Existing federal law prohibits certain oil and gas well activities that affect underground sources of drinking water unless those sources are located in an exempt exempted aquifer. Existing federal law authorizes a state delegated with the responsibility of regulating certain wells to propose that an aquifer or a portion of an aquifer be an exempt exempted aquifer and authorizes the United States Environmental Protection Agency to approve the proposal if the aquifer or a portion of the aquifer meets certain criteria. Under existing federal law, the authority to regulate those wells in California is delegated to the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation.

This bill would prohibit the division from submitting a proposal for an aquifer exemption to the United States Environmental Protection Agency unless the division and the State Water Resources Control Board concur in writing that the aquifer meets specified conditions.

Existing federal law prohibits certain oil and gas well activities that affect underground sources of drinking water unless those sources are located in an exempt aquifer. Existing federal law authorizes a state delegated with the responsibility of regulating certain wells to propose that an aquifer or a portion of an aquifer be an exempt aquifer and authorizes the United States Environmental Protection Agency to approve the proposal if the aquifer or a portion of the aquifer meets certain criteria. Under existing federal law, the authority to regulate those wells in California is delegated to the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation.

This bill would prohibit the division from submitting a proposal for an aquifer exemption to the United States Environmental Protection Agency unless the division and the State Water Resources Control Board concur in writing that the aquifer meets specified conditions.

The Porter-Cologne Water Quality Control Act authorizes the State Water Resources Control Board and the California regional water quality control boards to conduct inspections for violations of specified law. The act requires the state board and the regional boards to determine the types of violations that are minor violations and requires the state board to adopt regulations or state policy for water quality, as prescribed.

This bill would make nonsubstantive changes to the provision relating to minor violations.

 THIRD READING 

Bill No: SB 454

Author: Allen (D)

Amended: 6/2/15

Vote: 21

SENATE NATURAL RES. & WATER COMMITTEE: 7-1, 4/28/15

AYES: Pavley, Allen, Hertzberg, Hueso, Jackson, Monning, Wolk

NOES: Stone

NO VOTE RECORDED: Vidak

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 4/29/15

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines, Bates

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15

AYES: Lara, Beall, Hill, Leyva, Mendoza

NOES: Bates, Nielsen

SENATE FLOOR: 18-17, 6/4/15 (FAIL)

(ROLL CALL NOT AVAILABLE)

SUBJECT: Water quality: oil and gas: exempted aquifer

SOURCE: Author

DIGEST: This bill prohibits the Division of Oil, Gas, and Geothermal Resources from submitting a proposal for an aquifer exemption to the US Environmental Protection Agency under the Underground Injection Control program unless the Division and the State Water Resources Control Board both make specified findings.

ANALYSIS:

Existing law:

1. Provides the state’s oil and gas regulator is the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation.

2. Provides the State Water Resources Control Board (board) has statutory responsibility to protect the waters of the state and to preserve all present and anticipated beneficial uses of those waters under the state’s Porter-Cologne Water Quality Act (Water Code (WAT) §§13000 et seq.) and other law.

3. Provides for the federal Safe Drinking Water Act (SDWA) enacted in 1974, to protect public health by regulating the nation’s public drinking water and its sources. The US Environmental Protection Agency (US EPA) developed the Underground Injection Control (UIC) Program following passage of the SDWA in order to protect aquifers that were or could become sources of drinking water from contamination.

4. Specifies if primacy is sought from the US EPA to operate a UIC program, the division is the state entity that may seek primacy for oil and gas (“Class II”) wells (WAT §13263.5). Class II injection wells primarily consist of oil and gas waste disposal wells and injection wells used for “enhanced oil recovery” operations. If certain criteria are met (described below) and procedures are followed, SDWA protection of an aquifer may be lifted so a Class II injection well can inject into it. These are “exempt aquifers.”

This bill requires the division and the board to concur on aquifer exemptions submitted to the US EPA for approval, and does not allow non-hydrocarbon bearing aquifers with total dissolved solids (TDS) concentrations less than 3,000 milligrams per liter to be proposed for exemption. Specifically, this bill requires the division and the board to concur on aquifer exemption proposals as follows:

1. For hydrocarbon-bearing aquifers:

1. the intended injection zone must be hydrogeologically isolated from other zones containing waters that may have a beneficial use, and

2. the board must find either that the water in the injection zone has no potential beneficial use or, if it does, that the injection will not impact that use.

2. For non-hydrocarbon-bearing aquifers:

1. the intended injection zone must be hydrogeologically isolated from other zones containing water that may have a beneficial use,

2. the aquifer is not a source of drinking water,

3. the aquifer cannot and will not become a source of drinking water due to proximity to a mining area, economic or technological impracticality, mineral concentration or geothermal energy production capability,

4. the TDS concentration in the aquifer must exceed 3,000 milligrams per liter, and

5. the board determines that the injection would not contaminate a source of water that does or may have a future beneficial use, or, if the water is already contaminated, that the injection would not further impair its limited or potentially limited beneficial use.

Background

In 1981, the division applied to the US EPA to become the primary enforcing agency for the Class II UIC program in California. As part of the application, the division asked to exempt certain aquifers from protection under the SDWA. These “exempt aquifers” were not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection.

In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing the division’s primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, the US EPA must approve any additional requests for aquifer exemption status, no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, by mutual agreement between the division and the US EPA, the exempt status for an aquifer may be withdrawn at any time.

In the primacy agreement, the division pledged to work closely with the board. A 1988 MOA between the division and the board still in effect today requires the division to share information with the appropriate regional water quality control board about proposed UIC applications and provides an opportunity for it to comment. Additionally, the division agreed not to issue final approvals until regional board concerns are satisfied.

The criteria for aquifer exemption for Class II wells (40 CFR §146.4) are as follows:

1. the aquifer is not a source of drinking water,

2. the aquifer cannot and will not become a source of drinking water because it is economically and technologically infeasible, as defined; located over a mining area; mineral- or hydrocarbon-bearing in commercial quantities or mineral, hydrocarbon or geothermal energy producing, and

3. the total dissolved salts (TDS) concentration is between 3,000 and 10,000 milligrams per liter. (TDS may be approximately considered as total dissolved salts.)

In 2011, a US EPA audit of the division’s implementation of the UIC program found numerous significant problems. Although not a public part of the review, documents released recently show that questions arose during this time period about aquifer exemptions.

In the last year there have been a series of revelations showing, at best, lax management of the UIC program by the division, particularly with respect to aquifer exemptions. Division staff disregarded the division’s own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required an exemption or where the aquifer’s water quality was unknown without obtaining an aquifer exemption. Some of these “non-exempt aquifers” contain or may contain good quality water. It was further revealed that two primacy agreements were in existence – one excluding 11 good water quality aquifers from exemption and the other approving their exemption.

As of today, 23 injection wells have now been shut-down due to contamination concerns stemming from the injection location, and over 2,500 injection wells continue to inject into non-exempt or “questionably” exempt aquifers. About 2,000 of these wells are injection wells used for enhanced oil recovery operations in existing oil and gas fields. The remaining 500 are waste disposal wells. In mid-May, the division and board revealed that an additional 3,600 injection wells appeared to also be improperly permitted with respect to aquifer exemptions, although the aquifers in this instance are likely to all be hydrocarbon-bearing. The board and the division are working closely together to review these injection wells. To date, no contamination of water used for domestic or irrigation purposes has been found, although the review continues. Oil and gas injection wells that pose the highest risk to wells supplying possible drinking or irrigation water are being reviewed first.

After a series of letter exchanges between the board, the division and the US EPA, a schedule for bringing all non-compliant injection wells into compliance has been established. Exempt aquifer status will either be obtained for a well’s injection zone by a date certain in the future, or the well will be shut down. This compliance schedule is in division emergency regulations approved in April and the process has started for a regular regulatory rulemaking too. The deadline for all wells is February 15, 2017 with two intermediate dates (October 15, 2015 and December 31, 2016) for higher priority wells.

Comments

Concurrence between the division and the board is appropriate for aquifer exemptions. As noted above, the board has jurisdiction over water quality, although the division has primacy for Class II UIC. In the 1988 MOA, the board clearly retains authority over water quality and at least one of the three post-primacy aquifer exemption petitions by the division to the US EPA reflected board input. The added weight of statutory concurrence may help to ensure continuing cooperation.

The bill’s potential impact on the resolution of the non-compliant wells. This bill would impact the resolution of the non-compliant wells if the division would otherwise ask the US EPA for an aquifer exemption for certain non-hydrocarbon-bearing aquifers with low saline concentrations (less than 3,000 milligrams per liter TDS) on or after January 1, 2016. Approximately 140 active wastewater disposal wells inject into aquifers with TDS concentrations of less than 3,000 milligrams per liter. The 11 aquifers of uncertain exemption also all have TDS concentrations of less than 3,000 milligrams per liter.

