BILL ANALYSIS Ó
SB 4
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 4
AUTHOR: Pavley
AMENDED: April 24, 2013
FISCAL: Yes HEARING DATE: May 1, 2013
URGENCY: No CONSULTANT: Laura
Feinstein
SUBJECT : OIL AND GAS: HYDRAULIC FRACTURING
SUMMARY :
Existing federal law :
1)Under the Clean Water Act (CWA), regulates surface
discharges of water associated with drilling and production.
2)Under the Clean Air Act (CAA), limits air emissions from
engines, gas processing equipment, and other sources
associated with drilling and production.
3)Under the Safe Drinking Water Act (SDWA), establishes the US
EPA's Underground Injection Control (UIC) program to
regulate oil and gas production wells that inject fluids.
Hydraulic fracturing that does not use diesel fuels is
excluded from regulation by the UIC program (SDWA
§1421(d)(1)).
Existing state law :
1) Creates the Division of Oil, Gas, and Geothermal Resources
(DOGGR) within the Department of Conservation and entrusts
DOGGR's Supervisor (supervisor) with extensive authority to
regulate activities associated with the production and
removal of hydrocarbons (e.g. oil and gas) from the ground
to prevent damage to life, health, property, natural
resources, and to underground and surface water suitable
for irrigation or domestic purposes (Public Resources Code
§3106).
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2) Entrusts the State Water Resources Control Board (SWRCB)
and regional water quality control boards (regional boards)
with the protection of water quality under the
Porter-Cologne Water Quality Control Act (Water Code §13000
et seq.).
3) Provides the California Air Resources Board (ARB) with
primary responsibility for control of mobile sources of air
pollution, and for greenhouse gas emissions (Health and
Safety Code §39000 et seq. and §39500 et seq.).
4) Provides that air pollution control districts (APCDs) and
air quality management districts (AQMDs) have primary
responsibility for controlling air pollution from
stationary sources and non-greenhouse gases (HSC §40000 et
seq.).
5) Entrusts the Department of Toxic Substances Control (DTSC)
with the safe handling and disposal of hazardous waste
under Chapter 6.5 of the Health and Safety Code (HSC §25100
et seq.).
6) Exempts waste from oil and gas production from hazardous
waste law, placing it under DOGGR's authority (HSC
§25159.12(l)(2)).
This bill provides a statutory framework for the comprehensive
regulation of hydraulic fracturing (fracking) in California.
1)Requires that DOGGR promulgate hydraulic fracturing
regulations by January 1, 2015.
2)Requires that DOGGR receive 72 hours' notice of the
hydraulic fracturing job in order to witness the event.
3)Establishes a hydraulic fracturing permit system. Within 5
days of approving a permit, DOGGR must notify the local
regional board, the local planning entity and post the
permit on-line.
4)Requires, as of January 1, 2015, that no hydraulic
fracturing permits can be issued until the scientific study
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is completed.
5)Requires DOGGR to perform spot checks to ensure that
pre-hydraulic fracturing disclosure is consistent with
post-hydraulic fracturing disclosure.
6)Provides for comprehensive annual reporting to the
Legislature on hydraulic fracturing including, for example,
well failure data, and the number of spills and inspections.
7)Raises the potential civil penalties for hydraulic
fracturing violations to no less than $10,000 and no more
than $25,000 per violation per day.
8)Requires the Department of Toxic Substances Control, the
California Air Resources Board, local air districts, the
State Water Resources Control Board, regional water quality
control boards, and other public entities to enter into an
agreement with DOGGR that:
a) Delineates how authority, responsibility, and
notification and reporting requirements associated with
hydraulic fracturing treatments are divided between
agencies in accordance with existing statutory and
regulatory responsibilities.
b) Specifies the appropriate agency for air and water
quality monitoring, include trade secret handling
protocols, if necessary, and provides for ready public
access to information related to hydraulic fracturing
treatments and related activities.
9)Requires notification of property owners within 1500 feet of
the wellhead, or within 500 feet from the horizontal
projection of all subsurface portions of the designated well
to the surface, that hydraulic fracturing will occur. These
property owners can choose to request that the regional
boards perform water quality sampling and testing on water
wells or surface water suitable for drinking or irrigation.
Regional boards will:
a) Obtain baseline measurements prior to the commencement
of the hydraulic fracturing treatment.
