Amended in Assembly April 30, 2013

Amended in Assembly April 8, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 7

Introduced by Assembly Member Wieckowski

December 3, 2012

An act to amend Sections begin insert 3203, end insert begin delete 3213 end delete begin insert 3213, end insert and 3215 of, to add Section 3215.5 to, begin insert and end insert to add Article 3 (commencing with Section 3150) to Chapter 1 of Division 3 of, begin delete and to repeal Section 3157 of, end delete the Public Resources Code, relating to oil and gas.

LEGISLATIVE COUNSEL’S DIGEST

AB 7, as amended, Wieckowski. Oil and gas: hydraulic fracturing.

Under existing law, the Division of Oil, Gas, and Geothermal Resources, begin insert or the division, end insert in the Department of Conservation begin insert , end insert regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. The State Oil and Gas Supervisor begin insert , or the supervisor, end insert supervises the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field regarding safety and environmental damage. Existing law requires an operator of a well, before commencing the work of drilling the well, to begin delete obtain approval from the State Oil and Gas Supervisor or a district deputy end delete begin insert file with the supervisor or the district deputy a written notice of intention to commence drilling, and prohibits the commencement of drilling until approval is given by the supervisor or the district deputy end insert . Existing law requires the operator of a well to keep, or cause to be kept, a careful and accurate log, core record, and history of the drilling of the well. Within 60 days after the date of cessation of drilling, rework, or abandonment operations, the owner or operator is required to file with the district deputy certain information, including the history of work performed.

begin insert

This bill would revise that procedure to instead require the operator to file an application before commencing drilling and would require, on and after January 1, 2014, additional information to be included in the application, including information regarding the chemicals, if any, to be injected into a well.

end insert

This bill would define, among other things, hydraulic fracturing and hydraulic fracturing fluid. The bill would require the owner or operator of a well to provide to the supervisor, or to arrange with the supplier to provide to the supervisor, specific information relating to hydraulic fracturing as a part of the history of the drilling of the well. begin delete The bill would provide that the owner or operator of a well may request in writing that the information required relating to hydraulic fracturing be considered confidential information under specific provisions. end delete begin insert The bill would, on or before January 1, 2015, require the division, in consultation with the Office of Environmental Health Hazard Assessment and the Department of Toxic Substances Control, to establish a process through which all chemicals used in hydraulic fracturing treatments may be studied or reviewed. end insert The bill would begin delete also end delete provide that the owner, operator, or supplier who provides information to the supervisor relating to hydraulic fracturing may, at the time of submission, submit to the supervisor a claim in writing that some or all of the information is protected trade secret information, as specified. The bill would permit the supervisor, upon his or her own initiative, to make an initial determination as to whether the information claimed as trade secret has been properly claimed as trade secret information. The bill would require the supervisor to make an initial determination upon receipt of a request for public information, as specified. The bill would require the supervisor, within 45 days, to provide written notification of the initial determination to the person who provided the information and claims trade secret protection. The bill would provide specific processes for the person claiming trade secret protection to challenge the supervisor’s initial determination within 30 days from the date of receipt of the initial determination by providing the supervisor with additional written justification for the trade secret claim. The bill would further require the supervisor, after making a final determination within 45 days of the date of receipt of the additional written justification that the information is not a trade secret, to make the information available to the public not sooner than 30 days from the date of the mailing of a copy of the final determination to the person who provided the additional written justification. The bill would also require the supervisor to send a notice of the final determination to the person who provided the additional written justification, if the information is determined to be a trade secret. The bill would provide that a person claiming trade secret protection is deemed to have waived his or her claim for trade secret if, on the date when the final determination requires that the information be made available to the public, he or she has not filed an action in a court of competent jurisdiction for a declaratory judgment or injunction prohibiting disclosure of the information by the supervisor. The bill would permit the supervisor to disclose information claimed to be a trade secret to specific government employees with a clear need for the information for an enforcement action or emergency response, as specified. The bill would require the operator, within 60 days of the cessation of hydraulic fracturing treatment, to post or cause to have posted on an Internet Web site accessible to the public specified information on hydraulic fracturing, as specified. The bill would further prohibit those with access to the trade secret from disclosing it, and would make a person who violates this prohibition guilty of a misdemeanor. Because this bill would create a new crime, it would impose a state-mandated local program.

This bill would require the supervisor, on or before January 1, 2014, and annually thereafter, to transmit to the Legislature a comprehensive report on hydraulic fracturing in the exploration and production of oil and gas resources in the state, as specified.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) Hydraulic fracturing has been used in California for several
decades to extract oil and gas and is likely to be used more
extensively as the industry seeks to develop additional oil-bearing
and gas-bearing formations.

