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HomeMy WebLinkAboutE-mail rec'd from Robinette Cook re Fracking Sweeney, Kathleen From: Bennett, Robin Sent: Monday, February 09, 2015 9:09 AM To, Hahn, Paul Cc: Sweeney, Kathleen Subject: RE: Robinette Cook FWD Packet omissions- Frackingi Attachments: Welsh Letter Butte 8 pages.pdf; Pages 339-339 BOS Packet.pdf; Hamman to county.sneffings.1-1 9-15.pdf Paul and Kathleen; Please see the attached email to 130S, from Robinette Cook, with attachments. Thanks, Robin Bennett, Executive Assistant to Supervisor Doug Teeter dteeter A&I u ILttcquniyi if e t (53o)872-6304 Ebennett@bjLt county.ret 5th District Supervisor's Office, County of Butte, Board of Supervisors, Chair 747EIliottRoad Paradise, CA 95969-3939 From: robinettec nk@ C gmalixorn [ungilLtp:,,LQbinettecook@grnLilcg.M] On Behalf Of Robinette Cook Sent: Friday, February 06, 2015 6:48 PM To: Maureen Kirk; Larry Wahl; Bill Connelly; Teeter, Doug; BO S District 4 Subject: Packet omissions - Fracking Dear Supervisor Friends: The 500+page staff report for the fracking hearing omitted the January letter from Brian Hamman at Wild Goose. I have attached. it. Also on page 338 of the staff report the letter our attorneys wrote is blanked out and only 2 pages of the eight were included (the letterhead and signature block were included, the content was whited out). Somehow the scannerat the county skipped six pages. I have attached the original letter with 8 pages and the two page version that was in your packet. I hope this helps in your deliberations, Look forward to seeing you. Robin Cook robinetteCqrobinettecook,com 530-346-3883 5 1 355 South Grand Avenue Los Angeles,California 90071-1580 Tel:+1.213.4051234 Fax,+1.213.691.9783 www.lw.00m FIRMAFFILIATE OFFICES LATHAM&WATKINSLLP Abu Dhabi Milan Barcelona Moscow BeQing Munich Boston New Jemsy Brussels Now York Chicago orange County Doha Paris VIA ELECTRONIC MAIL Dubai Riyadh nOsseldcrt Rome Frankfurt San Diego October 22,2014 Hamburg San Francisco Hong Kong Shanghai Houston Silicon Valley London Singapore Los Angeles Tokyo Butte County Planning Commission Madrid Washington,D,C. 7 County Center Drive Oroville, CA 90000 Re: Proposed Ordinance to Ban Hydraulic Fracturing:Butte Countâ–ºPlanning Commission October 23 2014 Meeting,Agenda Item No. V.A Dear Chair Nelson and Honorable Commissioners: We are writing on behalf of our client, Californians for Energy Independence,a statewide coalition of energy producers, agricultural groups, business associations, local government leaders and agencies, and taxpayer advocates, among others, formed to educate the public about proven,safe oil extraction technologies. We write to urge the Planning Commission Q to advance the proposed Ordinance to Ban Hydraulic Fracturing in Butte County ("Ordinance"). The Ordinance represents bad public policy, and adoption of the Ordinance is not permitted under state law. Although the Ordinance is presented as a hydraulic fracturing ban (and the focus of the Agenda Report prepared by the Department of Development Services is on hydraulic fracturing), the Ordinance is written more broadly to prohibit well stimulation treatments, which potentially captures a much larger range of extraction techniques. The Ordinance's definitions of the prohibited techniques differ from those used by the state, particularly with regard to the definition of well stimulation treatment, thereby creating uncertainty as to the specific types of extraction techniques (e.g., water flooding, cyclic steam injection) that are covered by the Ordinance's ban and what would still be permitted in the appropriate zones. The Ordinance creates regulations that are inconsistent with state law and,as such, is void and unenforceable. The proposed Ordinance is preempted by state law. The state has fully occupied the field relating to the methods of oil and gas production, leaving no room for local regulations that are conflicting or duplicative. As such, the County may not ban particular methods of oil and gas production, as proposed by the Ordinance. LA13844800 Butte County Planning Commission October 22,2014 Page 2 LATHAM&WATKINSup Further, consideration and adoption of the Ordinance is subject to review under the California Environmental Quality Act ("CEQA") because the Ordinance is a discretionary project under CEQA that could potentially result in significant environmental impacts. The Agenda Report states that the Ordinance is exempt from CEQA but presents no evidence to support such assertions. There has been