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California Adopts Strict New Law Regarding Fracking

October 1, 2013

 

On September 20, 2013, California Governor Jerry Brown signed into law new stringent requirements for hydraulic fracturing. The law mandates technical standards for well construction, fracking water management, groundwater monitoring and public disclosure of fracking fluid constituents.

In general, hydraulic fracturing (or “fracking”) involves the injection of fluids under pressure great enough to fracture oil- and gas-producing formations. The resulting fractures are then held open using “proppants,” such as fine grains of sand or ceramic beads, to allow oil and gas to flow from small pores within the rock to production wells. The new law, S.B. 4, also applies to other “well stimulation treatments” designed to enhance oil and gas production or recovery by increasing the permeability of underground geologic formations, including acid well stimulation treatments that involve the injection of hydrochloric or other acids into the well.

The law is intended to provide “transparency and accountability to the public” regarding well stimulation treatments, including air emissions, and the handling, processing and disposal of well stimulation and related wastes.

The law directs the Department of Conservation, in consultation with other state, regional and local agencies, by January 1, 2015, to adopt new regulations for well stimulation. The new rules must include requirements for the construction of wells and well casings and the “full” disclosure of the composition and disposition of well stimulation fluids. Full disclosure includes the name and maximum concentration of every chemical constituent and additive in the stimulation fluids. Under the law, neither the identities of the chemical constituents of additives, nor the concentrations of the additives in the well stimulation fluids can be protected as trade secrets.

The operator of an oil or gas well will be required to obtain a permit prior to conducting any new well stimulation or repeating any prior well stimulation, and must implement site-specific water management and groundwater monitoring plans during well stimulation activities. The owner or operator of the well must provide a copy of the approved permit to every tenant of the surface property and every surface property owner whose property is within 1,500 feet of the wellhead, or within 500 feet from the horizontal projection of the well to the surface.

When implementing the law, Governor Brown instructed the Department of Conservation to develop an “efficient permitting program for well stimulation activities” that groups permits together based on factors such as geologic conditions and environmental impacts, while also “providing for more particularized review in other situations when necessary.”

In addition, by January 1, 2015, the Natural Resources Agency must complete an independent scientific study on well stimulation. The study must evaluate the potential risks that well stimulation treatments pose to natural resources and public, occupational and environmental health and safety.

The full impact of the new law will not be known until the Department of Conservation adopts implementing regulations. In addition, environmental groups continue to call for a complete moratorium on fracking in California, and Governor Brown has stated that he intends to work with the legislature to make “clarifying” amendments to the law next year. However, California’s new law, particularly its focus on disclosure and targeted studies, may be adopted by other states. For more information about federal and state statutory and regulatory actions regarding fracking, see our alert “Recent Developments Affecting Hydraulic Fracturing Operations.”

 


 

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Eric Rothenberg, an O'Melveny partner licensed to practice law in New York and Missouri, Kelly McTigue, an O'Melveny partner licensed to practice law in California, and John Renneisen, an O'Melveny counsel licensed to practice law in the District of Columbia contributed to the content of this newsletter,contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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