Water Management 

for California Shale Plays

California Legal and Regulatory Issues

May 28, 2014

Denver, CO

John J. Harris

Paul M. Williams

Dentons US LLP

T +1 213 623 9300 

john.harris@dentons.com

paul.williams@dentons.com

dentons.com
Monterey Shale

2
Water Management Considerations

In California Oil and Gas Operations

• What state, federal and local agencies are involved 

in the regulation of water supply, water injection and 

disposal for oil and gas exploration and production 

operations in California?

• With the implementation of SB4, what regulatory 

changes are likely in the short term to effect 

hydraulic fracturing and shale exploration efforts in 

California?

3
California Regulatory Agencies Involved in 

Water Management Issues

• Division of Oil, Gas and Geothermal Resources 

(“DOGGR”)

•Bureau of Land Management

•State Water Resources Control Board

• Regional Water Quality Control Board

• Local Water Districts

• Counties

• Cities

4
California Division of Oil, Gas 

and Geothermal Resources 

Permitting Authority
Permitting by the 

Division of Oil, Gas and Geothermal Resources 

• The duties of the Division of Oil, Gas and Geothermal 

Resources (“DOGGR”) are set forth in 

• Sections 3000, et seq., of the Public Resources Code and 

• Title 14, Chapter 4 of the California Code of Regulations

• All oil and gas wells, onshore and offshore (within three 

nautical miles of the coastline), located on state and private 

lands are permitted, drilled, operated, and plugged and 

abandoned are regulated by DOGGR

6
DOGGR Requirements for Operators

• Before drilling an oil or gas well, operator submits to 

DOGGR a notice of intent to drill or redrill with drilling 

program for review and approval. 

• The approval only relates to the drilling or re-working 

operation

• Most other actions do not require DOGGR approval

• Operations must be conducted in accordance with good 

oilfield practices. 14 C.C.R. § 1722(a).

7
DOGGR Drilling Requirements

• Fundamental purpose of well construction standards are to 

ensure “zonal isolation”, including zones that might contain 

fresh water. 

• DOGGR approves the proposal if notice of intent and 

program meet existing standards. 

8
“The supervisor shall also supervise the drilling, 

operation, maintenance, and abandonment of wells so 

as to permit the owners or operators of the wells to 

utilize all methods and practices known to the oil 

industry for the purpose of increasing the ultimate 

recovery of underground hydrocarbons and which, 

in the opinion of the supervisor, are suitable for this 

purpose in each proposed case....”

Public Resources Code §3106(b):

9
“.....To further the elimination of waste by increasing the recovery of 

underground hydrocarbons, it is hereby declared as a policy of this 

state that the grant in an oil and gas lease ...., in the absence of an 

express provision to the contrary contained in the lease or contract, 

is deemed to allow the lessee or contractor, or the lessee' s or 

contractor's successors or assigns, to do what a prudent operator 

using reasonable diligence would do, having in mind the best 

interests of the lessor, lessee, and the state in producing and 

removing hydrocarbons, including, but not limited to, the 

injection of air, gas, water, or other fluids into the productive 

strata, ..... 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 supervisor, ....”

Public Resources Code §3106(b) 

(Cont’d)

10
Public Resources Code §3106(b) 

(Cont’d)

“....except that nothing contained in this section imposes a legal duty 

upon the lessee or contractor, or the lessee's or contractor's successors 

or assigns, to conduct these operations.”

11
Waste Water Disposal and Injection 

• Generally, 80-90% water cut is not uncommon in California 

oil and gas

• About 6 times more water than oil is produced from 

California’s oil and gas fields

• DOGGR was granted primacy by the United States 

Environmental Protection Agency (“EPA”) in 1983 to 

implement its UIC Program under the federal Safe Drinking 

Water Act (42 U.S.C. §§ 300f to 300j) and to oversee Class 

II well injection operations in California. 

12
Waste Water Disposal and Injection 

• DOGGR Class II UIC Permitting process applies to 

• Water disposal wells

• Water injection and other enhanced recovery wells

13
Application of the Clean Water Act to 

Oil and Gas Activities

• State Water Resources Control Board (“State Board”) was 

granted authority for its NPDES program

• NPDES Permits for Exploration and Production Activity

• Federal Water Pollution Control Act (“CWA”) (33 U.S.C. 

§§1251, et seq.) 

