HYDRAULIC FRACTURING:

Calif. governor's signature on fracking bill comes with a twist

California Gov. Jerry Brown (D) has signed into law a closely watched measure mandating oversight of hydraulic fracturing and other emerging oil drilling techniques.

Brown quietly announced through an email message late Friday that he had signed S.B. 4, a bill sponsored by Sen. Fran Pavley (D) that establishes regulatory standards governing unconventional drilling. Through the method of energy extraction widely known as fracking, companies blast chemical-laced water some 8,000 feet underground at high pressure to break apart rock formations and release oil or natural gas.

The newly signed law requires some disclosure of chemicals used in the process and notification of residents before work starts. Groundwater testing and other oversight measures are also put in place for fracking and other well stimulation techniques, including one called acidization.

"This is a first step toward greater transparency, accountability and protection of the public and the environment," Pavley said in a statement. "Now we need immediate, robust enforcement and widespread public involvement to ensure the law is upheld to its fullest."

Until now, the state had no rules governing fracking. Pavley and supporters of new oil and gas rules argue that they are important because of the size of California's Monterey Shale formation, a swath of land stretching from the middle of the state south to Los Angeles County that geologists believe holds 15.5 billion barrels of recoverable petroleum.

Oil industry trade group Western States Petroleum Association, or WSPA, said that with S.B. 4 becoming law, "California has the toughest regulations of hydraulic fracturing and other energy production technologies in the country."

But the bill signing included an unexpected political wrinkle that left many questioning its repercussions.

Brown noted alongside his signature, "I am also directing the Department of Conservation when implementing the bill to develop an efficient permitting program for well stimulation activities that groups permits together based on factors such as known geologic conditions and environmental impacts, while providing for more particularized review in other situations where necessary."

The governor added that "the bill needs some clarifying amendments, and I will work with the author in making those changes next year."

S.B. 4 requires oil and gas companies using hydraulic fracturing and other techniques for stimulating oil and gas wells to get permits from the Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR).

Brown's office declined to elaborate on the governor's goal or the potential effects of grouping permits together.

Some environmental groups said they believed it could mean oil fields with several wells might be looked at as a group, while an individual well in an agricultural or urban area would be given more scrutiny.

"These different situations would pose different environmental impacts," said Bill Allayaud, California director of government affairs for the Environmental Working Group (EWG).

Another green group representative warned that shortcuts aren't permissible.

"The bottom line is that the permitting system must meet the minimum requirements of S.B. 4 and other applicable law," said Kassie Siegel, senior counsel at the Center for Biological Diversity. "If grouping permits turns into a shortcut that reduces either substantive protection or public process, we would strenuously object to that."

Siegel said Brown's powers are limited in terms of shaping S.B. 4. California law allows its governor to strike out portions of laws, known as a line-item veto.

"But I don't think he can change the law via a signing statement," Siegel said.

Oil industry pact?

A person familiar with the politics said the governor's signing statement appears to have been added as part of a deal with the oil industry in exchange for easing up on its efforts to prevent S.B. 4's passage.

WSPA would not comment on the signing statement. The group last week did not respond to questions about the reported pact with the governor, when EnergyWire first reported it had happened (EnergyWire, Sept. 9). The governor's office also did not respond to questions.

"While S.B. 4's requirements went significantly [further] than the petroleum industry felt was necessary," said WSPA Catherine Reheis-Boyd in a statement, "we now have an environmental platform on which California can look toward the opportunity to responsibly develop the enormous potential energy resource contained in the Monterey Shale formation."

Allayaud with EWG said Brown's statement on clarifying amendments could refer to a tussle that erupted over how S.B. 4 would interact with the California Environmental Quality Act, or CEQA.

Four green groups that had led the advocacy for the bill -- the Natural Resources Defense Council (NRDC), the Environmental Working Group, the California League of Conservation Voters and Clean Water Action -- abandoned their sponsorship just before a final vote because of late amendments they found unacceptable. Green groups say the language limits the reach of CEQA.

The late amendments arrived as oil lobbyists were offering language that would have struck the word "permit" in the bill and replaced it with the word "notice." Deleting "permit," legislative aides said, would have created a CEQA exemption, because the permit requirement is what triggers the law and its requirement for a state environmental impact report.

State law requires an environmental review addressing how the development would affect land, water, species and other factors and ways to mitigate the damage. The oil and gas industry contends that fracking operations up until now have not been subject to CEQA.

David Pettit, senior attorney at NRDC, said last week that one clause gives DOGGR authority to approve a fracking project if it believes its potential impacts have already been investigated by a statewide environmental review. In that case, the wording says that "no additional review or mitigation shall be required."

Pettit said that could mean some permits are issued for fracking with no public notice and no ability to appeal in court.

Greens also objected to what they see as a "grace period" before the law is implemented in January, during which oil companies can secure permits for fracking without going through CEQA.

DOGGR, meanwhile, has been working on fracking regulations. It released an informal discussion draft of rules earlier this year. Green groups and some residents criticized those as weak.

"While some of the requirements proposed in the informal draft regulations were incorporated into S.B. 4, the department will still need to adopt comprehensive regulations to implement the new law," DOGGR said in a statement. "These new regulations will include extensive protections for groundwater, which will be developed and implemented by the State Water Resources Control Board."

S.B. 4 sets a deadline of Jan. 1, 2015, for completion of the regulations.