SB 724: Oil and gas: wells and production facilities.
- Session Year: 2017-2018
- House: Senate
- Latest Version Date: 2017-10-10
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is deemed canceled, would prohibit the notice from being extended, and would require the cancellation to be noted in the divisions records.
(2)Existing law requires the operator of any idle well to either file with the supervisor a certain annual fee or file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as specified.
This bill would, if the operator has eliminated more wells than required in the prior 2 years under the plan, authorize the supervisor to deduct from the new requirement in the plan the net total of long-term idle wells eliminated in excess of those previously required.
(3)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.
This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.
(4)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(5)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-mandated local program.
(6)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells. The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would temporarily raise the cap on spending for these purposes from $1,000,000 to $3,000,000 in any one fiscal year, for the 201819 fiscal year to the 202122 fiscal year, inclusive. The bill would require these moneys to be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and would prohibit the moneys from being used for nonwell or nonproduction facility-related activities and payments. The bill would require the division to develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to these provisions, and would exempt the development of those criteria from the Administrative Procedure Act.
This bill would require the department to report on October 1, 2020, to the Legislature on the estimated number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals, and, as part of that report, provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. The bill would require the department to provide the Legislature with an update to this report on October 1, 2023, containing specified information.
(7)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.
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is deemed canceled, would prohibit the notice from being extended, and would require the cancellation to be noted in the divisions records.
(2)Existing law requires the operator of any idle well to either file with the supervisor a certain annual fee or file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as specified.
This bill would, if the operator has eliminated more wells than required in the prior 2 years under the plan, authorize the supervisor to deduct from the new requirement in the plan the net total of long-term idle wells eliminated in excess of those previously required.
(3)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.
This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.
(4)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(5)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-mandated local program.
(6)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells. The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would temporarily raise the cap on spending for these purposes from $1,000,000 to $3,000,000 in any one fiscal year, for the 201819 fiscal year to the 202122 fiscal year, inclusive. The bill would require these moneys to be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and would prohibit the moneys from being used for nonwell or nonproduction facility-related activities and payments. The bill would require the division to develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to these provisions, and would exempt the development of those criteria from the Administrative Procedure Act.
This bill would require the department to report on October 1, 2020, to the Legislature on the estimated number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals, and, as part of that report, provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. The bill would require the department to provide the Legislature with an update to this report on October 1, 2023, containing specified information.
(7)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.
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is deemed canceled, would prohibit the notice from being extended, and would require the cancellation to be noted in the divisions records.
(2)Existing law requires the operator of any idle well to either file with the supervisor a certain annual fee or file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as specified.
This bill would, if the operator has eliminated more wells than required in the prior 2 years under the plan, authorize the supervisor to deduct from the new requirement in the plan the net total of long-term idle wells eliminated in excess of those previously required.
(2)(3)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.
This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.
(3)(4)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(4)(5)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-mandated local program.
(5)(6)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells. The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would temporarily raise the cap on spending for these purposes from $1,000,000 to $5,000,000 $3,000,000 in any one fiscal year. year, for the 201819 fiscal year to the 202122 fiscal year, inclusive. The bill would require these moneys to be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and would prohibit the moneys from being used for nonwell or nonproduction facility-related activities and payments. The bill would require the division to develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to these provisions, and would exempt the development of those criteria from the Administrative Procedure Act.
This bill would require the division to provide a list of known idle-deserted wells, hazardous wells, deserted facilities, and hazardous facilities to cities and counties upon request. The bill would authorize a city or county to request to enter into a contract with the division to either receive funds to reimburse a city or county for its costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities, or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities, as specified. The bill would prohibit the division, on or after July 1, 2018, from commencing any activity to plug and abandon a hazardous or idle-deserted well or decommission a hazardous or deserted facility within the jurisdiction of a city or county without entering into a contractual memorandum of understanding with the city or county, except as provided.This bill would require the department to report on October 1, 2019, 2020, to the Legislature on the estimated number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals. goals, and, as part of that report, provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. The bill would require the department to provide the Legislature with an update to this report on October 1, 2022, 2023, containing specified information.
(6)(7)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.
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is required to be deemed canceled, and would prohibit the notice from being extended. extended, and would require the cancellation to be noted in the divisions records.
(2)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.
This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.
(3)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(4)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-mandated local program.
(5)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would raise the cap on spending for these purposes from $1,000,000 to $5,000,000 in any one fiscal year.
This bill would require the division to provide a list of known, known idle-deserted wells, hazardous wells wells, deserted facilities, and hazardous facilities to cities and counties upon request. The bill would authorize a city or county to request to enter into a contract with the division to either receive funds to reimburse a city or county for its costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities, or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities, as specified. The bill would prohibit the division, on or after July 1, 2018, from commencing any activity to plug and abandon a hazardous or idle-deserted well or decommission a hazardous or deserted facility within the jurisdiction of a city or county without entering into a contractual memorandum of understanding with the city or county, except as provided.
This bill would require the department to report on October 1, 2019, to the Legislature on the estimated number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals. The bill would require the department to provide the Legislature with an update to this report on October 1, 2022, containing specified information.
(6)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.
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is required to be deemed canceled, and would prohibit the notice from being extended.
(2)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.
This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.
(2)(3)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(3)(4)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of an attendant production facility of a well a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-imposed state-mandated local program.
(4)(5)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would raise the cap on spending for these purposes from $1,000,000 to $5,000,000 in any one fiscal year.
This bill would require the division to provide certain information regarding those a list of known, hazardous wells and hazardous facilities to cities and counties upon request. The bill would authorize a city or county to apply to the division request to enter into a contract with the division to either receive funds to reimburse a city or county for its costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning production hazardous or deserted facilities, or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning production hazardous or deserted facilities, as specified. The bill would prohibit the division, on or after July 1, 2018, from commencing any activity to plug and abandon a hazardous or idle-deserted well or decommission a production hazardous or deserted facility within the jurisdiction of a city or county without entering into a contractual memorandum of understanding with the city or county, except as provided.
This bill would require the department to report on October 1, 2019, to the Legislature on the estimated number of orphan wells, hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals. The bill would require the department to provide the Legislature with an update to this report on October 1, 2022, containing specified information.
(5)(6)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.
(1)Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources, as provided; to permit owners and operators of wells to utilize all known methods and practices to increase the ultimate recovery of hydrocarbons; and to perform the supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt.
This bill would extend the time period to commence operations from one year to 24 months before the notice is required to be deemed canceled, and would prohibit the notice from being extended.
(2)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.
This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.
(3)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
This bill would additionally authorize the supervisor or district deputy to order the decommissioning of an attendant production facility of a well that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-imposed local program.
(4)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells.
This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would raise the cap on spending for these purposes from $1,000,000 to $5,000,000 in any one fiscal year.
This bill would require the division to provide certain information regarding those wells and facilities to cities and counties upon request. The bill would authorize a city or county to apply to the division to enter into a contract with the division to either receive funds to reimburse a city or county for its costs related to plugging and abandoning a well and decommissioning production facilities, or for the division to conduct work related to plugging and abandoning a well and decommissioning production facilities, as specified. The bill would prohibit the division, on or after July 1, 2018, from commencing any activity to plug and abandon a well or decommission a production facility within the jurisdiction of a city or county without entering into a contractual memorandum of understanding with the city or county, except as provided.
This bill would require the department to report on October 1, 2019, to the Legislature on the estimated number of orphan wells, hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals. The bill would require the department to provide the Legislature with an update to this report on October 1, 2022, containing specified information.
(5)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.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the divisions records. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206 of the Public Resources Code, as added by Section 4 of Chapter 272 of the Statutes of 2016, is amended to read:3206.(a)The operator of any idle well shall do either of the following:
(1)No later than January 31 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:
(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.
(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.
(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.
(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the divisions satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.
(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:
(i)The plan shall specify the time period that it covers. The plan and any renewal of the plan shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.
(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.
(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). If the operator has eliminated more wells than required in the prior two years, the supervisor may deduct from the new requirement the net total of long-term idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.
(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisors rejection of a plan and plan amendments and the supervisors determination of the operators failure to comply with a plan. If the supervisors determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisors determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.
(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the production facilities, or both, at a well of an operator subject to the requirements of this section.
(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.
(e)This section shall become operative on January 1, 2018.
SEC. 3.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of all idle wells, as defined in subdivision (d) of Section 3008, within its jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells identified pursuant to subdivision (a) within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 4.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well or the decommissioning of a production facility that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well or production facility. The supervisor or district deputy shall determine from credible evidence whether a well or production facility is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well or production facility, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well or production facility.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production facilities or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well or production facility that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well or production facility site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well or production facility has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission a production facility may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well or the decommissioning of deserted production facilities. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well or the decommissioning of deserted production facilities, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well or the decommissioning of deserted production facilities.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well or decommissioning deserted production facilities. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well or decommissioning deserted production facilities by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well or production facility.
(5)If the supervisor is unable to determine that an operator who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment of the well or decommissioning deserted production facilities, the supervisor may undertake plugging and abandonment of the well or decommissioning deserted production facilities pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 5.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 6.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 7.Section 3251 of the Public Resources Code is repealed.SEC. 8.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means a production facility determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission has the same meaning and requirements, as applicable, as the definition established in Section 1760 of Title 14 of the California Code of Regulations.
(c)Hazardous facility means a production facility determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 9.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order to be carried out, or may undertake, any of the following operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of the well.
(3)The reabandonment of the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of hazardous or deserted facilities.
(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility and that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from the property, substantially interfere with the enjoyment of the property, the supervisor may acquire, as provided in Section 3256, a minimal interest in the property as is necessary to carry out the operation. No acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of the acquisition, irrespective of the manner in which the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 10.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed in any one fiscal year:
(1)Three million dollars ($3,000,000) commencing on July 1, 2018, for the 201819 fiscal year, and continuing for three fiscal years thereafter.
(2)One million dollars ($1,000,000), commencing with the 202223 fiscal year.
(b)Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(c)The division shall develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to this article. The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to the development of criteria by the division pursuant to this subdivision.
(d)(1)(A)On October 1, 2020, the department shall report to the Legislature on the number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those wells and facilities, and a timeline for future abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(B)As part of the report required in subparagraph (A), the department shall provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. In drafting these recommendations, the department shall consider factors unique to each of the divisions districts, and shall consult with local agencies in developing recommendations.
(2)On October 1, 2023, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2027, pursuant to Section 10231.5 of the Government Code.
SEC. 11.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the divisions records. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206 of the Public Resources Code, as added by Section 4 of Chapter 272 of the Statutes of 2016, is amended to read:3206.(a)The operator of any idle well shall do either of the following:
(1)No later than January 31 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:
(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.
(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.
(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.
(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the divisions satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.
(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:
(i)The plan shall specify the time period that it covers. The plan and any renewal of the plan shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.
(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.
