BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1882


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          Date of Hearing:  April 4, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 1882  
          (Williams) - As Introduced February 11, 2016


          SUBJECT:  Oil and gas:  groundwater monitoring


          SUMMARY:  Requires the State Water Resources Control Board  
          (SWRCB) or appropriate regional water quality control board  
          (RWQCB) to review and concur with any Underground Injection  
          Control (UIC) project subject to review or approval.  Authorizes  
          SWRCB or appropriate RWQCB to propose additional requirements  
          for a project, including groundwater monitoring.  


          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 UIC program for class II wells in the  
               State of California, except those on tribal lands, is  
               administered by the Division of Oil, Gas, and Geothermal  
               Resources (DOGGR) approved by United States Environmental  
               Protection Agency (US EPA) pursuant to SDWA section 1425.









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             c)   Allows DOGGR to propose and the regional administrator  
               of US 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.



          5)Requires DOGGR to consult with SWRCB or the appropriate RWQCB  
            regarding any proposed aquifer exemption. 



          6)Requires DOGGR and SWRCB to concur prior to proposing an  
            aquifer exemption to US EPA. 


          THIS BILL: 










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          1)Defines the terms "project" and "regional board" related to  
            the UIC program.


          2)Requires DOGGR to provide an opportunity and the information  
            necessary for SWRCB or the appropriate RWQCB to review UIC  
            projects.


          3)Requires SWRCB or the appropriate RWQCB to review, comment on,  
            and propose additional requirements it deems necessary,  
            including groundwater monitoring, for a new project or a  
            project under review to ensure that injection of fluids will  
            not affect the quality of water that is, or may reasonably be,  
            used for any beneficial use.


          4)Prohibits DOGGR from approving a new project, approving any  
            modification or revision to an existing project, or finalizing  
            a comprehensive review of an existing project without written  
            concurrence from SWRCB or the appropriate RWQCB.


          5)Requires the written concurrence to specify the rationale for  
            concurrence and explain why permit conditions, such as  
            requiring groundwater monitoring, were or were not required  
            for the project.   


          FISCAL EFFECT:  Unknown


          COMMENTS: 


          1)UIC Program.  In 1974, the Safe Drinking Water Act gave the US  
            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  








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            implement the US EPA's UIC program for oil and gas wells in  
            California.  In 2014 it was 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 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 US 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 2,553 injection wells were identified  
            as operating in non-exempt aquifers.  The wells represented  
            both disposal wells and enhanced oil recovery wells.  To date,  
            the state has shut down 56 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. 








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            In addition to the DOGGR and SWRCB review of projects whose  
            aquifer exemptions are in question, DOGGR has taken other  
            actions to improve its implementation of the UIC program.  In  
            October 2015, DOGGR released its "Renewal Plan for Oil and Gas  
            Regulation," which outlines reforms DOGGR will undertake with  
            the goal of having "an effective regulatory program that  
            ensures the protection of public health and the environment in  
            the oil fields of California."  Included in the plan is a  
            review of every project DOGGR has approved and updated  
            regulations for the UIC program. 





          2)Aquifer exemptions.  Aquifers with less than 10,000 mg/l TDS  
            must be exempted by US EPA to be injected into. The state can  
            decide which aquifers to propose to US EPA.  In response to US  
            EPA's audit and concerns over aquifers that were not properly  
            exempted, DOGGR will now require SWRCB concurrence on any  
            aquifer exemption proposal.  Last year SB 83 (Committee on  
            Budget and Fiscal Review), Chapter 24, Statutes of 2015,  
            required DOGGR and SWRCB to concur on all proposed exemptions  
            of aquifers from the SDWA before they can be submitted to the  
            US EPA.  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.  In its written concurrence for the Arroyo  
            Grande Aquifer Exemption, SWRCB indicated that "approval of  
            Class II UIC projects and permits will involve a joint review  
            by the DOGGR and the Water Boards."  It also stated DOGGR and  
            SWRCB will consider incorporating groundwater monitoring into  
            projects in the aquifer exempted.









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          3)Memorandum of Agreement (MOA).  In 1988, DOGGR entered into a  
            MOA with SWRCB for prescribing permit requirements.  The MOA  
            specifies that SWRCB or appropriate RWQCB may require permit  
            applicants to submit additional data.  The MOA also states  
            that the appropriate RWQCB may comment on permit requirements  
            and proposes additional conditions or revisions to proposed  
            conditions.  The MOA states that DOGGR will not issue final  
            requirements until the appropriate RWQCB concerns have been  
            satisfied.  However, if DOGGR does not receive a response from  
            the appropriate RWQCB during the public comment period, it is  
            required to presume the appropriate RWCRB finds the  
            requirement acceptable.  In most instances, since this MOA was  
            executed, the appropriate RWCRB has not commented on an  
            application or asked for additional requirements.  Now that  
            SWRCB has new oil and gas responsibilities from SB 83 and SB 4  
            (Pavley), Chapter 313, Statutes of 2013, it reviews all UIC  
            applications and asks for additional data from applicants when  
            necessary.  In addition, DOGGR and SWRCB are currently working  
            on a new MOA to recognize SWRCB's enhanced role in oil and gas  
            regulation.   
             