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b) Take measurements after the hydraulic fracturing
treatment on the same schedule as the pressure testing of
the well-casing of the hydraulically fractured well.
c) Retain and archive a sufficient quantity of water
sample to permit a reasonable number of additional
analyses.
10) The regional boards may contract with an independent
third party that adheres to SWRCB-specified standards and
protocols to perform the water sampling and testing.
11) Requires the Secretary of the Natural Resources Agency to
commission a study on effects on water quality, air
quality, and waste disposal of hydraulic fracturing. The
study will also include a risk assessment of the impacts
to public health and safety of hydraulic fracturing with
the participation of the Office of Environmental Health
Hazard Assessment.
12) Requires disclosure of the chemical content of all
hydraulic fracturing fluids to DOGGR. DOGGR would share
chemical data, including trade secret information, as
necessary with other regulators, emergency responders and
health professionals.
13) Modifies the oil and gas production fee calculation to
include the costs associated with hydraulic
fracturing-related activities. This includes the costs of
scientific studies required to evaluate the treatment,
inspections, and air and water quality monitoring and
testing performed by public entities.
COMMENTS :
1)Purpose of the bill . According to the author, this
legislation is motivated by the public's right to know about
fracking. The author asserts that DOGGR's proposed
regulations are a step in the right direction, but don't go
far enough. The author believes it is essential for public
transparency and accountability that companies obtain a
state-issued permit to frack, notify neighboring property
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owners 30 days before fracturing a well, and disclose the
chemical content of hydraulic fracturing fluids. The author
states that water quality monitoring and an independent
scientific study of the environmental risks associated with
hydraulic fracturing are essential to protect air and water
quality. According to the author, the bill allows industry
to claim trade secret protection for chemicals under
specific circumstances, while providing full disclosure to
DOGGR and allowing health professionals and other regulators
to obtain trade secret information when necessary.
The author states that there is an emerging national
consensus on the basic assurances the public needs around
fracking operations. The author notes that, while fracking
has taken place in California for 60 years, many of the
techniques and chemicals are new, as is the immense scale of
many of hydraulic fracturing fields. The author concludes
that SB 4 will ensure that the state will gather sufficient
information on the extent of fracking in California and its
environmental effects, thereby enabling informed
decision-making about the practice.
2)Arguments in support . The Environmental Defense Center
states, "while the state of California is widely regarded as
the nation's leader on environmental issues, our state lags
far behind other major oil and gas producing states in the
development of a legal and regulatory framework to address
fracking and the significant risks it poses to the public
health, safety, and the natural environment? No one but the
oil industry truly knows the location, extent, or frequency
of fracking, the source and volume of water used, or what
chemicals are being utilized? SB 4 would remedy this
unacceptable status quo."
Ventura County supports SB 4 because the county is "highly
dependent on local groundwater resources for potable water,
and groundwater is the lifeblood of the County's $1
billion-plus agricultural industry? Ventura County has
historically balanced oil and gas production and the jobs it
brings with the protection of our natural and agricultural
resources. It is important that this balancing continue to
occur."
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3)Arguments in opposition . In a joint letter, the Western
States Petroleum Association states that "SB 4 imposes a
moratorium on the use of hydraulic fracturing in oil and gas
production starting on January 1, 2015, until [the state's]
regulations are complete. This would unnecessarily and
substantially threaten our supplies of oil and natural gas,
raising business costs and harming California's economy."
They continue "this significant, untimely burden on
California's businesses and economy is unnecessary. Oil and
gas production as a whole is heavily regulated and
monitored, and hydraulic fracturing has been used for
decades with no reported incidents of harm to the
environment or public health. Opponents argue that SB 4
will not provide added public health or environmental
protections, but it will increase business costs, hamper
California's economic recovery and deprive our state of
much-needed fuel, jobs and tax revenues indefinitely."
The California Independent Petroleum Association makes
similar points and adds that "over 90% of hydraulic
fracturing happens within Kern County, 80% within the
Belridge oil field alone? These fields have no potable
water, no surrounding population and no other significant
business interests? CIPA supports the disclosure of
chemicals used to the appropriate health and safety
regulatory agencies while protecting proprietary
information."
The Physicians for Social Responsibility - Los Angeles
oppose SB 4 unless trade secret protection of the fracking
fluid chemicals is removed. Clean Water Action and the
Sierra Club California, while writing in support, call for a
similar amendment.
