As reported in our April 11, 2014 post, SB 1132 – the bill that seeks a moratorium on well stimulation during oil and gas development, thereby rescinding portions of  SB 4, which was enacted just a few months ago – passed its first major hurdle when it achieved a 5-2 vote out of the Senate Natural Resources and Water Committee on April 8, 2014.  Since that vote, SB 1132 has been amended and referred to the Senate Committee on Environmental Quality, and its hearing before that Committee is currently set for April 30, 2014.  The amendments offered on April 21, 2014 expand on how the moratorium roll out would occur and how long it would last, and there are three particularly noteworthy amendments to the bill:

  • As we’ve previously discussed, a moratorium would be placed on all well stimulation activities until the independent scientific study required by SB 4 in Public Resources Code § 3160(a) is completed.  However, as the deadline for that study was January 1, 2015 in the original language of SB 4, it was unclear how and when the moratorium would apply, if SB 1132 passed later this year.

    The amendments would extend the deadline for the independent scientific study to June 30, 2016, giving the Natural Resources Agency an additional 18 months of time to complete the study, and simultaneously adding an additional 18 months to the potential moratorium’s duration.  Additionally, the original language of SB 1132 stated that “[a] committee” made up of representatives from various environmental quality and health agencies in California, would review the study and make findings on whether well stimulation activities “do not pose a risk to, or impairment of, the public health and welfare.”  That standard has been amended to broaden its potential scope, and would instead require the committee to determine whether well stimulation treatments “do not contribute to the deterioration of environmental conditions in a way that threatens public health and welfare or the environmental or economic sustainability of the state.” 

  • Under the current iteration of the bill, the Governor would review the committee’s report and make findings to the legislature concerning whether “specific measures” are in place to ensure that well stimulation treatments do not contribute to such deterioration.  Additional time could be added to the moratorium’s duration by another new provision which provides that until the Governor makes such findings, SB 1132 would ban all well stimulation treatments.  However, the Governor’s findings would only be final when all “pending legal challenges are resolved” and when those findings are (1) based on clear and convincing evidence and (2) affirmed.  Though SB 1132 provides a process through which the moratorium could be lifted, a realistic timeline for the entire process could likely drag on for years.
  • The previous version of SB 1132 included a hearing process for any person claiming a vested right to perform well stimulation treatments, placing the burden of proof on the person claiming that vested right.  However, this hearing process was deleted from the bill, and replaced with a simple statement that “this section does not impair or infringe any existing property rights or interests.”  Presumably, as SB 1132 states that the Division of Oil, Gas & Geothermal Resources “shall not approve as complete any Interim Well Stimulation Treatment Notice (‘IWSTNs’) forms…on or after January 1, 2015,” any operators that obtain an approved IWSTN during 2014 would have a vested right to conduct well stimulation treatment pursuant to that IWSTN. 

Ultimately, based on his past positions, the Governor is unlikely to sign this bill, and presently, even some Democrats have abstained from voting to move the measure along.  These amendments, however, indicate that if SB 1132 is passed, there could very well be an indefinite moratorium on well stimulation treatment in California.