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
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          |Author:    |Allen                  |           |                 |
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          |Version:   |April 21, 2015                                       |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Katharine Moore                                      |
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               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  







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            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  








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            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  








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                 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.








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          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  








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          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  








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          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








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          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

          
          
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