There are pending budget actions on the UIC program. The division and the board have asked for increased ongoing funding and personnel to address the UIC program, aquifer exemptions and other related activities.

Related Legislation

SB 248 (Pavley, 2015) reforms the division’s well history reporting and the regulations governing its UIC program. (This bill is on the Senate floor).

SB 545 (Jackson, 2015) revises and updates division’s authority and permitting practices, and reforms the handling of confidential wells (This bill was held on the Senate Appropriations Committee Suspense file).

AB 356 (Williams, 2015) provides for reform of the UIC program with an emphasis on the role of the Water Boards and require groundwater monitoring in the vicinity of UIC wells. (This bill is on the Assembly floor.)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• Ongoing costs of $560,000 from the Oil, Gas, and Geothermal Administrative Fund (special) to the board to consider aquifer exemptions, and

• Unknown potential revenues losses to the Oil, Gas, and Geothermal Administrative Fund (special) for decreased oil production.

SUPPORT: (Verified 6/1/15)

Association of Irritated Residents

Ballona Network

California League of Conservation Voters

Center for Race, Poverty and the Environment

Center for Environmental Health

Citizens for Responsible Oil and Gas

Clean Water Action

Coastal Environmental Rights Foundation

Earthworks

Environment California

Environmental Action Center of West Marin

Environmental Defense Center

Environmental Working Group

Foothill Conservancy

Fresnans Against Fracking

League of Women Voters

Los Padres ForestWatch

Natural Resources Defense Council

Planning and Conservation League

San Diego350

Sierra Club California

Southern Monterey County Rural Coalition

The Wildlands Conservancy

Wholly H2O

OPPOSITION: (Verified 6/1/15)

African American Farmers of California

Anne DeMartini, Trustee, Yosemite Community College District

Associated Builders & Contractors of California

Buddy Mendes, Supervisor, Fresno County Board of Supervisors

California Asian pacific Chamber of Commerce

California Chamber of Commerce

California Cotton Ginners Association

California Cotton Growers Association

California Independent Petroleum Association

California Women for Agriculture

Camarillo Chamber of Commerce

Cerritos Regional Chamber of Commerce

Chambers of Commerce Alliance of Ventura & Santa Barbara Counties

Clint Olivier, Councilmember, City of Fresno

Coastal Energy Alliance

Craig Pedersen, Supervisor, Kings County Board of Supervisors

Dick Monteith, Supervisor, Stanislaus County Board of Supervisors

Doug Verboon, Supervisor, Kings County Board of Supervisors

El Monte/South El Monte Chamber of Commerce

Frank Hotchkiss, Councilmember, City of Santa Barbara

Fresno Area Hispanic Foundation/Downtown Business Hub

Fresno County Farm Bureau

Greater Bakersfield Chamber of Commerce

Hayward Chamber of Commerce

Humboldt Taxpayer’s League

Huntington Beach Chamber of Commerce

Independent Oil Producers’ Agency

Inland Empire Economic Partnership

International Faith Based Coalition

Jim DeMartini, Supervisor, Stanislaus County Board of Supervisors

José Flores, Councilmember, City of Clovis

Justin Mendes, Councilmember, City of Hanford

Kern County Black Chamber of Commerce

Kern County Firefighters IAFF Local 1301

Kern County Hispanic Chamber of Commerce

Kern County Taxpayers Association

Kern Economic Development Corporation

Kings County Farm Bureau

Latino Community Roundtable of Stanislaus County

Lee Brand, Councilmember, City of Fresno

Louie Arrollo, former Mayor, City of Ceres

Luis Chavez, Trustee, Fresno Unified School District

Mike Spence, Councilmember, City of West Covina

Mike Welsh, School Board Member, Ceres Unified School District

Monterey County Farm Bureau

National Association of Royalty Owners

National Association of Royalty Owners – California

National Federation of Independent Business

National Hmong American Farmers

Nickel Family, LLC

Nisei Farmers League

Oxnard Chamber of Commerce

Pete Vander Poel, Supervisor, Tulare County Board of Supervisors

Peter Adam, Supervisor, Santa Barbara County Board of Supervisors

Peter Foy, Supervisor, Ventura County Board of Supervisors

Porterville Chamber of Commerce

Richard Valle, Supervisor, Kings County Board of Supervisors

Rick Farinelli, Supervisor, Madera County Board of Supervisors

Robert Silva, Mayor, City of Mendota

Rudy Mendoza, Mayor, City of Woodlake

Russ Curry, Mayor, City of Hanford

Sacramento Asian Pacific Chamber of Commerce

Sal Quintero, Councilmember, City of Fresno

San Diego East County Chamber of Commerce

San Diego Tax Fighters

San Joaquin Farm Bureau

Santa Barbara County Taxpayers Association

Santa Barbara Technology and Industry Association

Santa Fe Springs Chamber of Commerce

Santa Maria Valley Chamber of Commerce & Visitor and Convention Bureau

Steve Brandau, Councilmember, City of Fresno

Steve Nascimento, Councilmember, City of Turlock

Steve Worthley, Supervisor, Tulare County Board of Supervisors

Sylvia V. Chávez, Mayor, City of Huron

Taft Chamber of Commerce and Visitors Bureau

Terry Withrow, Supervisor, Stanislaus County Board of Supervisors

The Chamber of Commerce of the Santa Barbara Region

Tulare County Farm Bureau

Valley Industry & Commerce Association

Western Agricultural Processors Association

Western States Petroleum Association

Western United Dairymen

Four individuals

ARGUMENTS IN SUPPORT: According to the author, the division “has allowed more than 2,500 waste water disposal and injections wells to be drilled into aquifers that have not been exempted from the Safe Drinking Water Act and therefore should have been protected. The fluids being injected into these aquifers contain a toxic cocktail of chemicals, many of which are known to cause cancer and other human health problems, including benzene, arsenic and radioactive material.”

“It is clear that going forward, given California’s long-term water challenges, the state will need to access deeper aquifers and adopt technology necessary to clean aquifers currently considered polluted. Given the current water crisis, it is irresponsible and shortsighted to not protect these aquifers.”

“SB 454 puts specific criteria in place to guide [the division] in determining which of California’s protected aquifers should be eligible for consideration for an exemption. The criteria require [the division] to work jointly with the [board].”

ARGUMENTS IN OPPOSITION: According to the California Independent Petroleum Association (CIPA), “SB 454 would re-define critical components of the UIC program and the aquifer exemption definition and application process. These proposed modifications to the UIC program would compromise California’s oil production without providing any additional environmental and groundwater protections beyond those provided by the enhancements to the UIC program proposed to US EPA by the [board] and the [division].”

“SB 454 instead alters the aquifer exemption process so as to exclude certain aquifers that would otherwise be exempt under the long-standing federal criterion (sic) […] For example, SB 454 would prohibit all injection into non-hydrocarbon-bearing zones where the total dissolved solids content of the water in the aquifer is less than 3,000 milligrams per liter.” CIPA notes that aquifers with these low salt concentrations may be considered for exemption if it is economically or technologically impractical for them to be used as drinking water.

CIPA further states that “injection wells have been an integral part of California’s oil and gas operations for over 50 years” and roughly 70% of California’s oil production depends upon enhanced oil recovery using injections wells. “Without sufficient injection well options, oil wells cannot produce and oil production in California will be adversely affected.”

Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116

6/4/15 16:02:47

**** END ****

 THIRD READING 

Bill No: SB 454

Author: Allen (D)

Amended: 6/2/15

Vote: 21

SENATE NATURAL RES. & WATER COMMITTEE: 7-1, 4/28/15

AYES: Pavley, Allen, Hertzberg, Hueso, Jackson, Monning, Wolk

NOES: Stone

NO VOTE RECORDED: Vidak

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 4/29/15

AYES: Wieckowski, Hill, Jackson, Leno, Pavley

NOES: Gaines, Bates

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15

AYES: Lara, Beall, Hill, Leyva, Mendoza

NOES: Bates, Nielsen

SUBJECT: Water quality: oil and gas: exempted aquifer

SOURCE: Author

DIGEST: This bill prohibits the Division of Oil, Gas, and Geothermal Resources from submitting a proposal for an aquifer exemption to the US Environmental Protection Agency under the Underground Injection Control program unless the Division and the State Water Resources Control Board both make specified findings.

ANALYSIS:

Existing law:

1. Provides the state’s oil and gas regulator is the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation.

2. Provides the State Water Resources Control Board (board) has statutory responsibility to protect the waters of the state and to preserve all present and anticipated beneficial uses of those waters under the state’s Porter-Cologne Water Quality Act (Water Code (WAT) §§13000 et seq.) and other law.