(b) The Division of Oil, Gas, and Geothermal Resources in the
Department of Conservation, which has the obligation to protect
public health and the natural resources of the state, including
groundwater resources, has the authority to regulate all oil and
natural gas drilling in the state, but currently does not require the
disclosure of pertinent information regarding hydraulic fracturing
or ascertain all specific types of production and exploration taking
place at permitted wells.

(c) Given California’s geologic, seismic complexity, and its
finite and significantly compromised water resources, it is
important to collect basic information about natural resource
production processes. The state and the public should know when
and where hydraulic fracturing is occurring and what chemicals
are being used in the process.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 3203 of the end insert begin insert Public Resources Code end insert begin insert is amended
to read: end insert

3203.  

(a) The operator of any well, before commencing the
work of drilling the well, shall file with the supervisor or the district
deputy begin delete a written notice of intention end delete begin insert an application end insert to commence
drilling. Drilling shall not commence until approval begin insert of the
application end insert is given by the supervisor or the district deputy. If the
supervisor or the district deputy fails to give the operator begin insert a end insert written
response to the begin delete notice end delete begin insert application end insert within 10 working days from
the date of receipt, that failure shall be considered as an approval
of the begin delete notice end delete begin insert application end insert and the begin delete notice, end delete begin insert application, end insert for the
purposes and intents of this chapter, shall be deemed a written
report of the supervisor. If operations have not commenced within
one year of receipt of the begin delete notice, end delete begin insert application, end insert the begin delete notice end delete begin insert application end insert
shall be deemed canceled. The begin delete notice end delete begin insert application end insert shall contain the
pertinent data the supervisor requires on printed forms supplied
by the division or on other forms acceptable to the supervisor. The
supervisor may require other pertinent information to supplement
the begin delete notice end delete begin insert end insert begin insert application end insert .

begin insert

(b) (1) On and after January 1, 2014, in addition to the
information required in the application under subdivision (a), the
application shall additionally include all of the following
information:

end insert begin insert

(A) The type of exploration and production techniques that the
operator will use at the well or wells.

end insert begin insert

(B) A complete list of the chemicals, if any, that will be injected
into the well for hydraulic fracturing or other production
enhancement methods in the exploration or production process or
processes. This list of chemicals shall include all of the following
information:

end insert begin insert

(i) The name of the chemical.

end insert begin insert

(ii) The purpose of the chemical in the production or exploration
process.

end insert begin insert

(iii) The Chemical Abstract Service numbers for the chemical.

end insert begin insert

(iv) The estimated total amount of the chemical used.

end insert begin insert

(2) If any of the information required pursuant to paragraph
(1) changes over the course of the exploration and production
process, the operator shall immediately notify the supervisor.

end insert begin delete

(b)

end delete

begin insert (c) end insert  After the completion of any well, this section also applies
as far as may be, to the deepening or redrilling of the well, begin delete any end delete begin insert an end insert
operation involving the plugging of the well, or any operations
permanently altering in any manner the casing of the well. The
number or designation of begin delete any end delete begin insert a end insert well, and the number or designation
specified for begin delete any end delete begin insert a end insert well in begin delete a notice end delete begin insert an application end insert filed as required
by this section, shall not be changed without first obtaining a
written consent of the supervisor.

begin delete

(c)

end delete

begin insert (d) end insert  If an operator begin delete has failed end delete begin insert fails end insert to comply with an order of the
supervisor, the supervisor may deny approval of proposed well
operations until the operator brings its existing well operations
into compliance with the order. If an operator begin delete has failed end delete begin insert fails end insert to
pay a civil penalty, remedy a violation that it is required to remedy
to the satisfaction of the supervisor pursuant to an order issued
under Section 3236.5, or to pay any charges assessed under Article
7 (commencing with Section 3400), the supervisor may deny
approval to the operator’s proposed well operations until the
operator pays the civil penalty, remedies the violation to the
satisfaction of the supervisor, or pays the charges assessed under
Article 7 (commencing with Section 3400).

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 3213 of the Public Resources Code is amended
to read:

3213.  

The history shall show the location and amount of
sidetracked casings, tools, or other material, the depth and quantity
of cement in cement plugs, the shots of dynamite or other
explosives, the results of production and other tests during drilling
operations, and the information required pursuant to Section 3156.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Article 3 (commencing with Section 3150) is added
to Chapter 1 of Division 3 of the Public Resources Code, to read:

 

Article 3.  Hydraulic Fracturing

 

3150.  

