BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: SB 454 Hearing Date: April 28, 2015 ----------------------------------------------------------------- |Author: |Allen | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |April 21, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Katharine Moore | | | | ----------------------------------------------------------------- Subject: Water quality: oil and gas: exempt aquifer BACKGROUND AND EXISTING LAW 1.The state's oil and gas regulator is the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation. 2.The State Water Resources Control Board (board) has statutory responsibility to protect the waters of the state and to preserve all present and anticipated beneficial uses of those waters under the state's Porter-Cologne Water Quality Act (Water Code (WAT) §§13000 et seq.) and other law. 3.The federal Safe Drinking Water Act (SDWA) was enacted in 1974 to protect public health by regulating the nation's public drinking water and its sources. The US Environmental Protection Agency (US EPA) developed the Underground Injection Control (UIC) Program following passage of the SDWA in order to protect aquifers that were or could become sources of drinking water from contamination. 4.In 1981, the division applied to the US EPA to become the primary enforcing agency for the oil and gas well ("Class II") portion of the UIC program in California. California law requires that the division be the state entity to seek primacy for that well class (WAT §13263.5). As part of the application, the division asked to exempt certain aquifers from protection under the SDWA. These "exempt aquifers" were SB 454 (Allen) Page 2 of ? not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection. 5.Class II injection wells primarily consist of oil and gas waste disposal wells and injection wells used for "enhanced oil recovery" operations. For the latter, typically fluids of various forms are pumped into an oil-bearing formation in order to help produce the oil. 6.In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing the division's primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, the US EPA must approve any additional requests for aquifer exemption status, no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, by mutual agreement between the division and the US EPA, the exempt status for an aquifer may be withdrawn at any time. 7.In the primacy agreement, the division pledged to work closely with the board. A 1988 MOA between the division and the board still in effect today requires the division to share information with the appropriate regional water quality control board (regional board) about proposed UIC applications and provides an opportunity for the regional board to comment. Additionally, the division agrees not to issue final approvals until regional board concerns are satisfied. 8.In 2011, a US EPA contractor reported the results of an audit of the division's implementation of the UIC program and found numerous significant problems. Although not a public part of the review, documents released recently show that questions arose during this time period about aquifer exemptions. 9.In the last 10 months there have been a series of revelations showing, at best, questionable and lax management of the UIC program by the division, particularly with respect to aquifer exemptions. Division staff disregarded the division's own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required SB 454 (Allen) Page 3 of ? exemption to be used or where the aquifer's water quality was unknown. Some of these "non-exempt aquifers" contain or may contain good quality water. It was further revealed that two primacy agreements were in existence - one excluding 11 good water quality aquifers from exemption and the other approving their exemption. These 11 aquifers are now considered to have "questionable" exemption. (See the March 10, 2015 joint oversight hearing on the UIC program convened by this committee and the Senate Committee on Environmental Quality and the California Environmental Protection Agency (CalEPA) memo on the UIC program dated March 2, 2015 for more information.) 10. As of today, 23 injection wells have now been shut-in, and over 2,500 injection wells in the state continue to inject into non-exempt or "questionably" exempt aquifers. About 2,000 of these wells are injection wells used for enhanced oil recovery operations in existing oil and gas fields. The remaining 500 are waste disposal wells. The board and the division are working closely together to review these injection wells. To date, no contamination of water used for domestic or irrigation purposes has been found, although the review continues. Oil and gas injection wells that pose the highest risk to wells supplying possible drinking or irrigation water are being reviewed first. 11. After a series of letter exchanges between the board, the division and the US EPA, a schedule for bringing all 2,500 wells into compliance has been established. Exempt aquifer status will either be obtained for a well's injection zone by a date certain in the future, or the well will be "shut-in" (i.e. shut down). For currently non-exempt aquifers, the schedule is as follows: by October 15, 2015 - the status of non-hydrocarbon-bearing aquifers that contains less than 3,000 milligrams per liter of total dissolved solids (TDS) must be resolved, by December 31, 2016 - the status of "questionably" exempt aquifers shall be resolved, as specified, and by February 15, 2017 - the status of non-hydrocarbon-bearing aquifers containing from 3,000 to 10,000 milligrams per liter TDS and the status of hydrocarbon-bearing aquifers that contain less than SB 454 (Allen) Page 4 of ? 10,000 milligrams per liter TDS must both be resolved. 1.This schedule was recently the subject of emergency regulations proposed by the division (case: 2015-0409-02E). 2.The criteria for aquifer exemption for Class II wells (40 CFR §146.4) are as follows: the aquifer is not a source of drinking water, the aquifer cannot and will not become a source of drinking water because it is economically and technologically infeasible, as defined; located over a mining area; mineral- or hydrocarbon-bearing in commercial quantities or mineral, hydrocarbon or geothermal energy producing, and the total dissolved salts concentration is between 3,000 and 10,000 milligrams per liter TDS. PROPOSED LAW This bill would require the division and the board to concur on aquifer exemptions submitted to the US EPA for approval, as specified. For hydrocarbon-bearing aquifers: the intended injection zone must be isolated from other zones containing waters that may have a beneficial use, and the board must find either that the water in the injection zone has no potential beneficial use or, if it does, that the injection will not impact that use. For non-hydrocarbon-bearing aquifers: the intended injection zone must be isolated from other zones containing water that may have a beneficial use, the aquifer is not a source of drinking water, the aquifer cannot and will not become a source of drinking water due to proximity to a mining area, economic or technological