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HomeMy WebLinkAboutE-mail 01.19.15 - regarding letter about fracking ordinances Sweerye Inert From: Sweeney, Kathleen Sent: Tuesday, January 20, 2015 4:00 PM To: BOTS Cc: Mahn, Paul Subject: FW: Letter from Brian Harriman dated January 19, 201�5, regarding Proposed, Fracking Ordinances Attachments: Letter to county.snellings.1-19-15.pdf Board members Attached is the letter to which Roger is referring. Kathleen Sweeney Assistant Clerk of the Board Butte County Administration 25 County Center Drive, Suite 200 Orovil:le, CA 95965 530-538-7643 "COUNTY OF BUTTE E-MAIL DISCLAIMER:This e-mail and any attachment thereto may contain private,confidential,and privileged material for the sole use of the intended recipient.Any review,copying,or distribution of this e-mail(or any attachments thereto)by other than the County of lButte or the intended recipient is strictly prohibited. If you are NOT the intended recipient,please contact the sender immediately and permanently delete the originai and any copies of this e-mail and any attachments thereto," From: Wilson, Roger Sent:Tuesday,January 20, 2015 1:11 PM To:Teeter, Doug; Connelly, Bill; Wahl, Larry; Kirk, Mlaureen; Lambert, Steve Cc: Kahn, Paul Subject: Letter from Brian Hamman dated January 19, 2015, regarding Proposed Fracking Ordinances Chair Teeter, Supervisor Connelly, Supervisor Wahl, Supervisor Kirk and Supervisor Lambert: On January 19, 20115, Brian Harriman, an attorney representing Wild Goose Storage, LLC, sent a letter to Tim Snellings regarding the two proposed fracking ordinances that will be presented to your Board on February 10, 2015. Per Mr. Hamman's request, a copy of the letter is also being forwarded to all, Supervisors,by the Assistant Clerk of the Board. Our office has reviewed Mr. Harriman's recent letter as well as his previous letters on this issue sent in May and October 2014. In short, Mr. Harriman reiterates that Wild Goose does not engage in any fracking activities, including the storage or disposal of fracking byproducts, and that such activities would be detrimental to its operations. Mr. Hamman also notes that the storage and distribution of natural gas is regulated by both the federal and state governments and that the County is preempted from regulating such activities. Finally, Mr. Hamman asks that gas,storage projects, such,as Wild Goose's operations, be specifically exempted in the proposed ordinances because the language in,the proposed ordinances "could be open to interpretation." our office has been in contact with Mr. Harriman regarding these *issues over several months, including both meetings and,telephone calls, and the proposed ordinances were drafted to both address Wild Goose's concerns and to not impact Wild Goose's operations. A short summary of Wild Goose's concerns and our responses follow: 1, Wild Goose does not en a e in an frackin activities includin the story or dis osal offrackin b roducts. rc : Response:We agree that Wild Goose does not engage in any fracking activities. The proposed ordinances contain widely-accepted and traditional definitions of fracking which are not part of Wild Goose's operations. 2. The storage and distribution of natural gas is regulated by the federal and state governments and the County is preempted from such regulation. Response:The proposed ordinances prohibit fracking and the storage and disposal of fracking byproducts. The proposed ordinances do not regulate the storage or distribution of natural gas in any manner. 3. Natural gas storage ro'ects should be specifically exempted in the proposed ordinances. Response: Given that the proposed ordinances prohibit fracking-related activities, and that Wild Goose has repeatedly reiterated that it does not engage in any fracking-related activities,there is no need to exempt gas storage projects. The definitions in the proposed ordinances were drafted and amended to address Wild Goose's concerns, including earlier amendments in November to exempt all routine maintenance activities from the definitions of fracking. These amendments were made in response to Wild Goose's earlier comments that it uses, on an infrequent basis, acids to clean wells and remove mineral deposits. 4. The language in the proposed ordinances should mirror the state's SB-4 language and definitions regarding fracking and underground inmection projects. Response:The Board is considering adopting the proposed ordinances because SB-4, the state's attempt to address fracking-related activities, has yet to be implemented and its effectiveness has yet to be demonstrated. The state's regulations are not a model for the County to follow and have been criticized in public comment before the Planning Commission as incomplete and ineffective. 5. The language in the proposed ordinances "could be open to interpretation" and may ultimately impact Wild Goose's operations. Response:As noted above,the language and definitions contained in the proposed ordinances are widely- accepted and are used in the oil industry and among regulators. County staff did not create new or novel fracking definitions and the definitions are precise and well-written. Please feel free to contact me should you have any questions regarding the above. Sincerely, Roger S.Wilson Deputy County Counsel 25 County Center Drive,Suite 210 Oroville, CA 95965-3380 Phone: (530) 538-7621 Fax: (530) 538-6891 Email: rwilson@buttecounty.net CONFIDENTIAL ATTORNEY CLIENT/WORK PRODUCT PRIVILEGE CONFIDENTIALITY NOTICE:This email transmission, and any documents or messages attached to it, may contain confidential information that is legally privileged. If you are not the intended recipient, then