(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). If the operator has eliminated more wells than required in the prior two years, the supervisor may deduct from the new requirement the net total of long-term idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.
(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisors rejection of a plan and plan amendments and the supervisors determination of the operators failure to comply with a plan. If the supervisors determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisors determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.
(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the production facilities, or both, at a well of an operator subject to the requirements of this section.
(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.
(e)This section shall become operative on January 1, 2018.
SEC. 3.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of all idle wells, as defined in subdivision (d) of Section 3008, within its jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells identified pursuant to subdivision (a) within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 4.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well or the decommissioning of a production facility that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well or production facility. The supervisor or district deputy shall determine from credible evidence whether a well or production facility is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well or production facility, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well or production facility.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production facilities or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well or production facility that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well or production facility site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well or production facility has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission a production facility may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well or the decommissioning of deserted production facilities. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well or the decommissioning of deserted production facilities, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well or the decommissioning of deserted production facilities.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well or decommissioning deserted production facilities. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well or decommissioning deserted production facilities by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well or production facility.
(5)If the supervisor is unable to determine that an operator who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment of the well or decommissioning deserted production facilities, the supervisor may undertake plugging and abandonment of the well or decommissioning deserted production facilities pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 5.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 6.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 7.Section 3251 of the Public Resources Code is repealed.SEC. 8.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means a production facility determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission has the same meaning and requirements, as applicable, as the definition established in Section 1760 of Title 14 of the California Code of Regulations.
(c)Hazardous facility means a production facility determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 9.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order to be carried out, or may undertake, any of the following operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of the well.
(3)The reabandonment of the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of hazardous or deserted facilities.
(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility and that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from the property, substantially interfere with the enjoyment of the property, the supervisor may acquire, as provided in Section 3256, a minimal interest in the property as is necessary to carry out the operation. No acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of the acquisition, irrespective of the manner in which the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 10.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed in any one fiscal year:
(1)Three million dollars ($3,000,000) commencing on July 1, 2018, for the 201819 fiscal year, and continuing for three fiscal years thereafter.
(2)One million dollars ($1,000,000), commencing with the 202223 fiscal year.
(b)Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(c)The division shall develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to this article. The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to the development of criteria by the division pursuant to this subdivision.
(d)(1)(A)On October 1, 2020, the department shall report to the Legislature on the number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those wells and facilities, and a timeline for future abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(B)As part of the report required in subparagraph (A), the department shall provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. In drafting these recommendations, the department shall consider factors unique to each of the divisions districts, and shall consult with local agencies in developing recommendations.
(2)On October 1, 2023, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2027, pursuant to Section 10231.5 of the Government Code.
SEC. 11.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the divisions records. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206 of the Public Resources Code, as added by Section 4 of Chapter 272 of the Statutes of 2016, is amended to read:3206.(a)The operator of any idle well shall do either of the following:
(1)No later than January 31 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:
(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.
(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.
(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.
(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the divisions satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.
(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:
(i)The plan shall specify the time period that it covers. The plan and any renewal of the plan shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.
(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.
(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). The If the operator has eliminated more wells than required in the prior two years, the supervisor may deduct from the new requirement the net total of long-term idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.
(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisors rejection of a plan and plan amendments and the supervisors determination of the operators failure to comply with a plan. If the supervisors determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisors determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.
(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the production facilities, or both, at a well of an operator subject to the requirements of this section.
(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.
(e)This section shall become operative on January 1, 2018.
SEC. 3.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of all idle wells, as defined in subdivision (d) of Section 3008, within its jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells identified pursuant to subdivision (a) within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 4.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well or the decommissioning of a production facility that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well or production facility. The supervisor or district deputy shall determine from credible evidence whether a well or production facility is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well or production facility, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well or production facility.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production facilities or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well or production facility that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well or production facility site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well or production facility has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission a production facility may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well or the decommissioning of deserted production facilities. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well or the decommissioning of deserted production facilities, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well or the decommissioning of deserted production facilities.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well or decommissioning deserted production facilities. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well or decommissioning deserted production facilities by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well or production facility.
(5)If the supervisor is unable to determine that an operator who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment of the well or decommissioning deserted production facilities, the supervisor may undertake plugging and abandonment of the well or decommissioning deserted production facilities pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 5.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 6.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 7.Section 3251 of the Public Resources Code is repealed.SEC. 8.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means a production facility determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission means the safe removal of all well equipment, the safe dismantling and removal of associated production facilities, and the restoration of the well and facility site in accordance with the divisions regulations. has the same meaning and requirements, as applicable, as the definition established in Section 1760 of Title 14 of the California Code of Regulations.
(c)Hazardous facility means a production facility determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 9.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order to be carried out, or may undertake, any of the following operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of the well.
(3)The reabandonment of the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of hazardous or deserted facilities.
(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility and that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from the property, substantially interfere with the enjoyment of the property, the supervisor may acquire, as provided in Section 3256, a minimal interest in the property as is necessary to carry out the operation. No acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of the acquisition, irrespective of the manner in which the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 10.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed five million dollars ($5,000,000) in any one fiscal year. Moneys year:
(1)Three million dollars ($3,000,000) commencing on July 1, 2018, for the 201819 fiscal year, and continuing for three fiscal years thereafter.
(2)One million dollars ($1,000,000), commencing with the 202223 fiscal year.
(b)Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(b)Upon request by a local entity, the division shall provide the local entity a list of known idle-deserted wells, hazardous wells, deserted facilities, and hazardous facilities.(c)A local entity may request to enter into a contract with the division to either receive funds to reimburse a local entitys costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities.(1)A local entity seeking to contract with the division pursuant to this section shall submit a request to the division. The request shall be approved by the local entitys legislative body before it can be considered by the division. The request shall contain all of the following:(A)The location of the well to be plugged and abandoned and the production facilities to be decommissioned.(B)(i)All required nonwell or nonproduction facility-related activities and payments the local entity believes will be required to complete the project, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.(ii)A stipulation that the local entity will pay all costs identified pursuant to clause (i).(C)(i)A statement of facts indicating why the specific well or wells or production facility or facilities were chosen.(ii)The statement shall provide details regarding the potential harms to public health and environmental safety posed by the well or facility as documented by the local agency or public health and safety agencies within the appropriate jurisdiction.(D)Estimated costs, determined by a licensed operator or contractor, to plug and abandon a well and decommission associated production facilities.(E)Estimated costs of all other activities identified in subparagraph (B).(F)All permits, if any, the division must obtain before the commencement of work to plug and abandon a well or decommission a production facility, and the anticipated timeline for the project.(G)A timeline for estimated project completion.(H)A verification that any funds provided by the division shall only be spent on the plugging and abandoning of a well and decommissioning production facilities and will not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.(I)A verification that the local entity will adhere to all state contracting and subcontracting rules, as specified in the state contract manual.(J)If a local entity is seeking funding to perform the plugging and abandonment or decommissioning work itself, documentation that the local entity is the operator of the well or production facility, will become the operator of the well or production facility, or has an agreement with the operator of the well or production facility for the work to be performed. (2)(A)In reviewing and evaluating requests related to plugging and abandoning a hazardous or idle-deserted well or decommissioning a hazardous or deserted facility, the division shall prioritize and decide to approve or deny requests based on, at minimum, all of the following criteria:(i)The degree of potential danger to life, health, or natural resources posed by a specific hazardous or idle-deserted well or hazardous or deserted facility.(ii)Whether the specific hazardous or idle-deserted well or hazardous or deserted facility is located within an economically disadvantaged community.(iii)The cost and potential environmental or public health benefits of plugging and abandoning the hazardous or idle-deserted well or decommissioning the hazardous or deserted facility.(iv)The availability of third-party funding, including private development fees and federal matching funds.(v)Any other consideration or priorities the division deems necessary, including, division funding and the statewide priority level of the hazardous or idle-deserted well or hazardous or deserted facility identified in the local entitys request.(B)This paragraph shall not be construed to require the division to approve any request.(3)(A)Upon approving a local entitys request, the division and the local entity shall enter into a contractual memorandum of understanding providing, at a minimum, all of the following:(i)A statement identifying the costs each party will be responsible for paying.(ii)A statement identifying the manner in which the city or county shall submit invoices for payment to the division.(iii)A verification that the local entity agrees to pay all costs to plug and abandon a well and decommission the production facility in excess of the estimate provided in the application pursuant to subparagraphs (D) and (E) of paragraph (1).(iv)A verification that the local entity shall be responsible for any cost not identified in the memorandum of understanding or the local entitys request.(v)A verification that any funds provided by the division that are not utilized shall be returned to the division within 15 days of the completion of the project identified in the local entitys request.(vi)Clearly state that the division shall only be responsible for the costs authorized pursuant to this section.(B)Before the memorandum of understanding is effective, both of the following shall occur:(i)The memorandum of understanding shall be approved by the legislative body of the local entity, and signed by an agent thereof, within 30 days of receiving notice of the divisions approval of the local entitys request. A failure to submit the approved memorandum of understanding to the division within 30 days cancels the divisions approval of the local entitys request.(ii)The memorandum of understanding shall be approved by the supervisor. The supervisor shall approve a memorandum of understanding provided both of the following conditions are met:(I)The division has sufficient funds to cover the plugging and abandonment of the well or decommissioning of the facility, based on a divisions estimate of the total cost of the work.(II)The local entity provided all information and contractual conditions required by this section.(d)On or after July 1, 2018, the division shall not commence any activity to plug and abandon a hazardous or idle-deserted well or decommission a hazardous or deserted facility within the jurisdiction of a local entity without entering into a contractual memorandum of understanding with the local entity pursuant to paragraph (3) of subdivision (c).(e)Subdivisions (b), (c), and (d) do not apply to any idle wells, hazardous wells, idle-deserted wells, deserted facilities, or hazardous facilities located on property owned by a state agency.(f)(1)Nothing in this section shall limit the divisions authority to plug and abandon a well or decommission a production facility deemed by the supervisor to pose a substantial threat to public health and environmental safety.(2)If the division acts pursuant to paragraph (1), moneys shall only be expended on plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.(c)The division shall develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to this article. The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to the development of criteria by the division pursuant to this subdivision.
(g)(d)(1)(A)On October 1, 2019, 2020, the department shall report to the Legislature on the number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those wells and facilities, and a timeline for future abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(B)As part of the report required in subparagraph (A), the department shall provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. In drafting these recommendations, the department shall consider factors unique to each of the divisions districts, and shall consult with local agencies in developing recommendations.
(2)On October 1, 2022, 2023, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2026, 2027, pursuant to Section 10231.5 of the Government Code.
(h)For purposes of this section, the following terms have the following meanings:(1)Economically disadvantaged community means a community with a median household income less than 80 percent of the statewide average.(2)Local entity means a city or county.SEC. 11.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled and may canceled, the notice shall not be extended. extended, and the cancellation shall be noted in the divisions records. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206 of the Public Resources Code, as added by Section 4 of Chapter 272 of the Statutes of 2016, is amended to read:3206.(a)The operator of any idle well shall do either of the following:
(1)No later than January 31 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:
(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.
