A federal district court denied the Trump administration’s request to block California’s oil and gas setback law, allowing the state to continue enforcing restrictions on drilling near homes, schools, and hospitals.
U.S. District Judge Dena Coggins rejected a U.S. Department of Justice motion for a preliminary injunction against enforcement of SB 1137, a 2022 law that implements a 3,200-foot buffer zone, known as a setback, between oil wells and schools, homes, and playgrounds.
The ruling preserves one of California’s most consequential oil and gas restrictions and is a setback for the Trump administration’s broader effort to challenge state-level environmental restrictions on fossil fuel development.
SB 1137 prohibits the approval of new wells and restricts the reworking of existing wells within designated health protection zones surrounding residential areas, schools, and other sensitive sites. The oil industry has also challenged the law since it was passed, including initial efforts around a voter referendum on the law and lawsuits from oil producers and mineral owners.
Trump Administration Challenge
The challenge to the law is part of President Donald Trump’s policy, outlined in an April 2025 executive order, to stop the “overreach” from “burdensome and ideologically motivated ‘climate change’ or energy policies that threaten American energy dominance and our economic and national security.”
The Trump administration filed suit against the law in January 2026, arguing that the Mineral Leasing Act and the Federal Land and Policy Management Act preempts the law. The administration said the law would “knock out about one-third of all federally authorized oil and gas leases in California.”
The court found that the federal government had not demonstrated a likelihood of success on the merits of its preemption claim. The court concluded that SB 1137 is “a reasonable environmental regulation that does not preclude alternative methods of accessing the oil and gas within those locations and the vast majority of federal leased lands are not within 3,200 feet of sensitive receptors…”
The decision found that the law regulates development rather than land use. The court cited the U.S. Supreme Court’s decision in California Coastal Commission v. Granite Rock Co. to distinguish between permissible environmental regulation and impermissible land-use control. The court noted that conflict preemption occurs when “it is impossible to comply with both state and federal law.”
The court also rejected the federal government’s characterization of the law as a “de facto ban” on drilling. The court said this “characterization would apply to the 79 leases out of 616 (12.8%) that are located entirely within HPZ [health protection zone.” Those operators “are not prohibited from continuing to operate existing wells.”
The court further noted that the law does not prohibit access to oil and gas resources within those zones. Operators may still use alternative methods to reach subsurface reserves.
In addition, the ruling clarified that certain infrastructure, including production facilities, may still be permitted within buffer zones if approved through California’s regulatory process, including authorization from the state’s Geologic Energy Management Division (CalGEM).
The Justice Department argued that SB 1137 would reduce federal revenue by deterring leasing activity. The court found that argument unpersuasive, noting that the federal government had already paused its leasing program in California for roughly a decade and had not issued new leases during that period.
The court also found no evidence of irreparable harm that would justify emergency relief, a key requirement for granting a preliminary injunction.