impracticality, mineral concentration or geothermal energy production capability, the TDS concentration in the aquifer must exceed 3,000 milligrams per liter, and the board determines that the injection would not contaminate a source of water that does or may have a future beneficial use, or, if the water is already contaminated, that the injection would not further impair its limited or potentially limited beneficial use. SB 454 (Allen) Page 5 of ? ARGUMENTS IN SUPPORT According to the author, the division "has allowed more than 2,500 waste water disposal and injections wells to be drilled into aquifers that have not been exempted from the Safe Drinking Water Act and therefore should have been protected. The fluids being injected into these aquifers contain a toxic cocktail of chemicals, many of which are known to cause cancer and other human health problems, including benzene, arsenic and radioactive material." "It is clear that going forward, given California's long-term water challenges, the state will need to access deeper aquifers and adopt technology necessary to clean aquifers currently considered polluted. Given the current water crisis, it is irresponsible and shortsighted to not protect these aquifers." "SB 454 puts specific criteria in place to guide [the division] in determining which of California's protected aquifers should be eligible for consideration for an exemption. The criteria require [the division] to work jointly with the [board]." ARGUMENTS IN OPPOSITION According to the California Independent Petroleum Association (CIPA), "SB 454 would re-define critical components of the UIC program and the aquifer exemption definition and application process. These proposed modifications to the UIC program would compromise California's oil production without providing any additional environmental and groundwater protections beyond those provided by the enhancements to the UIC program proposed to US EPA by the [board] and the [division]." "SB 454 instead alters the aquifer exemption process so as to exclude certain aquifers that would otherwise be exempt under the long-standing federal criterion (sic) [?] For example, SB 454 would prohibit all injection into non-hydrocarbon-bearing zones where the total dissolved solids content of the water in the aquifer is less than 3,000 milligrams per liter." CIPA notes that aquifers with these low salt concentrations may be considered for exemption if it is economically or technologically impractical for them to be used as drinking water. CIPA further states that "injection wells have been an integral SB 454 (Allen) Page 6 of ? part of California's oil and gas operations for over 50 years" and roughly 70% of California's oil production depends upon enhanced oil recovery using injections wells. "Without sufficient injection well options, oil wells cannot produce and oil production in California will be adversely affected." COMMENTS This bill is double-referred to the Senate Committee on Environmental Quality . Aspects of this bill under that committee's jurisdiction include water quality and the role of the board and regional boards. Should this bill pass this committee, those issues will be addressed there. (Information on water quality is provided in this analysis for completeness and context.) Concurrence between the division and the board is appropriate for aquifer exemptions. The division and the board appear to be closely working together to resolve the problems with aquifer exemptions and on other oil and gas field-related groundwater quality issues for at least the last year. In the 1988 MOA, the board clearly retains authority over water quality and at least one of the three post-primacy aquifer exemption petitions by the division to the US EPA reflected board input. However, it is not clear that historically the two agencies have consistently worked closely together on water quality issues relevant to the state's oil and gas fields or that division decisions that impacted or could have potentially impacted water quality were consistently vetted by the board. In fact the CalEPA memo notes that under the 1988 MOA the regional boards "generally deferred to [the division's] determination of whether or not an aquifer was exempt without scrutinizing the applications." The added weight of statutory concurrence may help to ensure continuing cooperation. The bill's potential impact on the resolution of the 2,500 wells . This bill would impact the resolution of the 2,500 wells if the division would otherwise ask the US EPA for an aquifer exemption for certain non-hydrocarbon-bearing aquifers with low saline concentrations (less than 3,000 milligrams per liter TDS) on or after January 1, 2016. According to the CalEPA memo noted above, approximately 140 active wastewater disposal wells inject into aquifers with TDS concentrations of less than 3,000 milligrams per liter. The 11 aquifers of questionable exemption also all have TDS concentrations of less than 3,000 milligrams SB 454 (Allen) Page 7 of ? per liter. Not all aquifers need aquifer exemptions . Groundwater that does not meet the criteria of an Underground Source of Drinking Water (see 40 CFR §144.3) may be injected into by a Class II UIC well without obtaining an aquifer exemption. For example, an aquifer with a TDS concentration of 30,000 milligrams per liter would not need to be exempted. It is worth noting, however, that a recent US Geological Survey white paper reported that municipalities and water districts have started to consider treating water saltier than 10,000 milligrams per liter in order to produce water suitable for domestic purposes. "Beneficial use" is broader than "domestic or irrigation purposes." The "beneficial use" criterion is a more expansive designation than the protection of water suitable for domestic or irrigation purposes (see, for example, Public Resources Code §3106) that the division is otherwise directed to protect. Pending budget actions . The board has asked for increased ongoing funding and personnel to address the UIC program, aquifer exemptions and other water-related oil and gas wastewater disposal issues. The division has also asked for increased funding. Recent related legislation. SB 248 (Pavley, 2015) This bill would reform the division's well history reporting and the regulations governing its UIC program (before the Senate Committee on Appropriations). SB 545 (Jackson, 2015) This bill would revise and update division's authority and permitting practices, and reform the handling of confidential wells (before the Senate Committee on Environmental Quality). AB 356 (Williams, 2015) This bill would provide for reform of the UIC program with an emphasis on the role of the Water Boards and require groundwater monitoring in the vicinity of UIC wells (before the Assembly Natural Resources Committee) SUPPORT Ballona Network California League of Conservation Voters SB 454 (Allen) Page 8 of ? Center for Environmental Health Clean Water Action Environmental Working Group Los Padres Forest Watch San Diego 350 OPPOSITION California Independent Petroleum Association Independent Oil Producers' Agency Western States Petroleum Association -- END --