(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.
(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.
(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the divisions satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.
(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:
(i)The plan shall specify the time period that it covers. The plan and any renewal of the plan shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.
(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.
(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). The supervisor may require additional well testing requirements as part of the plan.
(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.
(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisors rejection of a plan and plan amendments and the supervisors determination of the operators failure to comply with a plan. If the supervisors determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisors determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.
(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the production facilities, or both, at a well of an operator subject to the requirements of this section.
(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.
(e)This section shall become operative on January 1, 2018.
SEC. 3.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of all idle wells, as defined in subdivision (d) of Section 3008, within its jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells identified pursuant to subdivision (a) within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 4.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well and or the decommissioning of a production facility that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well. well or production facility. The supervisor or district deputy shall determine from credible evidence whether a well or production facility is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well or production facility, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well. well or production facility.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production facilities or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well or production facility that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well or production facility site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well or production facility has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission a production facility may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well and or the decommissioning of deserted production facilities. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well and or the decommissioning of deserted production facilities, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well and or the decommissioning of deserted production facilities.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well or decommissioning deserted production facilities. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well and or decommissioning deserted production facilities by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well. well or production facility.
(5)If the supervisor is unable to determine that an operator who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment of the well and or decommissioning deserted production facilities, the supervisor may undertake plugging and abandonment of the well and or decommissioning deserted production facilities pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 5.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 6.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 7.Section 3251 of the Public Resources Code is repealed.SEC. 8.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means a production facility determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission means the safe removal of all well equipment, the safe dismantling and removal of associated production facilities, and the restoration of the well and facility site in accordance with the divisions regulations.
(c)Hazardous facility means a production facility determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 9.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order to be carried out, or may undertake, any of the following operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of the well.
(3)The reabandonment of the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of hazardous or deserted facilities.
(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility and that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from the property, substantially interfere with the enjoyment of the property, the supervisor may acquire, as provided in Section 3256, a minimal interest in the property as is necessary to carry out the operation. No acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of the acquisition, irrespective of the manner in which the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 10.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed five million dollars ($5,000,000) in any one fiscal year. Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(b)Upon request by a local entity, the division shall provide the local entity a list of known idle-deserted wells, hazardous wells wells, deserted facilities, and hazardous facilities.
(c)A local entity may request to enter into a contract with the division to either receive funds to reimburse a local entitys costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning hazardous or deserted facilities.
(1)A local entity seeking to contract with the division pursuant to this section shall submit a request to the division. The request shall be approved by the local entitys legislative body before it can be considered by the division. The request shall contain all of the following:
(A)The location of the well to be plugged and abandoned and the production facilities to be decommissioned.
(B)(i)All required nonwell or nonproduction facility-related activities and payments the local entity believes will be required to complete the project, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(ii)A stipulation that the local entity will pay all costs identified pursuant to clause (i).
(C)(i)A statement of facts indicating why the specific well or wells or production facility or facilities were chosen.
(ii)The statement shall provide details regarding the potential harms to public health and environmental safety posed by the well or facility as documented by the local agency or public health and safety agencies within the appropriate jurisdiction.
(D)Estimated costs, determined by a licensed operator or contractor, to plug and abandon a well and decommission associated production facilities.
(E)Estimated costs of all other activities identified in subparagraph (B).
(F)All permits, if any, the division must obtain before the commencement of work to plug and abandon a well or decommission a production facility, and the anticipated timeline for the project.
(G)A timeline for estimated project completion.
(H)A verification that any funds provided by the division shall only be spent on the plugging and abandoning of a well and decommissioning production facilities and will not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(I)A verification that the local entity will adhere to all state contracting and subcontracting rules, as specified in the state contract manual.
(J)If a local entity is seeking funding to perform the plugging and abandonment or decommissioning work itself, documentation that the local entity is the operator of the well or production facility, will become the operator of the well or production facility, or has an agreement with the operator of the well or production facility for the work to be performed.
(2)(A)In reviewing and evaluating requests related to plugging and abandoning a hazardous or idle-deserted well or decommissioning a hazardous or deserted facility, the division shall prioritize and decide to approve or deny requests based on, at minimum, all of the following criteria:
(i)The degree of potential danger to life, health, or natural resources posed by a specific hazardous or idle-deserted well or hazardous or deserted facility.
(ii)Whether the specific hazardous or idle-deserted well or hazardous or deserted facility is located within an economically disadvantaged community.
(iii)The cost and potential environmental or public health benefits of plugging and abandoning the hazardous or idle-deserted well or decommissioning the hazardous or deserted facility.
(iv)The availability of third-party funding, including private development fees and federal matching funds.
(v)Any other consideration or priorities the division deems necessary, including, division funding and the statewide priority level of the hazardous or idle-deserted well or hazardous or deserted facility identified in the local entitys request.
(B)This paragraph shall not be construed to require the division to approve any request.
(3)(A)Upon approving a local entitys request, the division and the local entity shall enter into a contractual memorandum of understanding providing, at a minimum, all of the following:
(i)A statement identifying the costs each party will be responsible for paying.
(ii)A statement identifying the manner in which the city or county shall submit invoices for payment to the division.
(iii)A verification that the local entity agrees to pay all costs to plug and abandon a well and decommission the production facility in excess of the estimate provided in the application pursuant to subparagraphs (D) and (E) of paragraph (1).
(iv)A verification that the local entity shall be responsible for any cost not identified in the memorandum of understanding or the local entitys request.
(v)A verification that any funds provided by the division that are not utilized shall be returned to the division within 15 days of the completion of the project identified in the local entitys request.
(vi)Clearly state that the division shall only be responsible for the costs authorized pursuant to this section.
(B)Before the memorandum of understanding is effective, both of the following shall occur:
(i)The memorandum of understanding shall be approved by the legislative body of the local entity, and signed by an agent thereof, within 30 days of receiving notice of the divisions approval of the local entitys request. A failure to submit the approved memorandum of understanding to the division within 30 days cancels the divisions approval of the local entitys request.
(ii)The memorandum of understanding shall be approved by the supervisor. The supervisor shall approve a memorandum of understanding provided both of the following conditions are met:
(I)The division has sufficient funds to cover the plugging and abandonment of the well or decommissioning of the facility, based on a divisions estimate of the total cost of the work.
(II)The local entity provided all information and contractual conditions required by this section.
(d)On or after July 1, 2018, the division shall not commence any activity to plug and abandon a hazardous or idle-deserted well or decommission a hazardous or deserted facility within the jurisdiction of a local entity without entering into a contractual memorandum of understanding with the local entity pursuant to paragraph (3) of subdivision (c).
(e)Subdivisions (b), (c), and (d) do not apply to any idle wells, hazardous wells, idle-deserted wells, deserted facilities, or hazardous facilities located on property owned by a state agency.
(f)(1)Nothing in this section shall limit the divisions authority to plug and abandon a well or decommission a production facility deemed by the supervisor to pose a substantial threat to public health and environmental safety.
(2)If the division acts pursuant to paragraph (1), moneys shall only be expended on plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(g)(1)On October 1, 2019, the department shall report to the Legislature on the number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those wells and facilities, and a timeline for future abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(2)On October 1, 2022, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2026, pursuant to Section 10231.5 of the Government Code.
(h)For purposes of this section, the following terms have the following meanings:
(1)Economically disadvantaged community means a community with a median household income less than 80 percent of the statewide average.
(2)Local entity means a city or county.
SEC. 11.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled and may not be extended. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206 of the Public Resources Code, as added by Section 4 of Chapter 272 of the Statutes of 2016, is amended to read:3206.(a)The operator of any idle well shall do either of the following:
(1)No later than January 31 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:
(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.
(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.
(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.
(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the divisions satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.
(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:
(i)The plan shall specify the time period that it covers. The plan and any renewal of the plan shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.
(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.
(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). The supervisor may require additional well testing requirements as part of the plan.
(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.
(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisors rejection of a plan and plan amendments and the supervisors determination of the operators failure to comply with a plan. If the supervisors determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisors determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.
(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the attendant production facilities, or both, at a well of an operator subject to the requirements of this section.
(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.
(e)This section shall become operative on January 1, 2018.
SEC. 2.SEC. 3.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of all idle wells wells, as defined in subdivision (d) of Section 3008, within its jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells identified pursuant to subdivision (a) within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 3.SEC. 4.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well and the decommissioning of attendant production facilities of a well a production facility that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well. The supervisor or district deputy shall determine from credible evidence whether a well or production facility is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well, well or production facility, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission attendant production facilities of a deserted well a production facility may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well and the decommissioning of attendant production facilities of the well. deserted production facilities. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well and the decommissioning of attendant production facilities of the well, deserted production facilities, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well and the decommissioning of attendant production facilities of the well. deserted production facilities.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well or decommissioning attendant production facilities of the well. deserted production facilities. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well and decommissioning attendant production facilities of a well deserted production facilities by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well.
(5)If the supervisor is unable to determine that an operator who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment of the well and decommissioning attendant production facilities of the well, deserted production facilities, the supervisor may undertake plugging and abandonment of the well and decommissioning attendant production facilities of the well deserted production facilities pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 4.SEC. 5.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 5.SEC. 6.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 6.SEC. 7.Section 3251 of the Public Resources Code is repealed.SEC. 7.SEC. 8.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means an attendant a production facility of a well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission means the safe removal of all well equipment or associated production facilities, as applicable, and remediation and reasonable site restoration as deemed necessary by the supervisor or a district deputy. equipment, the safe dismantling and removal of associated production facilities, and the restoration of the well and facility site in accordance with the divisions regulations.
(c)Hazardous facility means an attendant a production facility of a well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 8.SEC. 9.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order to be carried out, or may undertake, any of the following operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of the well.
(3)The reabandonment of the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of attendant production hazardous or deserted facilities.
(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility and that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from the property, substantially interfere with the enjoyment of the property, the supervisor may acquire, as provided in Section 3256, a minimal interest in the property as is necessary to carry out the operation. No acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of the acquisition, irrespective of the manner in which the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 9.SEC. 10.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed five million dollars ($5,000,000) in any one fiscal year. Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning production hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(b)Upon request by a local entity, the division shall provide the local entity the total number, and location, of known idle wells, hazardous wells, idle-deserted wells, hazardous facilities, and deserted facilities identified within the local entitys jurisdiction. a list of known hazardous wells and hazardous facilities.
(c)A local entity may apply to the division request to enter into a contract with the division to either receive funds to reimburse a local entitys costs related to plugging and abandoning a hazardous or idle-deserted well and decommissioning production hazardous or deserted facilities or for the division to conduct work related to plugging and abandoning a hazardous or idle-deserted well and decommissioning production hazardous or deserted facilities.
