BILL ANALYSIS                                                                                                                                                                                                    



                                                                AB 1323
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        ASSEMBLY THIRD READING
        AB 1323 (Mitchell)
        As Amended  May 28, 2013
        Majority vote 

         NATURAL RESOURCES   5-3         APPROPRIATIONS      12-5        
         
         ----------------------------------------------------------------- 
        |Ayes:|Chesbro, Muratsuchi,      |Ayes:|Gatto, Bocanegra,         |
        |     |Skinner, Stone, Williams  |     |Bradford,                 |
        |     |                          |     |Ian Calderon, Campos,     |
        |     |                          |     |Eggman, Gomez, Hall,      |
        |     |                          |     |Ammiano, Pan, Quirk,      |
        |     |                          |     |Weber                     |
        |     |                          |     |                          |
        |-----+--------------------------+-----+--------------------------|
        |Nays:|Grove, Bigelow, Patterson |Nays:|Harkey, Bigelow,          |
        |     |                          |     |Donnelly, Linder, Wagner  |
        |     |                          |     |                          |
         ----------------------------------------------------------------- 
         SUMMARY  :  Prohibits hydraulic fracturing until the date that  
        regulations adopted by the Division of Oil, Gas, and Geothermal  
        Resources (DOGGR) regulating hydraulic fracturing take effect.
         
        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 operator  
          written response to the notice within 10 working days from the  
          date of receipt, that failure shall be considered as an approval  








                                                                AB 1323
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          of the notice.

         FISCAL EFFECT  :  According to the Assembly Appropriations Committee,  
        potential delay in state revenues of up to $9 million due to the  
        inability to use hydraulic fracturing on tidelands oil wells owned  
        by the state while the regulations are being developed.

         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 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 US Government Accountability  
        Office (GAO) categorizes the potential environmental risks of  
        fracking into the following categories:  a) air quality; b) water  
        quality and quantity; and c) land and wildlife.









                                                                AB 1323
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        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

         DOGGR's 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 California Environmental Quality  
        Act (CEQA) process to fully determine significant environmental  
        effects.
         

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

         
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