California One Step Closer To Regulating Fracking

As reported widely this week, the California State Assembly voted in favor of Senate Bill 4, a bill that would regulate the oil and gas well stimulation technique known as hydraulic fracturing, or “fracking.” According to the bill’s sponsor, State Senator Fran Pavley, the bill “provides the strongest well stimulation statutory framework in the country.”

Senator Pavley stated that the legislation “addresses the growing national concern about the impacts of hydraulic fracturing (otherwise known as ‘fracking’) on communities and the environment.”  She further noted that the bill “directs the California Division of Oil Gas and Geothermal Resources (DOGGR) to enact comprehensive hydraulic fracturing regulations, in consultation with additional regulators, which include advanced public notice of planned fracking activities and fracking fluid chemical disclosure.” Senator Pavley has published a “Fact Sheet” discussing the key provisions of the bill.

Among other things, the bill requires:

  • An independent scientific study of well stimulation addressing occupational, public and environmental health and safety to be completed by January 1, 2015.  The study will address seismicity associated with fracking, potential recycled water use, and research necessary to address concerns raised by well stimulation.
  • The DOGGR to adopt well stimulation regulations by January 1, 2015 that include full disclosure of the composition and disposition of hydraulic fracturing and well stimulation fluids to DOGGR.
  • The independent study to determine appropriate threshold values for non-fracking acid treatments to ensure large-scale acidization, but not routine well cleanups, are targeted.
  • The strongest public disclosure on fracking chemicals of any state in the nation. The name and quantity of each chemical additive used in the well stimulation treatment will be publicly available. Only the recipe of chemical additives could be claimed as a trade secret, and the public would know the maximum concentration of any and all chemical constituents.
  • That well operators obtain a permit for well stimulation.  The permit application would include estimates of the amount of water and the composition of the stimulation fluids planned to be used, a disposal plan, and a groundwater monitoring plan.
  • Regional groundwater monitoring in the vicinity of oil and gas fields following criteria developed by the state water board in consultation with experts. This would include requirements about emergency monitoring procedures in the event of a spill or well failure.
  • At least 30 days advance notice to the public, neighbors (including tenants) and the regional water quality control board of the intent to frack or stimulate a well. The well owner would have to specifically notify DOGGR 72 hours ahead of the scheduled job in order for DOGGR to witness the procedure.
  • Provisions that allow neighbors to have baseline and followup water quality testing on water wells and surface water by contractors meeting state water board standards.
  • DOGGR to develop and maintain its own web-site for fracking information by January 1, 2016, although could be used in the interim.
  • A procedure for trade secret protections to be challenged and for public health professionals and other regulators to obtain trade secret information, if needed. In the event of a challenge, the default is public disclosure.
  • An increase in the civil fine provision to at least $10,000 and up to $25,000 per day per violation.
  • Incorporation of additional clarifying and technical provisions to promote regulatory accountability and public transparency.

The bill was returned to the California state Senate where it was approved Wednesday night and is being sent to Governor Jerry Brown for his signature.  A spokesman for the Governor stated the governor intends to sign the bill.

We will, of course, continue to follow these developments in California and their potential impact on oil and gas drillers in the State.  As noted in one recent analysis by a senior managing director at Conway MacKenzie, fracking in California could go a long way to address the state’s increasing energy demand:  “The Monterey shale, a vast formation of shale rock that stretches across more than 1,750 square miles of California’s coastal plains and inland valleys, could contain as much as 15.4 billion barrels of oil. That’s more than half the undeveloped, technically recoverable shale oil believed to exist in the continental United States.”