Macpherson Oil Lawsuit: A Timeline

Thirteen years have gone by and yet the battle has just begun in that Macpherson Oil Co. brought against the city of Hermosa Beach over an oil-drilling project.

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A pretrial hearing has been set for Monday in the case, which will go to trial on Jan. 18.

The Santa Monica-based company has alleged that the city violated a 1992 lease agreement to allow the company to drill for oil beneath city property. The lawsuit was filed in 1998.

Now lawyers for both the city and Macpherson will prepare arguments as the judge decides what evidence will be allowed during trial—and the details can get complicated.

The issue of oil drilling in Hermosa Beach dates back to 1932, when voters passed a ban on all oil and gas operations within city limits, according to a timeline the city released last week.

In 1976 Macpherson proposed an oil-drilling project in town and withdrew it, according to the city. About a decade later, in 1984, Hermosa voters approved two initiatives—propositions P and Q—that overturned the city's ban on oil drilling to permit drilling at two local sites.

According to the city, Hermosa council members in 1986 approved an initial lease to allow Macpherson to drill for oil. In 1992 an operative lease was signed, allowing Macpherson to "slant drill" from an onshore site at 6th Street and Valley Drive.

But voters in 1995 then approved Proposition E, which reinstated the oil-drilling ban in the city. Three years later, the City Council voted to halt the MacPherson Oil drilling project, and the company sued for breach of contract.

"We have assembled a highly qualified and experienced team of lawyers and expert consultants to vigorously defend the city’s right to protect the health and safety of the community without having to face the threat of huge judgments that could affect the city’s financial future," said City Councilman Peter Tucker in a statement in February, when for the case.

O’Donnell found that the city was in breach of contract in February 2008 and ruled that a jury should decide whether Macpherson should be awarded damages. Macpherson is seeking about $700 million.

The 2nd District Court of Appeals ruled in February 2010 that a jury should determine whether the city had the right to break its contract "if there was substantial evidence ... after the lease was executed of health and safety risks associated with the [oil-drilling] project."

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