4)Proposed regulations . DOGGR issued a discussion draft of
regulations for hydraulic fracturing in December 2012.
DOGGR's Frequently Asked Questions document on the
discussion draft regulations states, "the Division hopes to
commence the formal rulemaking process in April 2013? The
Division estimates that this rulemaking process will take
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eight to ten months to complete." The discussion draft
regulations include the following:
a) The well operator submits a form providing notice of
planned hydraulic fracturing operations 10 days in
advance of hydraulic fracturing to DOGGR and the
appropriate regional water quality control board.
b) DOGGR publicly posts the form on-line within 7 days of
receipt.
c) DOGGR receives 24 hours advance notice of the start of
a hydraulic fracturing job in order to witness it.
d) Operator tests well integrity before hydraulic
fracturing.
e) Operator monitors well pressure and production rates
during and after hydraulic fracturing.
f) Operator ceases hydraulic fracturing if well integrity
is compromised.
g) Operator updates spill contingency plans to include
hydraulic fracturing fluids.
h) Operator discloses non-trade secret chemical
information to the privately run FracFocus.org website.
i) Operator declares to DOGGR, under penalty of perjury,
that chemical information not disclosed meets trade
secret requirements.
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j) Health professionals and state agency officials can
obtain trade secret information in case of emergency.
5)California's oil and gas industry and the potential of
hydraulic fracturing . California is the fourth largest oil
and gas producing state, and natural resources extraction is
an important contributor to the state's economy. According
to 2009 data provided by the Western States Petroleum
Association, approximately 100,000 people were directly
employed in oil and gas production in California and the
state received a combined $5.8 billion in fuel excise,
corporate and personal income taxes. The technological
innovation of hydraulic fracturing, by itself and in
combination with advanced drilling techniques, has allowed
unconventional reserves to be developed. One of the largest
unconventional shale reservoirs in the United States is
California's Monterey Shale formation, estimated to contain
15.4 billion barrels of recoverable oil. This is equivalent
to the amount of petroleum the United States imports every
five years. Because of potential adverse impacts to the
environment and public health, hydraulic fracturing has been
a controversial practice, with critics calling for careful
examination and regulation of its environmental impacts.
6)A technical overview of hydraulic fracturing . Hydraulic
fracturing, commonly known as fracking, is a strategy for
stimulating oil and gas production whereby water and
chemicals are pumped into the well under high pressure to
create or enlarge cracks in the rock formations surrounding
the well. Sand is also injected to help keep the cracks
open after the fracturing process is completed. It is often
used in conjunction with horizontal drilling, in which a
well bore runs horizontally through the production zone to
increase the zone of contact between the well bore and the
hydrocarbon producing formation. Hydraulic fracturing is
used to extract oil and gas from unconventional sources such
as shale rock. Shale rock may contain large reservoirs of
oil and gas, but the hydrocarbons are difficult to extract
because they are trapped in the relatively impermeable rock.
The innovation of horizontal drilling combined with
hydraulic fracturing has made shale fossil fuel development
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economically feasible in recent decades.
7)History of hydraulic fracturing in California . Hydraulic
fracturing has been employed in California since the 1950s.
With no systematic public tracking of its use, estimates of
how many wells in California have been fracked vary.
Informal reports from industry sources suggest that a
majority of wells in the state are fracked. However, the
Western States Petroleum Association (WSPA) voluntarily
reported to DOGGR in 2012 that its members fracked 628 new
and existing oil and gas wells in California in 2011, which
represents about 27% of the 2,300 new wells drilled or 1% of
the more than 50,000 existing wells. Industry can
voluntarily report fracking operations to FracFocus.org;
however, as of March 7, 2013, FracFocus.org showed only 93
hydraulically fractured wells in California in 2011.
Citizens and local governments have reported fracking
operations that do not appear on FracFocus.org.
8)Hydraulic fracturing and water quality concerns . Hydraulic
fracturing has the potential to affect water quality at a
number of steps during the process, including the following:
a) Groundwater contamination by hydraulically fractured
production wells. Well casing failures or nearby,
inadequately sealed abandoned wells can act as conduits
for hydraulic fracturing fluid and/or produced water to
penetrate surrounding aquifers.
b) Contamination by mismanaged fluids at surface.
Hydraulic fracturing injects large volumes of chemicals,
some of which are known to be hazardous. These chemicals
are transported by trucks and mixed at the surface. After
a fracking job is performed, the well generates produced
water: oil or gas mixed with large amounts of brackish,
underground water and the fracturing fluid. Produced
water can contain hazardous substances. While at the
surface, improper management of fluids can contaminate
surface water.
