHON ATTORNEYS AT LAW J. R. VAUGHAN DOUGLAS W. ARGUE A PROFESSIONAL CORPORATION MARK L. LAMKEN ARNOLD SIMON PATRICK C. COUGHLAN LEE T. PATERSON RICHARD H. DINEL FRED A. E STERPIEPE FRED July 1 0, 1984 E. RENTER ALLEN E. RENN STEVEN L. DORS SE EY WILLIAM L. STRAUSZ ROBERT M. GOLDFRIED ANTHONY B. DREWRY MITCHELL E. ABBOTT TIMOTHY L. NEUFELO STEVEN A. BROILES GREGORY W. STEPANICICH ROCHELLE BROWNE DONALD STERN MARY JO MCGRATH MICHAEL JENKINS BURTON MARK SENKFOR MARIANNE GOODWIN TERESA R. TRACY OUINN M. BARROW DEBORAH S. GERSHON COLEMAN J. WALSH. JR. JOHN F. P. LAMB CAROL W. LYNCH LAUREN SEYMOUR RONALD F. GARRITY Mayor Gary Brutsch Members of the City Council City of Hermosa Beach Civic Center Hermosa Beach, California 90250 Re: Roy Stinnett "Lease" and Royalties Dear Mayor and Members of City Council: THIRTY-EIGHTH FLOOR 333 SOUTH HOPE STREET LOS ANGELES, CALIFORNIA 90071 12131 626-8464 CABLE ADDRESS RICHWAT OF COUNSEL GILBERT DREYFUSS. INC. RONALD M. GREENBERG A RROFESSIONAL CORPORATION JAMES K. HERBERT The Request for Proposals contained the following observation: "As a result of the Committee's investigation regarding the City Yard it appears that lease pay- ments to the City for the well head site have not been made in several years and are due to the City." While the RFP did not define the scope of any services in this regard, we have been requested by the City Manager to review the available materials and to make recommendations regarding the City's course of action. We have reviewed the Oil and Gas Lease made by the City of Hermosa Beach as lessor to California -Ventura Oil Company as lessee, dated February 10, 1930. The lease is recorded in book 10150, page 375, Official Records in the Office of the County Recorder of Los Angeles County. The lease was for a term of 20 years and so long thereafter as oil or gas is produced in paying quantities but not to exceed 35 years. Accordingly, the lease expired ( e ) Mayor Gary Brutsch Members of the City Council City of Hermosa Beach July 10, 1984 Page Two by its terms in 1965, approximately 19 years ago. The City's file reflects that even before its ex- piration the lease was quitclaimed as to all of the prop- erties covered by the lease with the exception of Lot 15 and the westerly half of Bard Street, Block U on which we understand a producing well is located. In connection with that quitclaim, the file reflects that the lessee received a license to use the surface of the two lots ad- joining to the north, Lots 13 and 14. Walter H. Harris, City Manager, directed a letter dated April 27, 1966 to McRoybil Petroleum Company, the then operator, stating: "The present continuance of operation shall be considered on a day-to-day basis as a continuance of previous license until such time as negotiations for changed terms and conditions are completed with the City of Hermosa Beach." That arrangement apparently serves as the basis for the occupancy of the property by Stinnett, apparently the successor of the lessee, to date. The file, including a report by Mayor Brutsch to the City Council dated in January 1984, shows that no royalty whatsoever has been paid to the City on production since January 1, 1967, a period of some 17 years. Mayor Brutsch's letter contains a brief summary of the background of the lease and royalty situation, shows the location of the well and includes figures showing the production from the well from 1967 through March of 1983. That letter recommended that immediate and appropriate legal action be taken to collect all sums due to the City and to remove the operator from the well. Apparently, that recommendation has not been acted upon to date. Mayor Gary Brutsch Members of the City Council City of Hermosa Beach July 10, 1984 Page Three The Oil and Gas Lease which has long since expired provided for a royalty of 1/8th of the value of all oil removed from the premises and, since Stinnett is holding over after the expiration of that lease, it is probable that the City's claim will be limited to 1/8th or 12-1/20. However, the City's rights to recover royalties for more than 4 years back are probably barred by the statute of limitations. Code of Civil Procedure Section 337 provides a four year limitation for actions founded upon an instru- ment in writing. Each month that a legal proceeding is delayed therefore bars recovery of an additional month of royalty. While we understand that the present production is not large, the amount already barred appears to be substantial and, accordingly, the action should be under- taken without further delay. Further, legal proceedings will probably be necessary to remove Stinnett from the premises in order to make way for a new lessee of the entire property. Our recommendation is that the City Council take action promptly to collect such royalties as have not been barred by the statute and to remove the operator from the premises in order that they will be available for a new lessee. It is possible to obtain a judgment for possession in such matters with a stipulation de- ferring actual removal until possession is required. Very truly yours, Glenn R. Watson GRW:dma A+ f