“Chemical Abstracts Service” means the division of the
American Chemical Society that is the globally recognized
authority for information on chemical substances.

3151.  

“Chemical Abstracts Service (CAS) number” means the
unique identification number assigned to a chemical by the
Chemical Abstracts Service.

3152.  

“Hydraulic fracturing” is a well stimulation treatment
that may include the application of hydraulic fracturing fluids into
an underground geologic formation in order to create fractures in
the formation, thereby causing or improving the production of oil
or gas from a well.

3153.  

“Hydraulic fracturing fluid” includes water or other
carrier fluids that may be mixed with physical and chemical
additives for the purpose of hydraulic fracturing. The additives
may, but are not required to, serve additional purposes beyond the
transmission of hydraulic pressure to the geologic formation.
Additives may be of any phase and may include proppants.

3154.  

 “Proppants” are materials inserted or injected into the
formation that are intended to prevent newly created or enhanced
fractures from closing.

3155.  

“Supplier” means an entity performing hydraulic
fracturing or a person supplying an additive or proppant directly
to the operator for use in hydraulic fracturing a well.

3156.  

If hydraulic fracturing is performed on a well, the owner
or operator of the well shall provide to the supervisor, or shall
arrange with the supplier to provide to the supervisor, and shall
include in the well history maintained pursuant to Section 3213,
all of the following information, except for information claimed
as a trade secret pursuant to Section 3158:

(a) A complete list of the chemical constituents formulated for
use in the hydraulic fracturing fluid that is injected into the well
and each chemical’s associated CAS numbers. Where the CAS
number does not exist, the operator or supplier may provide another
unique identifier where available.

(b) The purpose of each additive contained in the hydraulic
fracturing fluid.

(c) The estimated total amount of the additives in the hydraulic
fracturing fluid.

(d) The estimated maximum concentration of each chemical
constituent in the additive as disclosed on a material safety data
sheet in the hydraulic fracturing fluid expressed as a percentage
by mass.

(e) The estimated maximum concentration of each chemical
constituent disclosed on a material safety data sheet in the hydraulic
fracturing fluid, expressed as a percentage by mass.

(f) The amount and source of any water suitable for irrigation
or domestic purposes used to conduct the hydraulic fracturing
treatment of the well.

(g) The amount and disposition of water and hydraulic fracturing
fluid recovered from each well where hydraulic fracturing occurred
prior to the reporting of the water produced pursuant to Section
3227.

(h) Any radiological components or tracers injected into the
well as part of the hydraulic fracturing process and a description
of the recovery method, if any, for those components or tracers,
the recovery rate, and the disposal method for recovered
components or tracers.

begin delete

3157.  

(a) The owner or operator of a well may request in
writing that the information required by Section 3156 be considered
confidential information pursuant to Section 3234.

(b) For nonexploratory wells where hydraulic fracturing is used
to complete or rework a well, the owner or operator may request
in writing that the information required by Section 3156 be
considered confidential information pursuant to Section 3234.

(c) This section shall become inoperative on January 1, 2017,
and, as of that date, is repealed, unless a later enacted statute, that
becomes operative on or before January 1, 2017, deletes or extends
the date on which it becomes inoperative and is repealed.

3157.5.  

(a) The owner or operator, of a well may request in
writing that the information required by Section 3156 be considered
confidential information pursuant to Section 3234.

(b) This section shall become operative on January 1, 2017.

end delete begin insert

begin insert 3157. end insert   

On or before January 1, 2015, the division, in
consultation with the Office of Environmental Health Hazard
Assessment and the Department of Toxic Substances Control, shall
establish a process through which all chemicals used in hydraulic
fracturing treatments may be studied or reviewed, a list containing
any restricted or prohibited toxic chemicals, and a list containing
any restricted or prohibited locations deemed extremely vulnerable
to a spill or release of chemicals.

end insert

3158.  

(a) The owner, operator, or supplier who provides
information to the supervisor in accordance with Section 3156
may, at the time of submission, submit to the supervisor a claim
in writing that some or all of the information is protected trade
secret information as defined in the Uniform Trade Secrets Act
(Title 5 (commencing with Section 3426) of Part 1 of Division 4
of the Civil Code).

(b) The written claim submitted to the supervisor under
paragraph (a) shall state the reasons for the trade secret information
and provide specific supporting documentation.

3159.  

