Loopholes in California's New Fracking Legislation Could Allow Drilling to Continue Unabated

by Sofia Plagakis, 9/24/2013

On Sept. 11, California lawmakers passed a controversial bill aimed at providing oversight of hydraulic fracturing for natural gas and oil (a drilling process known as fracking). While the new law includes some of the key elements of an effective chemical disclosure policy, last-minute, industry-friendly amendments forced into the bill undermine its ability to protect the health and safety of California residents.

Background

California's Monterey Shale is said to be the largest shale oil play in the country. Located in the Central Valley and Central Coast near Los Angeles, the play lies below most of the sources of drinking water for the area. It is estimated to contain 15 billion barrels of oil that have, until the advent of new technology, been too difficult and expensive to extract.

State Sen. Fran Pavley (D-Agoura Hills) sponsored Senate Bill 4, which would require oil companies to get permits for fracking, notify neighbors near drilling sites, disclose the chemicals used, and monitor air and groundwater quality. The new law would also require the state's Department of Natural Resources to work with air and water pollution control boards across the state to stringently regulate hydraulic fracturing. In addition, the law requires the state agency to conduct a statewide scientific study of the risks of fracking.

The new law will also put in place the first-ever rules in the state for fracking and "acidizing," a practice commonly used along with fracking in which acids (such as hydrofluoric acid) are injected into the well to actually dissolve the surrounding rock.

Loopholes in New Law

Several large national environmental groups, such as the Natural Resources Defense Council (NRDC), Environmental Working Group, and Clean Water Action, supported the legislation as initially proposed. However, in August, a coalition of over 100 local environmental and community groups opposed the bill, describing it as too weak. The coalition called on Governor Jerry Brown (D) to establish an immediate moratorium on all fracking.

The larger environmental groups sought to strengthen the bill and protect it from industry-friendly changes as it moved through the legislature. But last-minute amendments proposed by industry interests and supported by Brown created loopholes that exempt fracking operations from key oversight requirements. In May, Brown called fracking a "fabulous economic opportunity." Now, even the larger environmental groups have come out firmly against the law.

The most significant industry-friendly amendment allows the state's Division of Oil, Gas, and Geothermal Resources (DOGGR) to waive requirements for environmental impact analyses of proposed drilling operations. The legislation allows the agency to establish threshold values for the volume of acid being used. Any operation using acid that falls below the agency's threshold can be carried out without a permit, and possibly without disclosing the chemicals used or without notifying people living nearby. It is unclear where the agency would set that threshold.

Normally an assessment of the possible impacts of drilling would be mandatory before a regulatory agency would even consider approving a permit to drill. The new provision could allow the agency to skip this critical step and approve drilling permits without fully understanding the potential impacts of the activity. This provision could exempt certain oil and gas operations from the California Environmental Quality Act (CEQA).

The new law also allows fracking to continue unabated while agencies draft regulations and investigate environmental impacts. The law mandates the state agency to conduct a scientific peer-reviewed statewide environmental impact report on the risks of fracking, but the report is not due until January 2015. Hundreds, possibly thousands of wells may be drilled before the study is completed. Environmentalists believe it is irresponsible to allow fracking while environmental problems potentially associated with the drilling technique are still uncertain.

"Californians deserve to have their health and drinking water sources protected from oil and gas development. Last-minute amendments, added due to oil industry pressure, threaten to weaken the environmental review required by CEQA," said Miriam Gordon, California Director of Clean Water Action, in a joint press release from four environmental organizations. Allowing fracking to continue before environmental impact analyses and approvals are granted and before regulations are completed means that the oil and gas industry will be able to significantly expand their operations in the state without any oversight for the next two years.

California's Break from the ALEC Disclosure Model

However, the new California legislation includes many provisions for addressing disclosure of the chemicals used in the fracking process. In the last few years, a number of states, including Texas, Ohio, and Pennsylvania, have passed legislation to require that companies disclose the chemicals used in fracking fluids. While the specific provisions vary by state, many have followed a model supported by the American Legislative Exchange Council (ALEC). ALEC is an influential conservative policy shop that drafts industry-friendly model legislation and pushes it out to state lawmakers. The ALEC model includes requirements for drillers to disclose the toxic chemicals they are injecting into the ground – but only after fracking is completed and with tanker-sized loopholes that allow the companies to keep many chemicals secret.

In March, Illinois became one of the first states to break away from the ALEC model and passed the strongest fracking disclosure bill in the country. The legislation included provisions for baseline water testing and chemical reporting, restricted allowable trade secrets, and required online disclosure by the state. Although California's new legislation does not duplicate the Illinois law, it does include a number of strong provisions.

Chemical Reporting and Baseline Water Testing

California's new law requires companies to report the chemicals they plan to use in fracking and the acid stimulation process as part of the permit application process and prior to drilling. The state will then post the approved permit on a publicly accessible website within five business days of issuing the permit and provide nearby landowners with a copy.

Landowners will have a chance to have their water wells tested before and after fracking or acidization occurs. To ensure the accuracy and completeness of the information reported, an independent third-party contractor approved by the state will conduct the water baseline sampling and testing; however, the drilling company will pay for it. However, baseline water testing will only be conducted upon request by nearby landowners. This is weaker than the Illinois approach, which requires well operators to conduct testing and monitoring on all fracking operations. Also, the Illinois law requires water monitoring for 30 months after fracking is completed, while the California law is vague on timeframes.

The California law requires well operators to report information on the chemicals actually used after the well is completed. The reported information must include specifics such as unique chemical identification numbers, maximum concentrations (instead of actual concentrations), and total volume of water or the type and total volume of base fluid used (and if water, whether the water is suitable for irrigation or domestic purposes).

Trade Secrets

Although the California law allows companies to withhold chemical information as "trade secrets," it provides stringent limits on the use of these claims. The law requires companies to substantiate any trade secrets claims with an explanation of why the information is confidential. The state reviews each trade secrets claim.

The law requires the state agency to collect all chemical data, including trade secrets information, on the fracking chemicals. In cases where trade secrets claims are made, the supplier must still provide a list of the chemical constituents, including chemical abstract identification numbers. This is a sharp contrast to other state laws, which do not require the state to even gather trade secrets information.

In addition, the new law provides the state agency with a framework for handling the trade secrets data and sharing it with health professionals in cases of emergencies. Lawmakers in both California and Illinois have included such provisions in their legislation after medical professionals in other states, such as Colorado and Pennsylvania, have voiced problems with gag rules that prevent them from sharing chemical information with their patients and other health professionals.

Online Disclosure

The legislation also calls for a state website to publicly list the chemicals used in fracking. Online disclosure helps citizens evaluate the potential risks and rewards of allowing fracking in their communities. The website will include the approved permit application (posted within five business days of approval), information about the chemicals used in the fracking fluid, and water quality data within 60 days of drilling a well. The law also specifies that the data be organized in a format, such as a spreadsheet, that allows the public to easily search and aggregate the information. However, the website is not required until January 2016. Until then, the law authorizes the state to use an alternative website for chemical reporting, recommending FracFocus.org. Disclosures reported to and posted on FracFocus are highly problematic, as the Center for Effective Government has reported on numerous occasions.

Conclusion

Although the California law represents a welcome departure from the ALEC model of fracking disclosure legislation, the loopholes regarding waivers of an environmental impact analysis leave the legislation ineffective in protecting public health and the environment for the next two years. Environmental groups and communities are calling on Brown and state lawmakers to fix these provisions and to impose a moratorium until the state can fully assess the threats of fracking and acidization to California's air, water, and communities.