no CEQA clearance provided for the Ordinance, and environmental review must take place before the Ordinance may be considered for adoption by the Board of Supervisors. These issues are discussed in greater detail in Attachment A to this letter. We appreciate your consideration of this letter. Please do not hesitate to contact us should have any questions or need further information. Very trulys, 4e o J. Mihlsten of LATHAM&WATKINS LLP cc, 'Tim Snellings,Director, Butte County Department of Development Services Stacey Jolliffe, Principal Planner, Butte County Department of Development Services Catherine Reheis-Boyd, Californians for Energy Independence Sean Welch,Nielsen Merksamer Parrinello Gross&Leoni LLP Attachment LAU84480D Bulb County Planning Commission October 22,2014 Page 3 LATHAM&WATKINSELP ATTACHMENT A I. THE ORDINANCE IS PREEMPTED BY STATE LAW The state has fully occupied the field concerning oil and gas production and extraction activities. Therefore,there is no room for the County's proposed Ordinance. Where local legislation conflicts with the state's general laws, the Iocal legislation is preempted and is void and unenforceable. (See, e.g., Sherwin-Williams Co. v. City of Los Angeles (1993) 4 CalAth 893, 897.) A conflict between local and state legislation exists where the local legislation duplicates, contradicts, or enters into an area fully occupied by state law. (Id. at 897-98.) Preemption by state law may either be express or implied. Implied preemption exists where the state has fully occupied the field that a lower body seeks to regulate. Implied preemption can take three forms: (1)the subject chatter has been so fully and completely covered by state law as to clearly indicate that it has become exclusively a matter of statewide concern; (2) the subject matter has been partially covered by state law couched in terms that indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by state law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the locality. (See, e.g.,Sherwin-Williams,supra,4 CalAth at 897-98.) A review of the relevant and long-standing statutes and authorities makes clear that the Ordinance is preempted by state law. First, the Public Resources Code has long assigned the State Division of Oil, Gas and Geothermal Resources ("DOGGR") exclusive responsibility for regulating subsurface activities. (See, e.g., Pub. Res. Code, § 3106(a) [State Oil & Gas Supervisor has authority over "the drilling,operation,maintenance,and abandonment of wells"].) The legislature declared, as a policy of the state to eliminate waste by increasing the recovery of underground hydrocarbons, that an oil and gas lessee or operator has the right to conduct"the injection of air, gas,water, or other fluids into the productive strata, the application of pressure heat or other means for the reduction of viscosity of the hydrocarbons,the supplying of additional motive force, or the creating of enlarged or new channels for the underground movement of hydrocarbons into production wells, when these methods or processes employed have been approved by the [State Oil and Gas Supervisor]." Subjects regulated under the Public Resources Code include well stimulation, well bonding, abandonment of wells, orphan wells, recordkeeping, blowout prevention, well casing, protection of water supplies, repairs, regulation of production facilities, unreasonable waste of gas, subsidence, spacing of wells, management and development of unit operations, and regulation of oil sumps. (See generally Pub. Res. Code, §§ 3000 — 3865.) Subjects regulated under the California Code of Regulations include CEQA exemptions for oil and gas activities, well testing, well plugging and abandonment, casing and cementing requirements, blowout 1A%3 800 Bata County Planning Commission October 22,2014 Pogo 4 LATHAM&WATKiNSLLP prevention, pipeline and tank requirements, and the maintenance and filing of well records. (See Cal. Code Reg. §§ 1681 et seq.) Local ordinances that seek to ban or restrict well stimulation techniques conflict with the state's express policy in the Public Resources Code. Second, Senate Bill 4 (Stats. 