BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:   April 27, 2015


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 356  
          (Williams) - As Amended March 17, 2015


          SUBJECT:  Oil and gas:  groundwater monitoring


          SUMMARY:  Requires, prior to submitting a proposal to exempt an  
          aquifer to the U.S. Environmental Protection Agency (U.S. EPA),  
          that the Division of Oil, Gas and Geothermal Resources (DOGGR)  
          hold a public hearing and gain concurrence from the State Water  
          Resources Control Board (SWRCB) on the proposal. Requires  
          groundwater monitoring plans for underground injection projects  
          (projects) as part of an application for approval of the project  
          or for the annual review of the project. 


          EXISTING LAW:  


          1)Pursuant to the Federal Safe Drinking Water Act (SDWA):
             a)   Prohibits certain well activities that affect  
               underground sources of drinking water unless those sources  
               are located in an exempt aquifer.
             b)   Declares that the Underground Injection Control (UIC)  
               program for class II wells in the State of California,  
               except those on Indian lands, is administered by the DOGGR  
               approved by U.S. EPA pursuant to SDWA section 1425.










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             c)   Allows DOGGR to propose and the regional administrator  
               of U.S. EPA to approve an exemption of an aquifer or its  
               portion that meets the criteria in the definition of  
               "underground source of drinking water" after considering  
               its current and potential future use as drinking water.


          2)Requires the state's Oil and Gas Supervisor (Supervisor) 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.
          3)Authorizes the Supervisor to implement a monitoring program,  
            designed to detect releases to the soil and water for  
            aboveground oil production tanks and facilities.


          4)Requires groundwater monitoring in the vicinity of a well  
            subject to a well stimulation treatment.





          THIS BILL:


          


          1)Defines several terms related to the UIC program including  
            "class II well," "exempt aquifer," and "UIC program." 
          2)Authorizes the Supervisor of DOGGR to require a well operator  
            to implement a monitoring program for underground oil  
            production tanks and facilities and disposal and injection  
            wells.


          3)Requires, prior to submitting a proposal to exempt an aquifer  








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            to U.S. EPA, that DOGGR hold a public hearing and gain  
            concurrence from the SWRCB on the proposal.


          4)Authorizes SWRCB to concur with the proposal if the following  
            conditions are met:


             a)   The proposed aquifer cannot now, or will not in the  
               future, serve as a source of drinking water or for other  
               beneficial uses.
             b)   Injection into the proposed aquifer will stay in the  
               proposed area and will not impact the ability of nearby  
               nonexempt aquifers to be a source of drinking water or for  
               other beneficial uses. 


          5)Requires DOGGR to review annually all projects for compliance  
            with applicable law.
          6)Requires the operator of a project to submit to SWRCB or  
            appropriate regional water quality control board (RWQCB) for  
            review and concurrence a groundwater monitoring plan that  
            provides the following inforamtion:


             a)   Information demonstrating that the aquifer into which  
               the injection occurs or the proposed injection will occur  
               is an exempt aquifer.
             b)   Information regarding the current water quality of the  
               groundwater basin through which the well passes sufficient  
               to characterize the quality of the aquifer.


             c)   Information regarding the current water quality of the  
               injection zone sufficient to demonstrate that the injection  
               zone is not suitable to be used as a source of drinking or  
               irrigation water based on treatment technologies existing  
               at the time of submission of the plan.









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             d)   The identification of both public supply and domestic  
               water wells located within one mile of the boundaries of  
               the injection zone or evidence showing that there are no  
               public supply or domestic water wells located within the  
               one mile zone.


             e)   A demonstration that the proposed injection well is  
               located in an area that is geologically suitable, including  
               an appropriate confining and injection zone.


             f)   Chemical and physical analyses of, and data regarding,  
               identities and concentrations of all constituents present  
               in the injected fluid or gas. 


             g)   Sites for monitoring wells that will allow for the  
               detection of contamination or degradation associated with  
               projects during and after the period of its active use.


             h)   Sites for monitoring wells that demonstrate that the  
               injection fluid is confined to the intended injection zone  
               or zones of injection.


             i)   A schedule for monitoring and reporting data that  
               provides, at a minimum, groundwater quality data on a  
               quarterly basis during the active life of the well and at  
               least annually after the well has been closed and  
               abandoned.


             j)   An emergency plan that will be implemented in the case  
               of a well failure or other event that has the potential to  
               degrade groundwater.









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          7)Exempts wells from the monitoring for degradation requirement  
            if SWRCB or the appropriate RWQCB determines the well does not  
            inject into, or pass through, an aquifer with a beneficial use  
            and there are no public supply or domestic water wells located  
            within one mile of the injection zone.
          8)Authorizes SRWCB or appropriate RWQCB to revise monitoring  
            plans to avoid duplication and assist with regional monitoring  
            plans associated with oil and gas activities.


          9)Authorizes SRWCB or appropriate RWQCB to authorize a well  
            operator to rely on a regional monitoring plan instead of  
            their own monitoring sites.