3. Provides for the federal Safe Drinking Water Act (SDWA) enacted in 1974, to protect public health by regulating the nation’s public drinking water and its sources. The US Environmental Protection Agency (US EPA) developed the Underground Injection Control (UIC) Program following passage of the SDWA in order to protect aquifers that were or could become sources of drinking water from contamination.

4. Specifies if primacy is sought from the US EPA to operate a UIC program, the division is the state entity that may seek primacy for oil and gas (“Class II”) wells (WAT §13263.5). Class II injection wells primarily consist of oil and gas waste disposal wells and injection wells used for “enhanced oil recovery” operations. If certain criteria are met (described below) and procedures are followed, SDWA protection of an aquifer may be lifted so a Class II injection well can inject into it. These are “exempt aquifers.”

This bill requires the division and the board to concur on aquifer exemptions submitted to the US EPA for approval, and does not allow non-hydrocarbon bearing aquifers with total dissolved solids (TDS) concentrations less than 3,000 milligrams per liter to be proposed for exemption. Specifically, this bill requires the division and the board to concur on aquifer exemption proposals as follows:

1. For hydrocarbon-bearing aquifers:

1. the intended injection zone must be hydrogeologically isolated from other zones containing waters that may have a beneficial use, and

2. the board must find either that the water in the injection zone has no potential beneficial use or, if it does, that the injection will not impact that use.

2. For non-hydrocarbon-bearing aquifers:

1. the intended injection zone must be hydrogeologically isolated from other zones containing water that may have a beneficial use,

2. the aquifer is not a source of drinking water,

3. the aquifer cannot and will not become a source of drinking water due to proximity to a mining area, economic or technological impracticality, mineral concentration or geothermal energy production capability,

4. the TDS concentration in the aquifer must exceed 3,000 milligrams per liter, and

5. the board determines that the injection would not contaminate a source of water that does or may have a future beneficial use, or, if the water is already contaminated, that the injection would not further impair its limited or potentially limited beneficial use.

Background

In 1981, the division applied to the US EPA to become the primary enforcing agency for the Class II UIC program in California. As part of the application, the division asked to exempt certain aquifers from protection under the SDWA. These “exempt aquifers” were not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection.

In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing the division’s primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, the US EPA must approve any additional requests for aquifer exemption status, no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, by mutual agreement between the division and the US EPA, the exempt status for an aquifer may be withdrawn at any time.

In the primacy agreement, the division pledged to work closely with the board. A 1988 MOA between the division and the board still in effect today requires the division to share information with the appropriate regional water quality control board about proposed UIC applications and provides an opportunity for it to comment. Additionally, the division agreed not to issue final approvals until regional board concerns are satisfied.

The criteria for aquifer exemption for Class II wells (40 CFR §146.4) are as follows:

1. the aquifer is not a source of drinking water,

2. the aquifer cannot and will not become a source of drinking water because it is economically and technologically infeasible, as defined; located over a mining area; mineral- or hydrocarbon-bearing in commercial quantities or mineral, hydrocarbon or geothermal energy producing, and

3. the total dissolved salts (TDS) concentration is between 3,000 and 10,000 milligrams per liter. (TDS may be approximately considered as total dissolved salts.)

In 2011, a US EPA audit of the division’s implementation of the UIC program found numerous significant problems. Although not a public part of the review, documents released recently show that questions arose during this time period about aquifer exemptions.

In the last year there have been a series of revelations showing, at best, lax management of the UIC program by the division, particularly with respect to aquifer exemptions. Division staff disregarded the division’s own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required an exemption or where the aquifer’s water quality was unknown without obtaining an aquifer exemption. Some of these “non-exempt aquifers” contain or may contain good quality water. It was further revealed that two primacy agreements were in existence – one excluding 11 good water quality aquifers from exemption and the other approving their exemption.

As of today, 23 injection wells have now been shut-down due to contamination concerns stemming from the injection location, and over 2,500 injection wells continue to inject into non-exempt or “questionably” exempt aquifers. About 2,000 of these wells are injection wells used for enhanced oil recovery operations in existing oil and gas fields. The remaining 500 are waste disposal wells. In mid-May, the division and board revealed that an additional 3,600 injection wells appeared to also be improperly permitted with respect to aquifer exemptions, although the aquifers in this instance are likely to all be hydrocarbon-bearing. The board and the division are working closely together to review these injection wells. To date, no contamination of water used for domestic or irrigation purposes has been found, although the review continues. Oil and gas injection wells that pose the highest risk to wells supplying possible drinking or irrigation water are being reviewed first.

After a series of letter exchanges between the board, the division and the US EPA, a schedule for bringing all non-compliant injection wells into compliance has been established. Exempt aquifer status will either be obtained for a well’s injection zone by a date certain in the future, or the well will be shut down. This compliance schedule is in division emergency regulations approved in April and the process has started for a regular regulatory rulemaking too. The deadline for all wells is February 15, 2017 with two intermediate dates (October 15, 2015 and December 31, 2016) for higher priority wells.

Comments

Concurrence between the division and the board is appropriate for aquifer exemptions. As noted above, the board has jurisdiction over water quality, although the division has primacy for Class II UIC. In the 1988 MOA, the board clearly retains authority over water quality and at least one of the three post-primacy aquifer exemption petitions by the division to the US EPA reflected board input. The added weight of statutory concurrence may help to ensure continuing cooperation.

The bill’s potential impact on the resolution of the non-compliant wells. This bill would impact the resolution of the non-compliant wells if the division would otherwise ask the US EPA for an aquifer exemption for certain non-hydrocarbon-bearing aquifers with low saline concentrations (less than 3,000 milligrams per liter TDS) on or after January 1, 2016. Approximately 140 active wastewater disposal wells inject into aquifers with TDS concentrations of less than 3,000 milligrams per liter. The 11 aquifers of uncertain exemption also all have TDS concentrations of less than 3,000 milligrams per liter.

There are pending budget actions on the UIC program. The division and the board have asked for increased ongoing funding and personnel to address the UIC program, aquifer exemptions and other related activities.

Recent related legislation

SB 248 (Pavley, 2015) This bill reforms the division’s well history reporting and the regulations governing its UIC program. (This bill is on the Senate floor).

SB 545 (Jackson, 2015) This bill revises and updates division’s authority and permitting practices, and reforms the handling of confidential wells (This bill was held on the Senate Appropriations Committee Suspense file).

AB 356 (Williams, 2015) This bill provides for reform of the UIC program with an emphasis on the role of the Water Boards and require groundwater monitoring in the vicinity of UIC wells. (This bill is on the Assembly floor.)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, this bill has:

• Ongoing costs of $560,000 from the Oil, Gas, and Geothermal Administrative Fund (special) to the board to consider aquifer exemptions, and

• Unknown potential revenues losses to the Oil, Gas, and Geothermal Administrative Fund (special) for decreased oil production.

SUPPORT: (Verified 6/1/15)

Association of Irritated Residents

Ballona Network

California League of Conservation Voters

Center for Race, Poverty and the Environment

Center for Environmental Health

Citizens for Responsible Oil and Gas

Clean Water Action

Coastal Environmental Rights Foundation

Earthworks

Environment California

Environmental Action Center of West Marin

Environmental Defense Center

Environmental Working Group

Foothill Conservancy

Fresnans Against Fracking

League of Women Voters

Los Padres ForestWatch

Natural Resources Defense Council

Planning and Conservation League

San Diego350

Sierra Club California

Southern Monterey County Rural Coalition

The Wildlands Conservancy

Wholly H2O

OPPOSITION: (Verified 6/1/15)