you are (1) notified that any disclosure, copying, distribution, saving, reading or use of this information is strictly prohibited, (2) requested to discard and delete this email and any attachments,and (3) requested to immediately notify us by email 2 (rwilson buttecount .net), fax(530)538-6891, or telephone (530) 538-7621 that you mistakenly received this message. Thank you. 3 „T7ORN I:Y> Ali.A. % SacValleyLawjohn T.Iiirris jrd Specia?iif in E tar,P[aiming,Trust 6=Probafr i-al4 Brian C. Hamman HARRIS, SANFORD & HAMMAN Jackson Glick A Professional Corporation Thomas G. Sanford of Caunse? January 19, 2015 Tiny Snellings, Director County of Butte County Department of Development Services 7 County Center Drive Oroville, CA 95965 Rc: Proposed Ordinance Bata on Fracking To Mr, Snellings: As you are aware,our client,Wild Goose Storage,LLC("Wild Goose"),has a significant interest in the Proposed Ordinance Ban on Fracking. The purpose of this letter is to again illustrate our concern with the proposed ordinances and to highlight for you and the Butte County Board of Supervisors ("supervisors") as to the importance of Wild Goose's operations within the county,the effect of regulatory control pursuant to the California Public Utilities Commission ("CPUC"), and the potential impact of the proposed local ordinance here in the county. Recently, the Butte County Planning Commission reviewed the two new proposals and after discussion was unable to make any recommendation to the supervisors. We applaud the efforts of the planning commission and staff along with their- queries into the impacts of the proposals. This is an 's efforts are coma-neridable, It is my understanding that the important issue for the county and everyone fracking issue will once again be presented to the supervisors for discussion,and thus,the reason for my letter. FACTUAL REVIEW First,it is beneficial to review some of the existing facts surrounding my client's operations. In operation since 1997, Wild Goose currently maintains 17 wells directly related to the storage of natural gas in its reservoir,4 wells for monitoring, and 1 injection well. As I have stated many times,the term "fracking" is not an activity conducted at Wild Goose as it would actually have a detrimental effect on Wild Goose's operations. Simply put, Wild Goose's reservoir is a water displacement reservoir where P.O. BOX 908 660 OHIO STREET - Gklt7LEY, CALIFORNIA 45958 P1 0NL- !'i301 B?6-5691 FAT :533) $?6-5Y 38 . EMAIL INF 0@u SAC VA 3„i.,FYLAW.COM , WW W SAC:VA LLEYLAIN C 0 M Tin Snellings Dept, Of Development Services January 19, 2015 Page 2 the natural gas is essentially sealed in the reservoir and only transported to and from Wild Goose's customers through the use of its highly maintained wells. Actual"fracking"would only possibly reduce the effectiveness of the reservoir field for this reason. Wild Goose stores natural gas in depleted natural gas reservoirs tliat are a part of the earth's geology and have existed for eons. It doesn't store "fracking fluids" nor does it perform any Racking as a result of their operations, Further, in the general area of Wild Goose the base of the fresh water table is approximatelyl,000 feet below the surface. However, the geological formation where we re- inject the produced salt water is 3,000 feet below the surface and as a result there is at least 2,000 feet of separation from the base of fresh water and the zone where the produced water is being re-injected. The only water that Wild Goose pumps out in a very limited quantity is salt water and as regulations require,Wild Goose contains this salt water,removes any gas particulates from it and returns it through the water injection well to the same depth zone fi•om which it came. These operations are all closely monitored and maintained on a regularbasis,including oversight by the CPUC. on one previous occasion, Wild Goose had found it necessary to clean out its water injection well in order to return this salt water due to scale build up. This was a necessary endeavor with a small alnOunt of diluted chemical fluids used to clean out the scale and again,this is done far below any fresh water table. It is possible that this sante process may be necessary again in the future as scale deposits and build up in the well over tine. Wild Goose's operations also serve and have aided PG&E when there has been a problem with the latter's operations. Wild Goose was, and is able,to offload natural gas from PG&E's lines in order to prevent catastrophic events. Asan example, during the December 2013 cold snap, Wild Goose was providing nearly 20%of FG&E's gas supply for the State on the coldest days. The loss of Wild Goose could actually increase the risk to the public by not being there to serve as a"safety valve". Wild Goose has always maintained a very efficient and successful business in Butte County. Not only does it provide many j obs for the full and part-time employees,but there are all sorts of independent contractors,consultants,etc,that spend a great deal of time and money in the area while performing their tasks and staying in local hotels,eating at local restaurants,and other normal recreational events. Wild Goose is also one of the largest, if not the largest,property tax payers in the county. To potentially lose there business in Butte County would be extremely devastating,. While Wild Goose appreciates that county staff has indicated that in the drafting of the proposed ordinances the intention was always to exclude Wild Goose's operations, it is the perspective of Wild Goose that the language is such that it could be open to interpretation in the future and that could Tint Snelhngs Dept. Of Development Services