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Bill to regulate fracking passes California state Assembly

By Rory Carroll

SAN FRANCISCO (Reuters) - A hotly contested bill that would impose California's first regulations on fracking and other oil production practices passed the state Assembly on Wednesday, despite opposition from environmentalists and oil companies.

Fracking, or hydraulic fracturing, is the practice of injecting water, sand and chemicals underground to crack rock formations and free up oil and natural gas. The technology makes it possible for oil companies to unlock California's vast Monterey Shale deposit, which is estimated to hold 15.4 billion barrels of recoverable oil.

Under the bill, passed by a vote of 47-17, companies would be required to obtain permits for fracking as well as acidizing, the use of hydrofluoric acid and other chemicals to dissolve shale rock. Oil company executives have previously said acidizing could be even more useful than fracking in getting at the Monterey Shale reserves.

The bill would also require notification of neighbors, public disclosure of the chemicals used, as well as groundwater and air quality monitoring and an independent scientific study.

The study would evaluate potential risks such as groundwater and surface water contamination, greenhouse gas emissions, local air pollution, seismic impacts, and effects on wildlife, native plants and habitat.

"There are still many unanswered questions about the use and impacts of fracking and acidizing, and it is in the interest of all Californians to monitor and regulate these practices," said state Senator Fran Pavley, an Aurora Hills Democrat who wrote the bill, SB 4. "Ultimately the oil industry, not the public, should be held accountable for the costs of these activities."

The bill was opposed by environmental groups that wanted to see an outright ban on fracking in the state.

They were especially critical of amendments added to the bill late last week that they said would cut some existing requirements for environmental review.

The new language would also make it more difficult for the governor or regulators to deny a fracking permit until the state finalizes fracking regulations it is currently developing on a separate track. They are not expected to be completed until 2015.

"We would truly be better off passing no fracking legislation this year than we would be if SB 4 passes in its current form," a coalition of environmental groups including CREDO, MoveOn.org and Friends of the Earth said last week.

It was also opposed by oil company interests in the state, which said it could make it difficult for California to reap the benefits offered by development of the Monterey Shale, including thousands of new jobs, increased tax revenue, and higher incomes for residents in one of the poorest regions in the nation.

"SB 4 could create conditions that will make it difficult to continue to provide a reliable supply of domestic petroleum energy for California," said Catherine Reheis-Boyd, president of the Western State Petroleum Association, which represents oil companies in California.

The bill now goes to the California Senate for a concurrence vote. The Senate, which passed an earlier version of the bill in late May, has until Friday to vote on the bill.

If it passes the Senate, California Governor Jerry Brown will sign it into law, his office said on Wednesday.

"The administration has worked collaboratively with the legislature to craft a bill that comprehensively addresses potential impacts from fracking, including water and air quality, seismic activity and other potential risks," Brown spokesman Evan Westrup said.

"SB 4 is an important step forward and the governor looks forward to signing it once it reaches his desk," he said.

(Reporting By Rory Carroll; Editing by Ken Wills and Steve Orlofsky)

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