African American Farmers of California

Anne DeMartini, Trustee, Yosemite Community College District

Associated Builders & Contractors of California

Buddy Mendes, Supervisor, Fresno County Board of Supervisors

California Asian pacific Chamber of Commerce

California Chamber of Commerce

California Cotton Ginners Association

California Cotton Growers Association

California Independent Petroleum Association

California Women for Agriculture

Camarillo Chamber of Commerce

Cerritos Regional Chamber of Commerce

Chambers of Commerce Alliance of Ventura & Santa Barbara Counties

Clint Olivier, Councilmember, City of Fresno

Coastal Energy Alliance

Craig Pedersen, Supervisor, Kings County Board of Supervisors

Dick Monteith, Supervisor, Stanislaus County Board of Supervisors

Doug Verboon, Supervisor, Kings County Board of Supervisors

El Monte/South El Monte Chamber of Commerce

Frank Hotchkiss, Councilmember, City of Santa Barbara

Fresno Area Hispanic Foundation/Downtown Business Hub

Fresno County Farm Bureau

Greater Bakersfield Chamber of Commerce

Hayward Chamber of Commerce

Humboldt Taxpayer’s League

Huntington Beach Chamber of Commerce

Independent Oil Producers’ Agency

Inland Empire Economic Partnership

International Faith Based Coalition

Jim DeMartini, Supervisor, Stanislaus County Board of Supervisors

José Flores, Councilmember, City of Clovis

Justin Mendes, Councilmember, City of Hanford

Kern County Black Chamber of Commerce

Kern County Firefighters IAFF Local 1301

Kern County Hispanic Chamber of Commerce

Kern County Taxpayers Association

Kern Economic Development Corporation

Kings County Farm Bureau

Latino Community Roundtable of Stanislaus County

Lee Brand, Councilmember, City of Fresno

Louie Arrollo, former Mayor, City of Ceres

Luis Chavez, Trustee, Fresno Unified School District

Mike Spence, Councilmember, City of West Covina

Mike Welsh, School Board Member, Ceres Unified School District

Monterey County Farm Bureau

National Association of Royalty Owners

National Association of Royalty Owners – California

National Federation of Independent Business

National Hmong American Farmers

Nickel Family, LLC

Nisei Farmers League

Oxnard Chamber of Commerce

Pete Vander Poel, Supervisor, Tulare County Board of Supervisors

Peter Adam, Supervisor, Santa Barbara County Board of Supervisors

Peter Foy, Supervisor, Ventura County Board of Supervisors

Porterville Chamber of Commerce

Richard Valle, Supervisor, Kings County Board of Supervisors

Rick Farinelli, Supervisor, Madera County Board of Supervisors

Robert Silva, Mayor, City of Mendota

Rudy Mendoza, Mayor, City of Woodlake

Russ Curry, Mayor, City of Hanford

Sacramento Asian Pacific Chamber of Commerce

Sal Quintero, Councilmember, City of Fresno

San Diego East County Chamber of Commerce

San Diego Tax Fighters

San Joaquin Farm Bureau

Santa Barbara County Taxpayers Association

Santa Barbara Technology and Industry Association

Santa Fe Springs Chamber of Commerce

Santa Maria Valley Chamber of Commerce & Visitor and Convention Bureau

Steve Brandau, Councilmember, City of Fresno

Steve Nascimento, Councilmember, City of Turlock

Steve Worthley, Supervisor, Tulare County Board of Supervisors

Sylvia V. Chávez, Mayor, City of Huron

Taft Chamber of Commerce and Visitors Bureau

Terry Withrow, Supervisor, Stanislaus County Board of Supervisors

The Chamber of Commerce of the Santa Barbara Region

Tulare County Farm Bureau

Valley Industry & Commerce Association

Western Agricultural Processors Association

Western States Petroleum Association

Western United Dairymen

Four individuals

ARGUMENTS IN SUPPORT: According to the author, the division “has allowed more than 2,500 waste water disposal and injections wells to be drilled into aquifers that have not been exempted from the Safe Drinking Water Act and therefore should have been protected. The fluids being injected into these aquifers contain a toxic cocktail of chemicals, many of which are known to cause cancer and other human health problems, including benzene, arsenic and radioactive material.”

“It is clear that going forward, given California’s long-term water challenges, the state will need to access deeper aquifers and adopt technology necessary to clean aquifers currently considered polluted. Given the current water crisis, it is irresponsible and shortsighted to not protect these aquifers.”

“SB 454 puts specific criteria in place to guide [the division] in determining which of California’s protected aquifers should be eligible for consideration for an exemption. The criteria require [the division] to work jointly with the [board].”

ARGUMENTS IN OPPOSITION: According to the California Independent Petroleum Association (CIPA), “SB 454 would re-define critical components of the UIC program and the aquifer exemption definition and application process. These proposed modifications to the UIC program would compromise California’s oil production without providing any additional environmental and groundwater protections beyond those provided by the enhancements to the UIC program proposed to US EPA by the [board] and the [division].”

“SB 454 instead alters the aquifer exemption process so as to exclude certain aquifers that would otherwise be exempt under the long-standing federal criterion (sic) […] For example, SB 454 would prohibit all injection into non-hydrocarbon-bearing zones where the total dissolved solids content of the water in the aquifer is less than 3,000 milligrams per liter.” CIPA notes that aquifers with these low salt concentrations may be considered for exemption if it is economically or technologically impractical for them to be used as drinking water.

CIPA further states that “injection wells have been an integral part of California’s oil and gas operations for over 50 years” and roughly 70% of California’s oil production depends upon enhanced oil recovery using injections wells. “Without sufficient injection well options, oil wells cannot produce and oil production in California will be adversely affected.”

Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116

6/2/15 21:38:51

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 454 (Allen) - Water quality: oil and gas: exempt aquifer

SUSPENSE FILE. AS AMENDED.

Bill Summary:

AB 454 would prohibit the division of Oil, Gas, and Geothermal Resources (DOGGR) from submitting a proposal for an aquifer exemption unless DOGGR and the State Water Resources Control Board (SWRCB) both make specified findings.

Fiscal Impact (as approved on May 28, 2015):

• Ongoing costs of $560,000 from the Oil, Gas, and Geothermal Administrative Fund (special) to the SWRCB to consider aquifer exemptions.

• Unknown potential revenues losses to the Oil, Gas, and Geothermal Administrative Fund (special) for decreased oil production.

Background:

DOGGR in the Department of Conservation is the state’s oil and gas regulator and is headed by the oil and gas supervisor. The supervisor is generally charged with overseeing the drilling, operation, maintenance, and abandonment of wells, tanks, and other facilities used in oil and gas regulation to prevent damage to life, health, property, and natural resources. Existing law requires the state’s oil and gas supervisor to produce a public annual report containing information about the state’s oil and gas production and other related material, as specified.

DOGGR sought and received “primacy” to operate the class II underground injection control (UIC) program from the US Environmental Protection Agency (US EPA) in the early 1980s. The class II UIC program is for oil and gas injection wells. These include wells used for EOR and waste disposal. As part of the application, DOGGR asked to exempt certain aquifers from protection under the Safe Drinking Water Act. These “exempt aquifers” were not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection.

In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing DOGGR’s primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, (1) the US EPA must approve any additional requests for aquifer exemption status, (2) no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, (3) by mutual agreement between DOGGR and the US EPA, the exempt status for an aquifer may be withdrawn at any time. In the primacy agreement, DOGGR pledged to work closely with the SWRCB. A 1988 MOA between DOGGR and the SWRCB requires the DOGGR to share information with the appropriate regional water quality control board (regional board) about proposed UIC applications and provides an opportunity for the regional board to comment. Additionally, DOGGR agrees not to issue final approvals until regional board concerns are satisfied.

In 2011, an audit of the DOGGR UIC program was completed by a US EPA contractor. One of the numerous issues raised by the audit was the need to improve the number and type of inspections by the DOGGR.

In the last 10 months there have been a series of revelations showing, at best, questionable and lax management of the UIC program by the division, particularly with respect to aquifer exemptions. DOGGR staff disregarded DOGGR’s own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required exemption to be used or where the aquifer’s water quality was unknown. Some of these “non-exempt aquifers” contain or may contain good quality water. (See the March 10, 2015 joint oversight hearing on the UIC program convened by the Senate Natural Resources and Water Committee and the Senate Environmental Quality Committee for more information.)

Proposed Law:

This bill would require DOGGR and the SWRCB to make specific written findings before submitting an application to the US EPA for an aquifer exemption. Specifically, if the aquifer is hydrocarbon bearing, DOGGR and the SWRCB must find that the aquifer (1) is geologically and hydrogeologically isolated from other zones containing waters that may have a beneficial use, and (2) does not contain waters with potential beneficial uses or has a beneficial use that wouldn’t be impacted by fluids injected into the zone.

If the aquifer is not hydrocarbon bearing, DOGGR and SWRCB must find that the aquifer (1) meets the US EPA requirements for an aquifer exemption, (2) has more than 3,000 milligrams per liter total dissolved salts, (3) is geologically and hydrogeologically isolated from other zones containing waters that may have a beneficial use, and (4) would not be contaminated for current or future beneficial use. This last finding must be made by the SWRCB and posted on its website in a public and readily accessible location.

Staff Comments:

The actions required of DOGGR in this bill are largely in line with the requirements that currently exist in DOGGR’s regulations and DOGGR’s MOA with the US EPA establishing DOGGR’s primacy in implementing the UIC program with two exceptions. First, the bill requires that an aquifer being geologically and hydrogeophically isolated while currently an aquifer only needs to geologically or hydrogeologically isolated. This difference will require additional review by DOGGR at an annual cost of approximately $350,000.