(1)A local entity seeking to contract with the division pursuant to this section shall submit an application a request to the division. On or before July 1, 2018, the division shall specify the information to be included in a local entitys application, consistent with this section, and including, but not limited to, all of the following: The request shall be approved by the local entitys legislative body before it can be considered by the division. The request shall contain all of the following:
(A)The location of the well to be plugged and abandoned and the production facilities to be decommissioned.
(B)(i)All required nonwell or nonproduction facility-related activities and payments the local entity believes will be required to complete the project, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(ii)A stipulation that the local entity will pay all costs identified pursuant to clause (i).
(C)(i)A statement of facts indicating why the specific well or wells or production facility or facilities were chosen.
(ii)The statement shall provide details regarding the potential harms to public health and environmental safety posed by the well or facility as documented by the local agency or public health and safety agencies within the appropriate jurisdiction.
(D)Estimated costs, determined by a licensed operator or contractor, to plug and abandon a well and decommission associated production facilities.
(E)Estimated costs of all other activities identified in subparagraph (B).
(F)All permits, if any, the division must obtain before the commencement of work to plug and abandon a well or decommission a production facility, and the anticipated timeline for the project.
(G)A timeline for estimated project completion.
(H)A verification that any funds provided by the division shall only be spent on the plugging and abandoning of a well and decommissioning production facilities and will not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(I)A verification that the local entity will adhere to all state contracting and subcontracting rules, as specified in the state contract manual.
(J)If a local entity is seeking funding to perform the plugging and abandonment or decommissioning work itself, documentation that the local entity is the operator of the well or production facility, will become the operator of the well or production facility, or has an agreement with the operator of the well or production facility for the work to be performed.
(2)An application shall be approved by a vote of the local entitys legislative body before it can be considered by the division. (3)(2)(A)In reviewing and evaluating applications requests related to plugging and abandoning a hazardous or idle-deserted well or decommissioning a production hazardous or deserted facility, the division shall prioritize and decide to approve or deny applications requests based on, at minimum, all of the following criteria:
(i)The degree of potential danger to life, health, or natural resources posed by a specific hazardous or idle-deserted well or production hazardous or deserted facility.
(ii)Whether the specific hazardous or idle-deserted well or production hazardous or deserted facility is located within an economically disadvantaged community.
(iii)The cost and potential environmental or public health benefits of plugging and abandoning the hazardous or idle-deserted well or decommissioning the production hazardous or deserted facility.
(iv)The availability of third-party funding, including private development fees and federal matching funds.
(v)Any other consideration or priorities the division deems necessary, including, division funding and the statewide priority level of the hazardous or idle-deserted well or production hazardous or deserted facility identified in the application. local entitys request.
(B)This paragraph shall not be construed to require the division to approve an application. any request.
(4)(3)(A)Upon approving a local entitys application, request, the division and the local entity shall enter into a contractual memorandum of understanding providing, at a minimum, all of the following:
(i)A statement identifying the costs each party will be responsible for paying.
(ii)A statement identifying the manner in which the city or county shall submit invoices for payment to the division.
(iii)A verification that the local entity agrees to pay all costs to plug and abandon a well and decommission the production facility in excess of the estimate provided in the application pursuant to subparagraphs (D) and (E) of paragraph (1).
(iv)A verification that the local entity shall be responsible for any cost not identified in the memorandum of understanding or the application. local entitys request.
(v)A verification that any funds provided by the division that are not utilized shall be returned to the division within 15 days of the completion of the project identified in the application. local entitys request.
(vi)Clearly state that the division shall only be responsible for the costs authorized pursuant to this section.
(B)Before the memorandum of understanding is effective, both of the following shall occur:
(i)The memorandum of understanding shall be approved by the legislative body of the local entity, and signed by an agent thereof, within 30 days of receiving notice of the divisions approval of the local entitys application. request. A failure to submit the approved memorandum of understanding to the division within 30 days cancels the divisions approval of the local entitys application. request.
(ii)The memorandum of understanding shall be approved by the supervisor. The supervisor shall approve a memorandum of understanding provided both of the following conditions are met:
(I)The division has sufficient funds to cover the plugging and abandonment of the well or decommissioning of the facility, based on a divisions estimate of the total cost of the work.
(II)The local entity provided all information and contractual conditions required by this section.
(d)On or after July 1, 2018, the division shall not commence any activity to plug and abandon a hazardous or idle-deserted well or decommission a production hazardous or deserted facility within the jurisdiction of a local entity without entering into a contractual memorandum of understanding with the local entity pursuant to paragraph (4) (3) of subdivision (c).
(e)Subdivisions (b), (c), and (d) do not apply to any idle wells, hazardous wells, idle-deserted wells, deserted facilities, or hazardous facilities located on property owned by a state agency.
(f)(1)Nothing in this section shall limit the divisions authority to plug and abandon a well or decommission a production facility deemed by the supervisor to pose a substantial threat to public health and environmental safety.
(2)If the division acts pursuant to paragraph (1), moneys shall only be expended on plugging and abandoning hazardous or idle-deserted wells and decommissioning production hazardous or deserted facilities and shall not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(g)(1)On October 1, 2019, the department shall report to the Legislature on the number of orphan wells, hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those wells and facilities, and a timeline for future abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(2)On October 1, 2022, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2026, pursuant to Section 10231.5 of the Government Code.
(h)For purposes of this section, the following terms have the following meanings:
(1)Economically disadvantaged community means a community with a median household income less than 80 percent of the statewide average.
(2)Local entity means a city or county.
SEC. 10.SEC. 11.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The operator of any well, before commencing the work of drilling the well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that failure shall be considered as an approval of the notice and the notice, for the purposes and intents of this chapter, shall be deemed a written report of the supervisor. If operations have not commenced within one year 24 months of receipt of the notice, the notice shall be deemed canceled. canceled and may not be extended. The notice shall contain the pertinent data the supervisor requires on printed forms supplied by the division or on other forms acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice.
(b)After the completion of any well, this section also applies as far as may be, to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation of any well, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.
(c)If an operator has failed to comply with an order of the supervisor, the supervisor may deny approval of proposed well operations until the operator brings its existing well operations into compliance with the order. If an operator has failed to pay a civil penalty, remedy a violation that it is required to remedy to the satisfaction of the supervisor pursuant to an order issued under Section 3236.5, or to pay any charges assessed under Article 7 (commencing with Section 3400), the supervisor may deny approval to the operators proposed well operations until the operator pays the civil penalty, remedies the violation to the satisfaction of the supervisor, or pays the charges assessed under Article 7 (commencing with Section 3400).
SEC. 2.Section 3206.5 of the Public Resources Code is amended to read:3206.5.(a)Any city or county may request from the supervisor a list of those all idle wells within its jurisdiction which have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a six-month period during any consecutive 10-year period prior to or after January 1, 1991. jurisdiction.
(b)After receiving the list from the supervisor, the city or county may identify idle wells within its jurisdiction which it has determined, based on a competent, professional evaluation, have no reasonable expectation of being reactivated, and formally request the supervisor to make a determination whether the wells should be plugged and abandoned.
(c)Upon receiving the written request of a city or county, as specified in subdivision (b):
(1)The supervisor may, within 60 days of receiving a written request from a city or county, require the operator or operators to file a statement for each well outlining those reasons why the wells should not be plugged and abandoned.
(2)The supervisor shall, within 120 days of receiving a written request, make a determination as to whether any of these wells should be plugged and abandoned, pursuant to the criteria contained in this chapter.
(d)Failure of the operator to file, for any well, the statement required under this section shall be conclusive evidence of desertion of the well, thereby permitting the supervisor to order the well abandoned.
SEC. 3.Section 3237 of the Public Resources Code is amended to read:3237.(a)(1)The supervisor or district deputy may order the plugging and abandonment of a well and the decommissioning of attendant production facilities of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well. The supervisor or district deputy shall determine from credible evidence whether a well is deserted.
(2)For purposes of paragraph (1), credible evidence includes, but is not limited to, the operational history of the well, the response or lack of response of the operator to inquiries and requests from the supervisor or district deputy, the extent of compliance by the operator with the requirements of this chapter, and other actions of the operator with regard to the well.
(3)A rebuttable presumption of desertion arises in any of the following situations:
(A)If a well has not been completed to production or injection and drilling machinery have been removed from the well site for at least six months.
(B)If a wells production or injection equipment has been removed from the well site for at least two years.
(C)If an operator has failed to comply with an order of the supervisor within the time provided by the order or has failed to challenge the order on a timely basis.
(D)If an operator fails to designate an agent as required by Section 3200.
(E)If a person who is to acquire a well that is subject to a purchase, transfer, assignment, conveyance, exchange, or other disposition fails to comply with Section 3202.
(F)If an operator has failed to maintain the access road to a well site passable to oilfield and emergency vehicles.
(4)The operator may rebut the presumptions of desertion set forth in paragraph (3) by demonstrating with credible evidence compliance with this division and that the well has the potential for commercial production, including specific and detailed plans for future operations, and by providing a reasonable timetable for putting those plans into effect. The operator may rebut the presumption set forth in subparagraph (F) of paragraph (3) by repairing the access road.
(b)An order to plug and abandon a deserted well or to decommission attendant production facilities of a deserted well may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
(c)(1)The current operator, as determined by the records of the supervisor, of a deserted well that produced oil, gas, or other hydrocarbons or was used for injection is responsible for the proper plugging and abandonment of the well. well and the decommissioning of attendant production facilities of the well. If the supervisor determines that the current operator does not have the financial resources to fully cover the cost of plugging and abandoning the well, well and the decommissioning of attendant production facilities of the well, the immediately preceding operator shall be responsible for the cost of plugging and abandoning the well. well and the decommissioning of attendant production facilities of the well.
(2)The supervisor may continue to look seriatim to previous operators until an operator is found that the supervisor determines has the financial resources to cover the cost of plugging and abandoning the well. well or decommissioning attendant production facilities of the well. However, the supervisor may not hold an operator responsible that made a valid transfer of ownership of the well prior to January 1, 1996.
(3)For purposes of this subdivision, operator includes a mineral interest owner who shall be held jointly liable for the well and attendant production facilities if the mineral interest owner has or had leased or otherwise conveyed the working interest in the well to another person, if in the lease or other conveyance, the mineral interest owner retained a right to control the well operations that exceeds the scope of an interest customarily reserved in a lease or other conveyance in the event of a default.
(4)No prior operator is liable for any of the costs of plugging and abandoning a well and decommissioning attendant production facilities of a well by a subsequent operator if those costs are necessitated by the subsequent operators illegal operation of a well.
(5)If the supervisor is unable to determine that an operator that who acquired ownership of a well after January 1, 1996, has the financial resources to fully cover the costs of plugging and abandonment, abandonment of the well and decommissioning attendant production facilities of the well, the supervisor may undertake plugging and abandonment of the well and decommissioning attendant production facilities of the well pursuant to Article 4.2 (commencing with Section 3250).