(a) The owner, operator, or supplier who provides
information to the supervisor and who claims trade secret
protection shall submit two versions of the information required
under Section 3156 as follows:

(1) The first version shall be labeled “Confidential Information
- Do Not Disclose” and shall include all the information required
under Section 3156.

(2) (A) The second version shall be labeled “Public Information
- This Information shall be Disclosed to the Public,” provide an
explanation of the basis for the claim of trade secrecy, and include
all of the information required under Section 3156, except that the
specific name of any constituent that is claimed as trade secret
information shall be replaced with the chemical family associated
with the trade secret constituent, the corresponding CAS number
shall be replaced with the phrase “Trade Secret Information,” and
all other trade secret information shall be redacted.

(B) The information contained in the version pursuant to
paragraph (2) shall be made available to the public in accordance
with Section 3215 or upon request by a member of the public
pursuant to Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code.

(b) The supervisor shall keep the version under paragraph (1)
of subdivision (a) confidential until the person claiming trade secret
protection waives its claim pursuant to subdivision (d) of Section
3161 or the claim of trade secret protection is determined to be
invalid by a court of competent jurisdiction.

3160.  

If the person claiming trade secret protection pursuant
to Section 3158 is a supplier, the supplier shall only provide the
well owner or operator with the version pursuant to paragraph (2)
of subdivision (a) of Section 3159 so the owner or operator may
include the information required in the history of the drilling of
the well pursuant to Section 3213.

3161.  

(a) (1) The supervisor, upon his or her own initiative,
may determine whether any or all of the information claimed as a
trade secret pursuant to Section 3158 has been properly claimed
as trade secret information. If the supervisor determines that the
information is not trade secret, the supervisor shall provide written
notification of the determination to the person who furnished the
information within 45 days. The written notification shall be sent
by certified mail.

(2) Upon receipt of a request for public information pursuant
to Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code, the supervisor shall determine
whether any or all of the information claimed as a trade secret
pursuant Section 3158 has been properly claimed as trade secret
information. If the supervisor determines that the information is
not trade secret, the supervisor shall provide written notification
of the determination to the person who furnished the information
within 45 days. The written notification shall be sent by certified
mail.

(b) (1) The person who provided the trade secret information
under Section 3159 shall have 30 days from the date of receipt of
a written notification of the determination under subdivision (a)
to provide the supervisor with additional written justification of
the grounds on which trade secret protection is claimed. The
additional written justification shall be submitted by certified mail.

(2) The additional written justification is not a public record
under subdivision (e) of Section 6252 of the Government Code,
and shall be disclosed by the supervisor only to state employees
with a clear need to know the information to reassess the trade
secrecy determination.

(c) (1) The supervisor shall make a final determination on
whether the additional written justification under subdivision (b)
satisfies a claim for trade secret protection, within 45 days of the
date of receipt of the additional written justification.

(A) If the supervisor makes a final determination that the
information is not protected as a trade secret, the supervisor, within
45 days, shall send a copy of the final determination to the person
who provided the additional written justification, specifying a date,
not sooner than 30 days from the date of the mailing of the final
determination, when the information claimed to be trade secret
information shall be made available to the public. The notice of
the final determination shall be sent by certified mail.

(2) If the supervisor makes a final determination that the
information is protected as a trade secret, the supervisor, within
45 days, shall send a copy of the final determination, including
information stating that the determination may be challenged in
court, to the person who provided the additional written
justification and to any person who requested the information
pursuant to Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code. The notice of the
final determination shall be sent by certified mail.

(d) (1) A person claiming trade secret protection shall be
deemed to have waived his or her claim for trade secret protection
if, on the date when the final notice states that the information
shall be made available to the public pursuant to subparagraph (A)
of paragraph (1) of subdivision (c), he or she has not filed an action
in a court of competent jurisdiction for a declaratory judgment or
injunction prohibiting disclosure of the information by the
supervisor after a final determination under subdivision (c).

(2) A person claiming trade secret protection may, at any time,
waive a claim of trade secret protection by submitting a voluntary
waiver of the claim to the supervisor in writing.

3162.  

(a) The supervisor may disclose information claimed
as trade secret information to an officer or employee of the county,
city, state, or federal government who has a clear need for the trade
secret information for an enforcement action or emergency
response.

(b) The information provided under subdivision (a) shall be
clearly labeled as “Confidential trade secret information.”

(c) An officer or employee who begin delete receive end delete begin insert receives end insert information
under subdivision (a) shall maintain the confidentiality of the
information and shall destroy all copies received once the need
for the information has ended.