The second difference between this bill and existing regulations and agreements is that existing regulations and agreements would allow for an aquifer exemption to be applied for even if it had a total dissolved solids concentration below 3,000 milligrams per liter if that aquifer was not economically recoverable or too polluted to use. Should this bill result in injection wells being shut-in, and that shut-in decreases oil production, DOGGR could have some revenue losses since well owners pay fees to the state based on oil production.

Staff notes that DOGGR currently has a budget change proposal (BCP) open for consideration by the Senate Budget Subcommittee #2 to reappropriate $1.5 million from the Oil, Gas, and Geothermal Administrative Fund for the UIC program. Approval of this BCP would give DOGGR the resources that it feels it needs to meet existing requirements. Thus, approval of the BCP would not provide funds for the activities required under this bill.

The actions required of the SWRCB in this bill are also largely in line with the MOA between DOGGR and the SWRCB regarding oil field wastewater disposal. However, the SWRCB was never appropriated funds for this purpose. As such, to implement this bill, the SWRCB would necessitate $560,000 for four PYs to review existing and future aquifer exemptions.

Staff notes that the SWRCB also has a budget change proposal for $2.1 million and 13 PYs from the Oil, Gas, and Geothermal Administrative Fund for UIC program oversight. According to the SWRCB, should this BCP be approved, it will need no additional funds needed to implement this bill.

Committee amendments (as adopted on May 28, 2015): Amend to specify that an isolated aquifer is hydrogeologically isolated.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

SB 454 (Allen) - Water quality: oil and gas: exempt aquifer

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 454 would prohibit the division of Oil, Gas, and Geothermal Resources (DOGGR) from submitting a proposal for an aquifer exemption unless DOGGR and the State Water Resources Control Board (SWRCB) both make specified findings.

Fiscal Impact:

• Up to $350,000 from the Oil, Gas, and Geothermal Administrative Fund (special) for additional aquifer evaluation by DOGGR.

• Ongoing costs of $560,000 from the Oil, Gas, and Geothermal Administrative Fund (special) to the SWRCB to consider aquifer exemptions.

• Unknown potential revenues losses to the Oil, Gas, and Geothermal Administrative Fund (special) for decreased oil production.

Background:

DOGGR in the Department of Conservation is the state’s oil and gas regulator and is headed by the oil and gas supervisor. The supervisor is generally charged with overseeing the drilling, operation, maintenance, and abandonment of wells, tanks, and other facilities used in oil and gas regulation to prevent damage to life, health, property, and natural resources. Existing law requires the state’s oil and gas supervisor to produce a public annual report containing information about the state’s oil and gas production and other related material, as specified.

DOGGR sought and received “primacy” to operate the class II underground injection control (UIC) program from the US Environmental Protection Agency (US EPA) in the early 1980s. The class II UIC program is for oil and gas injection wells. These include wells used for EOR and waste disposal. As part of the application, DOGGR asked to exempt certain aquifers from protection under the Safe Drinking Water Act. These “exempt aquifers” were not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection.

In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing DOGGR’s primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, (1) the US EPA must approve any additional requests for aquifer exemption status, (2) no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, (3) by mutual agreement between DOGGR and the US EPA, the exempt status for an aquifer may be withdrawn at any time. In the primacy agreement, DOGGR pledged to work closely with the SWRCB. A 1988 MOA between DOGGR and the SWRCB requires the DOGGR to share information with the appropriate regional water quality control board (regional board) about proposed UIC applications and provides an opportunity for the regional board to comment. Additionally, DOGGR agrees not to issue final approvals until regional board concerns are satisfied.

In 2011, an audit of the DOGGR UIC program was completed by a US EPA contractor. One of the numerous issues raised by the audit was the need to improve the number and type of inspections by the DOGGR.

In the last 10 months there have been a series of revelations showing, at best, questionable and lax management of the UIC program by the division, particularly with respect to aquifer exemptions. DOGGR staff disregarded DOGGR’s own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required exemption to be used or where the aquifer’s water quality was unknown. Some of these “non-exempt aquifers” contain or may contain good quality water. (See the March 10, 2015 joint oversight hearing on the UIC program convened by the Senate Natural Resources and Water Committee and the Senate Environmental Quality Committee for more information.)

Proposed Law:

This bill would require DOGGR and the SWRCB to make specific written findings before submitting an application to the US EPA for an aquifer exemption. Specifically, if the aquifer is hydrocarbon bearing, DOGGR and the SWRCB must find that the aquifer (1) is geologically and hydrogeologically isolated from other zones containing waters that may have a beneficial use, and (2) does not contain waters with potential beneficial uses or has a beneficial use that wouldn’t be impacted by fluids injected into the zone.

If the aquifer is not hydrocarbon bearing, DOGGR and SWRCB must find that the aquifer (1) meets the US EPA requirements for an aquifer exemption, (2) has more than 3,000 milligrams per liter total dissolved salts, (3) is geologically and hydrogeologically isolated from other zones containing waters that may have a beneficial use, and (4) would not be contaminated for current or future beneficial use. This last finding must be made by the SWRCB and posted on its website in a public and readily accessible location.

Staff Comments:

The actions required of DOGGR in this bill are largely in line with the requirements that currently exist in DOGGR’s regulations and DOGGR’s MOA with the US EPA establishing DOGGR’s primacy in implementing the UIC program with two exceptions. First, the bill requires that an aquifer being geologically and hydrogeophically isolated while currently an aquifer only needs to geologically or hydrogeologically isolated. This difference will require additional review by DOGGR at an annual cost of approximately $350,000.

The second difference between this bill and existing regulations and agreements is that existing regulations and agreements would allow for an aquifer exemption to be applied for even if it had a total dissolved solids concentration below 3,000 milligrams per liter if that aquifer was not economically recoverable or too polluted to use. Should this bill result in injection wells being shut-in, and that shut-in decreases oil production, DOGGR could have some revenue losses since well owners pay fees to the state based on oil production.

Staff notes that DOGGR currently has a budget change proposal (BCP) open for consideration by the Senate Budget Subcommittee #2 to reappropriate $1.5 million from the Oil, Gas, and Geothermal Administrative Fund for the UIC program. Approval of this BCP would give DOGGR the resources that it feels it needs to meet existing requirements. Thus, approval of the BCP would not provide funds for the activities required under this bill.

The actions required of the SWRCB in this bill are also largely in line with the MOA between DOGGR and the SWRCB regarding oil field wastewater disposal. However, the SWRCB was never appropriated funds for this purpose. As such, to implement this bill, the SWRCB would necessitate $560,000 for four PYs to review existing and future aquifer exemptions.

Staff notes that the SWRCB also has a budget change proposal for $2.1 million and 13 PYs from the Oil, Gas, and Geothermal Administrative Fund for UIC program oversight. According to the SWRCB, should this BCP be approved, it will need no additional funds needed to implement this bill.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: SB 454

SUBJECT: Water quality: oil and gas: exempt aquifer

ANALYSIS:

Existing law:

1. Under the federal Safe Drinking Water Act (SDWA):

1. Authorizes and requires the United States Environmental Protection Agency (US EPA) to regulate underground injection in order to protect underground drinking water sources.

2. Prohibits certain oil and gas well activities that affect underground sources of drinking water unless those sources are located in an exempt aquifer.

3. Authorizes US EPA to delegate primacy to states to regulate and enforce as long as the state’s regulation and enforcement is as stringent as federal law. In California the Division of Oil, Gas, and Geothermal Resources (DOGGR) in the Department of Conservation has been granted primacy by US EPA.

4. Authorizes primacy agencies to apply to US EPA to propose that an aquifer or a portion of an aquifer be an exempt aquifer.

5. Authorizes the US EPA to approve the proposal if the aquifer or a portion of the aquifer meets certain criteria.

2. Under the Porter-Cologne Water Quality Control Act (Porter-Cologne) the State Water Resources Control Board (SWRCB) and the regional water quality control boards have regulatory authority to protect, preserve and enhance the quality of the waters of the state.

This bill: prohibits DOGGR from submitting a proposal for an aquifer exemption to US EPA unless DOGGR and SWRCB concur in writing that the aquifer meets specified conditions.

Background

Underground Injection Wells.

There are approximately 50,000 underground injection wells in California. The majority of which are used for Enhanced Oil Recovery (EOR) operations to spur oil and gas production.

Approximately 75% of California’s oil and gas production is attributable to the use of EOR. The wastewaters produced by oil and gas extraction are disposed of in approximately 1,500 injection waste disposal wells.