14
NPDES General Permits

• Industrial Permit- Not required unless the industrial storm 

water discharge contributed to a violation of a water quality 

standard

• Construction Permit- Not required if discharges of storm 

water runoff from drilling operations are not contaminated

• Notice of Intent (NOI) is a request for NPDES coverage for 

a General Permit

15
Oil and Gas Operations Exemption

• Historically, most oil and gas exploration and production 

activities have been statutorily exempted from the permit 

requirements of the CWA

• The 1987 amendments added Section 402(l)

• Exempted oil and gas “operations” from NPDES permit 

requirement 

• If the discharge is not contaminated by contact with 

“overburden, raw material, intermediate products, finished 

product, byproduct or waste products” 

16
Oil and Gas Operations Exemption

• 2005 Energy Policy Act

• Broadened the Section 402(l) NPDES permit exemption for 

uncontaminated oil and gas operations storm water 

discharges to include construction activities

• State Water Resources Control Board interpretation and 

application

17
Waste Water Disposal and Injection Rulemaking

• DOGGR was planning to commence rulemaking in 2013 to update its 

UIC program.

• Area Of Review / Zone Of Endangering Influence 

• Well Construction Practices 

• Status Of Wells Located Within Area of Review

• Mechanical Integrity Tests

• Maximum Allowable Surface Injection Pressures

• Inspections And Compliance / Enforcement

• Idle Well Planning And Testing Program 

• Financial Responsibility Requirements 

• Plugging And Abandonment Requirements 

• UIC Staff Qualifications 

18
Regulation of Hydraulic 

Fracturing and Well 

Stimulation in California 
Regulatory Background

• Hydraulic fracturing is generally exempt from the federal 

Safe Drinking Water Act, UNLESS the fracing solution 

contains diesel

Regulation of Hydraulic Fracturing

20
Hydraulic fracturing not regulated under UIC program

The Energy Policy Act of 2005 amended the SDWA (42 

U.S.C. §300h(d)(1)):

“The term “underground injection”--

• means the subsurface emplacement of fluids by well 

injection; and

• excludes--

• the underground injection of natural gas for purposes of 

storage; and

• the underground injection of fluids or propping agents 

(other than diesel fuels) pursuant to hydraulic fracturing 

operations related to oil, gas, or geothermal production 

activities....”

DOGGR Regulation of Hydraulic Fracturing 

21
Senate Bill 4 - Pavley

• Passed by Legislature on September 11, 2013

• Signed by Governor Brown on September 20, 2013

• Effective on January 1, 2014

• Requires DOGGR to adopt final well stimulation and hydraulic 

fracturing regulations by January 1, 2015. 

• Governor's signing message:

• Directed DOGGR to develop an efficient permitting program for well stimulation 

activities that groups permits together based on factors such as known geologic 

conditions and environmental impacts, while providing for more particularized 

review in other situations when necessary.

• Noted that "The bill needs some clarifying amendments and I will work with the 

author in making those changes next year."

Dentons US LLP Document reference # 60398858 22
Senate Bill 4 - Pavley

• Provides for notification to property owners within a specified distance of 

a well. 

• Does not expressly modify the current process of filing a notice of intent 

to drill a well,

• Contemplates a second and separate permit unless fracturing is 

approved as part of original drilling permit. 

• BLM Lands- DOGGR’s regulations would govern.

• Requires DOGGR to conduct a study on the effects that hydraulic 

fracturing. 

Dentons US LLP Document reference # 60398858 23
Senate Bill 4 

CEQA Review?

• Public Resources Code § 3160(d)(2)(B):

"Where the supervisor determines that the activities proposed in the well 

stimulation treatment permit or the combined authorization have met all of the 

requirements of Division 13 (commencing with Section 21000) [CEQA], and 

have been fully described, analyzed, evaluated, and mitigated, no additional 

review or mitigation shall be required."

• Public Resources Code § 3161(b):

"The division shall allow, until regulations governing this article are finalized and 

implemented, and upon written notification by an operator, all of the activities 

defined in Section 3157, provided all of the following conditions are met: ..."

SB4 and DOGGR appear to treat the approval of a well stimulation permit 

as being a ministerial act, not a discretionary act, and not subject to review 

under CEQA (Public Resources Code §§ 21000, et seq.) 

Dentons US LLP Document reference # 60398858 24
Senate Bill 1132

• Currently pending in the State Senate

• Would impose a moratorium on hydraulic fracturing

• Prohibits DOGGR from approving any authorizations for well 

stimulation treatments on or after January 1, 2015.

Dentons US LLP Document reference # 60398858 25
• DOGGR commenced the rulemaking process for final 

hydraulic fracturing regulations. 

• Final regulations will have to be completed by January 1, 

2015 

DOGGR Rulemaking

26
• SB 4 does not require that the permanent regulations to 

take effect until January 2015. 

• Until the permanent regulations go into effect, SB 4 allows 

operators to proceed with well stimulation treatments 

without a permit if they comply with specified provisions of 

SB 4. 

• DOGGR used emergency regulatory authority to adopt 

interim regulations which went into effect on January 1, 

2014.