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at his or her sole discretion, may determine that a well that has been idle for 25 years or more and that fails to meet either of the following conditions is conclusive evidence of desertion, and may order the well abandoned:
(A)The operator is operating in compliance with a valid idle well management plan that is on file with the supervisor pursuant to paragraph (4) (2) of subdivision (a) of Section 3206 or is covered by an indemnity bond provided under Section 3204, subdivision (c) (a) of Section 3205, or subdivision (a) of Section 3205.2.
(B)The well meets the relevant testing standards for idle wells required by the districts Idle Well Planning and Testing Program and Section 1723.9 of Title 14 of the California Code of Regulations. under the regulations implementing this chapter.
(2)The supervisor or district deputy shall provide the operator a 90-day notice of warning once a determination has been reached pursuant to this subdivision that a well has been deserted. An operator may rebut the determination, made pursuant to paragraph (1), of the supervisor or district deputy by demonstrating compliance with subparagraphs (A) and (B) of paragraph (1).
(3)An order to plug and abandon a deserted well under this section due to the supervisors or district deputys determination of an operators noncompliance with either subparagraph (A) or (B) of paragraph (1) may be appealed to the director pursuant to the procedures specified in Article 6 (commencing with Section 3350).
SEC. 4.The heading of Article 4.2 (commencing with Section 3250) of Chapter 1 of Division 3 of the Public Resources Code is amended to read:4.2.Hazardous Wells and FacilitiesSEC. 5.Section 3250 of the Public Resources Code is amended to read:3250.The Legislature hereby finds and declares that hazardous and certain idle-deserted oil and gas wells, wells and hazardous and deserted facilities, as defined in this article, are public nuisances and that it is essential, in order to protect life, health, and natural resources that such those oil and gas wells and facilities be abandoned, reabandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, and natural resources.
The Legislature further finds and declares that, although the abatement of such public nuisances could be accomplished by means of an exercise of the regulatory power of the state, such regulatory abatement would result in unfairness and financial hardship for certain landowners, while also resulting in benefits to the public. The Legislature, therefore, finds and declares that the expenditure of funds to abate such nuisances as provided in this article is for a public purpose and finds and declares it to be the policy of this state that the cost of carrying out such abatement be charged to this states producers of oil and gas as provided in Article 7 (commencing with Section 3400).
SEC. 6.Section 3251 of the Public Resources Code is repealed.3251.For the purposes of this article, an oil or gas well is a hazardous well if the supervisor determines that the well is a potential danger to life, health, or natural resources and there is no operator determined by the supervisor to be responsible for plugging and abandoning the well under subdivision (c) of Section 3237. Also, for the purposes of this article, an oil or gas well is an idle-deserted well if the supervisor determines that the well is deserted under Section 3237 and there is no operator responsible for its plugging and abandonment under Section 3237.SEC. 7.Section 3251 is added to the Public Resources Code, to read:3251.For the purposes of this article, the following definitions apply:
(a)Deserted facility means an attendant production facility of a well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its decommissioning under Section 3237.
(b)Decommission means the removal of all well equipment or associated production facilities, as applicable, and remediation and reasonable site restoration as deemed necessary by the supervisor or a district deputy.
(c)Hazardous facility means an attendant production facility of a well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its decommissioning under Section 3237.
(d)Hazardous well means an oil and gas well determined by the supervisor to be a potential danger to life, health, or natural resources and for which there is no operator determined by the supervisor to be responsible for its plugging and abandonment under Section 3237.
(e)Idle-deserted well means an oil and gas well determined by the supervisor to be deserted under Section 3237 and for which there is no operator responsible for its plugging and abandonment under Section 3237.
SEC. 8.Section 3255 of the Public Resources Code is amended to read:3255.(a)Notwithstanding any other provision of this division, the supervisor may order that to be carried out, or may undertake, any of the following operations be carried out operations, as applicable, on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be either a hazardous or well, an idle-deserted well: well, a hazardous facility, or a deserted facility:
(1)Any inspection or tests necessary to determine what action, if any, would be appropriate to effectuate the purpose of this article.
(2)The abandonment of such a the well.
(3)The reabandonment of such a the well.
(4)The redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(5)The drilling and production of a well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources.
(6)The decommissioning of attendant production facilities.
(6)(7)Any other remedy or oilfield operation calculated to effectuate the purpose of this article.
(b)If, pursuant to this article, the supervisor orders that any operation be carried out with respect to a hazardous or well, an idle-deserted well well, a hazardous facility, or a deserted facility and such that operation will, by virtue of the physical occupation or destruction of all or any part of the property or the extraction of oil or gas from such the property, substantially interfere with the enjoyment of the property, the supervisor shall may acquire, as provided in Section 3256, such a minimal interest in the property as is necessary to carry out such the operation. No such acquisition may be made pursuant to this subdivision unless the supervisor finds and determines that the public benefits to be derived therefrom in remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources will exceed the cost of such the acquisition, irrespective of the manner in which such the acquisition is to be funded.
(c)An order of the supervisor to carry out any of the operations listed in subdivision (a) may be appealed by the owner of the property pursuant to Article 6 (commencing with Section 3350), except that in the case of an emergency no stay of the supervisors order shall accompany the appeal.
SEC. 9.Section 3258 of the Public Resources Code is amended to read:3258.(a)The division shall not make expenditures pursuant to this article that exceed the following sum five million dollars ($5,000,000) in any one fiscal year: year. Moneys expended pursuant to this article shall be used exclusively for plugging and abandoning wells and decommissioning production facilities and shall not be used for nonwell or nonproduction facility-related activities and payments.
(1)Two million dollars ($2,000,000) commencing on July 1, 2008, for the 200809 fiscal year, and continuing for six fiscal years thereafter.(2)One million dollars ($1,000,000), commencing with the 201516 fiscal year.(b)Upon request by a local entity, the division shall provide the local entity the total number, and location, of known idle wells, hazardous wells, idle-deserted wells, hazardous facilities, and deserted facilities identified within the local entitys jurisdiction.
(c)A local entity may apply to the division to enter into a contract with the division to either receive funds to reimburse a local entitys costs related to plugging and abandoning a well and decommissioning production facilities or for the division to conduct work related to plugging and abandoning a well and decommissioning production facilities.
(1)A local entity seeking to contract with the division pursuant to this section shall submit an application to the division. On or before July 1, 2018, the division shall specify the information to be included in a local entitys application, consistent with this section, and including, but not limited to, all of the following:
(A)The location of the well to be plugged and abandoned and the production facilities to be decommissioned.
(B)(i)All required nonwell or nonproduction facility-related activities and payments the local entity believes will be required to complete the project, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(ii)A stipulation that the local entity will pay all costs identified pursuant to clause (i).
(C)(i)A statement of facts indicating why the specific well or wells or production facility or facilities were chosen.
(ii)The statement shall provide details regarding the potential harms to public health and environmental safety posed by the well or facility as documented by the local agency or public health and safety agencies within the appropriate jurisdiction.
(D)Estimated costs, determined by a licensed operator or contractor, to plug and abandon a well and decommission associated production facilities.
(E)Estimated costs of all other activities identified in subparagraph (B).
(F)All permits, if any, the division must obtain before the commencement of work to plug and abandon a well or decommission a production facility, and the anticipated timeline for the project.
(G)A timeline for estimated project completion.
(H)A verification that any funds provided by the division shall only be spent on the plugging and abandoning of a well and decommissioning production facilities and will not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(I)A verification that the local entity will adhere to all state contracting and subcontracting rules, as specified in the state contract manual.
(J)If a local entity is seeking funding to perform the plugging and abandonment or decommissioning work itself, documentation that the local entity is the operator of the well or production facility, will become the operator of the well or production facility, or has an agreement with the operator of the well or production facility for the work to be performed.
(2)An application shall be approved by a vote of the local entitys legislative body before it can be considered by the division.
(3)(A)In reviewing and evaluating applications related to plugging and abandoning a well or decommissioning a production facility, the division shall prioritize and decide to approve or deny applications based on, at minimum, all of the following criteria:
(i)The degree of potential danger to life, health, or natural resources posed by a specific well or production facility.
(ii)Whether the specific well or production facility is located within an economically disadvantaged community.
(iii)The cost and potential environmental or public health benefits of plugging and abandoning the well or decommissioning the production facility.
(iv)The availability of third-party funding, including private development fees and federal matching funds.
(v)Any other consideration or priorities the division deems necessary, including, division funding and the statewide priority level of the well or production facility identified in the application.
(B)This paragraph shall not be construed to require the division to approve an application.
(4)(A)Upon approving a local entitys application, the division and the local entity shall enter into a contractual memorandum of understanding providing, at a minimum, all of the following:
(i)A statement identifying the costs each party will be responsible for paying.
(ii)A statement identifying the manner in which the city or county shall submit invoices for payment to the division.
(iii)A verification that the local entity agrees to pay all costs to plug and abandon a well and decommission the production facility in excess of the estimate provided in the application pursuant to subparagraphs (D) and (E) of paragraph (1).
(iv)A verification that the local entity shall be responsible for any cost not identified in the memorandum of understanding or the application.
(v)A verification that any funds provided by the division that are not utilized shall be returned to the division within 15 days of the completion of the project identified in the application.
(vi)Clearly state that the division shall only be responsible for the costs authorized pursuant to this section.
(B)Before the memorandum of understanding is effective, both of the following shall occur:
(i)The memorandum of understanding shall be approved by the legislative body of the local entity, and signed by an agent thereof, within 30 days of receiving notice of the divisions approval of the local entitys application. A failure to submit the approved memorandum of understanding to the division within 30 days cancels the divisions approval of the local entitys application.
(ii)The memorandum of understanding shall be approved by the supervisor. The supervisor shall approve a memorandum of understanding provided both of the following conditions are met:
(I)The division has sufficient funds to cover the plugging and abandonment of the well or decommissioning of the facility, based on a divisions estimate of the total cost of the work.
(II)The local entity provided all information and contractual conditions required by this section.
(d)On or after July 1, 2018, the division shall not commence any activity to plug and abandon a well or decommission a production facility within the jurisdiction of a local entity without entering into a contractual memorandum of understanding with the local entity pursuant to paragraph (4) of subdivision (c).
(e)Subdivisions (b), (c), and (d) do not apply to any idle wells, hazardous wells, idle-deserted wells, deserted facilities, or hazardous facilities located on property owned by a state agency.
(f)(1)Nothing in this section shall limit the divisions authority to plug and abandon a well or decommission a production facility deemed by the supervisor to pose a substantial threat to public health and environmental safety.
(2)If the division acts pursuant to paragraph (1), moneys shall only be expended on plugging and abandoning wells and decommissioning production facilities and shall not be used for nonwell or nonproduction facility-related activities and payments, including, but not limited to, relocating and accommodating impacted residents, utility relocation, business and transportation impacts, and site restoration.
(b)(g)(1)On October 1, 2011, 2019, the department shall report to the Legislature on the number of orphan wells wells, hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning and decommissioning those orphan wells, wells and facilities, and a timeline for future orphan well abandonment and decommissioning of those wells and facilities with a specific schedule of goals.
