BILL ANALYSIS �
AB 1301
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1301 (Bloom) - As Amended: March 21, 2013
SUBJECT : Oil and gas: hydraulic fracturing
SUMMARY : Prohibits hydraulic fracturing operations until the
Legislature enacts subsequent legislation that determines
whether and under what conditions hydraulic fracturing may be
conducted while protecting the public health and safety and the
natural resources of the state.
EXISTING LAW :
1)Creates the Division of Oil, Gas, and Geothermal Resources
(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
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extraction of hydrocarbons is deemed to allow, unless
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. Drilling shall not commence
until approval is given by DOGGR. If DOGGR fails to give the
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.
THIS BILL :
1)Defines "hydraulic fracturing" as a technique used in
preparing a well that typically involves the pressurized
injection of water and chemicals, compounds, and materials
into an underground geologic formation in order to expand
existing fractures or create new fractures in that formation,
thereby causing or enhancing the production of oil or gas from
a well. Hydraulic fracturing shall include the terms
"fracking," "hydrofracking," "hydrofracturing,"
"unconventional shale drilling," and other colloquial terms
referencing this drilling technique.
2)Notwithstanding any other law, prohibits hydraulic fracturing
operations until the Legislature enacts subsequent legislation
that determines whether and under what conditions hydraulic
fracturing may be conducted while protecting the public health
and safety and the natural resources of the state.
FISCAL EFFECT : Unknown
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COMMENTS :
1)Purpose of the Bill. This bill imposes a moratorium on
hydraulic fracturing operations until appropriate laws and
regulations are developed that protect the public health and
safety and the natural resources of the state.
The author's rationale for this bill is based, in part, on
DOGGR's lack of regulations on hydraulic fracturing. The
author explains that DOGGR knew about the public health and
environmental concerns related to hydraulic fracturing back in
2010, but did nothing to implement new regulations until
recently. In 2012, DOGGR finally began conducting workshops
for the purpose of creating a discussion draft of hydraulic
fracturing regulations. According to the author, the
discussion draft (which is explained in more detail below),
includes significant gaps. Regulations are expected to be
proposed sometime later this year and the rulemaking process
will take at least another year. Meanwhile, hydraulic
fracturing activities will continue without any oversight.
In addition to DOGGR's lack of regulations, the author points
to DOGGR's failure to require environmental impact reports
(EIR) pursuant to the California Environmental Quality Act
(CEQA). DOGGR has recently been sued by environmentalists who
argue that the agency has been "approving permits for oil and
gas wells after exempting such projects from environmental
review or? issuing boilerplate negative declarations finding
no significant impacts from these activities." The plaintiffs
are seeking injunctive relief to prohibit the approval of new
oil and gas wells until DOGGR complies with its legal
requirements to evaluate and mitigate the significant
environmental and public health impacts caused by hydraulic
fracturing operations.
The author further states that "[g]iven [DOGGR's] snail's pace
to date and the significant gaps in the discussion draft, it
appears that unless a moratorium is enacted, there are few
incentives to draw all stakeholders together to thoughtfully
and comprehensively develop the appropriate laws and
regulations needed to protect public health and safety and
address other factual environmental risks."
2)Background on Hydraulic Fracturing. According to the Western
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States Petroleum Association (WSPA), hydraulic fracturing
(a.k.a. 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.
In 2005, Congress enacted what is colloquially referred to as
the "Halliburton Loophole," which exempts hydraulic fracturing
(except when involving the injection of diesel fuels) from the
federal Safe Drinking Water Act. As a result of this action,
the U.S. Environmental Protection Agency lacks the authority
to regulate hydraulic fracturing activities that do not use
diesel fuel as an additive.
Around the same time that Congress exempted hydraulic
fracturing from the Safe Drinking Water Act, the country
experienced a boom in the production of shale oil and gas.
From 2007 to 2011, shale oil production increased more than
fivefold, from approximately 39 million barrels to about 217
million barrels, and shale gas production increased
approximately fourfold, from 1.6 trillion cubic feet to 7.2
trillion cubic feet. This increase in production was driven
primarily by technological advances in horizontal drilling and
hydraulic fracturing that made more shale oil and gas
development economically viable.
But with this boom comes various issues with regard to
environmental health and safety, which has caused enormous
public anxiety. Cases of environmental contamination
attributed to hydraulic fracturing have been reported in
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Wyoming, Texas, Colorado, West Virginia, and Pennsylvania.
