Senate Bill 4 to Provide for Additional Regulation of Fracking Activities in California

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State Division of Oil, Gas and Geothermal Resources to Develop Fracking Regulations

Last Friday, the governor signed Senate Bill 4, which addresses the controversial practice of hydraulic fracturing (fracking) in California. Under existing California law, the state Division of Oil, Gas and Geothermal Resources (DOGGR) is responsible for issuing permits for the drilling and operation of oil and gas wells. Senate Bill 4 would expand the regulation of fracking in California and would require DOGGR, in conjunction with the other state and local agencies in charge of water and air resources, to develop regulations that address fracking by January of 2015. Depending on the extensiveness of the regulations enacted, oil and gas companies may soon be pressing forward to mine the Monterey Shale Formation and other oil bearing formations, which are estimated to hold more than 15 billion barrels of oil, most of which is only accessible through fracking extraction.

Under SB 4, DOGGR’s regulations will implement a fracking permit system in an attempt to ensure that geologic and hydrologic formations are isolated during fracking operations. The regulations will require the construction of wells and well casings to meet state standards and will require operators to disclosure the composition and disposition of well stimulation fluids used in fracking. Operators will be able to prevent the public disclosure of certain components of their well stimulation formulas through a trade secret protection provision in the Bill, however the protected information must be disclosed to DOGGR. As part of the permit application process, operators will be required to develop and submit water management plans that estimate and identify the amount and source of water and recycled water to be used in the fracking operation and specify how the water will be disposed of after the fracking operation is complete. Permits will expire after one year and will be available for public review. 

The fracking regulations will include a public notice procedure that requires operators to notify area property owners and tenants at least 30 days prior to the start of fracking operations. Operators will be required to notify DOGGR at least 72 hours prior to the actual start of fracking a well and the regulations will provide area property owners and tenants with a right to water quality sampling at the expense of the fracking operator. These public noticing and permitting requirements should enhance the level of transparency available on fracking operations in California, which are currently below that required by other states.