BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 669
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          ASSEMBLY THIRD READING
          AB 669 (Stone and Williams)
          As Amended  May 24, 2013
          Majority vote 

           NATURAL RESOURCES   6-3         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Chesbro, Garcia,          |Ayes:|Gatto, Bocanegra,         |
          |     |Muratsuchi, Skinner,      |     |Bradford,                 |
          |     |Stone, Williams           |     |Ian Calderon, Campos,     |
          |     |                          |     |Eggman, Gomez, Hall,      |
          |     |                          |     |Ammiano, Pan, Quirk,      |
          |     |                          |     |Weber                     |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Grove, Bigelow, Patterson |Nays:|Harkey, Bigelow,          |
          |     |                          |     |Donnelly, Linder, Wagner  |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Requires an oil and gas operator conducting hydraulic  
          fracturing to include water quality and quantity information to  
          the Division of Oil, Gas, and Geothermal Resources (DOGGR) as  
          part of the permit process and provide 30 days' notice to  
          neighboring property owners prior to the commencement of  
          hydraulic fracturing.  Specifically,  this bill:
           
          1)Requires that prior to the approval of the commencement of any  
            drilling, redrilling, or deepening of a well, the well  
            operator submit written proof to DOGGR that a waste discharge  
            report has been filed with the applicable regional water  
            quality control board for the disposal of wastewater for the  
            well.

          2)Requires, at least 30 days prior to commencing a hydraulic  
            fracturing treatment, the well operator to provide a copy of  
            the approved hydraulic fracturing treatment permit to every  
            surface property owner whose property line is located either  
            within a 1,500 foot radius of the wellhead or within 500 feet  
            from the horizontal projection.  A property owner notified may  
            request the applicable regional water quality control board to  
            perform water sampling and testing on any well or surface  
            water suitable for drinking or irrigation.  The sampling can  
            be for baseline measurements prior to the commencement of the  








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            hydraulic fracturing and for follow up measurements after the  
            hydraulic fracturing treatment. 

          3)Requires all of the following as part of the notice of intent  
            to drill, rework, or deepen a well where hydraulic fracturing  
            will occur:

             a)   A description of the estimated quantity of water planned  
               to be used in the hydraulic fracturing process;

             b)   Information on the source of water to be used; and

             c)   A groundwater monitoring plan for approval or denial of  
               the appropriate regional water quality control board.

          4)Requires DOGGR to include in its annual public report  
            additional information related to freshwater used for oil and  
            gas production, disposed wastewater from oil and gas  
            production, and well casing failures.

          5)For the monthly statements that an owner of an oil and gas  
            well files with DOGGR, requires  the owner to include  
            additional information related to produced wastewater and  
            freshwater used for oil and gas production.
                
            EXISTING LAW  :

          1)Requires DOGGR to 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.

          2)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.  Drilling shall not commence  
            until approval is given by DOGGR.  If DOGGR fails to give the  








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            operator written response to the notice within 10 working days  
            from the date of receipt, that failure shall be considered as  
            an approval of the notice. 

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, increased costs to the State Water Resources Control  
          Board and regional boards in the $2-$3 million range for  
          one-time and ongoing evaluations, monitoring, tracking and  
          permitting.

          Increased costs to DOGGR in the $400,000 to $500,000 range for  
          the first year; ongoing costs in the $700,000 to $800,000 range.

           COMMENTS  :  

           Background  .  Hydraulic fracturing (also known as fracking) is  
          one energy production technique used to obtain oil and natural  
          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.

           Federal Exemption Followed by Fracking Increase  .  In 2005,  
          Congress exempted hydraulic fracturing (except when involving  
          the injection of diesel fuels) from the federal Safe Drinking  
          Water Act.  As a result of this action, the United States (US)  
          Environmental Protection Agency (US EPA) lacks the authority to  
          regulate hydraulic fracturing activities that do not use diesel  
          fuel as an additive.  Since 2007, shale oil production has  








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          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 fracking into the following categories:  
          a) air quality; b) water quality and quantity; c) 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 fracking  
          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 fracking fluids. The 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

           DOGGRs Fracking Regulations  .  DOGGR has the statutory  
          responsibility to regulate fracking, but to date has not done  
          so.  In December 2012, DOGGR released a pre-rulemaking  
          discussion draft of fracking 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 fracking 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.
             









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          Analysis Prepared by  :  Mario DeBernardo / NAT. RES. / (916)  
          319-2092


                                                                FN: 0001006