(2)On October 1, 2022, the department shall provide to the Legislature an update on the report required in paragraph (1) that describes the total costs, average costs per well and facility, the number of wells plugged and abandoned, the number of facilities decommissioned, the total number of projects completed, and any additional wells and facilities identified by the department requiring abandonment or decommissioning.
(3)The report and update to the report required to be submitted under this subdivision shall be submitted in compliance with Section 9795 of the Government Code.
(4)The requirement for submitting a report imposed under this subdivision is inoperative on October 1, 2026, pursuant to Section 10231.5 of the Government Code.
(h)For purposes of this section, the following terms have the following meanings:
(1)Economically disadvantaged community means a community with a median household income less than 80 percent of the statewide average.
(2)Local entity means a city or county.
SEC. 10.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
|
Date
|
Status
|
|---|---|
| Oct 10, 2017 | Chaptered by Secretary of State. Chapter 652, Statutes of 2017. |
| Oct 10, 2017 | Approved by the Governor. |
| Sep 18, 2017 | Enrolled and presented to the Governor at 3 p.m. |
| Sep 13, 2017 | In Senate. Ordered to engrossing and enrolling. |
| Sep 12, 2017 | Read third time. Passed. Ordered to the Senate. |
| Sep 5, 2017 | Read second time. Ordered to third reading. |
| Sep 1, 2017 | From committee: Do pass. (Ayes 16. Noes 0.) (September 1). |
| Sep 1, 2017 | Joint Rule 62(a) suspended. |
| Aug 30, 2017 | August 30 set for first hearing. Placed on APPR. suspense file. |
| Aug 23, 2017 | August 23 hearing postponed by committee. |
| Jul 11, 2017 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 10. Noes 0.) (July 10). Re-referred to Com. on APPR. |
| Jun 15, 2017 | Referred to Com. on NAT. RES. |
| Jun 1, 2017 | In Assembly. Read first time. Held at Desk. |
| May 31, 2017 | Read third time. Passed. (Ayes 39. Noes 0. Page 1334.) Ordered to the Senate. |
| May 26, 2017 | Read second time and amended. Ordered to third reading. |
| May 25, 2017 | From committee: Do pass as amended. (Ayes 7. Noes 0. Page 1189.) (May 25). |
| May 19, 2017 | Set for hearing May 25. |
| May 15, 2017 | May 15 hearing: Placed on APPR. suspense file. |
| May 4, 2017 | Set for hearing May 15. |
| Apr 27, 2017 | Read second time and amended. Re-referred to Com. on APPR. |
| Apr 26, 2017 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0. Page 829.) (April 25). |
| Apr 17, 2017 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on N.R. & W. |
| Mar 14, 2017 | Set for hearing April 25. |
| Mar 9, 2017 | Referred to Com. on N.R. & W. |
| Feb 21, 2017 | From printer. May be acted upon on or after March 23. |
| Feb 17, 2017 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
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Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 12, 2017 | SB 724 Lara Senate Third Reading By CALDERON | Assembly Floor |
Passed |
|
| Sep 1, 2017 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jul 10, 2017 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Natural Resources |
Passed |
|
| May 31, 2017 | Senate 3rd Reading SB724 Lara | Senate Floor |
Passed |
|
| May 25, 2017 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| May 15, 2017 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 25, 2017 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Natural Resources and Water |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Asian Pacific Environmental Network | ** Support | Jul 7, 2017 |
| California Environmental Justice Coalition | ** Support | Jul 7, 2017 |
| California League Of Conservation Voters | ** Support | Jul 7, 2017 |
| Center For Biological Diversity | ** Support | May 27, 2017 |
| Center For Environmental Health | ** Support | Jul 7, 2017 |
| Center For Food Safety | ** Support | Jul 7, 2017 |
| Central California Environmental Justice Coalition | ** Support | Jul 7, 2017 |
| Citizens Coalition for a Safe Community | ** Support | Jul 7, 2017 |
| Clean Water Action | ** Support | Jul 7, 2017 |
| Department of Conservation | ** Support | Jul 7, 2017 |
| Earthworks | ** Support | Jul 7, 2017 |
| Environment California | ** Support | Jul 7, 2017 |
| Environmental Defense Center | ** Support | Jul 7, 2017 |
| Environmental Defense Fund | ** Support | Jul 7, 2017 |
| Environmental Justice Coalition for Water | ** Support | Jul 7, 2017 |
| Environmental Working Group | * Support | Jul 10, 2017 |
| Friends of the Earth - US | ** Support | Jul 7, 2017 |
| Grassroots Coalition | ** Support | Jul 7, 2017 |
| Los Padres Forest Watch | ** Support | Jul 7, 2017 |
| Natural Resources Defense Council | * Support | Jul 10, 2017 |
| Rootskeeper | ** Support | Jul 7, 2017 |
| Save the Sespe | ** Support | Jul 7, 2017 |
| Sierra Club | * Support | Jul 10, 2017 |
| The Trust For Public Land | ** Support | Jul 7, 2017 |
| Wholly H20 | ** Support | Jul 7, 2017 |
| Wholly H2O | ** Support | May 27, 2017 |
SENATE THIRD READING
STR Bill Id:SB 724
Author:(Lara)
As Amended Ver:May 26, 2017
Majority vote
SENATE VOTE: 39-0
Committee | Votes | Ayes | Noes |
Natural Resources | 10-0 | Cristina Garcia, Acosta, Travis Allen, Chau, Eggman, Flora, Limón, McCarty, Muratsuchi, Mark Stone | |
Appropriations | 16-0 | Gonzalez Fletcher, Bigelow, Bloom, Bocanegra, Bonta, Brough, Calderon, Chau, Eggman, Fong, Friedman, Gallagher, Eduardo Garcia, Jones-Sawyer, Obernolte, Reyes |
SUMMARY: Authorizes the Division of Oil, Gas, and Geothermal Resources (DOGGR) to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities. Authorizes the state's Oil and Gas Supervisor (Supervisor) or district deputy to order the decommissioning of a production facility.
EXISTING LAW:
- Requires the Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities attendant to oil and gas production.
- Defines "production facility" to mean any equipment attendant to oil and gas production or injection operations including, but not limited to, tanks, flowlines, headers, gathering lines, wellheads, heater treaters, pumps, valves, compressors, injection equipment, and pipelines that are not under the jurisdiction of the State Fire Marshal.
- Defines "idle well" as any well that has had 24 consecutive months of not producing oil, natural gas, or water to be used in production stimulation, enhanced oil recovery, or reservoir pressure management. Defines "long-term idle well" as any well that has been an idle well for eight or more years.
- Authorizes the Supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
- Establishes a charge computed at a uniform rate per barrel of oil produced from the well for the preceding calendar year. Specifies that proceeds of the charge be used exclusively for the support the regulation of oil and gas production by DOGGR, for the State Water Resources Control Board, and the regional water quality control boards for their activities related to oil and gas operations that may affect water resources, and for the support of the State Air Resources Board and the Office of Environmental Health Hazard Assessment for their activities related to oil and gas operations that may affect air quality, public health, or public safety.
- Provided $2 million in 2015-16 fiscal year to DOGGR for abandonment of hazardous or idle-deserted wells.
FISCAL EFFECT: According to the Assembly Appropriations Committee, Increased first-year costs of $650,000 and approximately $600,000 annually thereafter to issue orders to responsible parties, prioritize orphan wells for plugging and abandonment, verify the location of orphan wells, assess risks and potential costs with orphan wells, draft contracts with local entities and contractors, and oversee work performed by contractors (Oil, Gas, and Geothermal Administrative Fund).
COMMENTS: From 2007 to September of 2011, DOGGR plugged and abandoned 142 orphan wells at a cost of $5 million. This led to an average cost per well of just over $35,000. The vast majority of these wells were in lower cost, sparsely populated areas of the state and the cost per well since that time has been significantly higher. Between 2012 and 2016, DOGGR plugged 41 wells at an average cost of $81,000 per well.
Plugging and abandonment costs on deserted wells are highly variable and, in many cases, difficult to predict. When an operator is plugging and abandoning one of their own wells, they are generally aware of the situation at a well, including obstructions that they may encounter based on having worked with the well. When DOOGR is approaching a hazardous deserted well that could be as old as 100 years, they may not know if the previous operator had attempted to plug it in the past, what material may have been emplaced in the well, if the casing is intact, and other information that is critical to understanding potential cost drivers in a plugging and abandonment job. Costs can range from as low as $11/foot in a well in Kern County if the project goes smoothly to well over $200/foot in an urbanized area with high ancillary costs, such as temporarily moving utility lines, higher staging and mobilization costs, and where "junk" obstructs downhole operations and leads into delays and cost over runs.
In September 2014, DOGGR personnel were asked to investigate complaints or odors from orphan idle well called Patel 1 in a residential neighborhood in Los Angeles. Patel 1 was estimated to have been drilled before 1903 and was leaking low levels of hydrogen sulfide, a toxic gas. Another neighboring well called Rogalske 10 was also found to be leaking and producing a strong smell. DOGGR, at the cost of more than $1 million, plugged and abandoned the two wells to protect the community. SB 724 would enhance DOGGR's resources to plug and abandon orphan wells and would allow them to decommission production facilities that are hazardous or deserted. The increased funding would likely cause the per barrel charge to increase by approximately one cent.
Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0001715
Date of Hearing: August 30, 2017
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
SBPCA Bill Id:SB 724
Author:(Lara) – As Amended Ver:May 26, 2017
Policy Committee: | Natural Resources | Vote: | 10 - 0 |
|
| ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill increases the expenditure authority for the Division of Oil, Gas, and Geothermal Resources (DOGGR) from $1 million to $3 million for the plugging and abandonment of hazardous or idle-deserted wells and the decommissioning of hazardous or deserted production facilities. Additionally, this bill:
- Extends the period of how long a notice to drill is valid from one year to two years, and prohibits the notice from being extended.
- Authorizes the DOGGR Supervisor to provide credit to an operator’s current long-term idle well elimination goal if an operator has eliminated more long-term idle wells than required in the previous two years, as specified
- Requires the list of idle wells that a city or county is authorized to request from the Supervisor to include all wells defined as idle by DOGGR.
- Authorizes the Supervisor or district deputy to order the decommissioning of a production facility.
- Prohibits DOGGR from making expenditures in excess of $3 million for four years and $1 million each year thereafter to do the following:
- Inspect or test to identify hazardous or deserted wells or hazardous or deserted facilities;
- The abandonment or reabandonment of a well;
- The drilling or redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources; and,
- The decommissioning of hazardous or deserted production facilities.
- Requires DOGGR to develop criteria for determining the priority for plugging and decommissioning activities, and exempts the development of criteria from the Administrative Procedures Act.
- Requires DOGGR to report to the Legislature on October 1, 2020, and October 1, 2023, as specified.
