BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 454 (Allen) - Water quality: oil and gas: exempt aquifer
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|Version: April 21, 2015 |Policy Vote: N.R. & W. 7 - 1, |
| | E.Q. 5 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 11, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 454 would prohibit the division of Oil, Gas, and
Geothermal Resources (DOGGR) from submitting a proposal for an
aquifer exemption unless DOGGR and the State Water Resources
Control Board (SWRCB) both make specified findings.
Fiscal
Impact:
Up to $350,000 from the Oil, Gas, and Geothermal
Administrative Fund (special) for additional aquifer
evaluation by DOGGR.
Ongoing costs of $560,000 from the Oil, Gas, and Geothermal
Administrative Fund (special) to the SWRCB to consider aquifer
exemptions.
Unknown potential revenues losses to the Oil, Gas, and
Geothermal Administrative Fund (special) for decreased oil
production.
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Background: DOGGR in the Department of Conservation is the state's oil and
gas regulator and is headed by the oil and gas supervisor. The
supervisor is generally charged with overseeing the drilling,
operation, maintenance, and abandonment of wells, tanks, and
other facilities used in oil and gas regulation to prevent
damage to life, health, property, and natural resources.
Existing law requires the state's oil and gas supervisor to
produce a public annual report containing information about the
state's oil and gas production and other related material, as
specified.
DOGGR sought and received "primacy" to operate the class II
underground injection control (UIC) program from the US
Environmental Protection Agency (US EPA) in the early 1980s.
The class II UIC program is for oil and gas injection wells.
These include wells used for EOR and waste disposal. As part of
the application, DOGGR asked to exempt certain aquifers from
protection under the Safe Drinking Water Act. These "exempt
aquifers" were 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.
In 1982, the US EPA signed a Memorandum of Agreement (MOA) with
the Department of Conservation establishing DOGGR's primacy for
the UIC program and, among other things, providing certain
aquifers with exempt status. Under this MOA, (1) the US EPA
must approve any additional requests for aquifer exemption
status, (2) no injection is allowed into an aquifer without
first obtaining exempt status (if needed), and, (3) by mutual
agreement between DOGGR and the US EPA, the exempt status for an
aquifer may be withdrawn at any time. In the primacy agreement,
DOGGR pledged to work closely with the SWRCB. A 1988 MOA
between DOGGR and the SWRCB requires the DOGGR 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, DOGGR agrees not to issue final approvals until
regional board concerns are satisfied.
In 2011, an audit of the DOGGR UIC program was completed by a US
EPA contractor. One of the numerous issues raised by the audit
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was the need to improve the number and type of inspections by
the DOGGR.
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. DOGGR staff disregarded DOGGR's own agreements,
guidelines and regulations and regularly approved Class II wells
that injected into aquifers that required 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.
(See the March 10, 2015 joint oversight hearing on the UIC
program convened by the Senate Natural Resources and Water
Committee and the Senate Environmental Quality Committee for
more information.)
Proposed Law:
This bill would require DOGGR and the SWRCB to make specific
written findings before submitting an application to the US EPA
for an aquifer exemption. Specifically, if the aquifer is
hydrocarbon bearing, DOGGR and the SWRCB must find that the
aquifer (1) is geologically and hydrogeologically isolated from
other zones containing waters that may have a beneficial use,
and (2) does not contain waters with potential beneficial uses
or has a beneficial use that wouldn't be impacted by fluids
injected into the zone.
If the aquifer is not hydrocarbon bearing, DOGGR and SWRCB must
find that the aquifer (1) meets the US EPA requirements for an
aquifer exemption, (2) has more than 3,000 milligrams per liter
total dissolved salts, (3) is geologically and hydrogeologically
isolated from other zones containing waters that may have a
beneficial use, and (4) would not be contaminated for current or
future beneficial use. This last finding must be made by the
SWRCB and posted on its website in a public and readily
accessible location.
Staff
Comments: The actions required of DOGGR in this bill are
largely in line with the requirements that currently exist in
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DOGGR's regulations and DOGGR's MOA with the US EPA establishing
DOGGR's primacy in implementing the UIC program with two
exceptions. First, the bill requires that an aquifer being
geologically and hydrogeophically isolated while currently an
aquifer only needs to geologically or hydrogeologically
isolated. This difference will require additional review by
DOGGR at an annual cost of approximately $350,000.
The second difference between this bill and existing regulations
and agreements is that existing regulations and agreements would
allow for an aquifer exemption to be applied for even if it had
a total dissolved solids concentration below 3,000 milligrams
per liter if that aquifer was not economically recoverable or
too polluted to use. Should this bill result in injection wells
being shut-in, and that shut-in decreases oil production, DOGGR
could have some revenue losses since well owners pay fees to the
state based on oil production.
Staff notes that DOGGR currently has a budget change proposal
(BCP) open for consideration by the Senate Budget Subcommittee
#2 to reappropriate $1.5 million from the Oil, Gas, and
Geothermal Administrative Fund for the UIC program. Approval of
this BCP would give DOGGR the resources that it feels it needs
to meet existing requirements. Thus, approval of the BCP would
not provide funds for the activities required under this bill.
The actions required of the SWRCB in this bill are also largely
in line with the MOA between DOGGR and the SWRCB regarding oil
field wastewater disposal. However, the SWRCB was never
appropriated funds for this purpose. As such, to implement this
bill, the SWRCB would necessitate $560,000 for four PYs to
review existing and future aquifer exemptions.
Staff notes that the SWRCB also has a budget change proposal for
$2.1 million and 13 PYs from the Oil, Gas, and Geothermal
Administrative Fund for UIC program oversight. According to the
SWRCB, should this BCP be approved, it will need no additional
funds needed to implement this bill.
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