SCAQMD First in California to Regulate Hydraulic Fracturing

by Snell & Wilmer

The possible benefits (and possible burdens) of hydraulic fracturing (“fracking”) in California have received significant media attention lately. Much of this attention has focused on the exploitation of the Monterey Shale Formation, an oil-rich subterranean rock formation in Central and Southern California that contains very significant oil reserves. Those reserves, it is believed, now can be easily accessed through the practice of fracking.

A recent study sponsored by the USC Price School of Public Policy projects that development of the Monterey Shale Formation could result in up to 2.8 million new California jobs annually and an increase in tax revenues of up to $24.6 billion per year.

Counterbalancing these potential benefits is the risk of environmental damage from fracking practices, which can produce air pollution and greenhouse gases and also release toxic chemicals into surface water and groundwater.

Fracking in California currently is allowed without any special authorization from the Department of Oil and Gas and Geothermal Resources (DOGGR) or any other agency. In response to public concern over the possibility of substantially increased fracking, the DOGGR last year released a draft rule proposing to regulate fracking. In addition, several bills have been introduced during the current legislative session that would regulate fracking in California, including bills introduced by Sen. Fran Pavley, Sen. Hannah-Beth Jackson, Assembly Member Marc Levine, and Assembly Member Das Williams. There also have been two well-publicized suits brought by the Center for Biological Diversity and others seeking to curtail fracking operations.

In the meantime, however, the South Coast Air Quality Management District (SCAQMD) on April 5 passed the first enforceable rule that could result in the comprehensive regulation of fracking in Southern California. The rule – Rule 1148.2 – provides in part as follows:

  • First, beginning June 5, 2013, the operator of any oil or gas well must notify the SCAQMD in advance of the nature of any proposed drilling operation and must provide information regarding the type of activity to be conducted as well as other information, such as the identity and location of any nearby sensitive receptors (e.g., residence, school, hospital);
  • Second, for each notice provided above, the well operator shall provide a report to the SCAQMD that identifies the volume and disposition of all drilling fluids, well completion fluids and flowback fluids;
  • Third, for each drilling activity, the supplier of the drilling chemicals must provide the name, CAS number, and purpose of each such chemical, along with air toxics information for all such chemicals.

The information reported by the SCAQMD will be posted on its website.

The new SCAQMD rule is particularly noteworthy in that the SCAQMD already has in place several rules that regulate oil and gas production, including Rule 1148.1 (which limits emissions of VOC’s from oil and gas production wells), Rule 1148 (which applies to thermally enhanced oil recovery wells) and a number of other rules that could well apply to, for example, fugitive dust emissions from mixing of drilling mud and hydraulic fracturing fluid (including Rules 401 – 405).

However, the SCAQMD’s new rule specifically arose out of a symposium held by the SCAQMD last September that was called to address concerns over fracking. As explained by the staff report supporting adoption of the rule:

“At the October 5, 2012 Board meeting, SCAQMD staff provided a report on the symposium …. Based on the comments and input received at the symposium, the Governing Board directed staff to initiate rule development to include reporting on the chemicals used during hydraulic fracturing conducted in oil and gas production activities, and possible additional reporting and public notification requirements. The Governing Board also directed SCAQMD staff to determine whether existing SCAQMD regulations adequately cover oil and gas production activities when hydraulic fracturing is used…. SCAQMD staff found regulatory gaps in existing SCAQMD rules that did not cover those operations.”

The new rule is expected to be challenged in court.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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