DOGGR Interim Regulations

27
Scope of Interim Regulations:

• Notification to DOGGR prior to fracturing

• Post-completion Reporting requirements

• Public notification

• Chemical disclosure

• Review of well construction standards

• Well integrity tests

• Structural integrity of overlying formation

• Groundwater protection

• Fluid management

DOGGR Interim Regulations

14 C.C.R. §§ 1761, et seq.

28
WELL STIMULATION TIMELINE UNDER INTERIM 

REGULATIONS

29

Well Stimulation Occurs

Submit Interim Well Stimulation 

Treatment Notice to Dogger 

(Form OG 109); Prepare 

Groundwater Monitoring Plan 

and Water Management Plan; 

Prepare List of Plugged and 

Abandoned Wells

Give Notice to 

Neighbors

Confirm Mechanical 

Integrity of Wells

Notify DOGGR that Well 

Stimulation will be Commencing

Confirm with DOGGR that Well 

Stimulation is proceeding

Give Notice to SCAQMD of 

Well Stimulation

24 hours prior to 

well stimulation

72 hours prior to 

well stimulation

at least 30 days prior 

to well stimulation

anytime prior to 

well Stimulation

anytime prior to 

well stimulation

at least 10 days prior 

to well stimulation

3 hours prior to 

well stimulation

Sample Groundwater Submit to DOGGR the Well 

Stimulation Treatment 

Disclosure Reporting Form

Provide Additional Disclosures to 

SCAQMD

within 60 days after 

well stimulation

Sample Groundwater

within 60 days after 

well stimulation

within 60 days after 

well stimulation
What is "Well Stimulation"

Three broad types of well stimulation used in California that 

are the focus of 

• SB 4 and the Department's interim regulations address:

1. Hydraulic fracturing

2. Acid fracturing 

3. Acid matrix stimulation

30
Public Resources Code §3157(b) and 14 C.C.R. §

1761(a)(1) exclude:

1. Steam flooding,

2. Water flooding 

3. Cyclic steaming 

4. Routine well cleanout work 

5. Routine well maintenance

6. Routine removal of formation damage due to drilling

7. Bottom hole pressure surveys

8. Removal of scale or precipitate from the perforations, 

casing, or tubing

DOGGR Interim Regulations

Excluded Operations

31
9. Underground injection projects 

10. Water disposal projects

11. A wells stimulation treatment that does not penetrate into 

the formation more than 36 inches from the wellbore.

12. Other routine activities that do not affect the integrity of 

the well or the formation.

DOGGR Interim Regulations

Excluded Operations

32
No. The answer depends on whether the fluid injected 

could be considered a “well stimulation treatment fluid”, 

which is defined in Public Resources Code §3153 and 14 

C.C.R. § 1781(n) as:

“... a base fluid mixed with physical and chemical additives, 

which may include acid, for the purpose of a well 

stimulation treatment. A well stimulation treatment may 

include more than one well stimulation treatment fluid. 

Well stimulation treatment fluids include, but are not 

limited to, hydraulic fracturing fluids and acid stimulation 

treatment fluids.”

DOGGR Interim Regulations

Are all well stimulation operations subject to the 

Interim Regulations?

33
14 C.C.R. § 1781(e) defines “base fluid” as:

“... the continuous phase fluid used in the makeup of a well 

stimulation treatment fluid. The continuous phase fluid may 

include, but is not limited to, water, and may be a liquid or a 

hydrocarbon or non-hydrocarbon gas. A well stimulation 

treatment may use more than one base fluid.”

DOGGR Interim Regulations

Are all well stimulation operations subject to the 

Interim Regulations?

34
The term “acid well stimulation treatment” is defined in 14 C.C.R. 

§1781(b) as :

“a well stimulation treatment that uses, in whole or in part, the 

application of one or more acids to the well or underground 

geologic formation. The acid well stimulation treatment may be 

at any applied pressure and may be used in combination with 

hydraulic fracturing treatments or other well stimulation 

treatments. Acid well stimulation treatments include acid matrix 

stimulation treatments and acid fracturing treatments.”

DOGGR Interim Regulations

Definition of acid well stimulation treatment

35
“Acid well stimulation treatment” is defined in 14 C.C.R. §1781(b) as:

“a well stimulation treatment that uses, in whole or in part, the 

application of one or more acids to the well or underground geologic 

formation. The acid well stimulation treatment may be at any applied 

pressure and may be used in combination with hydraulic fracturing 

treatments or other well stimulation treatments. Acid well stimulation 

treatments include acid matrix stimulation treatments and acid 

fracturing treatments.”

"Acid matrix stimulation treatment” is defined in Section 1781(a) as: 

“an acid treatment conducted at pressures lower than the applied 

pressure necessary to fracture the underground geologic formation.” 