Consequently, governments at all levels across the country are
looking to regulate the practice and address these concerns.
3)What are the environmental risks associated with hydraulic
fracturing? According to a recent report from the U.S.
Government Accountability Office (GAO), which is an
independent, nonpartisan agency that works for Congress,
"[d]eveloping oil and gas resources?poses inherent
environmental and public health risks, but the extent of risks
associated with shale oil and gas development is unknown, in
part, because the studies we reviewed do not generally take
into account potential long-term, cumulative effects." The
GAO's report categorizes the environmental risks into the
following categories: air quality, water quantity, water
quality, and land and wildlife.
With regard to air quality, the risks are "generally the
result of engine exhaust from increased truck traffic,
emissions from diesel-powered pumps used to power equipment,
intentional flaring or venting of gas for operational reasons,
and unintentional emissions of pollutants from faulty
equipment." The GAO report also explains how silica sand, a
proppant commonly used in hydraulic fracturing, and storing
fracturing fluids and produced waters in impoundments can
cause air quality issues. Silica sand, if not properly
handled, can become airborne, lodge into a person's lungs, and
cause silicosis, which is an incurable lung disease.
Impoundments (i.e. ponds) containing fracturing fluids and
produced waters (i.e. the water produced when oil and gas are
extracted from the ground) pose a risk because the evaporation
of the fluids has the potential to release contaminants into
the atmosphere.
With regard to water quantity, water is used for well drilling
operations to make drilling mud as well as to cool and
lubricate the drill bits. Water is also the primary component
of hydraulic fracturing fluids. According to the GAO, "the
amount of water used for shale gas development is small in
comparison to other water uses, such as agriculture and other
industrial purposes. However, the cumulative effects of using
surface water or ground water at multiple oil and gas
development sites can be significant at the local level,
particularly in areas experiencing drought conditions." It
should be noted that the oil and gas industry and DOGGR both
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assert that the amount of water used for hydraulic fracturing
in California is a fraction of what is used in other states.
This assertion is based on information voluntarily provided by
oil and gas operators. It is not clear whether this
information is representative of all hydraulic fracturing in
the state. Additionally, with the potential for a hydraulic
fracturing boom in the Monterey Shale (which is explained in
more detail below), it would be too speculative to determine
the type and amount of hydraulic fracturing that will take
place in the future and how much water will be needed.
With regard to water quality, the GAO explains that shale oil
and gas development pose risks from contamination of surface
water and ground water as a result of spills and releases of
hydraulic fracturing chemicals, produced water, and drill
cuttings. Spills and releases of these materials can occur as
a result of tank ruptures, blowouts, equipment or impoundment
failures, overfills, vandalism, accidents, ground fires, or
operational errors.
The potential for the spill and release of chemicals involved
in hydraulic fracturing has received a great amount of public
attention. According to a recent congressional report,
between 2005 and 2009, oil and gas companies throughout the
United States used hydraulic fracturing products containing 29
chemicals that are (1) known or possible human carcinogens,
(2) regulated under the Safe Drinking Water Act for their risk
to human health, or (3) listed as hazardous air pollutants
under the Clean Air Act. As for produced water, it can carry
a range of contaminants, including hydraulic fracturing
chemicals, salts, metals, oil, grease, dissolved organics, and
naturally occurring radioactive materials. Drill cuttings
(i.e. the broken bits of solid material removed from drilling)
may contain naturally occurring radioactive materials.
The potential for underground migration is also a potential
risk to water quality. The GAO explains that "[u]nderground
migration can occur as a result of improper casing and
cementing of the wellbore as well as the intersection of
induced fractures with natural fractures, faults, or
improperly plugged dry or abandoned wells. Moreover, there
are concerns that induced fractures can grow over time and
intersect with drinking water aquifers." It should be noted
that the oil and gas industry has provided information
claiming that hydraulic fracturing typically occurs thousands
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of feet below the earth's surface and that the well casing for
these wells extends below an impervious layer of rock "that
would prevent any migration of fluids up into the drinking
water supply." Assuming that the industry is correct, there
is still the problem with well casing failures. A 2000
Society of Petroleum Engineers article regarding an oil field
in Kern County explained that "the well failure rate, although
lower than that experienced in the 1980s, is still
economically significant at 2 to 6% of active wells per year."