Since June 2014, when a set of oil and gas waste disposal wells were ordered “shut in” by DOGGR, there have been a series of news stories released, as well as acknowledgements made by DOGGR, that numerous oil and gas related injected wells are improperly sited and present a risk of contamination to good quality ground water used for drinking water and agricultural irrigation purposes.

Why Does US EPA Regulate Injection Wells?

In 1974, Congress passed the Safe Drinking Water Act (SDWA). The SDWA required US EPA to report back to Congress on underground waste disposal practices, and develop minimum federal requirements for injection practices that protect public health by preventing injection wells from contaminating USDWs.

What is a USDW?

An underground source of drinking water (USDW) is an aquifer or a part of an aquifer that is currently used as a drinking water source or may be needed as a drinking water source in the future.  Specifically, a USDW:

• Supplies any public water system, or

• Contains a sufficient quantity of ground water to supply a public water system, and

• currently supplies drinking water for human consumption, or contains fewer than 10,000 mg/l total dissolved solids (TDS), and

• Is not an exempted aquifer.

The UIC program implements this protective mandate through the UIC regulations.

How do the UIC Regulations Protect Groundwater?

The UIC program protects USDWs from endangerment by setting minimum requirements for injection wells. All injection must be authorized under either general rules or specific permits. Injection well owners and operators may not site, construct, operate, maintain, convert, plug, abandon, or conduct any other injection activity that endangers USDWs.

The purpose of the UIC requirements is to:

• Ensure that injected fluids stay within the well and the intended injection zone, or

• Mandate that fluids that are directly or indirectly injected into a USDW do not cause a public water system to violate drinking water standards or otherwise adversely affect public health.

Who Regulates Injection Wells?

Injection wells are overseen by either a state or Tribal Agency or one of US EPA's regional offices. States and tribes may apply for primary enforcement responsibility, or primacy, to implement the UIC program within their borders. In general, state and tribal programs must meet minimum federal UIC requirements to gain primacy. If a state or tribe does not obtain primacy, US EPA implements the program directly through one of its regional offices.

US EPA has delegated primacy for all well classes to 33 states and 3 territories; it shares responsibility in 7 states, and implements a program for all well classes in 10 states, 2 territories, the District of Columbia, and most Tribes. California has primacy for the UIC program for Class II wells. DOGGR implements this program.

• DOGGR has implemented the UIC program, specific to Class II wells, for California pursuant to a primacy agreement with US EPA reached in 1982 and incorporated into federal regulations in 1983.

In California SWRCB has statutory authority and responsibility to protect ground water under both the federal Clean Water Act and Porter-Cologne. SWRCB Resolution 88-63 recognizes and incorporates aquifer exemptions with specific reference to the SDWA.

In 1988, DOGGR and SWRCB signed an MOA governing oil and gas related discharges. SWRCB retains authority over water quality independent of the MOA. The MOA lacks clarity, however, according to SWRCB emails. The terms of the MOA, as well as state statute, give DOGGR lead responsibility over Class II wells.

What is an Aquifer Exemption?

An aquifer exemption is an action by US EPA to remove an aquifer or a portion of an aquifer from protection as an underground source of drinking water under the SDWA.

What Criteria Does US EPA Use to Evaluate Aquifer Exemptions?

US EPA is responsible for the final review and approval of all aquifer exemption requests. UIC permit applicants that seek an aquifer exemption in order to conduct injection activities typically delineate the proposed exempted area and submit a package, including supporting data, to the primacy agency. States with primacy, like California, review the application and, if the information submitted supports a determination that an aquifer exemption is warranted, propose to exempt the aquifer, provide for public participation, and submit a request for approval of the exemption to US EPA.

US EPA must follow the regulatory criteria set forth in 40 CFR 146.4 in making aquifer exemption determinations. For US EPA to approve an aquifer exemption, US EPA must:

1. Find that the state, or where US EPA directly implements the UIC program, the applicant, has demonstrated that the aquifer or the portion of an aquifer sought for exemption does not currently serve as a source of drinking water.

2. Determine either that the aquifer cannot now, or will not in the future, serve as a source of drinking water, or that the total dissolved solids content of the ground water is more than 3,000 and less than 10,000 mg/l and is not reasonably expected to supply a public water system.

The regulations describe four potential reasons for making the determination that the aquifer cannot now and will not in the future serve as a source of drinking water.

• The aquifer is mineral, hydrocarbon, or geothermal energy producing, or

• Can be demonstrated as part of a permit application to contain minerals or hydrocarbons that are expected to be commercially producible.

• The other reasons relate to the practicality and cost of accessing and treating the water for human consumption.

What is the Importance of TDS Levels in Water?

Salinity is a measure of the amount of dissolved particles and ions in water. A common measure of salinity is the level of total dissolved solids (TDS). TDS is generally expressed in units of mg/l (milligrams per liter) or ppm (parts per million). In expressions of TDS levels, milligrams per liter (mg/l) and parts per million (ppm) are equivalent units.

Salinity levels can result from hundreds of different ions, but a few make up most of the dissolved material in water: chloride and sodium, followed by calcium, nitrate, magnesium, bicarbonate and sulfate.

The higher the salinity level of water, the less likely it is to be used for purposes such as drinking and other beneficial uses. As a general rule, aquifer TDS levels increase with depth. Below is some information about water with different TDS levels:

• Precipitation: 10 ppm

• Freshwater lake: 10-200 ppm

• Agricultural impact to sensitive crops: 500 ppm

• California drinking water limit - secondary max contaminant level (taste/odor): 1,000 ppm (max)

• US EPA’s regulatory definition of a USDW: 10,000 ppm

• Brackish: 23,000 ppm

• Seawater: 35,000 ppm

What is the Risk to Ground water Associated with Class II Wells?

As noted above, the UIC program is a part of the federal SDWA and is in place to ensure that injection wells are not located near ground water aquifers that may currently be used as or have the potential to be used in the future for drinking water.

Additionally, if a well is drilled near a USDW the following pathways of contamination put the USDW at risk:

• lack of well casing integrity.

• faulty cementing of the well allowing fluid movement up the annulus.

• Movement from the formation itself into the confining formation (the cap, meant to separate it geologically from a USDW).

• Abandoned or poorly plugged wells acting as a conduit.

• Movement from one part of a formation to another (by changing the hydraulic gradient).

• Injection directly into a USDW. (NOTE: this is the current problem in which California is concerned).

California is becoming ever more reliant on ground water as a source of drinking water as well as other beneficial uses, such as agriculture.

When wastewater and other fluids associated with the extraction of oil or natural gas are injected into an aquifer they can change the chemistry of and contaminate that aquifer. For this reason the SDWA criteria for injection specify that these wells cannot be drilled into aquifers where the water quality is currently or may be considered in the future high enough to use as a source of drinking water. Class II wells should only be located in areas where there is not any potential use of the aquifer as a USDW.

Injection into Non-Exempt Aquifers in California.

In 2014, SWRCB began to conduct its review as to whether or not ground water monitoring would be required around wells with well stimulation treatments, (pursuant to the requirements of SB 4 (Pavley), Chapter 313, Statutes of 2013. As SWRCB conducted its review, staff questioned the apparent exemption of numerous aquifers. In communications between SWRCB and DOGGR, it was discovered that DOGGR is approving injection wells in numerous locations where there are not exempt aquifers. SWRCB started to order ground water quality data for injection wells injecting in the wrong place.

From July 2 – September 26, 2014, DOGGR ordered a net 11 wells to be shut-in as these wells were injecting into non-exempt aquifers.

On July 17, 2014, US EPA sent a letter to DOGGR inquiring into these wells and the UIC program. The letter stated that in 2012 US EPA started a review of aquifer status and it was provided to DOGGR. This letter demanded specified information be provided from DOGGR at 30, 60 and 90 days. By 30 days, US EPA needed a status report or action plan on all Class II wells injecting into non-hydrocarbon bearing aquifers where the TDS is less than 10,000 ppm. By 60 days, US EPA required a timeline. By 90 days US EPA wanted a status report or action plan on all Class II wells injecting in to hydrocarbon-bearing aquifers that have a TDS less than 10,000 ppm.

On July 18, 2014, DOGGR issued a press release stating that DOGGR is working on complying with the letter.

On July 21, 2014, US EPA released an “enhanced coordination and communication” memo to the states on aquifer exemption requests.

On August 18, 2014, DOGGR responded to US EPA via email with draft work plan (work plan which is very similar to DOGGR’s 2012 “Road Map”).

On September 15, 2014, SWRCB sent a letter to US EPA, accompanying DOGGR’s emailed transmission. The focus of the SWRCB’s investigation outlined in the letter is where waste disposal wells are injecting into aquifers which have <3,000 ppm TDS and there is a risk to public health. SWRCB specifies a tiered priority investigation of the injection wells in question, as requested by US EPA.

