BILL ANALYSIS �
AB 7
Page 1
Date of Hearing: June 24, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 7 (Wieckowski) - As Amended: June 10, 2013
SUBJECT : Oil and gas: hydraulic fracturing
SUMMARY : Requires the owner or operator of an oil and gas well
in which hydraulic fracturing is utilized to provide the
Division of Oil, Gas, and Geothermal Resources (DOGGR) and the
public with specific information related to the hydraulic
fracturing treatment.
EXISTING LAW :
1)Creates DOGGR within the Department of Conservation.
2)Requires DOGGR to do all of the following:
a) Supervise the drilling, operation, maintenance, and
abandonment of wells and the operation, maintenance, and
removal or abandonment of tanks and facilities attendant to
oil and gas production, including certain pipelines that
are within an oil and gas field, so as to prevent, as far
as possible, damage to life, health, property, and natural
resources; damage to underground oil and gas deposits from
infiltrating water and other causes; loss of oil, gas, or
reservoir energy, and damage to underground and surface
waters suitable for irrigation or domestic purposes by the
infiltration of, or the addition of, detrimental
substances.
b) Supervise the drilling, operation, maintenance, and
abandonment of wells so as to permit the owners or
operators of the wells to utilize all methods and practices
known to the oil industry for the purpose of increasing the
ultimate recovery of underground hydrocarbons and which, in
the opinion of DOGGR, are suitable for this purpose in each
proposed case.
3)Declares as a policy of the state that to further the
elimination of waste by increasing the recovery of underground
hydrocarbons, a lease or contract for the exploration and
extraction of hydrocarbons is deemed to allow, unless
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otherwise stated, the lessee or contractor to do what a
prudent operator using reasonable diligence would do, having
in mind the best interests of the lessor, lessee, and the
state in producing and removing hydrocarbons, including, but
not limited to, the injection of air, gas, water, or other
fluids into the productive strata, the application of pressure
heat or other means for the reduction of viscosity of the
hydrocarbons, the supplying of additional motive force, or the
creating of enlarged or new channels for the underground
movement of hydrocarbons into production wells, when these
methods or processes employed have been approved by DOGGR.
4)To best meet oil and gas needs in this state, requires DOGGR
to administer its authority so as to encourage the wise
development of oil and gas resources.
5)Requires the operator of any well, before commencing the work
of drilling the well, to file with DOGGR a written notice of
intention to commence drilling. Prohibits drilling until
approval is given by DOGGR; however, if DOGGR fails to give
the operator written response to the notice within 10 working
days from the date of receipt, that failure is considered as
an approval of the notice.
THIS BILL :
1)Oil and Gas Drilling Application. Requires an operator of an
oil and gas well to file with DOGGR an application to commence
drilling (as opposed to a written notice of intention to
commence drilling). Requires DOGGR to approve or deny an
application to commence drilling within 30 days (as opposed to
10 days). Repeals the provision that deems an oil and gas
permit approved if DOGGR fails to respond to the permit
request.
2)Application Information. Requires an operator of an oil and
gas well to include the following additional information as
part of the application to commence drilling:
a) The type of exploration and production techniques that
the operator will use at the well;
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
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production process or processes. This list must include
the name of the chemical; the purpose of the chemical in
the production or exploration process; the Chemical
Abstract Service (CAS) numbers for the chemical; and the
estimated total amount of the chemical used; and,
c) If hydraulic fracturing will occur, a description of the
estimated quantity of water planned to be used in the
process; the sources of water to be used; and a groundwater
monitoring plan as specified.
3)Waste Discharge Report. Requires, prior to the approval of
the commencement of drilling, the operator of an oil and gas
well to submit written proof to DOGGR that a waste discharge
report for the disposal of wastewater has been filed with the
applicable regional water quality control board.
4)Notice to Neighbors. Requires, at least 30 days prior to
commencing a hydraulic fracturing treatment, the operator of
an oil and gas well to provide a copy of the approved
hydraulic fracturing treatment permit to every surface
property owner whose property line location is either within a
1,500 foot radius of the wellhead or within 500 feet from the
horizontal projection of all subsurface portions of the
designated well to the surface. Allows a property owner who
receives notice to request the applicable regional water
quality control board to perform surface and well water
quality sampling and testing to obtain baseline measurements
prior to the commencement of the hydraulic fracturing
treatment and follow-up measurements after the hydraulic
fracturing treatment.
5)Post-Hydraulic Fracturing Disclosure. Requires the operator
of a hydraulic fracturing well to provide DOGGR (either
directly or through an arrangement with the supplier), and
include in the well history, all of the following information:
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;
b) The purpose of each additive contained in the hydraulic
fracturing fluid;
c) The estimated total amount of the additives in the
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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; and,
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.
6)Public Posting. Requires, within 60 days after the cessation
of hydraulic fracturing, the operator of the oil and gas well
to file with DOGGR information related to the history of work
performed on the well. Requires DOGGR to post the well's
hydraulic fracturing information to maps on DOGGR's web site
and make the information available to the public. Authorizes
DOGGR to use an existing public web site, such as
fracfocus.org, if certain criteria are met.