DOGGR Interim Regulations

Definitions of acid well and matrix 

stimulation treatment

36
14 C.C.R. 1761(a)(1):

“Well stimulation treatment does not include routine well 

cleanout work; routine well maintenance; routine treatment for the 

purpose of removal of formation damage due to drilling; bottom hole 

pressure surveys; routine activities that do not affect the integrity of 

the well or the formation; the removal of scale or precipitate from the 

perforations, casing, or tubing; or a treatment that does not 

penetrate into the formation more than 36 inches from the 

wellbore.” 

Thirty-six inches is considered by DOGGR to be the typical limit 

of penetration distance associated with drilling or operational 

damage.

What operations are excluded from the scope of the 

Interim Regulations?

37
Public Resources Code §3160(b)(1)(C) requires DOGGR to 

establish threshold values for acid volumes and concentrations. 

• To the extent that the chemicals contain any acid, and might be 

considered an “acid matrix stimulation treatment”, the Interim 

Regulations address the specified acid concentration threshold at 

which the regulations are applicable in Section 1780(a): 

• An operator is not required to obtain a permit under Public 

Resources Code §3160 (d), prior to performing an acid matrix 

stimulation treatment that uses an acid concentration of 7% 

or less.

What operations are excluded from the scope of the 

Interim Regulations?

38
No. Operators can proceed with well stimulation if they 

have provided DOGGR with written notice and 

certification of compliance with specified requirements of 

SB 4. 

• At least 10 days in advance of commencing a well stimulation 

treatment, the operator must submit an Interim Well 

Stimulation Treatment Notice ("WST Notice") (14 C.C.R. §

1783)

• Well stimulation treatments cannot commence unless 

DOGGR has reviewed the Interim Well Stimulation Treatment 

Notice form and approved the form as complete.

DOGGR Interim Regulations

Is a permit required?

39
Operators are required to include in the Interim Well 

Stimulation Treatment Notice:

 Operator contact information

 Well location information, including directionally drilled 

well information, if applicable 

 Time period during which the well stimulation treatment is 

planned to occur 

Planned location of the well stimulation treatment on the 

well bore

Estimated length, height, and direction of the induced 

fractures or other planned modification, if any.

DOGGR Interim Regulations

Interim Well Stimulation Treatment Notice 

40
Operators must also include:

Specified chemical information

Water Management Plan

 List of locations of existing wells, including plugged and 

abandoned wells, that may be impacted by the fractures

Groundwater Monitoring Plan

Neighbor notification information

Cement casing information

Production zone information

Mechanical integrity testing and pressure testing 

information

DOGGR Interim Regulations

Interim Well Stimulation Treatment Notice 

41
Operators must also include:

Well stimulation fluid concentration information

Information regarding the operator’s Spill Contingency 

Plan

Any claim of trade secret protection.

DOGGR Interim Regulations

Interim Well Stimulation Treatment Notice 

42
WST Notice DOGGR Form OG 109 

43
DOGGR Form OG 109 (continued)

44
DOGGR Form OG 109 (continued)

45
• Public Resources Code § 3160(j) and Sections 1783.1(c) 

and 1788(d) of the Interim Regulations set forth a process 

for addressing any trade secret claim.

 

• 14 C.C.R. § 1783.1(c): 

“Notwithstanding any claim of trade secret protection, 

[DOGGR] shall not approve as complete an Interim Well 

Stimulation Treatment Notice unless all of the information 

specified in Public Resources Code section 3160, 

subdivision (d)(1)(D), has been provided to [DOGGR].”

DOGGR Interim Regulations

Trade Secret Claims

46
 14 C.C.R. § 1783(b) and Public Resources Code §

3160(d)(1)(D) require an operator to certify that it has 

attached to the DOGGR Form OG 109 a complete list of 

• Names of chemicals in well stimulation fluid 

• Chemical Abstract Service (CAS) numbers

• Estimated concentrations, in percent by mass, of each and 

every chemical constituent of the well stimulation fluids 

anticipated to be used 

• If a CAS number does not exist for a chemical constituent, 

another unique identifier must be provided, if available.

DOGGR Interim Regulations

Chemical Content Disclosure

47
• If any portion of the well stimulation treatment is 

performed by someone other than the operator or if 

additives are supplied, SB4 requires that supplier to 

furnish the operator, within 30 days following conclusion 

of the well stimulation treatment, with the information 

necessary to comply with DOGGR requirements and 

other similar public disclosure requirements. (Public 

Resources Code § 3160(f).)

DOGGR Interim Regulations

Supplier Chemical Content Disclosure

48
• The operator must certify that within 60 days after the 

cessation of the well stimulation treatment that it will make 

all public disclosures required by Public Resources Code 

§§ 3160(b) and (g) and Section 1788 of the Interim 

Regulations. 

