Legislation Revamping California Groundwater Adjudications Marches Forward

AB 1390 aims in unprecedented fashion to expedite procedures and processes for groundwater adjudications, which, in California, are known to take one or two decades before reaching a final judgment. The bill would add various provisions to the California Code of Civil Procedure that would be codified as Sections 830 through 849. AB 1390 was introduced in the California Assembly on February 27, 2015 and last amended in the California Senate earlier this week on August 18. September 4 is the last day to amend bills, September 11 is the last for each house to pass bills and October 11 is the last day for the Governor to sign or veto bills. With unanimous support so far in both chambers of the Legislature, AB 1390 is well on its way to becoming law, set for further hearing next week in the California Senate.

The key to whether AB 1390 is triggered comes down to whether the trial court – within its discretion – deems the action to be a “comprehensive adjudication.” Section 830.5(d) lends some assistance by defining this term as “an action filed in superior court to comprehensively determine rights to extract groundwater in a basin.” AB 1390 provides exceptions of what would not be a “comprehensive adjudication” (set forth in Section 831 (c)), such as claiming a party’s groundwater extraction facility is interfering with the availability of groundwater to another, or, claiming interference with a specific source of recharge.

While these exceptions seem clear, adjudication history of many cases demonstrates that such claims quickly evolve into basin-wide determinations, in which case AB 1390’s procedures would apply. Specifically, AB 1390 requires the plaintiff or a cross-complainant to undertake various steps (set forth in Sections 832 through 840), including: (i) naming all public water suppliers; (ii) providing public notification of the lawsuit; (iii) providing a draft model answer; and (iv) providing initial disclosures regarding historical water use, locations of extraction and use, and the claimed legal basis for a water right such as an overlying right or prescriptive right. Other obligations then fall upon the trial court and other parties (set forth in Sections 840 through 842), such as identifying trial issues and dividing the process into phases, with the parties required to expedite factual discovery about water use and related factual issues.

With the recent enactment of the Sustainable Groundwater Management Act (“SGMA”), an interesting dynamic would exist as to how AB 1390 (if it becomes law) and SGMA will interplay. On the one hand, AB 1390 might operate in conjunction with SGMA (see Sections 846, 848 and 849) by Groundwater Sustainability Agencies (“GSAs”) being appointed by a trial court as the watermaster in adjudications. On the other hand, if local efforts by GSAs or others dissatisfy just one local water stakeholder, a groundwater adjudication might be filed as an alternative to the GSA’s efforts.

These evolving issues significantly impact all water users throughout the State of California, making all the more necessary strategic planning and implementation for protecting immediate and long-term water rights and supplies.

California DWR’s New Groundwater Basin Regulations for SGMA

With the Sustainable Groundwater Management Act (“SGMA”) taking effect on January 1, 2015, the California Department of Water Resources (“DWR”) is in full swing of holding public workshops and information sessions to solicit input from stakeholders and other members of the public as well as to answer questions regarding SGMA’s various milestone requirements.

On July 20, 2015, DWR held its most recent information session. DWR staff outlined the key topics relating to groundwater basin boundary “emergency regulations” and development of Groundwater Sustainability Plan (“GSP”) regulations.

The July 20 discussion started with a brief overview that SGMA is premised on the idea that local management of groundwater is best, and above all, management needs to be done with sustainable practices. Procedurally, DWR formulates SGMA regulations, the California Water Commission adopts the regulations, and the State Water Resources Control Board serves as an advisor.

Discussion then turned to an open dialogue between DWR staff and members of the public and DWR’s emergency regulations, which were released just days earlier following approval from the California Water Commission. DWR is required under SGMA (Water Code sec. 10722.2) to adopt emergency regulations by January 1, 2016, with these regulations intended to provide the methodology and criteria that DWR will apply when reviewing and approving requests from local agencies to modify groundwater basin boundaries. Existing basin boundaries are identified in DWR Bulletin 118 (2003). Based on local dynamics – political or scientific – local agencies may want to request basin boundary modifications to better fit the conditions in a particular geographic area. If making such a request, the draft regulations require the local agency to assess the likelihood that the proposed basin can be sustainably managed. Part of that analysis involves use of quantitative terms such as “significant” or “unreasonable” to assess impacts that might result from a basin boundary modification or a particular set of management practices. These terms are not defined in the draft regulations, and while creating flexibility, public comments suggest that the terms leave much to be desired to enhance certainty for planning and compliance with SGMA.

As for GSP regulations, the timeline is staggered on a later timeline than the basin boundary regulations. This particular topic on the July 20 agenda was more of advance notice that the draft regulations are anticipated to be available during December 2015. Meanwhile, “discussion papers” are being developed by DWR through a series of ten topics intended to organize issues with GSP formation and implementation. The first batch of discussion papers has been released, focusing on: (1) Pre-SGMA Conditions and Undesirable Results; (2) Measurable Objectives and Interim Milestones; and (3) Land Use and County Involvement. Draft discussion papers on the next two batches of topics are planned for release in August and September 2015.