7)Trade Secret. Allows a supplier of hydraulic fracturing
chemicals to claim trade secret protections for the chemical
composition of additives; however, the supplier must still
provide the trade secret information to DOGGR. If DOGGR
receives a request for release of the trade secret information
to the public, requires DOGGR to notify the supplier of the
request and give the supplier 60 days to commence a court
action to prohibit the release of information. Authorizes
disclosure of trade secret information to certain parties,
including health professionals.
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8)Regulating Hydraulic Fracturing. Requires DOGGR, on or before
January 1, 2015, 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, a list containing restricted or
prohibited toxic chemicals, and a list containing restricted
or prohibited locations deemed extremely vulnerable to a spill
or release of chemicals.
9)Annual Reports. Requires annual public reports from DOGGR
regarding fresh water used for oil and gas production,
wastewater produced from oil and gas production, well casing
failures, chemicals used in hydraulic fracturing, emergency
responses to spills and releases, and trade secret claims.
FISCAL EFFECT : According to the Assembly Appropriations
Committee's May 15, 2013 analysis, estimated one-time special
costs in the range of $1 million and ongoing costs of a similar
amount to fulfill new duties at DOGGR relating to evaluating
trade secrets and processing public requests, and reporting to
the Legislature.
The bill was subsequently amended to include additional
requirements related to disclosure, groundwater monitoring,
wastewater disposal, and notice to neighbors. The cost of these
additional requirements is unknown.
COMMENTS :
Legislative History. This bill was heard and passed by the
Assembly Natural Resources Committee on April 14, 2013. On May
24, 2013, the Assembly Appropriations Committee passed the bill
with amendments that extend the oil and gas development permit
review period from 10 to 30 days and rewrite the trade secret
language (the trade secret language is now similar to the
language contained in SB 4 (Pavley)). Subsequently, the author
amended the bill to require additional disclosure; proof of a
waste discharge report for the disposal of wastewater; a ground
water monitoring plan; and notice of hydraulic fracturing
treatment to neighbors.
Background. Hydraulic fracturing (also known as fracking) is
one energy production technique used to obtain oil and natural
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gas in areas where those energy supplies are trapped in rock
(i.e., shale) or sand formations. Once an oil or natural gas
well is drilled and properly lined with steel casing, fluids are
pumped down to an isolated portion of the well at pressures high
enough to cause cracks in shale formations below the earth's
surface. These cracks or fractures allow oil and natural gas to
flow more freely. Often, a propping agent such as sand is
pumped into the well to keep fractures open.
In many instances, the fluids used in hydraulic fracturing are
water-based. There are some formations, however, that are not
fractured effectively by water-based fluids because clay or
other substances in the rock absorb water. For these
formations, complex mixtures with a multitude of chemical
additives may be used to thicken or thin the fluids, improve the
flow of the fluid, or even kill bacteria that can reduce
fracturing performance.
Halliburton Loophole and Fracking Boom. In 2005, Congress
exempted hydraulic fracturing (except when involving the
injection of diesel fuels) from the federal Safe Drinking Water
Act. This is colloquially referred to as the "Halliburton
loophole." As a result of this action, the United States
Environmental Protection Agency lacks the authority to regulate
hydraulic fracturing activities that do not use diesel fuel as
an additive. Since 2007, U.S. shale oil production has
increased from about 39 barrels to 217 million barrels and shale
gas production increased from 1.6 trillion cubic feet to 7.2
trillion cubic feet.
Potential Environmental Risks. The United States Government
Accountability Office (GAO) categorizes the potential
environmental risks of hydraulic fracturing into the following
categories: (1) air quality; (2) water quality and quantity; and
(3) land and wildlife.
Air quality risks are generally a result of engine exhaust from
increased traffic and equipment emissions with a risk of
unintentional emissions of pollutants from faulty equipment.
Water quality risks result from spills or releases of hydraulic
fracturing fluids from tank ruptures, or operational errors or
underground migration. Fracturing chemicals may contaminate
surface or groundwater under these conditions. Water is the
primary component of hydraulic fracturing fluids. The
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cumulative effects of using surface water or groundwater should
be regulated to prevent significant local effects.
With regard to land and wildlife, the GAO raises concerns about
vegetation clearing, road construction, pipelines and storage
tanks, unintentional oil or toxic chemical spills, and the
resulting impact on wildlife and habitat.
DOGGR's Hydraulic Fracturing Regulations. DOGGR has the
statutory responsibility to regulate hydraulic fracturing, but
to date has not done so. In December 2012, DOGGR released a
pre-rulemaking discussion draft of hydraulic fracturing
regulations to help inform the next regulatory draft.
Once released, the proposed regulations will be vetted through a
year-long formal rulemaking process. In the meantime, DOGGR is
conducting workshops throughout the state. Numerous groups are
concerned that hydraulic fracturing activity is continuing
absent formally adopted safeguards and regulations. Others are
concerned that DOGGR may not be conducting adequate
environmental review through the CEQA process to fully determine
significant environmental effects.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
Sierra Club
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092