BILL ANALYSIS Ó
SB 4
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Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 4 (Pavley) - As Amended: August 19, 2013
Policy Committee: Natural Resources
Vote: 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill establishes a comprehensive regulatory program for oil
and gas well stimulation treatments (such as fracking and acid
injection) including a study, the development of regulations, a
permitting process, and public notification and disclosure.
FISCAL EFFECT
1)One-time costs of $2 million for Division of Oil, Gas, and
Geothermal Resources (DOGGR) initial activities including
rulemaking. Ongoing costs of approximately $2 million for
DOGGR to provide regulatory oversight.
2)Increased initial costs to the State Water Resources Control
Board (SWRCB) of $1.87 million and on-going costs of up to $10
million annually for the SWRCB and regional boards to provide
groundwater monitoring depending on well activity.
3)Unknown significant costs to the Natural Resources Agency,
potentially in the hundreds of thousands of dollars to conduct
an independent scientific study.
4)Ongoing costs of approximately $2 million for the Air
Resources Board to update their regulations and provide
associated monitoring.
5)Unknown one-time and ongoing costs for CalRecycle and the
Department of Toxic Substance Control likely in the hundreds
of thousands of dollars to consult with DOGGR in regulation
development and form multi-agency agreements.
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This bill expands DOGGR's existing fee and assessment authority
(special fund) to allow revenues to be expended, upon
appropriation by the Legislature, for all costs associated with
the development and implementation of consultation processes and
agreements, well-stimulation treatment, scientific studies and
evaluations, inspections, air and water quality sampling,
monitoring and testing performed by public entities.
COMMENTS
1)Purpose. The intent of this bill is to provide a
comprehensive regulatory approach for various well injection
activities to protect human health and safety and
environmental resources. The author's approach contains the
following elements identified by the Natural Resources Defense
Council as necessary for any fracking regulations:
a) Prior notice of hydraulic fracturing to landowners and
residents, and disclosure of the chemicals to be used, at
least 30 days before fracking commences.
b) Complete disclosure concerning the geological and
environmental context of the well;
c) Chemical identification of all substances used in
fracking, including the Chemical Abstract Service numbers
and actual concentrations.
d) Disclosure of other important information about the
hydraulic fracturing treatment, including the volume,
source, and type of the base fluid, the maximum pressure
used, a record of all annulus pressures, and the fracture
length.
e) Information concerning the waste generated, its
contents, and the methods of waste storage and disposal;
f) Provision of confidential information to state
regulators and a process for the public to challenge
confidentiality claims; and
g) Immediate access for medical professionals and first
responders to confidential information in order to diagnose
and treat patients.
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1)Background. Hydraulic fracturing (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.
2)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 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.
3)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
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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
4)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.
5)Unresolved Issues. The author, the administration and
interested stakeholders are involved in on-going discussions
including how best to regulate well stimulation, conduct
groundwater monitoring and strengthen the trade secret
language.
6)Related Legislation. The following related bills failed
passage in the Assembly:
a) AB 7 (Wieckowski) fracking disclosure and
regulations.
b) AB 288 (Levine) well stimulation permits and code
update.
c) AB 649 (Nazarian) fracking moratorium.
d) AB 669 (Stone) wastewater disposal and groundwater
monitoring.
e) AB 982 (Williams) groundwater monitoring.
f) AB 1301 (Bloom) fracking moratorim.
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g) AB 1323 (Mitchell) fracking moratorium
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081