Office of Sen.

Mike Johnston
Colorado General Assembly | 200 E. Colfax Avenue | Denver, CO 80203 | 303.866.4864

FACT SHEET MEMORANDUM

SB 12-107 Water Rights Protection Act Sen. Carroll & Rep. Wilson Staff Name: Eric Wilson What the Bill Does: SB 12-107 aims to safeguard existing water rights as they pertain to oil and gas hydraulic fracturing. Under SB 12-107, the Colorado Oil and Gas Conservation Commission (the Commission) is charged with establishing rules for hydraulic fracturing near radioactive materials and sites listed on the national priority list. The bill further charges the Commission to establish rules for the shut-down of hydraulic fracturing operations when pressure readings indicate that the hydraulic fracturing fluid has entered a nontargeted area of the geologic formation. SB 12-107 imposes mandatory reporting requirements on operators, before and after hydraulic fracturing treatment (detailed below). The Commission must promptly post these reports on its website and allow the public to easily access the reported information for each well. Water Quantity Reports The operator shall prepare and submit electronically a water quantity report to the Commission before conducting hydraulic fracturing treatment. This report must include an estimate of the amount of water, as well as where and how the operator intends to acquire the requisite water for the hydraulic fracturing operation. Within 60 days following conclusion of the hydraulic fracturing, and annually thereafter if more water is required, the operator must prepare and electronically submit another report. This post-fracturing report must include how much water was actually used and where and how the operator actually acquired the water for the hydraulic fracturing treatment. Water Quality Reports Before the Commission authorizes an operator to begin fracturing a well, the operator must collect water quality samples from all active water wells located within one-half mile of the proposed well. The operator must thereafter collect water quality samples related to samples related to potential impacts from hydraulic fracturing by the first, third, and sixth anniversary of completion of the fracturing from all water wells located within one-half mile of the well. These samples are submitted to the Commission in a format and deadline to be established by the Commission. Financial Assurances SB 12-107 requires operators that engage in high-risk hydraulic fracturing treatment to obtain additional financial assurances that would be forfeited if the operators cause any damage to any water rights or non-tributary waters. Hydraulic fracturing treatment is considered high-risk if it is located within oneDRAFT 2/6/2012 9:52 AM For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.

half mile of any superfund site, naturally or non-naturally occurring radioactive materials, surface water, or federally designated wilderness. Rebuttable Presumption SB 12-107 creates a rebuttable presumption that an owner is presumed responsible for the pollution of a water supply that is within one-half of a line between the well head and the surface projection of the bottom hole location of the well. This presumed liability attaches only if the pollution occurred within six months after the completion of the hydraulic fracturing of the well. In order to rebut this presumption of liability, an operator must affirmatively prove one of the defenses provided in the bill. SB 12-107 eliminates the use of chemicals known or reasonably anticipated to cause cancer, including the commonly used diesel fuel, in the hydraulic fracturing treatment. Finally, the bill prohibits hydraulic fracturing within one-half mile of any surface water, unless the operator uses a closed-loop system. Colorado Context: Colorado has approximately 45,000 active oil and gas wells. In 2009 Colorado ranked fourth in the United States for natural gas production and ninth for oil production.1 Hydraulic fracturing has occurred in Colorado since 1947. Nearly all active wells in Colorado have been hydraulically fractured. Created by the Oil and Gas Conservation Act in 1951,2 the Colorado Oil and Gas Conservation Commission (the Commission) is the regulatory agency in Colorado responsible for the regulation of oil and gas. The Commission serves as first responder to incidents and complaints concerning oil and gas wells, including those related to hydraulic fracturing. To date, the Commission has not verified any instances of groundwater being contaminated by hydraulic fracturing.3 Currently, hydraulic fracturing operators are subject to minimal reporting requirements to obtain a well permit. SB 12-107 increases reporting requirements for operators to allow for more extensive information regarding the water involved for each well. Water that is used for hydraulic fracturing must come from a legal source. It is typically purchased or leased from the holder of a water right. National Context: Similar to this bill, several states, including New York, Pennsylvania, Texas, North Dakota, Wyoming, and Oklahoma, have enacted laws and regulations to protect water quality from hydraulic fracturing impacts. These statutes and regulations have largely come in the form of requiring casing installation- a physical impermeable barrier to contain the well extraction cavity- to prevent contamination. As hydraulic fracturing has become more commonly used in the oil and gas industry, regulations have been promulgated that further impose reporting requirements on operators and impose liability on them in cases of groundwater contamination. 4 Bill Provisions:
1

See Generally: http://205.254.135.7/state/

2 3

Colo. Rev. Stat. 34-60-100, et seq. See the State Review of Oil and Natural Gas Environmental Regulations, Inc. (STRONGER) Colorado Hydraulic Fracturing State Review, 2011. 4 See Generally:http://www.efdsystems.org/Portals/25/Hydraulic%20Fracturing%20BMPs%20White%20Paper.pdf, for

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For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.

Mandates that the Colorado Oil and Gas Conservation Commission establish rules: o for hydraulic fracturing operations near radioactive materials and Superfund Sites.5 o for mandatory shutdown of fracturing operations when pressure readings indicate that the fluid has entered a nontarged area of the geologic formation. Mandates that operators of hydraulic fracturing wells: o Submit reports regarding water quantity and quality; and o Take out environmental bonds or other financial assurances; and Prohibits operators from inserting any quantity of chemicals known or reasonably anticipated to cause cancer, including: o Diesel Fuel o Benzene, Toluene, Ethylbenzene, or Xylene; o Any substance included in the most recent Report on Carcinogens.

Fiscal Impact: There is currently no fiscal note available for SB 12-107.

Sites listed on the national priority list pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). 42 U.S.C. 9601. et seq.

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For a complete list of fact sheets, visit www.mikejohnston.org/in-the-legislature.