2013, ch. 313) ("SB 4") expanded DOGGR's pre-existing comprehensive regulatory program by adding more detailed requirements for well stimulation treatment activities including hydraulic fracturing. Among other things, SB 4 defined terms related to hydraulic fracturing, required specific studies and reports on hydraulic fracturing, mandated additional regulations which DOGGR has already implemented on an interim basis, further delineated regulatory authority over well stimulation treatment activities, required specific permits to utilize hydraulic fracturing, required notice and disclosures,established water quality monitoring requirements, imposed stiffer penalties for noncompliance, and authorized new fees. DOGGR promulgated interim regulations pursuant to SB 4 in December 2013 that address reporting and operational requirements for the use of hydraulic fracturing and other well stimulation techniques in greater detail. (See Pub. Res. Code, §§ 3150-3161; see also SB 4 (Pavley, Chapter 313, Statutes 2013).) DOGGR's interim SB 4 regulations reinforced DOGGR's regulatory authority over all "downhole" activities, demonstrating further that the field is fully covered by the extensive state regulations. DOGGR is currently in the process of promulgating final regulations pursuant to SB 4,which are to be adopted by January 1,2015. Third, the state has fully occupied the field regarding "downhole" regulations of oil extraction. The Agenda Report lists the many DOGGR regulations applicable to downhole activities. (See Agenda Report, pp. 4-5.) The Agenda Report acknowledges that DOGGR is in the process of finalizing regulations pursuant to SB 4, as discussed above. (Id. at p. 5.) These statements implicitly, if not explicitly, acknowledge that DOGGR's regulations preempt local ordinances on the subject of"downhole"activities. Even if the County may determine the location of surface oil and gas facilities, the County cannot regulate the "downhole" business of drilling and operating wells in zones where those uses are permitted. As set forth above, that is wholly within DOGGR's purview. A local government may not use its police power over zoning and land use of the surface of the land to regulate technical, subsurface methods and means. In other words, while the County may be able to determine where oil wells may be operated, DOGGR has the exclusive power over how they are operated. (See Braly v. Board of Fire Commissioners (1958) 157 Cal.App.2d 608, 616 [municipal regulations on technical aspects of oil production such as the size of the property and distance from public streets required to allow the siting of an oil well imposed an unconstitutional taking of plaintiffs' right to drill on their own land in a jurisdiction that allowed such drilling].) The County's proposed Ordinance would intrude onto regulatory territory claimed in full by the state legislature. The Ordinance includes definitions of acidizing, hydraulic fracturing, and well stimulation treatment that would be added to Section 24-304 of the Butte County Zoning Ordinance. While there are some similarities to the definitions of these techniques used in SB 4, there are also significant differences,particularly with regard to the definition of well stimulation treatment. The Ordinance's departure from the definitions in SB 4 creates regulations that are inconsistent with and preempted by state law, and the discrepancies also create a separate legal LAUs44800 Butte County Planning Commission 0doher 22,2D14 Page 3 LATHAM&WATKINSLLP problem: uncertainty about what types of other extraction techniques (e.g., water flooding, cyclic steam injection)may be covered by the Ordinance's ban and what would still be permitted in the appropriate zones. Specifically, while the first two sentences of the Ordinance's definition of "Well Stimulation Treatment" largely match the well stimulation treatment definition set forth in Section 3257 of the Public Resources Code (added by SB 4), the last sentence does not. Section 3257 explicitly states that "[w]ell stimulation treatments do not include steam flooding water flooding, or cyclic steaming and do not include routine well cleanout work, routine well maintenance,routine removal of formation damage due to drilling,bottom_ hole pressure surveys or routine activities that do not affect the integrity of the well or the formation." (emphasis added). The omission of the underlined language from the SB 4 well stimulation treatment definition creates uncertainty about whether the Ordinance would ban steam flooding, water flooding, and cyclic steaming. Further, "Hydraulic fracturing"is defined in the Ordinance as: Any well stimulation treatment that, in whole or in part, includes the pressurized injection of hydraulic fracturing fluid or fluids, which may include a mixture of water. chemicals,_orrsand, into an underground geologic formation in order to fracture, or with the intent to fracture, the formation, thereby causing