• Section 1788 requires an operator to disclose the 

chemical information on the Well Stimulation Treatment 

Disclosure Reporting Form.

DOGGR Interim Regulations

Chemical Content Disclosure

49
• SB 4 requires DOGGR to develop a website to provide 

chemical information to the public. 

• Until website is developed, operators are required to employ 

the FracFocus.org website to make the information public.

• DOGGR will be collecting information from 

FracFocus.org, and directly from operators, and making 

all of the information available on its website in an 

aggregated spreadsheet that can be sorted and 

searched. 

DOGGR Interim Regulations

Chemical Content Disclosure

50
14 C.C.R. §1782(a)(5) requires the operator to confirm that: 

“The well stimulation treatment fluid shall not be of a 

concentration level that will damage the well casing, tubing, 

cement, or other well equipment, or would otherwise cause 

degradation of the well’s mechanical integrity during the 

treatment process.”

DOGGR Interim Regulations

Chemical Concentrations

51
Companies have a statutory right to protect trade secret 

information from public disclosure, but SB 4 put limitations 

on trade secret protection for well stimulation fluids.

If the information is subject to a claim of trade secret, the 

operator is required to post the chemical family or similar 

descriptor for a chemical.

•Companies can withhold information about what is in the 

well stimulation treatment fluid based on a claim of trade 

secret to a limited extent only, subject to DOGGR review 

and court challenge. 

DOGGR Interim Regulations

Trade Secret Claims

52
• Trade secret claim is subject to challenge in court. 

• SB 4 also provides that even if the information is a 

protected trade secret, it must be disclosed to specified 

government entities, or for a health professional who 

reasonably believes that the information may be 

necessary in the diagnosis or treatment of a patient.

DOGGR Interim Regulations

Trade Secret Claims

53
• At least 30 days in advance of commencing well 

stimulation treatment, the operator must provide notice to 

property owners and tenants within

1500 foot radius of the wellhead, or

500 feet of the path of the well. 

• Operators must hire an independent entity to provide 

notification. 

14 C.C.R. § 1783.2

DOGGR Interim Regulations

Notice to Property Owners

54
• Property Owners can request water quality sampling and 

testing on any water well located on the parcel that is 

suitable for drinking or irrigation purposes and on any 

surface water located on the parcel that is suitable for 

drinking or irrigation purposes 

• Request must be made within 20 days of receipt of the 

notification. 

• Upon receipt of a timely request for water quality sampling 

and testing, the operator must pay for testing and 

sampling by one or more qualified independent third-party 

contractor or contractors designated by the State Water 

Resources Control Board.

DOGGR Interim Regulations

Water Quality Sampling 

55
• .Operators may request that certain information about a 

well be maintained as confidential. 

• Confidential status applies to onshore wells for two years, 

subject to six month extensions

• In no case may such status apply for longer than a total of 

4 years. 

• Public Resources Code § 3160(k) requires disclosure of a 

proposed or completed stimulation treatment on a well, 

but not the chemical constituents used.

DOGGR Interim Regulations

Confidential Wells

56
• Operator must certify: 

(1) The well’s casing is sufficiently cemented in order to 

effectively control the well at all times during well 

stimulation treatment; 

(2) All potentially productive zones, zones capable of 

over-pressurizing the surface casing annulus, or 

corrosive zones are isolated and sealed to prevent 

vertical migration of fluids or gases behind the casing;

(3) The wellbore’s mechanical integrity is tested and 

maintained and all cemented casing strings and all 

tubing strings to be utilized in the well stimulation 

treatment operations will be pressure tested.

DOGGR Interim Regulations

Well Integrity

57
• Operators must evaluate the casing, tubing, and cement 

lining of the well bore to ensure that it is more than 

adequate to withstand operations that are intended to 

increase the permeability of the hydrocarbon producing 

formation. 

• Surface equipment utilized for well stimulation treatment 

be rigged up as designed

• Pump and all equipment downstream from the pump must 

be pressure tested.

DOGGR Interim Regulations

Well Evaluation

58
• Operators are required to analyze other wells in the area 

to ensure that they will not permit the migration of fluid to 

other zones.

DOGGR Interim Regulations

Field Evaluation

59
Operator must notify the Division at least 72 hours prior to 

commencing well stimulation so that Division staff may 

witness the well stimulation treatment.

DOGGR Interim Regulations

Notice Prior To Well Stimulation

60
DOGGR Interim Regulations 

Groundwater Monitoring Plan 

1. A map and cross section of the well borehole(s)

2. Complete well construction details for the well and all new and 

existing groundwater monitoring wells

3. Map of all existing groundwater supply and monitoring wells 

within a 1500-foot radius of the well, and within 500 feet of the 

surface representation of the horizontal path of the wellbore

4. A map showing the location of any abandoned or inactive 

wells within a 1500-foot radius of the well, and within 500 feet 

of the surface representation of the horizontal path of the 

wellbore

5. Location of groundwater sampling wells

6. A contingency plan for reporting information in the event of a 

well failure

61
DOGGR Interim Regulations 

Groundwater Monitoring

• An operator must also test water quality:

• Prior to well stimulation, and 

•Once within 60 days after well stimulation, and semiannually 

thereafter.

