Hopefully a judge will throw this out.
You can make a decent argument that gravel is a type of paving anyway. It is designed to serve the same purpose as asphalt: make the surface suitable for automobiles.
“hopefully a judge will throw this out”... Spoken like somebody who accepts the power the government exercises over day to day behavior. I am now a conservative nihilist. Burn it down and start over.
Could somebody play the environmental angle and counter sue the city?
The issue would be increased runoff caused by paving. A gravel drive absorbs and holds rainwater. Flooding is attributed to sealing areas of surface. I don't know the terrain out there, but flooding and water quality make viable arguments.
They city might counter that oil leaks would be absorbed into the ground, but the counter would be the oil would be carried by the runoff.