Industry and Environmental Groups Make Pitch to Water Board Regarding Draft Model Criteria for Groundwater Monitoring

On Tuesday, May 19, 2015, the State Water Resources Control Board (“Water Board”) held a Public Workshop regarding the proposed Draft Model Criteria for Groundwater Monitoring (“Model Criteria”). In this meeting, the Water Board heard comments from stakeholders who voiced their support or concern regarding the Model Criteria.

Dr. Steven Bohlen, the State Oil & Gas Supervisor, on behalf of the Division of Oil, Gas & Geothermal Resources (“DOGGR”) provided the Water Board with a variety of statistics regarding well stimulation operations that have occurred since DOGGR’s Interim Regulations went into effect on January 1, 2014. Dr. Bohlen reported that over 1,500 Interim Well Stimulation Treatment Notices have been received by DOGGR since January 1, 2014. Additionally, 809 well stimulation operations have been conducted and 22 monitoring plans have been approved. Furthermore, about 200 acre feet of water has been used for well stimulation operations.

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Lawsuit Seeks to Halt Oil Industry Wastewater Disposal Practices

On Thursday, May 7, 2015, two environmental groups filed a lawsuit seeking an immediate halt to oil and gas wastewater injection at 2,500 wells across California.

The suit, filed by the Sierra Club and the Center for Biological Diversity, claims that the state Division of Oil, Gas and Geothermal Resources (“DOGGR”) should be prohibited from letting companies pump produced water from their drilling operations into non-exempt aquifers.

DOGGR has repeatedly assured Californians that there has been “no contamination of water used for drinking or agricultural purposes related to underground injection by the oil and gas industry” and “no evidence has been found that underground injection has damaged sources of potential drinking water.”

Under DOGGR’s recently issued emergency proposed rulemaking, industry wastewater injections into non-exempt aquifers must be phased out by 2017.   However, the lawsuit calls for the injections to stop immediately. The proposed phasing-out period gives both DOGGR and the U.S. Environmental Protection Agency (“EPA”) the opportunity to determine whether some of the aquifers — particularly those that also contain oil — should be considered suitable places to inject produced water. The EPA has the authority to declare an aquifer exempt from the federal Safe Drinking Water Act, making it eligible for wastewater injections. Continue Reading

California Water Board Signs Off on Emergency Urban Water Use Restrictions

On May 5, 2015, the State Water Resources Control Board (“Water Board”) adopted Emergency Regulations implementing a statewide 25% reduction of potable urban water use, which includes commercial, industrial, and institutional water use, in addition to residential water use. These regulations are in response to Governor Brown’s April 1, 2015 Executive Order mandating a statewide 25% reduction in water use from June 2015 through February 2016, as compared to the same months in 2013.   These regulations apply to all urban water suppliers, as defined in Water Code section 10617, excluding wholesalers.

To achieve the 25% statewide reduction in potable urban water use, the Water Board requires those areas with high per capita water use to achieve proportionally greater reductions than those with low use. The Water Board assigned each urban water supplier to one of nine tiers depending on the per capita water use in the supplier’s distribution area. Suppliers with the highest per capita water use must reduce water consumption by as much as 36%, while suppliers with the lowest water use must reduce water consumption by only 8%. Upon meeting certain requirements and approval by the Executive Director of the Water Board, some suppliers may qualify to be placed in a special tier requiring only a 4% reduction. Small water suppliers, defined as those with fewer than 3,000 service connections, must achieve a 25% reduction in water use or restrict outdoor irrigation to no more than two days per week. Water suppliers are left to obtain these results through local restrictions on both residential and non-residential users.

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Water Board Issues Proposed Draft Model Criteria for Groundwater Monitoring

On April 29, 2015, the State Water Resources Control Board (“Water Board”) issued a Notice of Opportunity for Public Comment and Notice of Public Workshop regarding the proposed Draft Model Criteria for Groundwater Monitoring (“Model Criteria”) for areas of oil and gas well stimulation. Senate Bill 4 requires groundwater monitoring for all oil and gas wells that receive stimulation treatments.

The Model Criteria will be used by (1) the Water Board to implement a regional groundwater monitoring program, and (2) oil and gas operators and Water Board staff in the development of groundwater monitoring near well stimulation activities. These Model Criteria outline the methods to be used for sampling, testing, and reporting the water quality associated with oil and gas well stimulation activities.

The groundwater monitoring data will be used to initially establish baseline condition prior to well stimulation. Thereafter, Water Board staff will evaluate data and test results to determine changes in water quality and whether additional monitoring requirements or corrective actions are necessary.

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Letter Urges Oil & Gas Wastewater Well Shut-Ins due to Risk of Groundwater Contamination; Regulators Stick to Rulemaking

On March 20, Senator Fran Pavley (D-Agoura Hills) wrote a letter to Governor Jerry Brown requesting that his administration immediately shut down approximately 2,500 underground injection wells.  The letter was signed by seven other legislators and urges that these wells must be closed until “all appropriate aquifer exemptions have been issued by the US EPA [Environmental Protection Agency] and investigations of groundwater contamination from these wells are complete.”

Senator Pavley’s letter comes in response to reports that California is out of compliance with the federal Safe Drinking Water Act (“SDWA”) underground injection control (“UIC”) program.  The SDWA prohibits injection of Class II wells into aquifers that are potential drinking water sources, called non-exempt aquifers.  Class II wells are those that dispose of waste water from oil and gas production.  The California Department of Conservation (“DOC”) is already addressing this matter, and has issued a notice of proposed emergency rulemaking to eliminate injection into non-exempt aquifers on April 2.