          10)Authorizes, subject to appropriation by the Legislature,  
            DOGGR's fee authority to be used to fund a public entity's  
            costs associated with implementing this article.


          FISCAL EFFECT:  Unknown


          COMMENTS: 


          1)UIC Program.  In 1974, the Safe Drinking Water Act gave the  
            U.S. EPA the authority and responsibility to control  
            underground injection to protect underground drinking water  
            sources. In 1982, a primacy agreement was signed that allowed  
            DOGGR to implement the U.S. EPA's UIC program for oil and gas  
            wells in California. It has recently been discovered that  
            there were two versions of this agreement, one allowing  
            exemptions for 11 aquifers with high water quality and another  
            denying those exemptions and requiring all existing injection  
            wells into those aquifers be phased out over 18 months. The  
            aquifers were non-hydrocarbon-producing and all had a total  
            dissolved solids (TDS) concentration below 3,000 mg/l. The  








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            SDWA is supposed to protect underground sources of water with  
            TDS concentrations below 10,000 mg/l. DOGGR's UIC permitting  
            decisions have been based on the assumption that these  
            exemptions were granted for the 11 aquifers in question. 



            A 2011 U.S. EPA audit of DOGGR's UIC program implementation  
            concluded that DOGGR was misclassifying underground sources of  
            drinking water and doing an insufficient job monitoring the  
            UIC program. In June 2014, it was discovered that DOGGR was  
            approving injection wells in nonexempt aquifers. This included  
            injections into the 11 aquifers that were not properly  
            exempted, but also included injections into aquifers that were  
            never exempt. California Environmental Protection Agency's  
            (CALEPA) review found that DOGGR's district offices were  
            approving projects without review from DOGGR and were making  
            errors identifying the injectable zone of exempt aquifers.   
            This included misidentifying the borders and depth of the  
            aquifer and allowing expansion of productive limits over time  
            beyond boundaries established in the Primacy Application.  
            Initially there were 2,553 injection wells operating in  
            non-exempt aquifers; after a review, 76 wells were removed  
            from that list. The wells represented both disposal wells and  
            enhanced oil recovery wells.  To date, the state has shut down  
            23 injection wells, because they were injecting into aquifers  
            that could be suitable for drinking water. In addition, these  
            wells could potentially have had an impact on nearby water  
            supply wells. While no contamination of water supply wells has  
            been found yet, it is clear that aquifers that could have been  
            a source of underground drinking water have been contaminated  
            with injection fluid. 





          2)Aquifer exemptions. Any aquifer less than 10,000 mg/l TDS must  
            be exempted by U.S. EPA to be injected into. The state can  








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            decide which aquifers to propose to U.S. EPA.  In response to  
            U.S. EPA's audit and concerns over aquifers that were not  
            properly exempted, DOGGR will now require SWRCB concurrence on  
            any aquifer exemption proposal.  In addition, the operator  
            will be required to demonstrate that the aquifer cannot now,  
            and will not in the future, serve as a source of drinking  
            water or for other beneficial uses. AB 356 codifies this new  
            procedure to ensure that aquifer exemptions will be thoroughly  
            vetted by DOGGR and SWRCB with public input. As California  
            deals with the fourth year of drought conditions, protecting  
            groundwater has become more important than ever. Past actions  
            by DOGGR harmed aquifers that could have been used for a  
            beneficial use. Thorough vetting of aquifers will help prevent  
            that from happening again. 


          3)Annual reviews. One of the U.S. EPA's audit's criticisms of  
            California's UIC program was the lack of annual reviews to  
            ensure compliance with laws and permit requirements. DOGGR had  
            not been conducting annual reviews, but in 2012 committed to  
            the U.S. EPA that it would conduct annual reviews for all  
            injection projects. In spite of this commitment, most  
            injection projects have not yet had an annual review. AB 356  
            would require annual reviews to address U.S. EPA concerns.


          4)Groundwater monitoring.  California's 515 alluvial (loose)  
            groundwater basins and sub-basins provide close to 40% of the  
            state's water supply in an average year.  In dry or drought  
            years, groundwater accounts for as much as 60% of the state's  
            water supply. Many disadvantaged communities rely on  
            groundwater for 100% of their water supply. There are  
            approximately 42,000 oil and gas injection wells in  
            California; however, those wells are grouped together as  
            injection projects. According to DOGGR, there are 897 active  
            injection projects and 2,146 total projects in DOGGR's  
            database. DOGGR estimates that these projects inject into 350  
            aquifers, but does not definitively know the number of  
            aquifers being injected into. Injection projects can also be  