FISCAL EFFECT:
Increased first-year costs of $650,000 and approximately $600,000 annually thereafter to issue orders to responsible parties, prioritize orphan wells for plugging and abandonment, verify the location of orphan wells, assess risks and potential costs with orphan wells, draft contracts with local entities and contractors, and oversee work performed by contractors (Oil, Gas, and Geothermal Administrative Fund).
COMMENTS:
- Purpose. This bill seeks to increase the funding available to the DOGGR to plug and abandon orphan wells, in order to safely remediate these public hazards, and clarify the scope of the DOGGR’s authority related to these wells. Additionally, this bill makes several technical changes related to idle wells and idle well management plans, and clarifies the Supervisor’s authority to order production facilities be addressed at the same time an operator is ordered to plug and abandon a well.
- Background. Under existing law, DOGGR is given sole authority to plug and abandon, or permit the plugging and abandonment of, deserted wells by property owners or local governments. However, the statute is not clear about whether state funding must be used for other incidental and secondary services. This bill seeks to clarify the DOGGR’s spending authority by limiting expenditures to the plugging and abandonment of deserted wells and the decommissioning of hazardous-deserted facilities.
Some local governments would prefer that the DOGGR assume the additional burden of the significant costs incurred for work wholly unrelated to the well or facility, including the costs of relocating residents and businesses impacted by plugging and abandonment work, as well as other remediation activities. However, such expenses would quickly exhaust the DOGGR’s limited resources on work more appropriately funded by the local governments directly responsible for permitting the siting of conflicting land uses (like residences) near oil and gas operations.
In September 2014, DOGGR personnel in Los Angeles were asked to investigate complaints of odors from orphan idle well Patel 1. This well, which had been drilled more than 110 years ago, was leaking very low levels of hydrogen sulfide, and methane measurements inside the top of the well were within the lower explosive limit. Shortly after inspection, an unknown person poured epoxy over the wellhead and stopped the gas emissions from Patel 1. In April 2015, residents of Firmin Street complained of a strong smell near well Patel 1. DOGGR staff examined Patel 1 and did not find a leak. Soon thereafter, however, they tracked the odor to cracks in a concrete walkway across the street. DOGGR staff identified Rogalske 10 as the nearest well. This well, also more than a century old, was buried under a house. After informing the property owner that the well would need to be excavated, DOGGR coordinated operations with local government and third-party contractors to plug and abandon both Patel 1 and Rogalske 10.
Ultimately, the DOGGR spent more than $1 million on the Firmin Street project, and many of the costs incurred stemmed from incidental services beyond the expressed statutory authority of the DOGGR’s obligations, including the temporary relocation and transportation of local residents inconvenienced by the vehicles, traffic, equipment, and personnel required to complete this project.
This bill would ensure that the financial liability incurred for projects similar to Firmin Street will not deplete all of the DOGGR’s resources. By clearly delimiting the Division’s statutory obligations to the plugging and abandonment of wells and the decommissioning of production facilities, this bill will ultimately increase the total number of wells that can be addressed in a single fiscal year.
- Related Legislation. SB 44 (Jackson) requires the State Lands Commission to administer a coastal hazard removal and remediation program. This bill is currently in this Committee on suspense.
Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081
Date of Hearing: July 10, 2017
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Cristina Garcia, Chair
SBPCA Bill Id:SB 724
Author:(Lara) – As Amended Ver:May 26, 2017
SENATE VOTE: 39-0
SUBJECT: Oil and gas: wells and production facilities
SUMMARY: Authorizes the Division of Oil, Gas, and Geothermal Resources (DOGGR) to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities.
EXISTING LAW:
- Requires the state’s Oil and Gas Supervisor (Supervisor) to supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities attendant to oil and gas production.
- Requires the operator of any well, before commencing the work of drilling the well, to file with the Supervisor or the district deputy a written notice of intention to commence drilling. Specifies that if the Supervisor or the district deputy fails to give the operator written response to the notice within 10 working days from the date of receipt, that notice is considered approved. Requires the notice to be deemed canceled if operations have not commenced within one year of receipt of the notice.
- Defines “production facility” to mean any equipment attendant to oil and gas production or injection operations including, but not limited to, tanks, flowlines, headers, gathering lines, wellheads, heater treaters, pumps, valves, compressors, injection equipment, and pipelines that are not under the jurisdiction of the State Fire Marshal.
- Defines "idle well" as any well that has had 24 consecutive months of not producing oil, natural gas, or water to be used in production stimulation, enhanced oil recovery, or reservoir pressure management. Defines "long-term idle well" as any well that has been an idle well for eight or more years.
- Allows an operator to file one blanket indemnity bond with the Supervisor to cover 20 or more wells instead of individual indemnity bonds. Requires, on January 1, 2018, the bond to be the following amounts:
- $200,000 for 20 to 50 wells;
- $400,000 for 51 to 500 wells,
- $2,000,000 for 501 to 10,000 wells; and,
- $3,000,000 for more than 10,000 wells.
- Requires an operator, on January 1, 2018 and after, to do one of the following:
- File with the Supervisor annual fees for the following amounts:
- $150 for each idle well that has been idle for three years but less than eight years;
- $300 for each idle well that has been idle for eight years or longer, but less than 15 years;
- $750 for each idle well that has been idle for five years or longer, but less than 20 years; and,
- $1,500 for each idle well that has been idle for 20 years or longer.
- File an idle well management plan with the Supervisor for approval that eliminates between 4 and 6% of their long-term idle wells each year.
- File with the Supervisor annual fees for the following amounts:
- Requires, on or after January 1, 2018, a well to be properly abandoned before an individual or blanket indemnity bond can be terminated or canceled.
- Requires, by June 1, 2018, DOGGR to review, evaluate, and update its testing regulations pertaining to idle wells.
- Authorizes the Supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
- Establishes a charge computed at a uniform rate per barrel of oil produced from the well for the preceding calendar year. Specifies that proceeds of the charge be used exclusively for the support the regulation of oil and gas production by DOGGR, for the State Water Resources Control Board, and the regional water quality control boards for their activities related to oil and gas operations that may affect water resources, and for the support of the State Air Resources Board and the Office of Environmental Health Hazard Assessment for their activities related to oil and gas operations that may affect air quality, public health, or public safety.
- Provided $2 million in 2015-16 fiscal year to DOGGR for abandonment of hazardous or idle-deserted wells.
THIS BILL:
- Extends the period of how long a notice to drill is valid for from one year to two years, and prohibits the notice from being extended.
- Authorizes the Supervisor to deduct from the idle well management plan requirements to plug and abandon a specified number of long term idle wells for over compliance in previous years.
- Requires the list of idle wells that a city or county is authorized to request from the Supervisor to include all wells defined as idle by DOGGR.
- Authorizes the Supervisor or district deputy to order the decommissioning of a production facility.
- Prohibits DOGGR from making expenditures in excess of $3 million for four years and $1 million each year after to do the following:
- Inspect or test to identify hazardous or deserted wells or hazardous or deserted facilities;
- The abandonment or reabandonment of a well;
- The drilling or redrilling and production of an existing well for purposes of remedying, mitigating, minimizing, or eliminating danger to life, health, and natural resources; and,
- The decommissioning of hazardous or deserted production facilities.
FISCAL EFFECT: According to the Senate Appropriations Committee:
- $3 million appropriated annually to DOGGR (Oil, Gas, and Geothermal Administration Fund) to fund the plugging and abandonment of the state’s hazardous and deserted wells and facilities.
- Approximately $685,000 in the first year and approximately $640,000 ongoing (Oil, Gas, and Geothermal Administration Fund) for DOGGR staff necessary to perform regulatory and administrative functions.
COMMENTS:
- Author’s statement:
California statute requires that operators plug and abandon oil and gas wells deemed deserted by DOGGR. Operators are also required to plug and abandon idle wells, if there is no intent to reactivate the well. Plugging a well requires cement to be pumped down into a well to fill it completely and seal it permanently to prevent a variety of potential hazards that threaten life, health, property, and the environment. Some financially struggling operators desert unplugged wells and associated production facilities with no notification to the proper authorities.
In addition to wells deserted by the negligence, financial failure, or death of an operator, many wells remain unplugged because they were deserted before DOGGR was created in 1915. Existing law authorizes DOGGR to spend $1 million annually to perform the work of plugging and abandoning deserted wells. This financial authority is insufficient for the work required to remediate these hazards. In addition to the wells, the deserted production facility equipment left behind by operators can sometimes pose as serious or an even greater hazard than the wells themselves. Existing law is ambiguous at best regarding the DOGGR’s authority to remove this equipment. SB 724 would provide the DOGGR the necessary authority to decommission these facilities and increase the funding available to expand its remediation work.
- Background. California has a long history of oil production and has ranked third in the nation in oil production behind Texas and North Dakota. In the early 1900s, the Los Angeles Basin produced one-quarter of the world’s oil. In 2015, 201.7 million barrels of oil were produced in California. A large portion of the oil produced in California is mixed with significant amounts of water, which is called produced water. That water is separated from the oil by the operator. Produced water can be treated and reinjected or disposed of either through underground injection or discharge into ponds or surface water. In limited cases, produced water is treated and reused for irrigation. Oil production in California has been enhanced by the application of several technologies, including water flooding, cyclic steaming, steam flooding, acidizing stimulation, and hydraulic fracturing.
DOGGR has identified more than 2,000 potential orphan wells that require further investigation. Many of these are “buried-idle” wells with antiquated, vague, or nonexistent records, below densely-built and populated urban areas in southern California. Some of these wells may never result in problems or may be remediated as a condition of permitting new construction projects as downtown Los Angeles and other areas are redeveloped. However, with so many wells, some dating back to the turn of the last century, it is probable that some will present some health or safety concern. Just one or two in any given year in an urban environment has the potential to consume the DOGGR’s entire hazardous deserted idle well budget leaving it unable to plug more than a few orphan wells every year throughout the entire state.
As DOGGR looks ahead at this problem, it sees the potential for it to grow. There are currently over 20,000 idle oil wells in the state, nearly a quarter of which have not produced oil or gas in over 25 years. An idle oil well can become an orphan well if the operator goes out of business or can’t be located.
- Abandoning wells. From 2007 to September of 2011, DOGGR plugged and abandoned 142 orphan wells at a cost of $5 million. This led to an average cost per well of just over $35,000. The vast majority of these wells were in lower cost, sparsely populated areas of the state and the cost per well since that time has been significantly higher. Between 2012 and 2016, DOGGR plugged 41 wells at an average cost of $81,000 per well.
Plugging and abandonment costs on deserted wells are highly variable and, in many cases, difficult to predict. When an operator is plugging and abandoning one of their own wells, they are generally aware of the situation at a well, including obstructions that they may encounter based on having worked with the well. When DOOGR is approaching a hazardous deserted well that could be as old as 100 years, they may not know if the previous operator had attempted to plug it in the past, what material may have been emplaced in the well, if the casing is intact, and other information that is critical to understanding potential cost drivers in a plugging and abandonment job. Costs can range from as low as $11/foot in a well in Kern County if the project goes smoothly to well over $200/foot in an urbanized area with high ancillary costs, such as temporarily moving utility lines, higher staging and mobilization costs, and where “junk” obstructs downhole operations and leads into delays and cost over runs.
