California Governor Jerry Brown Signs Strict Hydraulic Fracturing Law

Stating that the measure “establishes strong environmental protections and transparency requirements for hydraulic fracturing and other well stimulation operations,” Governor Jerry Brown signed California S.B. 4 into law on September 20, 2013.

This new law, which takes effect on January 1, 2014, sets out tough restrictions on the use of hydraulic fracturing and other acidizing processes.

Oil and gas companies will be required to:

1. apply for and obtain permits before starting fracking and other well stimulation operations, 
2. notify near-by landowners of these activities, 
3. disclose all chemicals used, and 
4. monitor groundwater and air quality. See California Closer to Having Hydraulic Fracturing Regulations, Norton Rose Fulbright's Hydraulic Fracking Blog, September 17, 2013. 

The new law makes clear that the California Department of Conservation’s Division of Oil, Gas and Geothermal Resources (“DOGGR”) will regulate fracking with its permit requirements while the state’s Natural Resources Agency will complete an independent scientific study on the potential hazards of fracking by January 2015.

The governor urged the Department of Conservation to set up a program that would group similar applications based on known geologic conditions and environmental impacts, while allowing for more particularized review when necessary.

Both environmentalists and oil and gas companies have criticized the new law, with the industry groups claiming that the requirements are too burdensome and the conservation groups arguing that the provisions are too weak to protect the environment.

Of particular concern to the oil and gas companies is the requirement to identify in the permit application what chemicals will be used and then, after the stimulation is complete, to disclose what chemicals were actually used during the fracking procedure.

Industry representatives have expressed concern that the law specifically states that certain information is not a trade secret, namely:

1. the identities of the chemical constituents of additives, including CAS identification numbers;
2. the concentrations of the additives in the well stimulation treatment fluids.; and 
3. the chemical composition of the flowback fluid.

The Center for Biological Diversity and other environmental groups are uncertain as to how these regulations will affect their pending litigation against the DOGGR for allegedly failing to apply the California Environmental Quality Act in the permitting process. Moreover, these groups object to taking “grouping” short-cuts to approve permits and would prefer an outright ban on hydraulic fracturing.

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This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.