A small California elementary school is teaming up with a multinational energy company to block an oil drilling ban approved by voters in November, which, the school says, will probably force it to shut its doors.
The San Ardo Elementary School District is reliant on the area's oil and gas industry. According to the school's most recent financial report, 89 percent of the district's tax revenue comes from the oil industry.
Voters in the encompassing Monterey County passed a ballot measure last month banning hydraulic fracturing, an innovative oil and gas extraction technique, and blocking all oil and gas extraction in the county's unincorporated areas.
That measure, which is set to take effect on Friday, could doom San Ardo schools and force the district's students to seek education elsewhere, the school told a California state court last week.
The San Ardo school district had just 100 students last year, most of whom come from low-income families. Ninety percent of students last year qualified for free or reduced-price meal programs, according to state education data.
Without the tax base provided by the oil industry, the district said, it will not be able to move forward with a $6.8 million bond sale designed to finance renovations and repairs to classrooms and other school facilities.
"The School District will likely be required to close as a result of its inability to issue the necessary bonds to repair its infrastructure," it told the court.
The school is fighting the oil and gas ban, known as Measure Z, in collaboration with oil company Chevron, which operates Monterey County's San Ardo Oil Field. Both are plaintiffs in a lawsuit seeking to block the drilling ban.
Chevron says the measure would reduce oil output from the field by 800,000 barrels per year and make continued activity in the field financially impossible. In fact, the company says, it would effectively prevent any future oil extraction in the county.
"Measure Z would have the effect not only of shutting down a business that has mutually benefited the County for nearly seven decades, but also of terminating the right to produce oil—an extraordinarily valuable resource that reduces the need for California to rely on foreign oil resources," Chevron told the court.
The lawsuit was filed in California superior court last Wednesday. Chevron claims that regulation of oil and gas operations is the domain of state government, and that Monterey County has exceeded its regulatory authority.
County counsel Charles McKee says he will fight the lawsuit.
"We knew about the potential for lawsuits as soon as Measure Z qualified for the ballot and we intend to defend it vigorously," McKee told Courthouse News. "If a measure is valid on its face, and as far as we can tell this is, then we have an obligation to defend it."
The lawsuit could be a matter of a survival for the San Ardo school. Voters in the town approved its bond sale in their own November referendum, but the school has put the issuance on hold until it knows whether its oil-reliant tax base will still be available.
"With the uncertainty of the oil industry in the area due to the passage of Measure Z, the District will not be issuing the bonds until litigation is settled between the County and the oil industry," the district said in its latest financial report.
"In the event the oil industry were to halt production due to Measure Z, there would not be a tax base to support the issuance of the bonds," it warned.
Chevron's presence in San Ardo has provided significant benefits to the school beyond swelling the district's tax base. Chevron has funded prior capital improvements at the school, and provided the money for curricula focused on science, technology, engineering, and mathematics (STEM).
The school recently began training for a national STEM program called Project Lead the Way, with financial assistance from the company. It also hosted a STEM summer camp last year "thanks to a donation from Chevron."
"The San Ardo Board of Trustees, school staff members, families, and students are forever grateful to Chevron for providing this tremendous opportunity," the school's website says.