• The groundwater samples should be analyzed using current 

EPA-approved analytical methods for water

• All groundwater quality data and groundwater monitoring 

reports must be submitted to the State Water Resources 

Control Board in an electronic format 

62
DOGGR Interim Regulations 

Water Management Program

•Operators are also required to publicly disclose the 

composition and disposition of all water associated with a well 

stimulation treatment.

63
Fluid Handling

• Current regulations require secondary containment features 

around fluid containers, regular testing and maintenance of 

tanks and pipelines, and maintenance of a detailed spill 

contingency plan. 

• Interim regulations also require operators to address the 

handling of well stimulation fluid and additives in their Spill 

Contingency Plan.

64
DOGGR Interim Regulations

Monitoring

• Operators will be required to monitor specified pressures, 

conditions and production rates 

• Daily for the first 30 days after fracturing and 

• Monthly for 5 years after the fracturing operation to ensure 

that the actual fracturing operations did not damage the 

well

• Operators must retain data about the fracturing operation, 

including fluids used, to allowing long-term monitoring.

65
DOGGR Final Regulations

• Final regulations are supposed to completed in 2014 to 

become effective by January 1, 2015.

• Differences

1. Permit will be required

2. Potential project authorization for multiple wells

3. More information regarding planned operation required in the 

application

4. Cement evaluation and modeling

5. Pressure testing prior to treatment

6. Well monitoring during and after stimulation operations

7. Post-Well Stimulation Treatment Report

66
DOGGR Final RegulationsEconomic Impact on Operations

The following areas of the proposed regulations have been identified by 

the DOGGR as potentially resulting in economic impact:

1. Well stimulation permitting.

2. Required public disclosure.

3. Neighbor notification / water well testing.

4. Cement evaluation.

5. Well stimulation treatment radius analysis.

6. Pressure testing prior to the well stimulation treatment.

7. Monitoring during a well stimulation treatment.

8. Storage and handling of well stimulation fluids.

9. Monitoring after a well stimulation treatment.

10. Post well stimulation reporting.

Estimated annual costs of between $216,000 and $504,000.

67
DOGGR Final RegulationsOther Potential Regulatory Initiatives

1. Development of Group Permit Procedures 

2. Regional groundwater monitoring plans.

3. Completion of Independent Scientific Study required by SB 

4.

4. State Water Resources Control Board development of 

standards and protocols for testing wells and surface 

water.

5. Development of other agencies regulations

68
Legal Issues Affecting 

Water Use and Hydraulic 

Fracturing in California 

69
Subsurface Trespass Issues Regarding 

Hydraulic Fracturing

• CEQA lawsuit by environmental organizations

• Coastal Oil and Gas v. Garza, 268 S.W.3d 1 (Tex. 2008) - Held, 

hydraulic fracturing not a subsurface trespass

• Stone v. Chesapeake Appalachia, LLC, 2013 U.S. Dist. LEXIS 

71121 (N.D. W.Va. 2013) - Unpublished opinion -Held, hydraulic 

fracturing can be a subsurface trespass

• Impact of a permit 

Dentons US LLP Document reference # 60398858 70
Water Supply and the 

California Environmental Quality Act

71
CEQA Issues

• California Environmental Quality Act (“CEQA”) Public 

Resources Code § §21000-21177 

• Establishes a procedural and substantive framework against 

which agencies are required to examine the impact of their 

decisions on the environment

72
CEQA Water Supply Issues

• Impact of drilling operations

• Construction and operations discharges

• Hydrostatic test discharge

• Construction and operations storm water runoff

• Construction of pipelines

• Construction standards

• Re-use/disposal of water

• Groundwater impacts

73
California Water Supply Issues

74

California Water Supply Issues

74
Water Supply Issues in California

• Primary Water Sources in California 

• Groundwater

• Surface Water

• Colorado River water

• State Water Project water

• Other Surface Water Sources

75
Water Uses in California

• Agricultural

• About 80-85% of all California water is used for agricultural 

purposes.

• This water irrigates almost 29 million acres (120,000 km2), 

on which grow 350 different crops.

• Urban

• Urban users consume 10% of the water, or around 

8,700,000 acre feet (10.7 km3).

• Industrial

• Industry, including the oil industry, receives rest of the water 

supply.

