California’s Division of Oil, Gas, and Geothermal Resources just issued final interim regulations (effective January 1, 2014) to implement California’s new fracking statute (SB 4), with permanent rules to follow by January 2015.  For an overview of the fracking statute, see our September E-Alert.

The Division’s interim regulations are supported by a narrative description that provides the Division’s view of fracking, including the differences between hydraulic fracking, acid fracking and acid matrix stimulation, a brief summary of pre SB 4 requirements and summarizes the SB 4 interim operator requirements.  The interim regulations distinguish well stimulation (which is subject to the regulations) from mere underground injection.  These regulations overlay an existing regulatory framework in California on oil and gas wells that is not specific to fracking and which contains requirements not included in the interim regulations.

The interim requirements include:

  • A definition of well stimulation (“treatment of a well designed to enhance oil and gas production or recovery by increasing the permeability of the formation”) and description of it as a short term and non-continual process for the purposes of opening and stipulating channels for the flow of hydrocarbons.  The interim regulations describe actions as not well stimulation, including routine well cleanout work and underground injection projects.
  • No requirement that the operator obtain Division approval, but the operator cannot undertake the well stimulation unless it has submitted a written Treatment Notice form 10 days in advance, which the Division must certify as complete.  The operator must also give notice to the Division of well stimulation at least 72 hours in advance.
  • Confirmation of the obligation to retain a third party (i) to identify and give notice to nearby property owners and tenants (within 1500 foot radius of the wellhead or within 500 feet of the horizontal projection of the subsurface parts of the well) and (ii) to sample groundwater if requested by the neighboring property owner.  In this regard, nearby property owners are entitled to demand water quality testing.
  • Disclosure within 60 days following the end of well stimulation treatment of information regarding the composition and disposition of well stimulation fluids.
  • Operator requirements including spill contingency plans to address the handling of well stimulation fluid and additives.

SB 4 and the interim regulations also addresses the manner in which trade secrets are to be handled.  Information regarding the chemical composition of well stimulation fluids must be submitted to the Division, although it can be marked as a trade secret.  There are provisions as to what will happen if the Division does not agree or there is third party demand for the information, including ensuring that a supplier can move for a preliminary injunction before the information is released.

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Photo of Lawrence A. Hobel Lawrence A. Hobel

Lawrence Hobel advises domestic and international clients on policyholder coverage and complex environmental matters and litigation.

According to a recent edition of Chambers USA, sources say that Mr. Hobel is “very creative in his approach to insurance issues and looks at a…

Lawrence Hobel advises domestic and international clients on policyholder coverage and complex environmental matters and litigation.

According to a recent edition of Chambers USA, sources say that Mr. Hobel is “very creative in his approach to insurance issues and looks at a complicated problem and finds two or three ways to solve it that others wouldn’t,” and that he is “well spoken, has a fantastic grasp of the case law, is a good strategic thinker and is an all-around strong coverage attorney.”

Mr. Hobel has served as lead counsel in numerous major coverage actions, and has secured in excess of $1.5 billion dollars in insurance recoveries for extraordinary losses. He has represented policyholders in litigation and negotiations on a broad range of insurance recovery claims and coverage, including first party property damage and business interruption loss, D&O and E&O disputes, privacy and data breach claims, third party toxic tort, asbestos, product liability, property damage claims, and environmental liability coverage.

Mr. Hobel also co-chairs the firm’s Environmental Practice. Clients seek his counsel and representation on a broad range of environmental issues, including waste and hazardous materials and substances, air, water, natural resources, Proposition 65 and other disclosure laws, and land use siting and permitting. He has represented clients in corporate transactions in due diligence and to resolve environmental issues, including risk and cost allocation, structuring, use of insurance. He has defended clients in governmental enforcement litigation and negotiations, provided regulatory counsel and representation on federal, state and local environmental regulations impacting both project development and ongoing operations, and litigated CERCLA, private property damage and toxic tort disputes.

Mr. Hobel has recently focused most of his pro bono practice on representation of veterans in benefits disputes.

Mr. Hobel has been an Assistant Adjunct Professor of Insurance Law at the University of California, Hastings College of the Law and a panelist at numerous programs on insurance coverage and environmental issues.