In Pennsylvania, poor cementing around a well casing allowed
methane to contaminate the water wells of 19 families.
Morever, little data exists on (1) fracture growth in shale
formations following multistage hydraulic fracturing over an
extended time period, (2) the frequency with which
refracturing of horizontal wells may occur, (3) the effect of
refracturing on fracture growth over time, and (4) the
likelihood of adverse effects on drinking water aquifers from
a large number of hydraulically fractured wells in close
proximity to each other.
With regard to land and wildlife, the GAO explains that
"clearing land of vegetation and leveling the site to allow
access to the resource, as well as construction of roads,
pipelines, storage tanks, and other infrastructure needed to
extract and transport the resource can fragment
habitats?[which] increases disturbances?, provides pathways
for predators, and helps spread nonnative plant species."
Noise, the presence of new infrastructure, and spills of oil,
gas, or other toxic chemicals are other risks that can
negatively affect wildlife and habitat.
There is also the issue of earthquakes with hydraulic
fracturing. According to the GAO report, well injections,
especially the injection of produced water, have been
connected to seismicity.
Ideally, the environmental risks referenced above would be
analyzed by the lead agency under CEQA. However, as
referenced above, a recent CEQA lawsuit filed against DOGGR
claims that the agency has not been conducting adequate
environmental review of hydraulic fracturing operations.
4)Hydraulic Fracturing in California. According to the oil and
gas industry, hydraulic fracturing has been used in California
for decades. The industry claims that over 90% of hydraulic
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fracturing occurs in Kern County, in areas with no potable
water, no surrounding population, and no other significant
business interests. However, reports from various sources
suggest that hydraulic fracturing in California will likely
increase significantly in the upcoming years, spreading to
areas throughout the state.
A recent report from the University of Southern California
explains that "California boasts perhaps the largest
deep-shale reserves in the world. Those reserves exist within
the Monterey Shale Formation, a 1,750 square mile swath of
mostly underground shale rock that runs lengthwise through the
center of the state, with the major portion in the San Joaquin
Basin." The U.S. Energy Department estimates that the
Monterey Shale contains more than 15 billion barrels of oil,
accounting for approximately two-thirds of the shale-oil
reserve in the United States. Additionally, according to a
2008 paper published by the Society of Petroleum Engineers,
"it is believed that hydraulic fracturing has a significant
potential in many Northern California gas reservoirs."
5)DOGGR's Draft Regulations. On December 28, 2012, DOGGR
released a pre-rulemaking discussion draft of regulations on
hydraulic fracturing. The proposed regulations attempt to
impose requirements on operators aimed to improve transparency
and safety. Specifically, the proposed regulations would
require an operator to: (1) submit information to DOGGR at
least 10 days prior to beginning hydraulic fracturing
operations and notify DOGGR at least 24 hours prior to
commencing hydraulic fracturing operations (advance disclosure
of hydraulic fracturing chemicals is not required); (2) prior
to operations, test the structural integrity of wells and
casings to prevent fluid migration; (3) store and handle
hydraulic fracturing fluids in a specified manner; (4) monitor
a specified set of parameters during hydraulic fracturing
operations and, in case a breach occurs, terminate operations
and immediately notify DOGGR about the breach; (5) after the
conclusion of operations, monitor wells for up to 30 days and
maintain data for a period of 5 years; and (6) disclose data
to a Chemical Disclosure Registry (such as FracFocus.org) that
is not a trade secret, unless a health professional submits a
written statement of need stating that the trade secret
information will be used for diagnosis or treatment of an
individual exposed to hazardous hydraulic fracturing chemicals
and the health professional also executes a confidentiality
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agreement.
These proposed regulations will be vetted through a year-long
formal rulemaking process beginning the summer or fall of
2013. In the meantime, DOGGR has conducted public workshops
in Los Angeles and Sacramento about the proposed regulations,
with more planned in California cities like Bakersfield and
Santa Maria through July 2013.
6)Related Legislation.
AB 7 (Wieckowski), which deals with hydraulic
fracturing disclosure.
AB 288 (Levine), which deals with permitting well
stimulation.
AB 649 (Nasarian), which deals with a hydraulic
fracturing moratorium.
AB 669 (Stone), which deals with permitting
wastewater disposal from oil and gas operations.
AB 982 (Williams), which deals with groundwater
monitoring.
AB 1323 (Mitchell), which deals with a hydraulic
fracturing moratorium.
