AB 1167: Oil and gas: acquisition: bonding requirements.

Existing law requires a person who acquires the right to operate a well or production facility, whether by purchase, transfer, assignment, conveyance, exchange, or other disposition, to submit to the State Oil and Gas Supervisor or a district deputy certain materials, including either an individual indemnity bond or a blanket indemnity bond in certain amounts. A violation of this law, or any related law concerning oil and gas, is a misdemeanor.

This bill would require a person who acquires the right to operate a well or production facility, whether by purchase, transfer, assignment, conveyance, exchange, or other disposition, except a well as specified, to instead file with the supervisor an individual indemnity bond for the well or production facility, or a blanket indemnity bond for multiple wells or production facilities, in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning of the facility, and site restoration, as provided. The bill would require the person to first submit a request to the supervisor for a determination of the amount of the bond required before completing the acquisition and prohibits the completion of the acquisition until the determination is received and the bond has been filed with the supervisor. The bill would also authorize the supervisor to approve other means of financial assurance in lieu of the individual indemnity bond or the blanket indemnity bond. Because the bill would impose a new bonding requirement for the acquisition of a well or production facility, it would expand the scope of a crime and thereby impose a state-mandated local program. The bill would require the Department of Conservation to post on its internet website the information on all indemnity bond determinations made by the supervisor, and to include for each determination the bond amount and calculations used. The bill would authorize the supervisor to approve a deposit, as provided, other than a deposit of money or bearer bonds or bearer notes, in lieu of the indemnity bond. The bill would require the supervisor to maintain records of all transfers recognized as complete, including all materials required to be provided by the new operator, and to make those records available on the Geologic Energy Management Divisions internet website.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.