On December 11, 2013, the California Department of Conservation (DOC) noticed an emergency rulemaking action and issued proposed interim fracking (hydraulic fracturing) regulations that are intended to take effect on January 1, 2014. When the interim regulations take effect, they will govern the manner in which oil and gas operators are allowed to use hydraulic fracturing and other well stimulation techniques within the State until final fracking regulations become effective. Comments on the proposed interim fracking regulations must be submitted to the Office of Administrative Law (OAL), with a copy to DOC, within five calendar days of OAL’s posting the proposed regulations on the OAL website.
The final regulations are scheduled to be promulgated by January 1, 2015. The text of the proposed final fracking regulations was released on November 15, 2013, by DOC’s Division of Gas and Geothermal Resources (DOGGR). Comments on the proposed final regulations must be submitted to DOGGR by 5:00 pm on January 14, 2014.
Fracking regulations are necessary to implement Senate Bill 4 (SB 4), a law that, among other things, requires oil or gas well operators: to obtain DOGGR permits before fracking; to notify nearby property owners and tenants of planned operations; and to disclose publicly the chemical makeup of fracking fluid. Governor Jerry Brown signed SB 4 into law in September. (Read Bingham’s summaries about SB 4 and the proposed final regulations.)
SB 4 establishes an interim grace period exempting well stimulation operators from permitting requirements until the final regulations under SB 4 are in effect, if the operator certifies compliance with specified requirements in SB 4. The interim regulations are intended to provide clarity and guidance to operators who are subject to SB 4’s fracking requirements that take effect January 1, 2014.
Interim Regulations
Consistent with the proposed regulations, the interim regulations focus on disclosure of detailed information about well stimulation operations including the fluids to be used, public notifications, requisite monitoring and general requirements for well stimulation treatment. Unlike the permanent regulations, the interim program does not provide DOGGR with any discretionary permitting authority over well stimulation activities. However, the interim regulations do provide that well stimulation operations cannot commence begin until an operator has notified DOGGR of a well stimulation operation and provided requisite information, DOGGR has confirmed that the notification is complete, and the operator follows the other procedural requirements.
• Defining Covered Well Stimulation Treatment Activities. The interim regulations clarify the range of activities subject to SB 4 requirements. The regulations specify that well stimulation treatment and underground injection projects are two separate processes subject to two distinct regulatory frameworks. The regulations also address the distinction between well stimulation treatment activities which are subject to the regulations and routine operating activities which are not. Finally, the regulations establish threshold concentrations of acid sufficient to trigger regulation of the acid matrix stimulation treatments under SB 4 and define commencement and cessation of well stimulation operations.
• Written Notice/Certification. The interim regulations require operators to provide a written notification to DOGGR of a well stimulation operation and to certify that the operation complies with specified requirements of Public Resources Code section 3160. Fracking or other well stimulation cannot commence unless DOGGR has reviewed the required written notice and approved it as complete. The written notification must contain specific items identified in the interim regulations which include information regarding the operator, the location of the well, and the timing of the proposed operations. Operators must certify that the following information attached to the notice satisfies the requirements of Public Resource Code Section 3160: a complete list of the chemical names, CAS numbers (if available), and concentration of each well stimulation fluid; a water management plan; a list of locations of existing wells that may be impacted by fractures or modifications; and a groundwater monitoring plan. In the notification, the operator must also certify that they have contracted with an independent third party who will provide neighboring property owners with the requisite notification and that they will make all required public disclosures within 60 days after cessation of well stimulation treatment. Notification must be submitted in electronic format on the Interim Well Stimulation Treatment Notice form and must be signed by an authorized representative of the operator. To allow DOGGR staff to witness the activities, the operator must notify DOGGR at least 72 hours prior to commencing well stimulation and provide confirmation that the activity will proceed at least three hours prior to commencing treatment.