76
Water Supply Issues in California

• Limited California Water Resources

• Less water from Colorado River

• Groundwater depleted

• State Water Project restrictions for species preservation

• Drought

• Agricultural vs. urban water use

• Storage limitations affect supply

• Inadequacy of storage facilities to capture runoff

• Seasonal fluctuations

77
Basic Water Use Considerations

In Oil and Gas Operations

• Who owns the water?

• What are rights does the oil & gas operator have to use 

water?

78
Primary Water Supply Issues In Oil and Gas 

Operations

Water Use in Conventional Exploration and Production Operations

Initial Production 

Secondary Recovery Operations

• Many of these recovery techniques involve injection of water or steam 

into the well

• Water consumption can range between 2 to 350 gallons of water 

per gallon of oil extracted, depending upon the recovery 

enhancement process.

• However, most of the water used for these purposes is not 

otherwise usable.

79
Water Use in Hydraulic Fracturing Operations

• Typically ranges from 2 million to 10 million gallons 

depending upon the location and the number of frack stages.

• Between 20-40% of the water can be expected to return to 

the surface.

• However, fracturing uses only a fraction of the freshwater 

that is consumed by all users of water.

• Section 14 of the California Well Standards recognizes: 

“Hydraulic fracturing (hydrofracturing) is sometimes an 

acceptable well development and redevelopment method 

when properly performed.”

80
Operational Water Supply Issues

• How much water is required?

• Can the lessor or surface owner supply the water?

• Is the property near to a watercourse?

• Is there a groundwater well on the property?

• How do you get water to the well site? 

• Can water be used to support operations on multiple 

properties?

• What permits are required?

81
Operational Water Supply Issues

• Is the basin in overdraft? 

• Is the basin adjudicated?

• Other suppliers- Metropolitan Water District or a local agency 

or water district?

• Is it feasible to purchase water from a State Water 

Contractor (i.e.)

• Handling waste water and flowback water

82
Water Rights in California

The State of California owns all of the groundwater in 

California, not as a proprietary owner, but in a manner that 

empowers it to supervise and regulate water use. 

State of California v. Superior Court, 78 Cal.App.4th 1019, 

1022, 1026 (2000).

83
Water Rights in California

Basic Principles

• Public Trust Doctrine

• All waters of the state, and all the fish and wildlife therein, 

are held by the state in trust for the people

“All water within the State is the property of the people of the 

State, but the right to the use of water may be acquired by 

appropriation in the manner provided by law.” Water Code 

§ 102.

• Preferred Water Uses

“the established policy of this State that the use of water for 

domestic purposes is the highest use of water and that the 

next highest use is for irrigation.” Water Code § 106

84
Usufructary Right

A water right in California is a usufructary right

• Holder of the right is entitled to use the water, but does not actually 

own the water. 

• No right of private ownership in a stream or groundwater.

• A usufructuary water right is the right to take water from the water 

source; the water source is the property and the water itself is the 

"profit" or fruit thereof. 

• Analogous to oil, gas and mineral rights

People v. Shirokow, 26 Cal. 3d 301, 308 (1980); State of California v. 

Superior Court, 78 Cal.App.4th 1019, 1023, 1025 (2000); City of 

Santa Maria v. Adam, 211 Cal. App. 4th 266 (Cal. App. 2012) 

85
Usufructary Right

Water rights holders have the right to 'take and use water,' 

but they do not own the water and cannot waste it.

State of California v. Superior Court, 78 Cal.App.4th 1019, 

1022, 1025(2000); Central and West Basin Water 

Replenishment Dist. v. Southern Cal. Water Co., 109 

Cal.App.4th 891, 905 (2003); see also, Water Code §

102.)

86
Usufructary Right

• Once an appropriator diverts the water from the stream or 

pumps it from the ground, the right to the substance of 

the water is no longer usufructuary. City of Santa Maria v. 

Adam, 211 Cal. App. 4th 266 (Cal. App. 2012).

• Although the appropriator does not own the water in the 

sense of having title to the individual water molecules, the 

appropriator does have "the sole and exclusive right to 

use the same for the purposes for which it was 

appropriated." Hoffman v. Stone, 7 Cal. 46, 49 (1857). 

• A type of possessory right. 

87
California Water Use Doctrines 

Reasonable and Beneficial Use

• Article X, Section 2 of the California Constitution, requires 

that water be put to reasonable and beneficial use. (See 

also, City of Barstow v. Mojave Water Agency, 23 Cal.4th 

1224, 1241 (2000); Water Code § 100.)

• If the use of the water is wasteful or otherwise 

unreasonable, it is not part of the water right. 

• Beneficial uses include domestic, irrigation, mining, 

power, industrial, municipal, storage, recreation, and 

preservation and enhancement of fish and wildlife.