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Citadel Drops Lawsuit Against San Benito Fracking Ban

On Friday, April 3, Citadel Exploration filed a request for dismissal in its suit against San Benito County’s Measure J.  Measure J was passed in the November 2014 election and is a ban on high-intensity petroleum operations, which includes hydraulic fracturing, acid well stimulation, and cyclic steam injection.  Citadel initiated this suit in February 2015, arguing that state law preempted Measure J, which is a county law.

The request for dismissal does not carry the weight of precedent or indicate that Measure J is legal, however.  It is still possible for another party to challenge the measure under other circumstances and stating the same legal arguments, such as the measure constitutes an illegal take of property without just compensation.

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California Proposes Emergency Rules for Oil & Gas Waste Water Injection Wells as Precautionary Measure

On Thursday, April 2, the California Department of Conservation (“DOC”) published a notice of proposed emergency rulemaking for the state’s Class II Underground Injection Control (“UIC”) program.  The purpose of the rulemaking is set a schedule to eliminate injection into non-exempt aquifers so as to ensure that California oil and gas activities are in compliance with the Safe Drinking Water Act (“SDWA”).  The SDWA prohibits injection of Class II wells — those that dispose of waste water from oil and gas production — into non-exempt aquifers.  The Division of Oil, Gas and Geothermal Resources (“DOGGR”), within the DOC, first proposed this rulemaking in a letter to the U.S. Environmental Protection Agency in February 2015.  In March, twelve wells were shut-in in order to achieve this goal.

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Legislature Approves $1 Billion Drought Spending Bills; Governor’s Approval Pending

On Wednesday and Thursday this week, the California Senate and Assembly approved Assembly Bill 91 (“AB 91”) and Assembly Bill 92 (“AB 92”), both which are part of the Budget Act of 2015.  The legislation allocates $1 billion for emergency response to the state’s ongoing drought.  The drought is in its fourth year and Governor Jerry Brown declared the drought a state emergency in January 2014.

Among other spending measures, AB 91 allocates $15,560,000 for “maximizing water delivery and efficiency to key endangered species habitats,” $3,250,000 for drought emergency response measures through June 30, 2016, and $2 million to assist local communities in implementing emergency water supply projects.  Further, AB 91 apportions about $660 million to flood prevention projects in the state.  AB 91 passed in the Senate 35 to 1, and in the Assembly 74 to 0.

The accompanying bill, AB 92 was more controversial, passing 24 to 14 in the Senate, and 50 to 27 in the Assembly.  Primarily, Republicans were concerned about provisions authorizing fines for those who engage in unauthorized stream diversion or harm fish passage. Violators may be fined up to $8,000 per day, and each day that a violation continues without a good faith effort to cure constitutes a separate violation.  A major of goal of AB 92 is to combat illegal marijuana grows and water diversions related to the practice.

The Governor’s office reports that the “package will expedite bond funding to make the state more resilient to the disastrous effects of climate change and help ensure that all Californians have access to local water supplies.”  The legislation is awaiting final approval from Governor Brown.

By Mike Mills (michael.mills@stoel.com) and Shannon Morrissey.  Ms. Morrissey is a Law Clerk with Stoel Rives LLP and is not currently licensed to practice law in California.

U.S. Supreme Court Hears Oral Arguments on EPA’s Mercury and Air Toxics Standard

Yesterday the U.S. Supreme Court heard oral argument in Michigan v. EPA, a Clean Air Act case involving hazardous air pollutant regulations, with implications for fossil fuel-fired power plant owners and operators in California and across the country.  Below you’ll find guest blogger Tom Wood‘s insight into the case and the arguments:

On Wednesday, the U.S. Supreme Court heard arguments from a large group of states challenging EPA’s approach in developing the Mercury and Air Toxics Standard (MATS) rule. The MATS rule imposes stringent hazardous air pollutant (HAP) standards on coal-fired and oil-fired power plants. The rule is expected to cost the industry nearly $10 billion per year to comply. 21 states and a variety of impacted industries argued to the court that EPA had not appropriately accounted for cost in determining whether to regulate hazardous air pollutants from these power plants.

In considering the Supreme Court case, it is important to understand that Congress established a different regulatory approach for power plants than for other industries. EPA regulates HAPs emitted from other industries by determining Maximum Achievable Control Technology (MACT) and requiring that it be implemented within a relatively short time frame (typically 3 years). After MACT is established, EPA is supposed to perform a residual risk determination and consider whether the risk after implementing MACT justifies additional requirements. Continue Reading

Regulators Confirm: No Drinking Water Contamination from Oil & Gas Disposal Wells

On Tuesday, March 10, California Environmental Protection Agency Secretary Matthew Rodriquez and California Natural Resources Agency (“CNRA”) Secretary John Laird testified before a joint State Senate committee hearing.  At the hearing before the Natural Resources & Water Committee and the Environmental Quality Committee, Rodriguez and Laird confirmed that there has been no drinking water contamination due to oil and gas disposal well injection.  This finding is reiterated in a memo from the California EPA: “To date, preliminary water sampling of select, high-risk groundwater supply wells has not detected any contamination from oil production wastewater.”  (Memo from Cal. EPA, at p. 1 (Mar. 2, 2015).)

DOGGR and USEPA Correspondence

On Monday, March 9, the U.S. Environmental Protection Agency (“USEPA”) sent a letter to California’s Division of Oil, Gas and Geothermal Resources (“DOGGR”) approving DOGGR’s plan to regulate Class II underground injection control (“UIC”) wells.  The USEPA’s letter responds to DOGGR’s letter to the USEPA which presented California’s plan to revamp its regulatory scheme for Class II UIC wells in order to come into compliance with the federal Safe Drinking Water Act (“SDWA”).  The USEPA stated that they are “pleased that you [California] have initiated action to implement the plan.”  (USEPA Letter to DOGGR, at p. 1 (Mar. 9, 2015).)

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