• Public Notification. At least 30 days before beginning fracking operations, operators must provide to all property owners and tenants within a 1,500-foot radius of the wellhead: a copy of the completed Interim Well Stimulation Treatment Notice, reviewed and approved as complete by DOGGR notice that the operator will pay for sampling and testing any surface water or groundwater well used for drinking or irrigation upon request; and information about how to request water sampling and testing. The notification must be provided by an independent third party retained by the operator, and the third party must submit to DOGGR both the names of those notified and the method by which notice was effectuated. Potentially affected property owners and tenants then have 20 days to request in writing water quality sampling and testing. Upon receipt of a timely request for water sampling, operators must pay for testing by a qualified independent third-party contractor designated by the State Water Resources Control Board and may not commence well stimulation until the sampling is complete.
• Groundwater Sampling, Testing, and Monitoring. The interim regulations delineate groundwater monitoring criteria which regulated well stimulation operations must meet until the State Water Resources Control Board finalizes the monitoring criteria required under SB 4. Under the interim rules, operators must prepare a groundwater monitoring plan which includes information about the well that will undergo the stimulation treatment as well as other wells in the vicinity. The plan must designate and justify the location of the monitoring wells to be utilized and provide detailed information regarding such wells. The regulations specify the constituents and field parameters which must be analyzed as well as minimum procedural requirements for gathering and testing samples. The plan must include a contingency plan for reporting information in the event of a well failure or any other unintended event that has the potential to affect groundwater quality.
Operators must sample groundwater monitoring wells before well stimulation commences to establish a groundwater quality baseline, must sample wells at least once within 60 days after well stimulation is completed, and must sample wells semiannually thereafter until the State Water Resources Control Board issues the final groundwater monitoring criteria called for under SB 4. Groundwater monitoring reports are to be submitted to the State Water Resources Control Board.
• Public Disclosure. Within 60 days after fracking a well, operators are required to publicly disclose information about the well and the fracking activity, including: the well name and location; the name, concentration, and purpose of each fracking fluid additive; the name, CAS number (if available), and concentration of each fracking fluid chemical constituent; the total volume of fluid used and recovered; and the source, volume, and disposition of all water used during fracking. For fracking operations, this information must be posted to the Chemical Disclosure Registry, to the extent that the website is able to receive the information. For well stimulation treatments other than fracking, or if the Chemical Disclosure Registry is unable to receive fracking information, operators must provide all required disclosures to DOGGR directly on the Well Stimulation Treatment Disclosure Reporting Form. SB 4 gives operators an opportunity to withhold information about the fracking fluid by claiming, and then substantiating to DOGGR’s satisfaction, that the information is a protected trade secret.
• General Requirements. To ensure the baseline and ongoing integrity of wells subject to stimulation, the interim regulations provide that operators must adhere to requirements relating to the cementing of the well, the isolation of productive zones, testing of the integrity of the wellbore, proper rigging and testing of surface equipment, limitations on concentrations of well stimulation treatment fluids, and addressing handling of well stimulation fluid and additives in the operator’s Spill Contingency Plan.
Next Steps
The interim regulations are intended to go into effect on January 1, 2014, and are not subject to the usual administrative procedures mandated by California law. Rather, these regulations will be adopted under a streamlined process in which the rules will be submitted to the Office of Administrative Law (OAL) on December 19, 2013. OAL will then post the regulations on its website and interested parties will have until December 24, 2013, to submit comments. Any comments should be submitted directly to OAL, with a copy to DOC. However, neither DOC nor DOGGR is required to respond to these comments. Additional information regarding the emergency rulemaking process is available at OAL’s website.
While the interim regulations provide temporary guidance to well operators, DOC will continue to finalize permanent fracking regulations that will implement additional components of the draft regulations not addressed by the emergency rulemaking, such as fracking permit application requirements, pre-fracking well analysis and testing, pressure monitoring during fracking, storage and handling of fracking fluids, and post-fracking monitoring. In addition, DOGGR will prepare a statewide environmental impact report (EIR) to provide the public with detailed information regarding potential environmental effects associated with fracking and other well stimulation treatments. Interested parties should follow closely further developments related to the final regulations and EIR.
Contacts
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Gannon-EllaThis article was originally published by Bingham McCutchen LLP.