88
Reasonable and Beneficial Use

Reasonable and Beneficial Use

•Article X, Section 2 of the California Constitution, requires 

that water be put to reasonable and beneficial use. 

•See also, City of Barstow v. Mojave Water Agency, 23 Cal.4th 

1224, 1241 (2000); Water Code § 100

89
Dual System of Water Rights in California

Riparian 

•Land abuts stream/watercourse 

•The riparian doctrine confers upon the owner of land 

contiguous to a watercourse the right to the reasonable and 

beneficial use of water on his land.

90
Dual System of Water Rights in California

Appropriative

•Land does not abut stream/watercourse. 

•The appropriation doctrine contemplates the diversion of 

water and applies to "any taking of water for other than 

riparian or overlying uses." 

City of Pasadena v. City of Alhambra, 33 Cal.2d 908, 925 

(1949).

91
Application for Appropriative Rights

• Any person or entity, public or private, wishing to appropriate 

water covered by the act must file an application for a permit 

with the State Water Resources Control Board. 

Water Code § 1260. 

92
Surface Water Rights

Surface Water

•Surface water is subject to a statutory system of permits and 

licenses regulating its appropriation. Water Code § 1200.

•Includes rivers, streams and lakes 

•Regulated by the State Water Resources Control Board 

(“State Board”) unless a pre-1914 right

93
Groundwater Rights

Types of Groundwater

•Subsurface Flow

•Subterranean streams flowing through known and definite 

channels (unless pre-1914 right)

94
Groundwater Rights

• No state-wide system for allocating rights in groundwater. 

• The Legislature has left regulation to local government or to 

adjudication by the courts. O.W.L. Foundation v. City of 

Rohnert Park, 168 Cal.App.4th 568, 587-588 (2008).

95
Groundwater Rights

Courts typically classify water rights in an underground basin 

as 

•Overlying 

•Appropriative, or 

•Prescriptive. 

City of Barstow v. Mojave Water Agency, 23 Cal.4th 1224, 

1240 (2000) 

96
Groundwater 

Overlying Rights

• The overlying right, like the riparian right, is associated with 

the ownership of land. 

• Overlying groundwater rights are the rights of landowners 

to pump the groundwater below their property for use on 

land overlying the aquifer. 

• "Overlying rights are special rights to use groundwater 

under the owner's property." 

City of Barstow v. Mojave Water Agency, 23 Cal.4th 1224, 

1237, fn. 7 (2000). 

97
Groundwater 

Overlying Rights

• Governed by reasonable and beneficial use doctrine, and 

correlative doctrine (if supply is insufficient as to all 

overlyers, each user is entitled to a fair and just proportion of 

water) 

City of Pasadena v. City of Alhambra, 33 Cal. 2d 908, 924 

(Cal. 1948).

98
Groundwater 

Overlying Rights

• As between overlying owners, the rights, like those of 

riparians, are correlative and are referred to as belonging to 

all in common; each may use only his reasonable share 

when water is insufficient to meet the needs of all. 

Katz v. Walkinshaw, 141 Cal. 116 (1903)

• Not quantified unless adjudicated

99
Groundwater 

Appropriative Rights

• Analogous to that of a riparian owner in a surface stream, is 

the right of the owner of the land to take water from the 

ground underneath for use on his land within the basin or 

watershed.

• Right is based on ownership of the land and is appurtenant 

thereto. Pasadena v. Alhambra, 33 Cal. 2d 908, 924 (Cal. 

1948). 

• Water that is surplus to the needs of overlying owners may 

be appropriated for use off the land or exported outside the 

basin

100
Appropriative Rights

• Appropriators may use any "surplus" water in the 

groundwater aquifer

• In times of overdraft, overlying uses of groundwater take 

precedence over all appropriations, and among themselves, 

overlying right holders must reduce their use equally.

• When the safe yield of the groundwater basin is being 

exceeded and overdraft begins, appropriators are required to 

stop pumping.

101
Prescriptive Rights

• Water rights, whether groundwater or surface water as well) 

that are obtained through adverse use

• Also exist for surface water

102
Water Transfers

• State Board Approval Of Transfers-

• Water Code establishes detailed procedures 

• Most transfers are not subject to State Board approval 

• Majority of transfers in California occur among the State 

Water Project contractors (or the Central Valley Project 

contractors). 

• Contractors may transfer water and these transfers are 

beyond direct regulation by the State Board. 

• Transfers can be short-term (lasting one year or less) or 

long-term

• Most water transfers involve a transfer of water, not the 

actual water right.

103
CONTACT INFORMATION

John J. Harris

Paul M. Williams

Dentons US LLP

601 South Figueroa Street

Suite 2500

Los Angeles, CA 90017-5704 

john.harris@dentons.com

paul.williams@dentons.com

Tel (213) 623-9300 

Fax (213) 623-9924

104
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