California Senate Bill 1137 (S.B. 1137), enacted in September 2022 and implemented in June 2024, establishes a 3,200-foot health protection zone around homes, schools, hospitals, parks, retirement homes, and other similarly sensitive locations. Within this zone, the legislation prohibits the drilling of new oil and gas wells, as well as the redrilling or deepening of existing wells. The law provides limited exceptions, including activities necessary to prevent or respond to threats to public health, safety, or the environment; to comply with a court order; or to plug, abandon, or re‑abandon an oil well.

At the beginning of 2026, the Justice Department’s Environment and Natural Resources Division filed a lawsuit against the State of California in the U.S. District Court for the Eastern District of California challenging S.B. 1137.

One of the primary arguments against S.B. 1137 is that certain provisions of the state law conflict with federal law by invalidating approximately one-third of all federally authorized oil and gas leases in California, and that federal law preempts state law in these instances. The lawsuit further contends that S.B. 1137 is a governmental overreach, represents an unconstitutional infringement on the federal government’s property and mineral development rights, and will increase energy costs for consumers.

Last week, a California federal judge, Judge Dena Coggins, denied the Justice Department’s motion for a preliminary injunction, which sought to temporarily block California officials from enforcing S.B. 1137 while the case proceeds.

Judge Coggins ruled that S.B. 1137 does not conflict with or preempt federal law. She held that S.B. 1137 is a reasonable environmental regulation that doesn’t ban oil and gas development entirely but rather limits new drilling near sensitive areas and within the protection zones established by S.B. 1137. Importantly, S.B. 1137 also does not preclude alternative methods of accessing oil and gas.

Moreover, Judge Coggins found S.B. 1137 to be consistent with Congress’s stated policy goals of overseeing and managing public lands in a manner that protects the quality of the environment, air, and water, while also safeguarding public health and preserving outdoor spaces for recreation, human occupancy, and use.

Although the case remains ongoing, the decision is significant because it allows the law to remain in effect while the case proceeds.