SB 4 (Pavley), which deals with hydraulic fracturing
regulations and disclosure.
SB 395 (Jackson), which deals with wastewater
disposal wells.
REGISTERED SUPPORT / OPPOSITION :
Support
350 Bay Area
350 Sacramento
350 Santa Barbara
350 Silicon Valley
350 Sonoma County
350.org
350.org Sonoma County
Clean Water Action (co-sponsor)
Center for Biological Diversity (co-sponsor)
Food & Water Watch (co-sponsor)
Alameda Creek Alliance
Alliance of Nurses for Healthy Environments
Aromas Cares for Our Environment (ACE)
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Baldwin Hills Oil Watch
Ballona Network
Battle Creek Alliance
Bay Area Healthy 880 Communities
Bay Localize
Breast Cancer Action
Burbank Green Alliance
Butte Environmental Council
California Coastkeeper Alliance
California Student Sustainability Coalition
Californians for Western Wilderness
Californians Who Drink Water
California Nurses Association
Center on Race, Poverty, and the Environment
Central Valley Safe Environment Network
Chalice Farm and Sustainable Living Center
Christians Caring for Creation
City of Culver City
Citizens Coalition for a Safe Community
Citizens Committee to Complete the Refuge
Claudia Y. Shafer, Attorney at Law
Clean Water and Air Matter
Cleveland National Forest Foundation
Coastal Environmental Rights Foundation
CoFED
Comite Civico Del Valle, Inc.
Community Food and Justice Coalition
CREDO
Democracy for America
The Democratic Club of the Santa Clarita Valley
Donna Shanske, HR Consulting
Earthworks' Oil & Gas Accountability Project
Ebbetts Pass Forrest Watch
EcoEquity
Environment California
Environmental Action Committee of West Marin
Environmental Defense Center
Environmental Health Coalition
Environmental Priorities Network
Environmental Protection Information Center
Evolving Products
Family Farm Defenders
Food & Water Watch
Food Empowerment Project
Frack-Free Culver City
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Fresno Metro Ministry
Friends Foundation International
Friends of the Earth
Friends of the Pogonip
Forest Forever
Gage & Gage Productions
GAIA-Global Alliance for Incinerator Alternatives
Global Community Monitor
Golden Gate Audubon Society
Green Party of Monterey County
Greenaction for Health and Environmental Justice
GreenFaith
Greenpeace
Humboldt Baykeeper
inNative
Klamath Forest Alliance
Klamath Riverkeeper
Klamath-Siskiyou Wildlands Center
KyotoUSA
Label GMOs Bakersfield
Local Clean Energy Alliance
Los Angeles Waterkeeper
Los Padres ForestWatch
Mainstreet Moms
Medicine Lake Citizens for Quality Environment
Movement Generation
Natural Resources Defense Council
Northcoast Environmental Center
Occupy Monterey Peninsula
Oil Change International
The Orange County Interfaith Coalition for the Environment
Organic Consumers Association
Paw PAC
People for Clean Air & Water of Kettleman City
Project Coyote
Protect Our Water
Public Citizen
Rainforest Action Network
RefineRichmond
Residents Organized for a Safe Environment (ROSE)
Rising Tide Monterey Bay
The River Project
San Francisco Baykeeper
San Joaquin Raptor/Wildlife Rescue Center
San Joaquin Valley Conservancy
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San Mateo Cool Cities
Santa Cruz Indigenous Solidarity
SaveWithSunlight, Inc.
Sierra Club of California
SLO Clean Water Action
Stewards of the Earth
Sungevity
Take Back Our Democracy
Transition Culver City
Transition San Francisco
Tri-Valley CAREs
Turtle Island Restoration Network
Union de Vecinos
Unitarian Universalists of San Mateo
Urban and Environmental Policy Institute
Ventura Coastkeeper
Whittier Hills Oil Watch
Wild Equity Institute
Wild Heritage Planners
Wishtoyo Foundation
Women's Earth and Climate Caucus
World Stewardship Institute
Xun Biosphere Project
Opposition
American Chemistry Council
California Business Properties Association
California Chamber of Commerce
California Independent Oil Marketers Association
California Independent Petroleum Association
California Manufacturers & Technology Association
California Small Business Alliance
Coalition for Energy Users
Friends for Saving California Jobs
Independent Oil Producers Agency
Kern Taxpayers Association
League of California Food Processors
Western States Petroleum Association
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
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