or enhancing the production of oil, gas, or other hydrocarbon substances from a well. (emphasis added) The underlined language above indicates language that is not included in the hydraulic fracturing definition from SB 4 set forth in Section 3152 of the Public Resources Code. Thus, in addition to the incurable defect of being preempted by state law, the Ordinance also creates confusion as to its applicability to other extraction techniques, particularly given the uncertainty noted above with regard to the definition of well stimulation treatment. The Ordinance creates regulations that are inconsistent with state law and must give way to it. The state long ago fully occupied the field of regarding oil and gas regulations. The state further expressed its intent to continue to occupy the field when it enacted SB 4. SB 4 directs DOGGR to develop final regulations that are even more comprehensive than those that already exist. DOGGR is now in the process of finalizing those regulations. Any effort by the County to regulate activities such as hydraulic fracturing and other well stimulation treatments covered by SB 4 is preempted. II. THE ORDINANCE IS NOT EXEMPT FROM CEQA The Agenda Report on the proposed Ordinance prepared by Department of Development Services staff, dated October 23, 2014, incorrectly concludes that the Ordinance is exempt from review under CEQA. The Agenda Report cites three provisions for this assertion: (1) CEQA Guidelines section 15378, which defines "project" under CEQA, (2) CEQA Guidelines section 15308, which categorically exempts regulatory actions to protect the environment, and (3) the "general rule exemption,"because "[i]t can be seen with certainty that there is no possibility the LA\38"soo Butte County Planning Commission October 22,2D14 Page 8 E_ATHAM&WATKINSiLp proposed Ordinance will have a significant effect on the environment." (See Agenda Report, P. 14.) As discussed below,the claims of exemption are not supported by the Agenda Report or by the facts. Instead,the Ordinance is a"project"under CEQA requiring environmental review. CEQA establishes a three-step process for public agencies to evaluate the environmental impacts of their actions. (Tomlinson v. County of Alameda (2012) 54 CalAth 281, 285-286.) First,the agency must determine whether the proposed action is a"project." A project is defined as an activity "which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment." (Pub.Res. Code, § 21065.) If the discretionary action is a "project," the second step is for the public agency to determine whether any environmental review is required. (Tomlinson, 54 CalAth at 286.) In completing the second step, the agency must determine whether the project is exempt from CEQA review. (See Public Resources Code, §§ 21080, subd. (b), 21084, subd. (a).) If the project is not exempt from CEQA, the agency must determine whether an environmental impact report, negative declaration, or mitigated negative declaration is required. (Pub. Res, Code, § 21080.1; CEQA Guidelines, § 15060.) However, even when a project fits within a categorical exemption, environmental review is required where there are "unusual circumstances" that create a "reasonable possibility" that the activity will have a significant effect on the environment. (CEQA Guidelines, § 15300.2, subd. (c).) A. The Ordinance is a discretionary project under CEQA with potentially significant environmental impacts The Ordinance is a discretionary "project" subject to review under CEQA. Section 15378 of the CEQA Guidelines defines "project" to include activities directly undertaken by public agencies, such as "enactment and amendment of zoning ordinances." The Ordinance would amend the Butte County Zoning Ordinance to defuse a method of oil and gas extraction, "well stimulation treatment," that would be prohibited, and would prohibit the storage and disposal of"well stimulation byproducts"within the County. Therefore,the Ordinance is clearly a zoning ordinance under the definition of"project"in Section 15378 of the CEQA Guidelines. A "project" under Section 15378 must also have the "potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment." The Agenda Report claims, without evidence, that the Ordinance would have no potential for direct or indirect change to the environment. (Agenda Report, p. 14.) On the contrary, the Ordinance could directly or indirectly result in several potential environmental and socioeconomic impacts, which have not been considered or disclosed. It is the County's responsibility to identify