Fracking Update: New Proposed Legislation

Building on recent public pronouncements, two California legislators have proposed new legislation that would regulate water usage during the hydraulic fracturing, or "fracking" process. Fracking involves injecting a high pressure stream of water, sand and chemicals into rock formations, known as shale, to extract natural gas and oil.

The first bill, SB 395, introduced by Senator Hannah-Beth Jackson, defines "produced water" as "any water brought up from the hydrocarbon bearing formation during the extraction of oil and gas, including hydraulic fracturing operations, and can include formation water, injection water, and any chemicals added downhole or during the oil and water separation process." The bill further classifies "produced water" as hazardous waste, meaning fracking operators would be required to obtain a permit or grant of authorization from the California Department of Toxic Substances Control ("DTSC") in order to manage produced water on site. California has a five-tier permitting program which matches the statutory/regulatory requirements imposed upon each category of hazardous waste facility to the degree of risk posed by them. If DTSC determines that produced water falls within the top two tiers, i.e., those which require the most regulatory oversight then the permitting process will require review under the California Environmental Quality Act ("CEQA"). The full text of SB 395 can be found here.

The second bill, AB 982, introduced by Assembly Member Das Williams and co-authored by Senator Lois Wolk, requires fracking operators to provide a groundwater monitoring plan for review and approval by the appropriate regional water quality control board. The groundwater monitoring plan must include certain information, including water quality monitoring data and an emergency monitoring plan that would be implemented in the case of an event causing groundwater contamination. Further, AB 982 requires fracking operators to prepare a specific plan for disposing wastewater produced by the fracking process, to disclose the estimated quantity of water planned to be used in the fracking process, and to disclose the source or sources of the water to be used. The full text of AB 982 can be found here.

SB 395 and AB 982 are examples of the recent legislative effort to regulate the fracking process in California. This effort comes on the heels of the Division of Oil, Gas & Geothermal Resources' ("DOGGR") "discussion draft" fracking regulations, which DOGGR released on December 18, 2012.

Although fracking has been banned in some states, California legislators have expressed a willingness to allow the practice in California with some regulation. The Legislature's willingness to allow fracking appears to be due in part to the recent discovery of California's Monterey Shale, which is believed to hold approximately 15.4 billion barrels of crude oil.

We will continue to provide regular updates regarding these bills, as well as any additional legislative developments regarding the fracking process.

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