BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1132|
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THIRD READING
Bill No: SB 1132
Author: Mitchell (D) and Leno (D), et al.
Amended: 5/27/14
Vote: 21
SENATE NATURAL RESOURCES AND WATER COMMITTEE : 5-2, 4/8/14
AYES: Pavley, Evans, Jackson, Monning, Wolk
NOES: Cannella, Fuller
NO VOTE RECORDED: Hueso, Lara
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-2, 4/30/14
AYES: Hill, Hancock, Jackson, Leno, Pavley
NOES: Gaines, Fuller
SENATE APPROPRIATIONS COMMITTEE : 4-2, 5/23/14
AYES: De Le�n, Hill, Padilla, Steinberg
NOES: Walters, Gaines
NO VOTE RECORDED: Lara
SUBJECT : Oil and gas: well stimulation treatments
SOURCE : Author
DIGEST : This bill expands the scope of the independent
scientific study to evaluate the risks and impacts of well
stimulation techniques and related activities. This includes an
evaluation of offshore well stimulation sites, human health
risks, economic costs, disadvantaged communities, pipeline
infrastructure, and emergency response.
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ANALYSIS :
Existing law:
1.Under SB 4 (Pavley, Chapter 313, Statutes of 2013):
A. Requires the Natural Resources Agency (Agency) to
facilitate an independent scientific study on well
stimulation treatments and their hazards and risks to
natural resources and public, occupational, and
environmental health and safety by January 1, 2015.
B. Requires the Division of Oil, Gas, and Geothermal
Resources (Division) to adopt rules and regulations for
well stimulation treatments by January 1, 2015, in
consultation with the Department of Toxic Substances
Control, the California Air Resources Board (CARB), the
State Water Resources Control Board (SWRCB), the Department
of Resources Recycling and Recovery, and any local air and
regional water quality control boards.
C. Requires the Division to complete a statewide
environmental impact report (EIR) by July 1, 2015.
D. Allows operators to continue well stimulation practices
while the Division completes its regulations, providing
that the well owner complies with interim requirements.
E. Establishes a well stimulation permit system and
disclosure requirement.
F. Requires notification of property owners within 1,500
feet of a wellhead or 500 feet from the stimulation area
that well stimulation will occur.
G. Requires an annual report to the Legislature that
includes information on any well stimulation activities,
response to spills, and disposition of produced water.
1.Under the California Global Warming Solutions Act of 2006 (AB
32, Nu�ez, Chapter 488, Statutes of 2006):
A. Requires CARB to determine the 1990 statewide greenhouse
gas (GHG) emissions level and approve a statewide GHG
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emissions limit that is equivalent to that level, to be
achieved by 2020.
B. Requires CARB to adopt GHG emissions reductions measures
by regulation.
1.Under the California Environmental Quality Act (CEQA),
requires lead agencies with the principal responsibility for
carrying out or approving a proposed discretionary project to
prepare a negative declaration, mitigated negative declaration
or EIR for this action, unless the project is exempt from
CEQA.
2.Requires the Division to finalize and implement regulations
regulating well stimulation treatments by January 1, 2015.
This bill:
1.Extends the deadline for the completion of regulations to June
30, 2015, and increases the scope of the independent
scientific study required and extends the deadline of that
study to June 30, 2016. Additional required elements or
expanded elements include, among other things:
A. Identification of offshore areas within the state where
well stimulation treatments are likely to spur or enable
oil and gas exploration and production.
B. An evaluation of all potential direct, indirect, and
cumulative health and environmental effects of onshore and
offshore well stimulation treatments and related
activities.
C. Potential noise and light pollution.
D. Identification and evaluation of impacts on private
property, potential human health risk for each chemical
used in well stimulation treatments, impacts on communities
consisting largely of people of color, low-income
individuals, or non-English-speaking households.
E. The impact on, and readiness of, emergency response.
1.Requires the Agency, within six months of the completion of
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the scientific study, to convene a committee to review the
scientific study. The committee will consist of the Agency,
the California Environmental Protection Agency, the CARB, the
SWRCB, and the Department of Public Health. The committee
will be required to evaluate and create a report on the
following:
A. Whether the study was based solely on the best
information available and met the requirements of this
bill.
B. Whether the regulations and other measures adopted by
the Division would sufficiently protect public and
environmental health at the local, regional, or statewide
level.
C. Whether there are sufficient measures in place to ensure
that the state's progress to achieving greenhouse gas
emissions are not impeded by well stimulation treatments.
1.Requires the committee to receive public comment on their
tentative report and authorizes the committee to require an
additional study to address areas of concern.
2.Requires the completed report be submitted to the Governor.
Requires the Governor to determine if well stimulation
treatments "create adverse impacts to public and environmental
health or, if the well stimulation treatments result in
adverse impacts to public and environmental health, the
impacts are identified and sufficiently mitigated to avoid
significant adverse impacts to public and environmental health
at the local, regional, or statewide level." Until the
Governor makes a positive determination, this bill will
prohibit all well stimulation treatments.
3.Provides that existing property rights and interests are not
impaired or infringed.
4.Prohibits the Division from approving any authorizations for
well stimulation treatments on or after January 1, 2015.
5.Allows a local government's land use authority to regulate or
prohibit oil and gas operations, including well stimulation
treatments.
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Background
The Division, located in the Department of Conservation, is the
state oil and gas regulator. The Oil and Gas Supervisor has
existing broad authority to regulate the oil and gas industry
"to prevent, as far as possible, damage to life, health,
property, and natural resources," among other factors.