and analyze these impacts, and here the County has failed entirely to even consider the potential occurrence of adverse impacts. These potential impacts cannot be ignored,and must be studied and considered by the County. The Agenda Report also claims that the "general rule exemption" applies to the Ordinance because "it can been seen with certainty that there is no possibility the proposed Ordinance will have a significant effect on the environment." (Agenda Report, p. 14.) As discussed above, this is not the case, and simply stating a conclusion does not make it so. The LM1384480D eutm County Planning Commission OeMber 22,4014 Page 7 LATH AM&WATKIN5u, Ordinance is a discretionary action initiated by a public agency that has the potential to cause several significant environmental impacts,and therefore must undergo CEQA review. B. The Ordinance is not exempt under CEQA Guidelines section 15309 The Agenda Report also claims that the proposed Ordinance is categorically exempt under CEQA Guidelines section 15308. Section 15308 exempts only "actions taken by regulatory agencies, as authorized by state or local ordinance, to assure the maintenance, restoration,enhancement, or protection of the environment where the regulatory process involves procedures for protection of the environment." (CEQA Guidelines, § 15308.) The Agenda Report presents no evidence that the Ordinance is necessary to protect the environment. In fact, the Agenda Report specifically notes that "[n]o existing or proposed `fracking' projects were identified in a review of Butte County land uses." (Agenda Report, p. 3.) In addition, the Agenda Report acknowledges that "there has not been a conditional use permit issued for oil or gas extraction in over 25 years." (Id.) Though the Agenda Report goes on to list purported concerns related to hydraulic fracturing, including water usage, subsidence, water contamination,and others,the Agenda Report fails entirely to draw any link between those alleged risks and existing or proposed land uses in Butte County. The Agenda Report says that Section 15308 applies because the proposed Ordinance"is a regulatory action taken by Butte County to assure the maintenance,restoration, enhancement and protection of the environment." (Agenda Report, p. 14.) The County has no evidence for its assertion and has not met its burden to prove that the exemption applies. Section 15308's exemption for regulatory acts is narrow and cannot be stretched to include the Ordinance. A municipality cannot "circumvent CEQA merely by characterizing its ordinances as environmentally friendly and therefore exempt" under the exemption. (Save the Plastic Bag Coalition a County of Marin (2013) 218 Cal.AppAth 209, 219-220.) Rather, a municipality claiming that a project need not undergo CEQA review because it is a regulatory action intended to protect the environment must first marshal substantial evidence establishing that the project falls within the exempt category of projects. (See Davidon Homes v. City of San Jose(1997) 54 Cal.App.4th 106, 115.) In Dunn-Edwards Corp. v. Superior Court (1992) 9 Cal.AppAth 644 (disapproved on other grounds by Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559), for example, the court rejected an air district's argument that regulations imposing emission standards for volatile organic compounds contained in architectural coatings were categorically exempt under CEQA Guidelines Sections 15307 and 15308 because the regulations were more stringent and"cannot be said to have created an adverse change."(Id.at 657.) The court held the agency's conclusion that the regulations would not result in a net increase in emissions was not supported by any evidence on the record and was therefore "predicated on lack of the very information which would be provided by an EIR." (Id. at 658.) Here,there is no evidence,much less substantial evidence,to support a determination that the Ordinance falls within the narrow exemption under Section 15308. The Agenda Report LAV3a48oa Butts County Planning Commission octotwr22,2014 Pap LATHAM&WATKINSLIP merely concludes,without further explanation,that the exemption applies. This is not enough. The County cannot simply assert,without any support,that the Ordinance is categorically exempt from CEQA under Section 15308. (Save the Plastic Bag Coalition,218 Cal.AppAth at 219-220.) Because the County has no evidence to support its conclusion that the Ordinance is exempt from CEQA,the County has not met its burden of establishing that the Ordinance falls within