SWRCB identified their first priority for investigation as those waste disposal well injection zones within 500 foot vertically of the bottom of a water well within a radius of 1 mile of the injection well. (NOTE: SWRCB is not just looking into the waste disposal wells. This applies to all the other Class II injection wells too).

• Category 1a wells are 11 waste disposal wells with 108 water wells in the vicinity. To date, thallium, arsenic and nitrate levels have been found at a level greater than the MCL in 4 samples and the TDS is higher than the secondary MCL in 3 samples.

• Category 1b wells are waste disposal wells injecting into aquifers of “uncertain” exemption (these are the 11 aquifers of disputed exemption). There are 19 waste disposal wells and 37 water wells (no contamination was found at the time of the letter). Please note that the water wells are not necessarily in the place that a monitoring well would be.

• Category 2, are 125 waste disposal wells injecting into aquifers that either have a TDS less than 3000 ppm or the TDS is not known.

On December 22, 2014 – Because DOGGR did not meet the 90-day deadline prescribed in US EPA’s July 17, 2014 letter and only partially met the other information requests, US EPA sent a follow up letter to DOGGR and SWRCB giving them a firm deadline of February 6, 2015 to show how California will get the State’s UIC program into compliance with federal law by February, 2017.

On February 6, 2015, DOGGR sent a letter to US EPA providing a detailed plan. In the letter, DOGGR does not unequivocally advocate for shutting down all wells injecting into high water quality aquifers but commits to reviewing all of them by the deadline of February, 2017. (NOTE: SDWA provides for a review process for aquifer exemptions).

As of this letter, approximately 500 waste disposal wells and 2000 EOR wells were identified to be reviewed. The well list which was provided in September, 2014 was revised to indicate that approximately 140 waste disposal wells were identified as the highest priority for review. Many of the highest priority wells are located in the disputed 11 aquifers. Ultimately, approximately 30,000 injection wells have been identified for review.

On March 3, 2015, The California Environmental Protection Agency (CalEPA) released a report, requested by Governor Brown, asking CalEPA to conduct an independent review of the state’s Underground Injection Control program. The report:

1. Outlines the discrepancies in understanding about the exemption of the 11 aquifers.

2. States that DOGGR notified US EPA regarding the discrepancies three years ago (NOTE: As discussed above, the first primacy agreement WITHOUT the exemption was publicly stated as the governing document on DOGGR’s website until recently it was represented to legislative staff that those aquifers were not exempt in discussions regarding SB 4 in 2013.)

3. Asserts that both DOGGR and US EPA agreed to exempt the 11 aquifers, but may not have followed regulatory procedures.

4. Specifies that about a half of the active wastewater disposal wells injecting in <3,000 ppm TDS aquifers are injecting into the 11 aquifers where the exemption is in question as part of the original primacy agreement with US EPA. The remaining half is the result of permitting errors.

On March 3, 2015, in conjunction with the above-referenced report, DOGGR announced that an additional 12 injection wells were ordered to be shut in, which brings the total to 23 wells. SWRCB announced that it has issued 40 additional requests for water quality data from injection well operators.

Comments

Purpose of Bill.

According to the author, “SB 454 establishes criteria to protect California’s precious ground water aquifers from the waste pollution resulting from oil and gas extraction operations. Under the Safe Drinking Water Act, before DOGGR can permit an oil company to drill a wastewater disposal or chemical injection well into an aquifer, California must obtain an exemption from the Act for that aquifer from the United States Environmental Protection Agency (USEPA).”

The author asserts, however, that “DOGGR has allowed more than 2,500 wastewater disposal and chemical injection wells to be drilled into aquifers that have not been exempted from the Safe Drinking Act and therefore should have been protected. The fluids being injected into these aquifers contain a toxic cocktail of chemicals, including benzene, arsenic and radioactive material. Many of these chemicals are known to cause cancer and other human health problems.”

The author states that “DOGGR has proposed a plan and process to examine these aquifers and seek exemptions from the Safe Drinking Water Act for those aquifers the agencies believes qualify for an exemption. According to this proposed plan, DOGGR will request exemptions for aquifers that cannot ‘reasonably be expected to be used for beneficial uses.’ However, the criteria DOGGR is using to make this determination does not consider California’s current severe drought or the reality of future water shortages.”

The author asserts that “it is clear that going forward, given California’s long-term water challenges, the state will need to access deeper aquifers and adopt technology necessary to clean aquifers currently considered polluted. Given the current water crisis, it is irresponsible and shortsighted to not protect these aquifers.”

Oversight Hearing on UIC.

On March 10, 2015, the Senate Natural Resources & Water and Environmental Quality Committees’ Oversight Hearing on UIC. During this hearing members heard testimony from both DOGGR and SWRCB. It was clearly stated that DOGGR did not adequately conduct appropriate oversight and enforcement activities to ensure that ground water aquifers were protected from contamination pursuant to the MOA between DOGGR and SWRCB. It was clear that it was only because of SWRCB activities pursuant to SB 4 that the state became aware of the illegal injection activities in violation of SDWA.

SOURCE:

Author

SUPPORT:

Ballona Network

California League of Conservation Voters

Center for Environmental Health

Clean Water Action

Environmental Working Group

Lost Padres Forest Watch

SanDiego350

OPPOSITION:

None on file

ARGUMENTS IN SUPPORT:

The support argues that “Ground water resources play a vital role in maintaining

California’s economic and environmental sustainability. California’s 515 alluvial ground water basins and sub-basins provide close to 40% of the state’s water supply in an average year. And in dry or drought year, ground water accounts for as much as 60% of the state’s water supply. Many disadvantaged communities rely on ground water for 100% of their water supply.”

According to the support, “the recent revelation that over 2,500 oil and gas wells were permitted by DOGGR to inject wastewater and other fluids into federally protected aquifers shows that action must be taken to protect California’s ground water. These injections violate the federal Safe Drinking Water Act and fail to protect ground water that potentially could be used for drinking water, irrigation or other beneficial uses. Considering we are currently in our fourth year of extreme drought, the time to act is now.”

Supporters believe “SB 454 enhances oversight and accountability in order to ensure that only aquifers that cannot and will not have beneficial uses be used for oil and gas wastewater disposal or take on fluids for enhanced oil recovery.”

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SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Fran Pavley, Chair

2015 - 2016 Regular

Bill No: SB 454 Hearing Date: April 28, 2015

Subject: Water quality: oil and gas: exempt aquifer

BACKGROUND AND EXISTING LAW

1. The state’s oil and gas regulator is the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation.

2. The State Water Resources Control Board (board) has statutory responsibility to protect the waters of the state and to preserve all present and anticipated beneficial uses of those waters under the state’s Porter-Cologne Water Quality Act (Water Code (WAT) §§13000 et seq.) and other law.

3. The federal Safe Drinking Water Act (SDWA) was enacted in 1974 to protect public health by regulating the nation’s public drinking water and its sources. The US Environmental Protection Agency (US EPA) developed the Underground Injection Control (UIC) Program following passage of the SDWA in order to protect aquifers that were or could become sources of drinking water from contamination.

4. In 1981, the division applied to the US EPA to become the primary enforcing agency for the oil and gas well (“Class II”) portion of the UIC program in California. California law requires that the division be the state entity to seek primacy for that well class (WAT §13263.5). As part of the application, the division asked to exempt certain aquifers from protection under the SDWA. These “exempt aquifers” were not or could not become sources of drinking water, as defined (see 40 Code of Federal Regulations (CFR) §146.4, described below). Most of these aquifers were either hydrocarbon-producing, co-located with an existing oil and gas field, or were already being used for oil and gas wastewater injection.

5. Class II injection wells primarily consist of oil and gas waste disposal wells and injection wells used for “enhanced oil recovery” operations. For the latter, typically fluids of various forms are pumped into an oil-bearing formation in order to help produce the oil.

6. In 1982, the US EPA signed a Memorandum of Agreement (MOA) with the Department of Conservation establishing the division’s primacy for the UIC program and, among other things, providing certain aquifers with exempt status. Under this MOA, the US EPA must approve any additional requests for aquifer exemption status, no injection is allowed into an aquifer without first obtaining exempt status (if needed), and, by mutual agreement between the division and the US EPA, the exempt status for an aquifer may be withdrawn at any time.

7. In the primacy agreement, the division pledged to work closely with the board. A 1988 MOA between the division and the board still in effect today requires the division to share information with the appropriate regional water quality control board (regional board) about proposed UIC applications and provides an opportunity for the regional board to comment. Additionally, the division agrees not to issue final approvals until regional board concerns are satisfied.

