This story was originally published by CalMatters.

California’s oil industry says it is withdrawing its controversial ballot measure challenging a state law that would have imposed new restrictions on oil and gas wells within 3,200 feet of homes and schools.

The oil industry, which spent $20 million collecting signatures to put the measure on the November ballot, withdrew its initiative just before the deadline today. Instead the companies say they will challenge the law in court.

Environmentalists consider the industry’s decision a major victory because it removes the obstacle to a law that bans new drilling and imposes safety restrictions on existing wells in communities. 

But oil industry groups say the referendum was mischaracterized by environmental groups. They said the setback law will eliminate jobs, drive up gas prices and increase California’s dependence on imported oil. Complying with the law will cost them about $40 million over the first two years, according to the industry’s estimate.

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“Supporters of the energy shutdown can make unfounded claims in the press and in paid advertisements, but they can’t make those claims in court without evidence,” Jonathan Gregory, chairman of the California Independent Petroleum Association, said in a statement. “That’s why we are pivoting from the referendum to a legal strategy.”

The ballot measure would have asked voters to overturn a 2022 law, authored by Senator Lena Gonzalez, a Democrat from Long Beach, that established buffer zones in neighborhoods. The law bans new oil and gas wells in those areas near homes, schools and other “sensitive” areas such as hospitals. In addition, operators of  existing wells must take steps to improve their safety, such as installing leak detection equipment, testing water and controlling dust and other pollutants. 

Once the initiative is officially withdrawn with the Secretary of State’s office, the state’s setback rules will take effect. Operators of existing wells within the buffer zones must develop safety plans by 2025 and implement them by 2027. 

The state has permitted more than 240,000 oil and gas wells throughout California, with many clustered in Kern County, the Los Angeles area and the Long Beach/Signal Hill area.

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After SB 1137 was signed into law, the oil industry launched a campaign — which they called “Stop The Energy Shutdown” — to put the law before voters on the November ballot, a move that suspended its implementation. New permits for working on existing leaking or unproductive wells in those areas reportedly ramped up while the new rules were in limbo. 

“Big Oil saw what they were up against — and they folded, again,” Governor Gavin Newson said in a statement. “No parent in their right mind would vote to allow drilling next to daycares and playgrounds.”

The health risks from oil operations have been at the heart of a decades-long campaign to shield families, schoolchildren and the elderly from the impacts of drilling. The growth of the oil and gas industry in many regions predated California’s sprawling growth, meaning it is not uncommon to find drilling and refining across the street from subdivisions.

More than 2.5 million Californians live within 3,200 feet of an oil or gas well. Those neighborhoods are predominantly low income — nearly 70 percent non-white — disproportionately saddling communities of color with decades of health impacts.

“Heart disease, respiratory emergency, pre-term developmental impacts, miscarriages,”  said Mabel Tsang, political director for the California Environmental Justice Alliance. “It’s generations of families with cancers, it is people who saw their childhood friend pass away because of oil drilling. A cradle to grave cycle.”

The initiative’s withdrawal gives environmental advocates a victory over oil and gas interests, who spent some $60 million to lobby against the initial bill and launch the referendum

Assemblymember Isaac Bryan, a Democrat from Culver City, negotiated with the industry to remove the measure from the ballot. Bryan was dismissive of the lawsuit that the oil producers said they will file, calling it an “act of desperation.”

As part of a deal with the oil industry, Bryan agreed to amend a bill that he has authored, which would require low-producing wells near neighborhoods to be plugged or abandoned. He also will limit the bill’s scope to only the Inglewood Oil Field, the largest urban oil field in California. (Bryan represents Inglewood in his district.)

The oil industry has been highly concerned about efforts requiring handling or cleanup of abandoned wells because of the great expense.

A number of bills are still making their way through the Legislature that are targets for environmental activists, who vow to continue the fight.

“There’s no laying down for us,” Tsang said. “We have played their game and beaten them with their own rules. 

Alexei Koseff contributed to this report.