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            into sand or rock that are not aquifers. When wastewater and  
            other fluids associated with the extraction of oil or gas are  
            injected into an aquifer, they can change the chemistry of and  
            contaminate that aquifer.  In addition, there is concern that  
            injection fluids may not stay in the aquifer they are injected  
            into. Zonal isolation is important to protect other nearby  
            aquifers.  SB 4 (Pavley), Chapter 313, Statutes of 2013,  
            requires groundwater monitoring for wells that have been  
            stimulated. SWRCB is currently working on Draft Model Criteria  
            to govern the groundwater monitoring plans required by SB 4.  
            In the meantime, DOGGR interim well stimulation regulations  
            require well operators to submit a groundwater monitoring plan  
            as part of their well stimulation treatment notices. A well  
            operator may alternatively request an exclusion from the  
            requirement to submit a groundwater monitoring plan if the  
            absence of protected water can be demonstrated. If protected  
            water is shown to be absent, SWRCB or a RWQCB will issue a  
            letter of written concurrence to the well operator. The  
            written concurrence letter is to be submitted by the well  
            operator in their well stimulation treatment notice. AB 356  
            will require injection projects to also have groundwater  
            monitoring plans. Operators whose injection projects will  
            inject into or pass through an aquifer with a beneficial use  
            will be required to monitor for contamination, degradation,  
            and confinement into the intended injection zone. Operators  
            whose injection projects do not, and could not, inject or pass  
            through an aquifer with a beneficial use will only be required  
            to monitor for confinement into the intended injection zone.  
            The author and the committee may wish to consider amending the  
            bill to clarify these provisions by focusing the groundwater  
            monitoring plans to provide the most relevant information that  
            is consistent with SB 4, create an end date for the monitoring  
            requirement, reduce the number of monitoring wells needed, and  
            allow operators to submit one plan with adjacent operators if  
            they are injecting into the same aquifer.


          5)Suggested amendments. In addition to the amendments above, the  
            author and committee may wish to amend the bill to:








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             a)   Replace the current definition of "exempt aquifer" with  
               the definition used in title 40 Section 144.3 of the code  
               of federal regulations.


             b)   Define "beneficial use" as having the same meaning as  
               subdivision f of Section 13050 of the Water Code.


             c)   Require DOGGR to provide the information necessary for  
               SWRCB to make the determinations required to concur with an  
               aquifer exemption proposal.  


          6)Previous and related legislation. 


          AB 982 (Williams, 2013) required RWQCBs to approve a proposed  
          groundwater monitoring plan prior to noticing the intent to  
          begin any oil or gas drilling. The bill requires the notice to  
          include the source of water used during any hydraulic fracturing  
          operations. The bill was held in Assembly Appropriations  
          committee. 


          SB 4 (Pavley), Chapter 313, Statutes of 2013, establishes a  
          comprehensive regulatory program for oil and gas well  
          stimulation treatments, which includes among other things, a  
          study, the development of regulations, a permitting process, and  
          public notification and disclosure. 


          SB 454 (Allen) prohibits DOGGR from submitting a proposal for an  
          aquifer exemption to the U.S. EPA unless DOGGR and SWRCB concur  
          in writing that the aquifer meets specified conditions. This  
          bill is awaiting a hearing in the Senate Natural Resources and  
          Water Committee on April 28.








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          SB 545 (Jackson, 2015) revises and updates DOGGR's authority and  
          permitting practices and reforms the handling of confidential  
          wells.  This bill is awaiting a hearing in the Senate Natural  
          Resources and Water Committee on April 28.


          SB 248 (Pavley) requires DOGGR to review and update its  
          regulations, data management practices, and enhance required  
          reporting. This bill is awaiting a hearing in the Senate  
          Appropriations Committee.


          AB 1490 (Rendon) prohibits well stimulation, and in some cases,  
          wastewater disposal in areas that are seismically active or have  
          recently had an earthquake. This bill will also be heard by this  
          committee on April 27.


          AB 1501 (Rendon) requires air districts to establish an emission  
          standard for methane from well stimulation treatment and other  
          petroleum extraction facilities. This bill requires emission  
          standards to include a permit requirement and consideration of  
          the effect production facilities have on adjacent vulnerable  
          populations. This bill requires the Air Resources Board or a  
          local air district to install monitoring stations near any  
          approved well stimulation site and other petroleum extraction  
          facilities to monitor for 12 different chemicals. This bill will  
          also be heard by this committee on April 27.


            
          REGISTERED SUPPORT / OPPOSITION:




          Support








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          Alliance of Nurses for Healthy Environments 


          Association of California Water Agencies


          California Environmental Justice Alliance


          California League of Conservation Voters 


          Center on Race, Poverty, and the Environment


          Citizens Coalition for a Safe Community 


          Citizens for Responsible Oil and Gas 


          Clean Water Action


          Coastal Environmental Rights Foundation


          Community Health Councils


          Earthworks


          East Bay Municipal Utility District 


          Environmental Defense Center 








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          Environmental Justice Coalition for Water


          Environmental Working Group


          Foothill Conservancy


          Goleta Water District


          League of Women Voters of California


          Los Angeles Waterkeeper


          Los Padres Forest Watch


          Natural Resource Defense Council


          Physicians for Social Responsibility, San Francisco Bay Area  
          Chapter


          SanDiego350


          Save the Sespe


          Sierra Club










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          Southern Monterey County Rural Coalition


          Ventura County Board of Supervisors


          Wholly H20




          Opposition


          CalChamber


          California Independent Petroleum Association 


          Independent Oil Producers Agency 


          Western States Petroleum Association 







          Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092















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