Source: http://www.lexology.com, October 8, 2013
By: Philip L. Comella and William R. Schubert, Seyfarth Shaw LLP
California is the most recent state to pass a new, comprehensive statute with which to regulate the hydraulic fracturing industry.
The California statute is making headlines, and for a good reason: California contains an estimated two thirds of the nation’s shale-rock oil deposits. Further, since many details underlying the law remain unsettled, the stakes remain high – particularly in light of the fact that the statute authorizes civil penalties of up to $25,000 per violation.
The statute requires well operators to obtain permits before drilling. Permit applications must provide information including: the specific identification of the fracking well; the precise confines of the drilling activity; the names of any chemical constituents and fluid additives to be used; and written plans for the management of wastewater and the monitoring of groundwater.
The law relies heavily on public disclosure. Not only must well operators disclose information that will ultimately be made public (subject to assertions of trade secret protection) in the application, they also must turn over records after the close of operations. These will include “all electrical, physical, or chemical logs, tests, or surveys.” The law also provides that basic about the activity at each individual fracking well be published to an online database. Many operators already provide this sort of information to the public voluntarily. (See http://fracfocus.org/).
The California law seems to envision a regulatory scheme that is comprehensive, although not quite as aggressive as the one recently drawn up in Illinois. (We have written about the Illinois Hydraulic Fracturing Regulatory Act in our environmental group’s blog entry and in a client alert). For example, the Illinois statute contains a citizen suit provision that allows people to sue the enforcement agency and violators when necessary to enforce the law’s substantive provisions. It also creates a presumption, which can be raised based on the existence certain circumstantial facts, that a fracking well has caused nearby water pollution. Comparable provisions do not appear on the face of the California statute.
But many of the details in California are not yet known, and this makes the forthcoming regulations critical. The Division of Oil, Gas and Geothermal Resources at California’s Department of Conservation will be promulgating regulations, the scope of which will include well stimulation, construction and maintenance, and permitting requirements. The State Water Resources Control Board will be setting forth groundwater monitoring criteria specific to fracking. The statute requires both of these sets of regulations to be finalized by January 1, 2015.
Also, the California law commissions a comprehensive a study regarding risks to environmental health and safety, which could affect the course of public policy.