This blog will continue to monitor this situation as DWR holds additional meetings and formulates more regulations intended for implementing SGMA.

Activists ask Court to Scrap EIR and Stop Fracking

Today, July 30, the Center for Biological Diversity (“CBD”) filed a complaint in Sacramento County Superior Court against the Division of Oil, Gas & Geothermal Resources (“DOGGR”). CBD claims, among other things, that DOGGR failed to comply with Senate Bill 4 (“SB 4”) by releasing its Final EIR regarding oil and gas well stimulation treatment prior to the release of a state-mandated Independent Study.

This lawsuit strikes us as more of a shout out to the Legislature and the Governor to highlight CBD’s ongoing disappointment with SB 4, more than anything else. CBD mistakenly construes SB 4 to require DOGGR to analyze and incorporate the Independent Study’s findings into its Final EIR, when no such requirement is found in the law. Indeed, by its terms, SB 4 only requires DOGGR to comply with the following requirements relating to the EIR:

  • The EIR shall be certified by the division as the lead agency, no later than July 1, 2015.
  • The EIR shall address the issue of activities that may be conducted as defined in Section 3157 and that may occur at oil wells in the state existing prior to, and after, the effective date of this section.
  • The EIR shall not conflict with an EIR conducted by a local lead agency that is certified on or before July 1, 2015.

(Pub. Resources Code, § 3161.) The Legislature, not the Sacramento County Superior Court, is the proper body to which this additional request should be made, as there is currently no law mandating it. Continue Reading

Fate of Injection Wells in Historically Exempt Aquifers Comes Closer to Determination

A lawsuit seeking an immediate halt to oil and gas wastewater injection at 2,500 wells across California took a positive turn for energy producers last week as Superior Court Judge George C. Hernandez denied plaintiffs’ motion for a preliminary injunction in a closely watched case challenging long-standing operations in the California oil and gas industry.

Plaintiffs in Center for Biological Diversity v. California Department of Conservation, California Superior Court, Alameda County, asked the court to throw out the emergency proposed rulemaking recently issued by the Division of Oil, Gas and Geothermal Resources (“DOGGR”). Additionally, the plaintiffs sought an injunction to stop injection wells operating in disputed aquifers.

Under the emergency proposed rulemaking, wastewater injections into non-exempt aquifers must be phased out by 2017. 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 should be considered suitable places to inject produced water.

In finding no evidence of risk of imminent harm to protected non-exempt aquifers, the court concluded: “On this record, the threat of such contamination [of drinking water aquifers] is theoretical and speculative and plainly outweighed by the other harms [to the public, economy and industry] which are virtually certain to occur if an injunction issues.” Continue Reading

Gov. Brown Assembles Fracking Review Panel

According to several news organizations, Governor Brown has announced plans to form a new panel to review the recent well stimulation study conducted by the California Council on Science and Technology (“CCST”).

The study found that while there is little evidence that hydraulic fracturing is directly linked to widespread negative health and environmental impacts, additional data and record-keeping may be necessary.

The new panel will be composed of individuals from nine different state agencies.  The individuals have yet to be announced.

The announcement comes shortly after a flurry lawsuits attempting to curb oil and gas production throughout the state.  In one case, the plaintiff claims that the state’s well stimulation regulations are discriminatory against minorities.  Another case seeks to impede the opening of federal land in California to oil and gas development.  In yet another case, the plaintiffs seek an immediate halt to oil and gas wastewater injection.

The increased scrutiny comes despite repeated assurance from the Division of Oil, Gas and Geothermal Resources 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.”

Furthermore, U.S. Environmental Protection Agency, found that hydraulic fracturing posed no “widespread, systemic” threat to drinking water.

California is the third largest oil producing state in the nation.  The CCST study found that oil produced in California using hydraulic fracturing emits less greenhouse gas per barrel than the average barrel imported to California.

Independent Study on California Fracking Released

The California Council on Science & Technology (“CCST”) recently released its Independent Study of well stimulation in California. The report was prepared for the California Natural Resources Agency in response to Senate Bill 4 (“SB 4”).

The Study notes the following key points:

  • Hydraulic fracturing in California does not use a lot of fresh water compared to other states and other human uses.
  • Available evidence indicates that impacts caused directly by hydraulic fracturing or acid stimulation or by activities directly supporting these operations appear small.
  • No recorded negative impacts from hydraulic fracturing chemical use in California were found; however, governmental reporting should be expanded.
  • Additives used in hydraulic fracturing and acid stimulation should be evaluated to reduce any potential adverse impacts.
  • The potential impacts caused by hydraulic fracturing are similar to oil development practices generally, even without the use of hydraulic fracturing.
  • There is a potential for additives used in hydraulic fracturing and acid stimulation to react with other elements underground causing the chemistry to change over time.
  • Fluid injected in the process of hydraulic fracturing will not likely cause earthquakes of concern.
  • Oil produced in California using hydraulic fracturing emits less greenhouse gas per barrel than the average barrel imported to California.

