BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1054|
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THIRD READING
Bill No: SB 1054
Author: Pavley (D)
Amended: 5/29/12
Vote: 21
SENATE NATURAL RESOURCES & WATER COMM. : 5-3, 4/10/12
AYES: Pavley, Kehoe, Padilla, Simitian, Wolk
NOES: La Malfa, Cannella, Fuller
NO VOTE RECORDED: Evans
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-2, 4/23/12
AYES: Simitian, Hancock, Kehoe, Lowenthal, Pavley
NOES: Strickland, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SUBJECT : Oil and gas: well operation: notice
SOURCE : Environmental Working Group
DIGEST : This bill requires a well owner or operator to
notify surface property owners of commencement of drilling
operations and hydraulic fracturing operations that are
about to occur near or below their property, and requires
notification to be given to the supervisor of the Division
of Oil, Gas, and Geothermal Resources (DOGGR), the
appropriate regional water quality control board (RWQCB),
and municipal government.
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ANALYSIS :
Existing law:
1.Requires, before commencing the work of drilling a well,
the operator to file a written notice of intention to
commence drilling with the State Oil and Gas Supervisor
or district deputy.
2.Provides that the notice is deemed approved if the
supervisor or the district deputy fails to give a written
response to the notice within 10 working days from the
date of receipt.
This bill:
1.Requires a well owner or operator to notify surface
property owners of the commencement of drilling
operations or hydraulic fracturing operations that are
planned to occur near or below their property.
2.Requires notification, either written or electronic, to
be given to the supervisor of DOGGR, the appropriate
RWQCB, and municipal government. DOGGR would be required
to post all notifications it receives on its website.
3.Requires DOGGR to submit an annual report to the
Legislature, beginning in January 1, 2014, including
aggregated data on the notices received.
4.Defines hydraulic fracturing.
Background
California is the 4th largest oil and gas producing state
and natural resources extraction is thus an important
contributor to the state's economy. The DOGGR exists
within California's Department of Conservation. DOGGR's
Supervisor (supervisor) has extensive and broad authority
to regulate activities associated with the production and
removal of hydrocarbons (e.g. oil and gas) from the ground.
This includes the subsurface injection of water and other
fluids. This authority is granted in order to prevent
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damage to life, health, property, natural resources, and
underground and surface water suitable for irrigation or
domestic purposes. DOGGR issues permits for drilling new
wells or reworking old ones and has 10 working days to
respond to each application. Once a permit is approved,
the owner or operator of any oil and gas well must keep, or
cause to be kept, a careful and accurate log, core record,
and history of the drilling of the well which must be
reported to DOGGR where it subsequently becomes a matter of
public record.
"Hydraulic fracturing" or "fracking" of hydrocarbon wells
to enhance oil and gas recovery is an increasingly popular
subsurface process/technique. Due to technological
innovations, fracking, by itself and in combination with
advanced drilling techniques (e.g. directional drilling)
have allowed companies to develop previously uneconomic oil
and gas reserves, such as those located in subsurface shale
formations throughout the United States. Once an oil or
natural gas well is drilled and properly lined, fluids are
pumped down to an isolated portion of the well at pressures
high enough to cause or enlarge cracks in the subsurface
shale formation. These cracks or fractures allow oil and
natural gas to flow more freely into the well and then to
the surface. The pumped fracking fluid is usually - but
not always - comprised almost entirely of water with a
small fraction of additional substances (less than a few
percent by volume) added to enhance the process. A
considerable amount of water - hundreds of thousands to
millions of gallons - may be needed to frack an individual
well. The fluid volume needed, its chemical composition
and physical characteristics will vary depending upon the
particular conditions of each well.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs of at least $220,000 from the Oil, Gas,
and Geothermal Administrative Fund (special fund) in
2013-14 for the development of regulations and notice
templates, mapping modifications, and database and
website modification.
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Ongoing costs of approximately $1 million to $1.2 million
from the Oil, Gas, and Geothermal Administrative Fund
(special fund) in 2013-14 to receive, record, and post
notices and general oversight to ensure accurate
reporting.
SUPPORT : (Verified 5/29/12)
Environmental Working Group (source)
AFSCME
California Coastal Protection Network
California League of Conservation Voters
Clean Water Action
Earthworks
Environment California
League of Women Voters
Planning and Conservation League
Santa Cruz County Board of Supervisors
Sierra Club California
Union of Concerned Scientists
OPPOSITION : (Verified 5/29/12)
Associated Builders & Contractors of California, Central
California Chapter
California Chamber of Commerce
California Construction Trucking Association
California Hispanic Chambers of Commerce
California Independent Oil Marketers Association
California Independent Petroleum Association
California Manufacturers and Technology Association
California Small Business Alliance
Chambers of Commerce Alliance of Ventura and Santa Barbara
Counties
Coalition of Energy Users
Greater Bakersfield Chamber of Commerce
Independent Oil Producers Agency
Kern County Black Chamber of Commerce
Kern County Taxpayers Association
The Coalition of Labor, Agriculture and Business
Western States Petroleum Association
ARGUMENTS IN SUPPORT : The Environmental Working Group
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points out that the "drilling or fracking of a well is a
significant development project. The nature of the
drilling and fracking process involves the use of heavy
equipment, chemicals, copious amounts of water, and often
accompanying noise, light, and dust. It is fair and
reasonable that a neighbor �?] be notified in advance.
After all, neighbors receive a notice for development
projects such as a variance to decrease a side yard setback
in a residential zone. It is important to point out that
SB 1054 would not initiate any new permit process or
establish any new appeals or hearings." Clean Water Action
agrees and states that SB 1054 "?is a necessary minimum
first step towards ensuring that oil and gas drilling in
California is conducted safely."
ARGUMENTS IN OPPOSITION : The Western States Petroleum
Association argues that this bill "requires unnecessary and
overly burdensome requirements" and that it represents "a
solution looking for a problem." WSPA continues that this
"legislation will slow oil and gas development by
increasing the legally acceptable permit review time by
50%, from 10 to 15 days" and that "the bill does not
recognize the existing contracts ("surface use agreement")
between surface and mineral owners that specify how oil and
gas development can occur."
CTW:RM:do 5/29/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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