          4)Groundwater monitoring.  Groundwater provides 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 55,000 oilfield injection wells in California;  
            however, those wells are grouped together as injection  
            projects.  According to DOGGR, there are 901 active injection  
            projects and 2,167 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.  Wastewater and other fluids associated with  
            the extraction of oil or gas can change the chemistry of and  
            contaminate aquifers.  There is concern that injection fluids  








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            may not stay in the aquifer they are injected into.  Zonal  
            isolation is important to protect other nearby aquifers.  SB 4  
            requires groundwater monitoring for wells that have been  
            stimulated.  On July 7, 2015, SWRCB released model criteria to  
            govern the groundwater monitoring plans required by SB 4.  In  
            SWRCB's model criteria regional monitoring programs are  
            required to factor in UIC wells, in addition to wells that  
            have been stimulated.  In the Arroyo Grande Aquifer Exemption,  
            the SWRCB stated that sentry groundwater monitoring wells on  
            the boundaries of the exempted area could provide assurances  
            that the injected fluid will remain in the proposed exempted  
            area. 


          5)AB 1882.  Currently, the SWRCB is reviewing and commenting on  
            UIC projects.  It has requested more data on some projects and  
            has indicated it will work with DOGGR to incorporate  
            groundwater monitoring in others.  However, it is unclear  
            whether this will be a permanent arrangement or until US EPA's  
            concerns with the program have been addressed. SB 83 required  
            on or before January 1, 2018, the Secretary for Environmental  
            Protection and the Secretary of the Natural Resources Agency  
            to appoint an independent review panel to evaluate DOGGR's  
            administration of the UIC Program and consider whether it  
            would be beneficial to transfer the program to SWRCB.  AB 1882  
            codifies a joint review of UIC projects that are under  
            consideration for approval or review, which is an alternative  
            approach to transferring the UIC program to SWRCB.  AB 1882  
            joint project review is consistent with the aquifer review  
            process outlined in SB 83.     


          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 required the notice to  
          include the source of water used during any hydraulic fracturing  








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          operations.  The bill was held in Assembly Appropriations  
          Committee. 


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




          SB 356 (Williams, 2015) required, prior to submitting a proposal  
          to exempt an aquifer to the US EPA, that DOGGR hold a public  
          hearing and gain concurrence from SWRCB on the proposal.  This  
          bill would have required groundwater monitoring plans for UIC  
          projects as part of an application for approval of the project  
          or for the annual review of the project.  This bill failed  
          passage on the Assembly Floor with a vote of 28-33. 


          SB 454 (Allen, 2015) prohibited DOGGR from submitting a proposal  
          for an aquifer exemption to the US EPA unless DOGGR and SWRCB  
          concur in writing that the aquifer meets specified conditions.   
          This bill failed passage on the Senate Floor with a vote of  
          17-17.


          SB 545 (Jackson, 2015) revised and updated DOGGR's authority and  
          permitting practices and reforms the handling of confidential  
          wells.  The bill was held in Senate Appropriations committee.


          SB 248 (Pavley, 2015) requires DOGGR to review and update its  
          regulations, data management practices, and enhance required  
          reporting.  This bill prohibits the use of oil sumps after July  
          1, 2017.  This bill also prohibits injection chemicals, unless  
          DOGGR has complete information about specified properties and  








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          potential groundwater impacts.  This bill is in the Assembly  
          Appropriations Committee.


          AB 2729 (Williams, 2016) creates disincentives for operators to  
          maintain large idle well inventories, will ensure that funds are  
          available to plug and abandon idle wells in the event that they  
          are deserted, and will help improve public perception of oil and  
          gas operations.  This bill will also be heard by this committee  
          on April 4, 2016.


          AB 2756 (Thurmond, 2016) enhances DOGGR's penalty and  
          investigative authority and allows penalties to be spent on  
          environmentally beneficial projects.  This bill will also be  
          heard by this Committee on April 4, 2016.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Association of California Water Agencies


          California League of Conservation Voters


          Center for Environmental Health


          Citizens Coalition for a Safe Community


          Clean Water Action California








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          Earthworks


          East Bay Municipal Utility District


          Environmental Defense Center


          Environmental Justice Coalition for Water


          Environmental Working Group 


          Grassroots Coalition


          League of Women Voters of California


          Mainstreet Moms


          Natural Resources Defense Council


          Santa Barbara County Board of Supervisors


          Save the Sespe


          Sierra Club California


          The Wildlands Conservancy








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          Ventura County Board of Supervisors 




          Opposition


          California Chamber of Commerce


          California Independent Petroleum Association


          California Manufacturers & Technology Association 


          Western States Petroleum Association 




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