Hermosa Beach's city council faces a possible bankruptcy because of a deal made by its predecessors in the 1970s, who entered into a deal to let a Santa Monica-based oil company drill for petroleum from the city's maintenance yards.
City voters elected a new city council, and at a 1998 election voted to ban oil drilling through zoning laws. Macpherson Oil sued, and won a claim in Superior Court that could cost Hermosa Beach $500 million, which would bankrupt the city.
Hermosa Beach is fighting the suit through appeals, and is expecting to pay more than $1 million as the case enters its next phase.
Assemblyman Ted Lieu, D-El Segundo, has proposed a law that would allow businesses that have been jilted by cities or other public agencies to win their expenses and legal fees in court, but not damages for potential future damages.
The oil company's lawyer, Jim Bright, called the legislation "ill- conceived" and said it was "designed to address the mistakes the city of Hermosa Beach has made."
"Actually, it does help Hermosa," Lieu told the Daily Breeze. "But you can imagine situations in the future as voters get upset about oil drilling, or by any number of other things."
The bill would reserve the right of voters to overturn an incorrect decision made by their elected city officials without worrying about getting socked with monstrous damages for canceling a deal that should never have been made in the first place.
It has yet to be heard by any committees in the State Assembly.