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c) Contamination from disposal wells. After separating
out the commercially valuable hydrocarbons, well
operators can reuse the produced water for hydraulic
fracturing or enhanced oil recovery, or they can dispose
of it, typically into a Class II underground injection
salt water disposal well. The potential avenues for
groundwater contamination from Class II wells are similar
to those from hydraulically fractured production wells.
In California, a Kern County almond farmer was awarded $8.5
million in damages in 2009, after his almond trees died when
he irrigated them with well water that had been tainted by
nearby oil and gas operations. The contamination was traced
to unlined pits where Aera Energy LLC had dumped billions of
gallons of wastewater that leached pollutants into nearby
groundwater. It is unknown if any of this wastewater came
from hydraulic fracturing.
The Central Valley Water Board is currently investigating
allegations that Vintage Production California dumped
hydraulic fracturing wastewater into unlined pits.
The US EPA has attributed two cases of groundwater
contamination to hydraulic fracturing: one in Jackson
County, West Virginia and another in Pavilion, Wyoming.
Industry representatives dispute the source of water
contamination in Wyoming; the data is presently being
reviewed by an independent group of experts. There is no
comprehensive list of surface spills associated with
hydraulic fracturing, but there have been a few dozen
documented cases in academic papers and the popular press
and confirmed by local and state governments.
9)Hydraulic fracturing and air quality concerns. Oil and gas
production wells, regardless of whether they are
hydraulically fractured, can emit air pollutants such as
greenhouse gases, volatile organic compounds, particulate
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matter, hydrogen sulfide, and carcinogenic benzene, toluene,
ethylbenzene, and xylene (BTEX) compounds. California well
sites are designed to control air emissions by operating as
closed systems, with vapors and other fluids from the wells
being directed through a series of pipes, valves, and
flanges into storage tanks, compressors, processors, and
other equipment. Emissions from the system are due to leaks,
also known as fugitive emissions, or emergency releases. The
air districts have authority to regulate VOC and toxic air
emissions from well sites. The ARB will be considering how
to address methane emissions in their pending rulemaking on
upstream oil and gas operations.
Silica is a common proppant material used in hydraulic
fracturing. The National Institute for Occupational Safety
and Health has identified exposure to airborne respirable
silica as a health hazard to workers conducting some
hydraulic fracturing operations. Breathing silica can
increase the risk of lung cancer and other diseases such as
silicosis, tuberculosis, and kidney and autoimmune diseases.
10)CEQA review of oil and gas wells . DOGGR regularly
approves oil and gas development proposals under the CEQA
categorical exemptions for minor alterations to land or
existing facilities, or by way of negative or mitigated
negative declarations. As a result, oil and gas permits are
rarely reviewed in Environmental Impact Reports that would
evaluate the potential risks associated with hydraulic
fracturing.
11)SB 4 imposes a moratorium on hydraulic fracturing beginning
January 1, 2015 only if the scientific study is incomplete .
An important misconception about the bill is that it stops
DOGGR from issuing permits for hydraulic fracturing after
January 1, 2015 unless the Division's regulations are
finalized. In fact, DOGGR must halt issuance of permits on
that date only if the scientific study is incomplete, and
may resume once the study is finalized.
12)Do other agencies need statutory authority to provide
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input on DOGGR's regulations ? South Coast Air Quality
Management District (SCAQMD) recommends that SB 4 require
DOGGR to consult with other agencies during their
rulemaking process, including the California Air Pollution
Control Officers Association (CAPCOA), which represents
local air districts. Their concern is that the formal
agreement DOGGR is required to negotiate with other
agencies will be constrained by regulations adopted without
input from those agencies.
A technical amendment is needed to clarify that DOGGR shall
consult with other agencies during the rulemaking process.
Additionally, as noted in Forbes Magazine, there is now
concern that waste from hydraulic fracturing that is
testing for high concentrations of low level radioactive
waste is being disposed of in landfills.
A second amendment is needed to require DOGGR to consult
with the Department of Resources, Recycling and Recovery
(CalRecycle) in the development and implementation of
regulations to ensure that radioactive waste is not being
inappropriately disposed of in landfills.