Continue Reading

Plaintiff Seeks to use Anti-Discrimination Law to Stop Fracking

On July 14, a complaint was filed in Sacramento County Superior Court against Governor Brown and the Division of Oil, Gas & Geothermal Resources (“DOGGR”) Supervisor Steve Bohlen.  The lawsuit claims Governor Brown and Supervisor Bohlen have adopted regulations that result in racially disparate impacts from well stimulation on minority students.

State regulators recently implemented final regulations pursuant to Senate Bill 4 (“SB 4”), which increased regulatory oversight over all well stimulation activities, including hydraulic fracturing.

Under Government Code section 11135(a), no person shall be unlawfully subjected to discrimination under any program conducted by the state or any state agency.

The plaintiff in the action is the parent of two minority children who attend school in Kern County, California.  In this novel lawsuit, the plaintiff claims that his children have suffered psychological distress due to well stimulation activities occurring near their schools and that a disproportionate number of minority children attend schools near stimulated wells.  The complaint states that Latino students are 18.4 percent more likely to attend school within 1.5 miles of a hydraulic fracturing operation than a non-Latino student.

The lawsuit seeks to invalidate the SB 4 regulations and enjoin the defendants from approving any well stimulation permits until well stimulation can be conducted in a non-discriminatory way.

The lawsuit comes just days after an Independent Study found “no recorded negative impacts from hydraulic fracturing chemical use” and “no records of groundwater contamination due to hydraulic fracturing.”  Indeed, the EPA also recently released a Study, which found no signs of “widespread, systemic” drinking water pollution from hydraulic fracturing.

California SB 4 Compliance Handbook: New Third Edition Now Available!

New Third Edition Reflects July 1 Permanent Regulations of Hydraulic Fracturing

We have prepared an update to the firm’s SB 4 Compliance Handbook to aid operators in their efforts to comply with SB 4 and its new permitting scheme. Senate Bill 4 (“SB 4”) regulates well stimulation treatments in California, including hydraulic fracturing and acid well stimulation. The law creates a permitting system, requires water testing and monitoring for surface and groundwater near the treatment site, and it places obligations on state agencies to study any environmental effects of well stimulation treatment. SB 4 requires the Division of Oil, Gas & Geothermal Resources (“DOGGR”) to finalize and implement permanent regulations, effective July 1, 2015.

The revised Third Edition reflects the requirements of the final regulations and provides details on the Water Board regulations for groundwater monitoring. The Handbook includes operator compliance obligations, disclosure requirements, neighbor notification requirements, and groundwater monitoring plan requirements.

To download a full-text PDF of the updated Handbook, please register here.

Water Board Signs Off on New Fracking Requirements

Yesterday, July 7, the State Water Resources Control Board (“Water Board”) adopted new requirements (“Model Criteria”) for groundwater monitoring in areas where oil and gas stimulation activities occur, such as hydraulic fracturing. The Water Board was required to develop these requirements pursuant to Senate Bill 4 (“SB 4”).

The requirements cover a wide range of new obligations on oil and gas producers, including: monitoring and sampling methods, chemicals to analyze, frequency of sampling, and areas to monitor. Under the Model Criteria, monitoring is required when a well to be stimulated penetrates “protected water for current and future beneficial use,” which is defined as:

  • Water with less than 10,000 mg/L total dissolved solids, and
  • Outside an exempt aquifer (meeting the criteria of Code of Federal Regulations, title 40, part 146.4).

The Model Criteria requires, at a minimum, one upgradient and two downgradient monitoring wells for each aquifer containing protected water penetrated by a stimulated well or group of wells. When multiple aquifers containing protected water are penetrated by a stimulated well, at least two aquifers must be monitored, the shallowest and deepest aquifer.

Felicia Marcus, Chair of the Water Board, called the new requirements “the strictest in the nation.” California is the third-largest oil producing state in the United States. Hydraulic fracturing has become an important process in oil and gas production throughout the state, particularly in the Central Valley.

The new regulations come despite a recently released EPA study, which found no signs of “widespread, systemic” drinking water pollution from hydraulic fracturing.

On Monday, July 13, Stoel Rives will release a comprehensive SB 4 Handbook to aid operators in their efforts to comply with SB 4 and its accompanying regulations.  The Handbook will be available on the Stoel Rives SB 4 Resources page.

DOGGR Releases Final Well Stimulation EIR

Yesterday, July 1, 2015, pursuant to Senate Bill 4 (“SB 4”) the State Oil & Gas Supervisor Steven Bohlen, head of the Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (“DOGGR”), certified a Final Environmental Impact Report (“Final EIR”) for oil and gas well stimulation treatments.

As presented in the Final EIR, for the purposes of CEQA, the “project” involves hydraulic fracturing, acid fracturing, or acid matrix stimulation of an oil and gas well, where the well either (1) existed prior to January 1, 2014, or (2) could be drilled after January 1, 2014, specifically for the purpose of a well stimulation treatment.

Further analysis of the Final EIR will follow on this blog in the coming days and weeks.