Section 15308°s exemption for regulatory actions to protect the environment. Therefore, the Ordinance must undergo CEQA review. LA3844800 355 South Grand Avenue Los Angeles.California 80071-1580 Tel:+1,21a.485.1234 Fax;+1.213.891,8743 www.lw.com FIRM I TE L AT H A M&W AT K l N S LLP Abu DhabiFilIA MienFiCES Barcelona Moscow Beijing Munich Boston New Jersey Brussels New York Chicago Orange County Doha Paris VIA ELECTRONIC MAIL Dubai Riyadh Dossetdort Rome Frankfurt San Diego October 22,2014 Hamburg San Francisco Hang Kong Shanghai Houston Silicon Valley London Singapore Los Angeles Tokyo Butte County Planning Commission Madrid Washington,D.C. 7 County Center Drive Oroville,CA 90000 338 L.AL3844800 eo J. Mihlsten of LATHAM& WATKINS LLP cc: Tim S ellings, Director,Butte County Department of Development Services Stacey Jolliffe,Principal Planner,Butte County Department of Development Services Catherine Rheis-Boyd, Californians for Energy independence Sean elch,Nielsen Merksamer Parrinello Gross & L,eoni LLP Attachment 339 LA\39 saa AdnmhL ATTc RNEYti AT 4AW 5acVa.11ey.La.w John T.Harris Ccrl ificd Spenalui in£slate Planning,Trust S Prolate lnw Brian C.Hamman HARRIS, SANFORD & HAMMAN Jackson Glick A Professional Corporation Thomas G.Sanford of Counsel January 19,2015 Tim Sneliings, Director County of Butte County Department of Development Services 7 County Center Drive Oroville, CA 95955 Re: Proposed Ordinance Ban 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 ofthe planning commission and staff along with their queries into the impacts of the proposals. This is an important issue for the county and everyone's efforts are commendable. It is my understanding that the 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 onto STREET a GRIDLEY, CALIFORNIA 95948 PHONE (530) 846-5691 . FAX (530) 846-5738 1 EMAIL INFOOS.ACVALLEYLAW.COM = WWW.SACVALLEYLAW.COM Tint 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 that are a part of the earth's geology and have existed for eons. It doesn't store "fracking fluids"nor does it perform any fracking as a result of their operations. Further, in the general area of Wild Goose the base of the fresh water table is approximately 1,000 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 from which it came. These operations are all closely monitored and maintained on a regular basis,includi ng oversi ght 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 amount of diluted chemical fluids used to clean out the scale and again,this is done far below any flesh 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 time. 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. As an example,during the December 2013 cold snap, Wild Goose was providing nearly 20%of PG&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 fixture and that could Tim Snellings Dept. Of Development Services January 19, 2015 Page a 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's behalf,this area of law is already very specifically covered in state and federal law. The United States' Pipeline Safety Act (`'PSA") (49 USC 60101 etseq.) 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 ruled that the Natural Gas Pipeline 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 under 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(a) 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 minimum 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(racking. 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 more 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 storage pro'ects."emphasis 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 S13-4 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 are 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 1748.3. It should also be noted that not only are there existing regulations in place regarding gas storage facilities as noted above under 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 quality monitoring and testing,and public transparency in addition to the fracking,stimulation and acidization concerns. Moreover,there are no known fracking 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 SB-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 Snellings Dept. Of Development Services January 19,2015 Page 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-fiacking ordinance, clearly provide a specific exemption to underground exemption projects similar to that in SB-4. Thank you for all of your time and efforts concerning this important matter. Very truly yours, HARRIS SANFORD & HAMMAN rhanHamman