January 19, 2015 Page 3 potentially be devastating to Wild Goose operations. However,as discussed below,this concern can be easily remedied by employing the same structure as similar state legislation. STATE AND FEDERAL LAW As mentioned in previous correspondence and at the related public meetings, despite what are surely good intentions on the county'sbehalf,this areaof law is already very specifically covered in state and federal law. The United States' Pipeline Safety Act (`'PSA") (49 USC 60101 et.seq.) contains an express preemption provision (49 USC 60104(c)) which renders the provisions of the California Health and Safety Code charged herein as "without effect." The Court in Southern California Gas Co. vs Occupational Safety and Health Appeals Bd. (1997) 58 Cal App4th 200,203 ailed that the Natural Gas Pipe]ine Safety Act, the predecessor to the PSA, applies to "both intrastate and interstate pipelines." A state may only have a role in the regulation or oversight of intrastate natural gas pipelines if one of its agencies annually is certified udder 49 USC 60105 by the federal Pipeline and Hazardous Materials Safety Administration ("PHMSA") of the U.S. Department of Transportation ("DOT"). In relevant part,Section 60104(c),which is entitled"Preemption,"provides that a"State authority that has submitted a current certification under section 60105(x) of this title may adopt additional or more stringent safety standards for intrastate pipeline facilities and intrastate pipeline transportation only if those standards are compatible with the nrinimurn standards prescribed under this chapter,"In California "the" only certified enforcement agency has been and remains the CPUC. As referenced many times, Wild Goose's operations are closely monitored and controlled under the oversight of the CPUC and the California Department of Conservation's Division of Oil; Gas & Geothermal Resources ("DOGGR"). EXISTING REGULATIONS ARE FURTHER SUPPORTED BY THE PASSING OF SB-4 The recent passing of SB-4,which will be in effect July 1,2015,provides a clear differentiation between projects such as Wild Goose's and projects which involve fracking. Gas storage projects(like Wild Goose) are specifically exempted from well stimulation treatment classification requirements as they are deemed to be "underground injection projects". The definition of an underground injection project identified in SB-4 and specifically referenced as California Code of Regulations Title 14 Section 1761(a)(2) is as follows: "(2) `Underground injection project' or `subsurface injection or disposal project' means sustained or continual injection into one or snore wells over an extended period in order to add fluid to a zone for the purpose of enhanced oil recovery,disposal,or storage. Examples Tim Snellings Dept. Of Development Services January 19, 2015 Page 4 of underground injection projects include waterflood injection, steamflood injection, cyclic steam injection, injection disposal, and as storyey ects." ern hasis supplied." The real problem with the two proposed ordinances is that their language appears to bypass the recognition of gas storage projects as underground injection projects and simply merge such a project with that of a fracking operation. This is in direct contravention of SB-4. The relevant laws for well stimulation treatments and well injection projects are operated tinder completely different requirements and this distinction is laid out in SB-4 and specifically referenced as California Code of Regulations Title 14 Section 1780(b): "(b) Well stimulation treatments are not subsurface injection or- disposal projects and ar•e not subject to Sections 1724.6 through 1724.10 or Sections 1748 through 1748.3. This article does not apply to underground injection projects. if well stimulation treatment is done on a well that is part of an underground injection project,then regulations regarding well stimulation treatment apply to the well stimulation treatment and regulations regarding underground injection projects apply to the underground injection project operations." As noted above, gas storage projects are regulated under California Code of Regulations Title 14 Sections 1724.6 through 1724.10, 1748 and 17483. It shoald also be noted that not only are there existing regulations in place regarding gas storage facilities as noted above tinder California Code of Regulations, but emergency interim regulations are currently in effect until SB-4 takes effect later this year. These interim regulations involve water duality monitoring and testing,and public transparency in addition to the(racking,stimulation and acidization conceals. Moreover, there are no known fi•acking permits on file with the county for any new ventures from anyone. So with nothing in the "pipeline" in Butte County with regard to fracking, and the incoming regulations as provided in S3-4,there is no reason to rush to pass either of these ordinances. In closing, the proposed language could be interpreted in a manner that is too broad and overreaching. As the Proposed Ordinances are currently written there is a risk that it could seriously impair Wild Goose's operations, Tim Sne flings Dept. Of Development Services January 19, 2015 Paas 5 With all the protections in place, Wild Goose respectfully requests the following: 1) Denial of both of the Proposed Ordinances as currently written; 2) Or should the board still feel it necessary to pass an anti-fracking ordinance, clearly provide a specific exemption to underground exeniption projects similar to that in SB-4. Thank you for all of your time and efforts concerning this important matter. Vett' truly yours, HARRIS SANFORD & HAMMAN Tian C. Hamman