AZ SB1354

Prohibits horizontal hydraulic fracturing in Arizona and classifies oil or gas produced using this method as "illegal gas" under state law.

Adds definition of "horizontal hydraulic fracturing" as the technique of expanding rock fractures from substantially horizontal wellbores by injecting water, fluids, chemicals, and proppants under pressure into rock formations for oil and gas exploration, drilling, completion, or production.

Increases civil penalties for violations related to horizontal hydraulic fracturing to at least $10,000 per day of operations, compared to a maximum of $1,000 per day for other oil and gas production violations.

Adds groundwater contamination prevention to the state's public policy for oil and gas conservation and classifies fracturing fluids, flowback, produced water, and drill cuttings as waste under state law.

Amends the Oil and Gas Conservation Commission's authority to prohibit the commissioner from allowing horizontal hydraulic fracturing even for purposes of pressure maintenance or secondary recovery operations.