8. In 2011, a US EPA contractor reported the results of an audit of the division’s implementation of the UIC program and found numerous significant problems. Although not a public part of the review, documents released recently show that questions arose during this time period about aquifer exemptions.

9. In the last 10 months there have been a series of revelations showing, at best, questionable and lax management of the UIC program by the division, particularly with respect to aquifer exemptions. Division staff disregarded the division’s own agreements, guidelines and regulations and regularly approved Class II wells that injected into aquifers that required exemption to be used or where the aquifer’s water quality was unknown. Some of these “non-exempt aquifers” contain or may contain good quality water. It was further revealed that two primacy agreements were in existence – one excluding 11 good water quality aquifers from exemption and the other approving their exemption. These 11 aquifers are now considered to have “questionable” exemption. (See the March 10, 2015 joint oversight hearing on the UIC program convened by this committee and the Senate Committee on Environmental Quality and the California Environmental Protection Agency (CalEPA) memo on the UIC program dated March 2, 2015 for more information.)

10. As of today, 23 injection wells have now been shut-in, and over 2,500 injection wells in the state continue to inject into non-exempt or “questionably” exempt aquifers. About 2,000 of these wells are injection wells used for enhanced oil recovery operations in existing oil and gas fields. The remaining 500 are waste disposal wells. The board and the division are working closely together to review these injection wells. To date, no contamination of water used for domestic or irrigation purposes has been found, although the review continues. Oil and gas injection wells that pose the highest risk to wells supplying possible drinking or irrigation water are being reviewed first.

11. After a series of letter exchanges between the board, the division and the US EPA, a schedule for bringing all 2,500 wells into compliance has been established. Exempt aquifer status will either be obtained for a well’s injection zone by a date certain in the future, or the well will be “shut-in” (i.e. shut down). For currently non-exempt aquifers, the schedule is as follows:

• by October 15, 2015 – the status of non-hydrocarbon-bearing aquifers that contains less than 3,000 milligrams per liter of total dissolved solids (TDS) must be resolved,

• by December 31, 2016 – the status of “questionably” exempt aquifers shall be resolved, as specified, and

• by February 15, 2017 – the status of non-hydrocarbon-bearing aquifers containing from 3,000 to 10,000 milligrams per liter TDS and the status of hydrocarbon-bearing aquifers that contain less than 10,000 milligrams per liter TDS must both be resolved.

12. This schedule was recently the subject of emergency regulations proposed by the division (case: 2015-0409-02E).

13. The criteria for aquifer exemption for Class II wells (40 CFR §146.4) are as follows:

• the aquifer is not a source of drinking water,

• the aquifer cannot and will not become a source of drinking water because it is economically and technologically infeasible, as defined; located over a mining area; mineral- or hydrocarbon-bearing in commercial quantities or mineral, hydrocarbon or geothermal energy producing, and

• the total dissolved salts concentration is between 3,000 and 10,000 milligrams per liter TDS.

PROPOSED LAW

This bill would require the division and the board to concur on aquifer exemptions submitted to the US EPA for approval, as specified.

For hydrocarbon-bearing aquifers:

• the intended injection zone must be isolated from other zones containing waters that may have a beneficial use, and

• the board must find either that the water in the injection zone has no potential beneficial use or, if it does, that the injection will not impact that use.

For non-hydrocarbon-bearing aquifers:

• the intended injection zone must be isolated from other zones containing water that may have a beneficial use,

• the aquifer is not a source of drinking water,

• the aquifer cannot and will not become a source of drinking water due to proximity to a mining area, economic or technological impracticality, mineral concentration or geothermal energy production capability,

• the TDS concentration in the aquifer must exceed 3,000 milligrams per liter, and

• the board determines that the injection would not contaminate a source of water that does or may have a future beneficial use, or, if the water is already contaminated, that the injection would not further impair its limited or potentially limited beneficial use.

ARGUMENTS IN SUPPORT

According to the author, the division “has allowed more than 2,500 waste water disposal and injections wells to be drilled into aquifers that have not been exempted from the Safe Drinking Water Act and therefore should have been protected. The fluids being injected into these aquifers contain a toxic cocktail of chemicals, many of which are known to cause cancer and other human health problems, including benzene, arsenic and radioactive material.”

“It is clear that going forward, given California’s long-term water challenges, the state will need to access deeper aquifers and adopt technology necessary to clean aquifers currently considered polluted. Given the current water crisis, it is irresponsible and shortsighted to not protect these aquifers.”

“SB 454 puts specific criteria in place to guide [the division] in determining which of California’s protected aquifers should be eligible for consideration for an exemption. The criteria require [the division] to work jointly with the [board].”

ARGUMENTS IN OPPOSITION

According to the California Independent Petroleum Association (CIPA), “SB 454 would re-define critical components of the UIC program and the aquifer exemption definition and application process. These proposed modifications to the UIC program would compromise California’s oil production without providing any additional environmental and groundwater protections beyond those provided by the enhancements to the UIC program proposed to US EPA by the [board] and the [division].”

“SB 454 instead alters the aquifer exemption process so as to exclude certain aquifers that would otherwise be exempt under the long-standing federal criterion (sic) […] For example, SB 454 would prohibit all injection into non-hydrocarbon-bearing zones where the total dissolved solids content of the water in the aquifer is less than 3,000 milligrams per liter.” CIPA notes that aquifers with these low salt concentrations may be considered for exemption if it is economically or technologically impractical for them to be used as drinking water.

CIPA further states that “injection wells have been an integral part of California’s oil and gas operations for over 50 years” and roughly 70% of California’s oil production depends upon enhanced oil recovery using injections wells. “Without sufficient injection well options, oil wells cannot produce and oil production in California will be adversely affected.”

COMMENTS

This bill is double-referred to the Senate Committee on Environmental Quality. Aspects of this bill under that committee’s jurisdiction include water quality and the role of the board and regional boards. Should this bill pass this committee, those issues will be addressed there. (Information on water quality is provided in this analysis for completeness and context.)

Concurrence between the division and the board is appropriate for aquifer exemptions. The division and the board appear to be closely working together to resolve the problems with aquifer exemptions and on other oil and gas field-related groundwater quality issues for at least the last year. In the 1988 MOA, the board clearly retains authority over water quality and at least one of the three post-primacy aquifer exemption petitions by the division to the US EPA reflected board input. However, it is not clear that historically the two agencies have consistently worked closely together on water quality issues relevant to the state’s oil and gas fields or that division decisions that impacted or could have potentially impacted water quality were consistently vetted by the board. In fact the CalEPA memo notes that under the 1988 MOA the regional boards “generally deferred to [the division’s] determination of whether or not an aquifer was exempt without scrutinizing the applications.” The added weight of statutory concurrence may help to ensure continuing cooperation.

The bill’s potential impact on the resolution of the 2,500 wells. This bill would impact the resolution of the 2,500 wells if the division would otherwise ask the US EPA for an aquifer exemption for certain non-hydrocarbon-bearing aquifers with low saline concentrations (less than 3,000 milligrams per liter TDS) on or after January 1, 2016. According to the CalEPA memo noted above, approximately 140 active wastewater disposal wells inject into aquifers with TDS concentrations of less than 3,000 milligrams per liter. The 11 aquifers of questionable exemption also all have TDS concentrations of less than 3,000 milligrams per liter.

Not all aquifers need aquifer exemptions. Groundwater that does not meet the criteria of an Underground Source of Drinking Water (see 40 CFR §144.3) may be injected into by a Class II UIC well without obtaining an aquifer exemption. For example, an aquifer with a TDS concentration of 30,000 milligrams per liter would not need to be exempted. It is worth noting, however, that a recent US Geological Survey white paper reported that municipalities and water districts have started to consider treating water saltier than 10,000 milligrams per liter in order to produce water suitable for domestic purposes.

“Beneficial use” is broader than “domestic or irrigation purposes.” The “beneficial use” criterion is a more expansive designation than the protection of water suitable for domestic or irrigation purposes (see, for example, Public Resources Code §3106) that the division is otherwise directed to protect.

Pending budget actions. The board has asked for increased ongoing funding and personnel to address the UIC program, aquifer exemptions and other water-related oil and gas wastewater disposal issues. The division has also asked for increased funding.

Recent related legislation.

SB 248 (Pavley, 2015) This bill would reform the division’s well history reporting and the regulations governing its UIC program (before the Senate Committee on Appropriations).

SB 545 (Jackson, 2015) This bill would revise and update division’s authority and permitting practices, and reform the handling of confidential wells (before the Senate Committee on Environmental Quality).

AB 356 (Williams, 2015) This bill would provide for reform of the UIC program with an emphasis on the role of the Water Boards and require groundwater monitoring in the vicinity of UIC wells (before the Assembly Natural Resources Committee)