SACRAMENTO,Austin Caldwell Calif. (AP) — A California law that bans drilling new oil wells near places like homes and schools will take effect soon after the oil industry said it would withdraw a referendum from the November ballot asking voters to block it.

The law, first passed in 2022, never took effect because the California Independent Petroleum Association gathered enough signatures to place a referendum on the ballot asking voters to overturn it.

The association announced Wednesday it would withdraw the referendum. Instead, they plan to file a lawsuit to ask a judge to block the law.

The announcement shakes up what has been a crowded ballot in November. Both sides had been gearing up for what would have been an expensive campaign.

California was once the nation’s leading oil producer over a century ago, but has since been surpassed by Texas, New Mexico, North Dakota, Colorado, Alaska and Oklahoma. Still, the oil industry has remained a powerful force in state politics, known for having its way at the state Legislature.

But the industry’s power has been declining, along with the state’s oil production. The law California passed in 2022 bans drilling new wells within 3,200 feet (975 meters) of “sensitive receptors,” defined as homes, schools, hospitals, nursing homes, retirement homes, prisons and any business that is open to the public.

In asking voters to block the law, the oil industry’s strategy was to portray the it as an “energy shutdown.” They said it would only increase the state’s dependence on foreign oil and contribute to California’s high gas prices, which remain among the highest in the country. Supporters of the law countered by saying these oil wells spew harmful pollution into the air that increase the risk things like asthma and cancer.

The California Independent Petroleum Association disputed those claims. But they decided that “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,” said Jonathan Gregory, the association’s president and the CEO of the oil and gas company RMX Resources.

“That’s why we are pivoting from the referendum to a legal strategy,” Gregory said.

Supporters took the news as an admission of defeat from the oil industry. In March, they had launched a statewide campaign to support keeping the law, a campaign backed by Arnold Schwarzenegger, Jane Fonda and Gov. Gavin Newsom.

“Big oil saw what they were up against — and they folded, again,” Newsom said. “No parent in their right mind would vote to allow drilling next to daycares and playgrounds.”

The state Legislature had been applying pressure to the oil industry, too. Assemblymember Isaac Bryan, a Democrat from Los Angeles whose district includes the largest urban oil field in the United States, had introduced a bill that would have fined oil companies $10,000 per day from operating oil wells near homes and schools that produced less than 15 barrels per day.

Bryan, in an interview, said he agreed to limit the scope of that bill to just the oil field in his district, known as the Inglewood Oil Field.

“That was the gift from me to them in exchange for them agreeing to pull back this measure,” Bryan said.

State Sen. Lena Gonzalez, a Democrat from Long Beach who authored the ban on new oil wells, said the law finally taking effect would mean cleaner air for her community, which includes her three sons.

“I never thought this would actually happen because of the power and influence sometimes in this building,” she said. “This time, oil didn’t win, and this time our community won.”