California is a major oil and gas producing state. It is the
third largest oil producing state and in the top 15 for natural
gas. Oil and gas development and production occurs statewide,
although it is concentrated in Kern County and surrounding areas
in the Central Valley. There are also important producing
fields in coastal areas including Los Angeles, Ventura, Santa
Barbara and other counties, and offshore, where allowed. There
are approximately 50,000 active producing oil and gas wells.
Lately, the practice of hydraulic fracturing (fracking) of oil
and gas wells to facilitate the production of oil and gas has
received considerable attention and scrutiny, and has become
increasingly controversial. Proponents argue that it promotes
energy independence, provides good jobs and is a long-standing
industry practice that is entirely safe. Opponents argue that
fracking contaminates the air, water and soil resulting in
adverse impacts to public, environmental and occupational health
and welfare, and climate change.
Fracking injects a fluid, typically composed of water and added
chemicals, into an underground geologic formation at pressures
sufficiently high to create or enhance fractures. This process
increases the permeability of the formation to the trapped
hydrocarbons which then can flow through the formation to the
wellbore and be produced. Fracking is one form of a well
stimulation treatment and others include acid-based treatments.
Well stimulation treatments are continuously evolving as
technology changes and are specifically tailored to each
particular location.
In California, recent projections suggest that the
"unconventional" oil reserves in the Monterey Shale formation
are the largest in the country. (The Monterey Shale is an
existing source of conventional hydrocarbon reserves.) Well
stimulation treatments, particularly acidization, may be a key
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factor in developing these unconventional reserves and, if
successful, could result in an economic boom and substantial
increases in oil production.
As recently as February 2011, the Division could not provide any
information about fracking in a response to an inquiry from
Senator Pavley, despite its acknowledged authority to take
regulatory action.
Over the last few years there have been numerous legislative
attempts to require the Division to specifically regulate or ban
well stimulation.
Governor Brown signed SB 4 (Pavley, Chapter 313, Statutes of
2013) into law in September. SB 4 provides a comprehensive
regulatory framework for well stimulation treatments and has
repeatedly been characterized as the most comprehensive and
stringent in the country. Emergency interim well stimulation
regulations governing well stimulation went into effect on
January 1, 2014.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs of $1-2 million (special) to increase the scope
of the existing scientific study commissioned by the Agency.
Unknown revenue losses (General Fund), likely at least in the
mid-tens of millions, from decreased oil production on state
lands granted to the City of Long Beach.
SUPPORT : (Verified 5/27/14)
350 Bay Area
350.org
American Congress of Obstetricians and Gynecologists
Asian Pacific Environmental Network
Breast Cancer Action
California Nurses Association
Carpinteria Valley Association
Center for Biological Diversity
Center for Environmental Health
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Center on Race, Poverty, and the Environment
Citizen's Coalition for a Safe Community
City of Culver City
Clean Water Action
CREDO Action
Earthworks
Environment California
Environmental Defense Center
Environmental Working Group
Food and Water Watch
Frack-Free Butte County
Friends Committee on Legislation of California
International Longshore and Warehouse Union - Southern
California District Council
Mainstreet Moms Organize or Bust
Natural Resources Defense Council
Oil Change International
Physicians for Social Responsibility - San Francisco Bay Area
Chapter
Planning and Conservation League
Santa Barbara County Action Network
Sierra Club - Los Padres Chapter
Sierra Club California
Surfrider Foundation
OPPOSITION : (Verified 5/27/14)
American Chemistry Council
Associated Builders and Contractors of California
California Chamber of Commerce
California Construction and Industrial Materials Association
California Independent Petroleum Association
California Manufacturers and Technology Association
California Metals Coalition
Chemical Industry Council of California
Independent Oil Producers' Association
National Federation of Independent Business
Western States Petroleum Association
ARGUMENTS IN SUPPORT : According to the author, "Today's
fracking techniques are new and may pose new dangers.
Technological changes have facilitated an explosion of drilling
in areas where, even a decade ago, companies couldn't recover
oil and gas profitably. It's important that the implications
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for health and environmental safety are fully understood before
fracking is allowed to continue in California. SB 1132 imposes
a moratorium on all well stimulation including fracking and
acidizing, on-shore and off-shore, until a comprehensive report
is completed and submitted to the Governor and the Legislature
and a recommendation is made as to if, how, and where fracking
activity can resume. Further, it lays out how the report is to
be conducted in a way that ensures fairness and reliability in
the data collected."
The City of Culver City adds "this area is home to hundreds of
thousands of residents and businesses who have experienced the
impacts of decades of oil extraction in the Inglewood oil field.
As evidenced by the number of residents who have expressed
their ongoing concerns during recent Culver City City Council
meetings, there is significant public apprehension regarding the
uncertain, additional impacts that may have occured, or may
occur in the future, as a result of well stimulation, including
hydraulic fracturing."
ARGUMENTS IN OPPOSITION : A joint oil and gas industry letter
states, "SB 1132 appears to establish a study, comment and
findings process designed to ensure that well stimulation
treatments are prohibited in California in perpetuity." The
letter continues, "The Governor's finding shall be considered
final only when all pending legal challenges are resolved and
the Governor's findings are affirmed based on "clear and
convincing evidence." Should this standard be set for all
future state scientific studies, economic studies and
regulations? [?] Oil and gas production in California is a $34
billion annual industry, employing more than 25,000 workers with
an annual payroll in excess of $1.5 billion" and point out that
the economic investments in fracking and other well stimulation
techniques that may make development of California's deep shale
reserves economically viable require certainty.
According to a joint letter signed by the California Chamber of
Commerce, among others, this bill is a "job killer." They
continue, "?the regulatory process for SB 4 implementation,
including the scientific study, is now underway and should be
given adequate time to proceed without abrupt and substantial
modifications such as those imposed by SB 1132."
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RM:e 5/27/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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