An Orange County judge is keeping the pressure on Huntington Beach in a closely watched fight over state oversight, but she is not pulling the trigger on a decision just yet.
On Monday, Orange County Superior Court Judge Carmen Luege pressed attorneys on both sides of the California state auditor's lawsuit against Huntington Beach, then declined to rule from the bench. At the heart of the dispute is whether the city must cooperate with a state audit of its nearly $5 million settlement with Pacific Airshow after the 2021 oil spill wiped out the event's final day. Luege tentatively set an evidentiary hearing for March 2, giving the city a chance to justify its refusal to turn over documents and make staff available for interviews.
According to the Los Angeles Times, State Auditor Grant Parks filed suit in October 2024 after Huntington Beach repeatedly rejected requests for records and staff interviews related to the settlement with Pacific Airshow LLC. The complaint seeks access to permits, internal records, and testimony about how the payout was calculated and whether standard procurement rules were followed. Lawmakers had earlier asked for scrutiny of the deal for transparency and potential misuse of public funds, and the lawsuit marked an escalation of that push.
"We're doing things that haven't been done before," Luege said as she explained why she was resisting a quick decision, as reported by the Los Angeles Times. She told the parties she wants a detailed record that could withstand potential appeals and said she did not yet see an urgent need to rush. The judge also noted that city officials, including current Treasurer Jason Schmitt, could be called to testify about how Huntington Beach handled the settlement.
What the auditor will examine
The California State Auditor has laid out a detailed game plan for the Huntington Beach review. Investigators plan to examine how the city selected Pacific Airshow as its event producer, how much it ultimately paid the company, and whether permit and settlement terms adequately protected the city's financial interests. In its project description, the California State Auditor says it will evaluate procurement practices and the city's reasoning for settling the case.
The Joint Legislative Audit Committee's May 14, 2024, record shows lawmakers explicitly asked the auditor to look for signs the settlement might be an improper gift of public funds. That vote is captured in the Joint Legislative Audit Committee transcript, which placed the airshow deal squarely on the Legislature's radar.
City's legal stance and local stakes
Huntington Beach officials insist the settlement was a purely local call and argue that their charter-city status shields many municipal decisions from state interference. In the JLAC transcript, City Attorney Michael Gates describes the arrangement as "the compromise of $5 million paid over six years" and defends the City Council's position that the payout was designed to preserve future air shows and the economic boost they bring.
That sets up a classic tug of war over who gets the last word on city hall finances. The key question, which Judge Luege has said she wants to address carefully, is whether the state auditor can dig into what Huntington Beach views as a core municipal affair under its charter.
Legal implications
California law gives the State Auditor clear authority over many contracts involving public money, and that statute sits at the center of this case. Under California Government Code § 8546.7, any contract involving public funds that exceeds $10,000 is subject to examination by the State Auditor for three years after the final payment. The auditor argues that this language squarely covers Huntington Beach's settlement with Pacific Airshow.
If the court agrees, the audit could dig into how the city arrived at its payment numbers and whether it followed procurement and disclosure requirements from start to finish.
Both sides can submit additional briefs before the March 2 evidentiary hearing, where Huntington Beach may be pushed to put witnesses on the stand and walk through its recordkeeping and decision-making in public. Luege's cautious approach signals that the case is likely to produce a robust record for higher courts, testing how far state watchdogs can go when they probe the spending decisions of a charter city. We will be watching the filings and that March hearing to see whether Huntington Beach ultimately opens its books or doubles down on its charter-city defense.