13)Is testing wells on request preferable to a systematic,
but costly, program to monitor water quality ? In a
February 8, 2013 letter to Senators Pavley and Rubio, the
State Water Resources Control Board noted "In order to
measure the impact on water quality of a particular point
source, one needs a specific monitoring protocol that
includes the proper placement of monitoring wells to detect
likely discharges from the activity." California's Toxic
Well Injection Control Act, which regulates wells for
disposal of hazardous waste, stipulates the construction of
groundwater monitoring wells around the injection well
sufficient in number and location to determine groundwater
movement, changes in water quality in the vicinity of the
well, and movements of wastes (HSC §25159.10 et seq.)
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Comprehensively and definitively identifying point source
pollution from a hydraulically fractured well would require
a thorough sampling program with monitoring wells in
strategic locations. However, such a program would be
costly, requiring the drilling of deep monitoring wells. SB
4 proposes a system of testing existing drinking water
wells upon request, which will be less costly and will
provide information to concerned citizens about individual
drinking water wells.
14)SB 4 institutes a large new program for regional boards .
Regional boards are small agencies that regulate the
substantial water quality problems in many regions of
California. A program of testing domestic water wells on
request could prove cumbersome for them. The bill does
allow the regional boards to contract out the testing of
water and provides for reimbursement for costs incurred by
the program.
15)Related legislation .
AB 7 (Wieckowski) of 2013 provides a comprehensive
framework for hydraulic fracturing regulation. AB 7 is in
the Assembly Committee on Natural Resources.
AB 288 (Levine) of 2013 provides general principles to
regulate hydraulic fracturing to protect public health and
safety. AB 288 is in the Assembly Committee on
Appropriations.
SB 395 (Jackson) of 2013 requires testing of produced water
for hazardous content, and moves hazardous produced water
under the purview of the Department of Toxic Substances
Control (DTSC), not DOGGR. SB 395 is in the Senate
Committee on Environmental Quality.
AB 649 (Nazarian) of 2013 directs a panel to investigate
hydraulic fracturing, places a moratorium on fracking that
would be lifted if the panel deems the practice to be safe,
and bans the use of fresh water in hydraulic fracturing as
well as hydraulic fracturing near an aquifer. AB 649 is in
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the Assembly Committee on Natural Resources.
SB 665 (Wolk) of 2013 raises the bonding requirements for
oil and gas wells. SB 665 is in the Senate Committee on
Natural Resources and Water.
AB 669 (Stone) of 2013 requires more tracking, approval and
reporting on use of freshwater and disposal of wastewater.
AB 669 is in the Assembly Committee on Appropriations.
AB 982 (Williams) of 2013 requires extensive groundwater
monitoring in the vicinity of hydraulic fracturing. AB 982
is in the Assembly Committee on Appropriations.
AB 1301 (Bloom) of 2013 bans hydraulic fracturing until the
Legislature specifically acts to authorize it. AB 1301 is
in the Assembly Committee on Natural Resources.
AB 1323 (Mitchell) of 2013 bans hydraulic fracturing until
a study shows how it can be done safely. It provides for
an advisory council of specified membership (appointed by
2014), a study due in 2016, formal public review of the
study, and a 2019 timeframe for further action. AB 1323 is
in the Assembly Committee on Natural Resources.
SB 1054 (Pavley) of 2012 would have required advance
notification of hydraulic fracturing and drilling
activities in California. SB 1054 failed on the Senate
floor, 18-15.
AB 591 (Wieckowski) of 2011 would have required DOGGR to
promulgate hydraulic fracturing regulations including
chemical disclosure. AB 591 was held on the Senate
Appropriations suspense file.
AB 972 (Butler) of 2011 would have instituted a ban on
hydraulic fracturing in California. AB 972 was held on the
Senate Appropriations suspense file.
SOURCE : Senator Pavley
SUPPORT : California Association of Professional
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Scientists
California Coastal Protection Network
California Nurses Association
City of Ventura Councilmember Brian Brennan
Environmental Defense Center
Environmental Working Group
League of Women Voters of California
Los Angeles Community College District
Los Angeles County Board of Supervisors
Natural Resources Defense Council
National Nurses Organizing Committee
PawPAC
Santa Cruz County Board of Supervisors
Ventura County Board of Supervisors
OPPOSITION : American Chemistry Council
California Business Properties Association
California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers and Technology
Association
Physicians for Social Responsibility - Los
Angeles
Western States Petroleum Association