3163.  

Nothing in this article is intended to change or supersede
the disclosure of information pursuant to the California
Occupational Safety and Health Act of 1973 (Part 1 (commencing
with Section begin delete 6300), end delete begin insert 6300) of end insert Division begin delete 5, end delete begin insert 5 of the end insert Labor Code), the
requirements of Article 1 (commencing with Section 25500) of
Chapter 6.95 begin insert , end insert concerning hazardous material release response
plans and inventories, the Porter-Cologne Water Quality Control
Act (Division 7 (commencing with Section begin delete 13000), end delete begin insert 13000) of the end insert
Water Code), or any other state or federal act allowing the
disclosure of chemical information.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 3215 of the Public Resources Code is amended
to read:

3215.  

(a) Within 60 days after the date of cessation of drilling,
rework, hydraulic fracturing, or abandonment operations, or the
date of suspension of operations, the owner or operator shall file
with the district deputy, in a form approved by the supervisor, true
copies of the log, core record, and history of work performed, and,
if made, true and reproducible copies of all electrical, physical, or
chemical begin delete logs, tests, or end delete begin insert logs and tests end insert . Upon a showing of
hardship, the supervisor may extend the time within which to
comply with this section for a period not to exceed 60 additional
days.

(b) (1) The supervisor shall post the information provided
pursuant to Section 3156 and that is not claimed as a trade secret
pursuant to Section 3158 to existing Internet maps on the division’s
Internet Web site, and shall make that information available to the
public in a way that the information is associated with each specific
well where chemicals are injected for purposes of hydraulic
fracturing.

(2) For purposes of complying with the posting requirements
of paragraph (1), the supervisor may use an existing public Internet
Web site administered by the Ground Water Protection Council
or the Interstate Oil and Gas Compact Commission if begin delete both end delete begin insert all end insert of
the following are met:

(A) The information is transmitted and posted to the public
Internet Web site in a form and manner approved by the supervisor
and includes the information provided to the supervisor pursuant
to Section 3156, except for trade secret information pursuant to
Section 3158.

(B) There is an electronic link from the wells represented on
the division’s existing internet maps that allows members of the
public to view the information about specific wells based on their
location.

begin insert

(C) On and after January 1, 2014, the Chemical Disclosure
Registry allows for the division staff and the public to aggregate
data and search and sort the registry for information by geographic
area, ingredient, Chemical Abstract Service number, time period,
and operator.

end insert begin insert

(D) Members of the public are permitted to copy, reproduce,
modify, republish, upload, post, transmit, or distribute the
information without restriction.

end insert

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section 3215.5 is added to the Public Resources Code,
to read:

3215.5.  

(a)  begin delete On end delete begin insert Notwithstanding Section 10231.5, on end insert or before
January 1, 2014, and annually thereafter, the supervisor shall
prepare and transmit to the Legislature a comprehensive report
regarding hydraulic fracturing in oil and gas exploration and
production in California, using the information provided pursuant
to Section 3156. Where the information involves trade secret
protection, the supervisor shall only use information provided
pursuant begin insert to end insert paragraph (2) of subdivision (a) of Section 3159 to
complete the report. The report shall additionally include, but is
not limited to, the following relevant information:

begin delete

(1) The disposition of water used in the treatments.

end delete begin insert

(1) Aggregated data detailing the volumes of hydraulic
fracturing fluid used during hydraulic fracturing, identifying
whether it is water suitable for irrigation or domestic purposes,
water not suitable for irrigation or domestic purposes, or
something other than water.

end insert begin insert

(2) Aggregated data detailing the disposition of hydraulic
fracturing fluid used to conduct hydraulic fracturing.

end insert begin delete

(2)

end delete

begin insert (3) end insert  Aggregated data detailing the volumes of each chemical
used in hydraulic fracturing treatments in the state, in each county,
and by each company, during the preceding year.

begin insert

(4) The number of emergency responses to a spill or release.

end insert begin insert

(5) The number of well failures.

end insert begin insert

(6) Based on a representative sampling of information submitted
to the division pursuant to subdivision (a) of Section 3159, the
percentage of chemical information withheld within the
representative sample as trade secret information.

end insert

(b) A report to the Legislature pursuant to subdivision (a) shall
be submitted in compliance with Section 9795 of the Government
Code.

begin delete

(c)

end delete begin delete

 The requirement for submitting the report pursuant to
subdivision (a) is inoperative seven years after the date the first
report is due, pursuant to Section 10231.5 of the Government Code.

end delete

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.