BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 591 (Wieckowski)
Hearing Date: 08/25/2011 Amended: 07/07/2011
Consultant: Brendan McCarthy Policy Vote: NR&W 5-3, EQ 5-1
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BILL SUMMARY: AB 591 requires operators of oil and natural gas
wells to provide information on hydraulic fracturing to the
Division of Oil, Gas, and Geothermal Resources, for publication
on the Division's website.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Developing regulations and $100 $225 Special
*
update information
systems
Reviewing and posting data $210 $720
$720Special *
* Oil, Gas and Geothermal Administrative Fund.
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STAFF COMMENTS: SUSPENSE FILE.
Under current law, operators of oil and gas wells are regulated
by the Division of Oil, Gas, and Geothermal Resources (the
Division), within the Department of Conservation. Well operators
are required to report specified information periodically to the
Division. Under federal law, the federal Environmental
Protection Agency sets standards for the injection on liquid
below ground, except for injections used by well operators to
hydraulically fracture rock strata. Under the process of
hydraulic fracturing, well operators pump water and a variety of
chemicals into wells at very high pressure. This causes cracks
to form or grow in the rock strata, allowing more oil or gas to
flow into the well and then to the surface.
Current law also provides protection to trade secret
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information. In general, when a state agency possesses trade
secret information, it is responsible to ensure that it does not
release such information to the public.
AB 591 requires any person carrying out hydraulic fracturing on
behalf of a well operator to provide information to the operator
on the chemicals used in the fracturing process, the amounts of
water used in the fracturing, and the ultimate disposition of
that water.
The bill requires well operators to include information on the
water and chemicals used in any hydraulic fracturing that has
taken place with existing information they are required to
report to the Division.
The bill requires the Division to post information received from
operators regarding hydraulic fracturing on the Division's
website and ensure that information on the chemicals used at
individual wells is available to the public. The bill also
requires annual reporting to the Legislature by the Division.
Staff estimates that the Division will incur one-time costs of
about $325,000 over two years to adopt regulations relating to
the reporting requirement and modify existing computer systems
to allow information to be made available to the public. In
addition, staff estimates that the Division will incur costs of
about $570,000 per year to collect information from operators,
to make information on individual wells available to the public,
and to ensure that the Division does not inadvertently release
any trade secret information to the public.
Staff notes that the Division's responsibility to provide
information to the public while also protecting trade secret
information may lead to litigation. The cost of such litigation
is unknown.
Staff notes that the Oil, Gas and Geothermal Administration Fund
has a structural deficit and the fund balance at the end of the
budget year is projected to be less than $2 million. However,
the Department has the legal authority to raise the fee, in
order to raise sufficient revenues to support expenditures
approved in the budget act.
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