In September 2014, DOGGR personnel were asked to investigate complaints or odors from orphan idle well called Patel 1 in a residential neighborhood in Los Angeles. Patel 1 was estimated to have been drilled before 1903 and was leaking low levels of hydrogen sulfide, a toxic gas. Another neighboring well called Rogalske 10 was also found to be leaking and producing a strong smell. DOGGR, at the cost of more than $1 million, plugged and abandoned the two wells to protect the community. SB 724 would enhance DOGGR’s resources to plug and abandon orphan wells and would allow them to decommission production facilities that are hazardous or deserted. The increased funding would likely cause the per barrel charge to increase by approximately one cent.
- Prior/Related legislation.
AB 2729 (Williams), Chapter 272, Statutes of 2016, increased idle oil and gas well fees and blanket indemnity bonds to provided disincentives for operators to maintain large numbers of idle wells.
SB 900 (Jackson, 2016) required, upon appropriation of funding by the Legislature, that the State Lands Commission administer a coastal hazard removal and remediation program. This bill was vetoed by the Governor.
SB 44 (Jackson) requires, upon appropriation of funding by the Legislature, that the State Lands Commission administer a coastal hazard removal and remediation program. This bill is also scheduled to be heard by this Committee on July 10.
REGISTERED SUPPORT / OPPOSITION:
Support
Department of Conservation (Sponsor)
Asian Pacific Environmental Network
California Environmental Justice Coalition
California League of Conservation Voters
Center for Environmental Health
Center for Food Safety
Central California Environmental Justice Coalition
Citizens Coalition for a Safe Community
Clean Water Action
Earthworks
Environmental Defense Center
Environmental Defense Fund
Environmental Justice Coalition for Water
Environmental Working Group
Environment California
Friends of the Earth – US
Grassroots Coalition
Los Padres Forest Watch
Natural Resources Defense Council
Rootskeeper
Save the Sespe
Sierra Club California
The Trust For Public Land
Wholly H20
Opposition
None on file
Analysis Prepared by: Michael Jarred / NAT. RES. /
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB |
THIRD READING
Bill No: SB 724
:
SENATE NATURAL RES. & WATER COMMITTEE: 9-0, 4/25/17
AYES: Hertzberg, Stone, Allen, Atkins, Hueso, Jackson, Monning, Stern, Vidak
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/25/17
AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener
SOURCE: Department of Conservation
DIGEST:
This bill substantially revises the Division of Oil, Gas and Geothermal Resources’ processes for addressing hazardous and deserted wells and facilities, and temporarily increases the annual cap on expenditures for plugging and abandoning wells such as these to $3 million.
Existing law:
- Establishes the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation (department), as the state’s oil and gas regulator. The division’s leader – the state oil and gas supervisor (supervisor) – is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, and the operation, maintenance and removal or abandonment of tanks and facilities related to oil and gas production, as specified.
- Requires the supervisor to undertake these activities in order to prevent damage to life, health, property, and natural resources, as provided.
- Requires the operator of an oil and gas well to file a written notice of intention to commence drilling, reworking or other operations on a well. An approved notice of intention is cancelled if the work described is not undertaken within a year. However, existing regulation appears to allow for a notice of intention to be extended beyond one year through the submission of (a) supplementary notice(s) (see Title 14, California Code of Regulations, §1722).
- Establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury and directs fee moneys collected from operators of idle wells to be deposited in this fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning certain production facilities, or both, as specified. Idle wells are those wells that are not engaged in the active production of oil and gas for a specified period, “idle-deserted” wells are idle wells with no responsible operator, and well “plugging and abandonment” is the decommissioning process for a well. Idle-deserted wells are sometimes referred to as orphan wells.
- Authorizes a city or county to request from the supervisor a list of those oil and gas wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period, as specified.
- Authorizes the supervisor or division district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
- Authorizes the supervisor to order certain operations to be carried out, as specified, on any well that the supervisor determines to be either a hazardous or idle-deserted well.
- Prohibits the division from expending more than $1 million in any given year for purposes related to hazardous or idle-deserted wells. (Historic funding levels have varied.)
This bill substantially revises the division’s processes related to addressing hazardous and deserted wells and facilities and makes additional related changes
pertaining to division reform. Specifically, this bill:
- Extends the valid time period for notices of intention issued to drill or re-work wells to two years from one year. Added language cancels the notice after two years, bars extensions, and requires the division keep records of the cancellation.
- Clarifies and makes explicit that the division generally shall treat the decommissioning of deserted production facilities similarly to the plugging and abandonment of deserted wells. Among other things, this includes the procedures the division follows to establish desertion, as specified.
- Clarifies and makes explicit that the division’s hazardous wells program includes hazardous and deserted facilities, as defined, and that the supervisor may undertake, as well as order, operations to address hazardous and idle-deserted wells and hazardous and deserted facilities.
- Authorizes a city or county to request a list of idle wells within its jurisdiction from the supervisor, as specified.
- Authorizes the supervisor to provide credit to an operator’s current long-term idle well elimination goal if an operator has eliminated more long-term idle wells than required in the previous two years, as specified.
- Repeals the existing definition of “hazardous well” and defines “deserted facility,” “decommission,” “hazardous facility,” “hazardous well,” and “idle-deserted well” for the purposes of the division’s hazardous wells and facilities program.
- Establishes a temporary $3 million annual fiscal expenditure limit for the plugging and abandonment of hazardous or idle-deserted wells and the decommissioning of hazardous or deserted facilities starting in FY 2018-2019 fiscal year and continuing for three fiscal years before reverting to $1 million annually thereafter, as specified.
- Requires the division to develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities, as specified. This criteria development is not subject to the Administrative Procedures Act.
- Requires the division to submit two reports to the Legislature regarding hazardous and idle-deserted wells and hazardous and deserted facilities. The reports shall include, among other things, recommendations on how to improve and optimize the involvement of local agencies in plugging and abandoning wells and decommissioning facilities, the estimated costs of abandoning and decommissioning these wells and facilities and a timeline and schedule for future abandonment and decommissioning activities, as specified. The first report is due October 1, 2020 and an update is due October 1, 2023.
- Makes further technical and clarifying changes, including to more fully incorporate recent statutory changes regarding idle wells into additional applicable law.
Background
Starting in around 2010, the department and the division began to acknowledge publicly the need to substantially review and reform the division’s practices in order to improve oversight of oil and gas production and related activities in the state. Reform efforts were spurred by numerous documenter reports of poor recordkeeping, and improperly permitted injection wells, among other things. In 2012 the division released a “road map” of planned reforms followed by the 2015 release of a “renewal plan” for the division. While progress has been made, with repeated and substantial Legislative support, many identified deadlines in the renewal plan have slipped.
In the last legislative session as part of its ongoing reform efforts, the department sponsored a bill to substantially revise and reform the division’s idle well program. AB 2729 (Williams, Chapter 272, Statutes of 2016), among other things, phased-in additional disincentives for operators to maintain large numbers of idle wells.
There are currently approximately 20,000 idle wells in the state, and, as the AB 2729 reforms are implemented, that number is anticipated to increase by up to 10,000. (For context, there are about 90,000 active or idle oil and gas wells in the state.) It is likely that these reforms will also result in more idle-deserted wells, particularly given the economic pressures on small operators. The division’s ability to seek funds from earlier operators of these wells is constrained by statute.
The division reports that there are currently approximately 2,000 potential idle-deserted wells in the state. According to the Senate Appropriations Committee analysis, the division has identified 108 orphan wells that may cost $3.8 million to plug and abandon in the current year alone. Each year a handful of these wells become hazardous. These wells may lead to contamination of groundwater, methane or hydrogen sulfide emissions, oil or contaminated fluids leaks, and, in some instances, may present a fire hazard. Remediating these wells can be expensive, particularly in urban areas.
According to the division, plugging and abandonment costs on deserted wells are “highly variable” and can be difficult to predict. Costs per well can range from thousands to one million dollars or more when all associated costs are included.
For example, the recent plugging and abandonment of two leaking wells by homes on Firmin Street in Los Angeles cost approximately on the order of $2 million.
Comments
Current funding for the plugging and abandonment of idle-deserted and hazardous wells is insufficient. The division can spend up to $1 million to abandon orphaned wells though this was temporarily increased to $2 million dollars for the 2014-15 and 2016-17 fiscal years. Given the highly variable costs of plugging and abandonment and the potential scale of the problem, the temporary increase to $3 million appears justified and should allow reasonable annual progress to addressing the problem of these wells.
Related/Prior Legislation
SB 773 (Stern, 2017) improves the public transparency of required division records. (This bill is on the Senate Floor.)
SB 465 (Jackson, 2017) updates, among other provisions, the supervisor’s authority to regulate oil and gas wells and related facilities and establishes a new advisory body for the supervisor to consult with. (This bill is on the Senate Floor.)
SB 44 (Jackson, 2017) creates and provides funding for a program to address hazardous wells in coastal areas. (This bill is on the Senate Floor.)
AB 1328 (Limón, 2017) requires, among other provisions, quarterly reporting to the division on the chemicals injected into oil and gas wells. (This bill is on the Assembly floor.)
AB 2729 (Williams, Chapter 272, Statutes of 2016), among other things, phased-in an increase in idle oil and gas well fees and blanket indemnity bonds to provide a disincentive for operators to maintain large numbers of idle wells.
AB 2756 (Thurmond, Chapter 274, Statutes of 2016), among other changes related to its enforcement actions, substantially revised the division’s civil penalty structure for violations and procedures for appeals of its orders.
SB 900 (Jackson, 2016) would have created and provided funding for a program to address hazardous wells in coastal areas (vetoed by Governor Brown).
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
According to the Senate Appropriations Committee:
- $3 million appropriated annually to the division (Oil, Gas, and Geothermal Administration Fund) to fund the plugging and abandonment of the state’s hazardous and deserted wells and facilities.
- Approximately $685,000 in the first year and approximately $640,000 ongoing (Oil, Gas, and Geothermal Administration Fund) for division staff necessary perform regulatory and administrative functions.
Asian Pacific Environmental Network
California Environmental Justice Coalition
California League of Conservation Voters
Center for Biological Diversity
Center for Environmental Health
Center for Food Safety
Central California Environmental Justice Coalition
Citizens Coalition for a Safe Community
Clean Water Action
Department of Conservation
Earthworks
Environmental Defense Center
Environmental Defense Fund
Environmental Working Group
Environmental Justice Coalition for Water
Environment California
Friends of the Earth - US
Grassroots Coalition
Los Padres Forest Watch
Natural Resources Defense Council
Rootskeeper
Save the Sespe
Sierra Club California
The Trust for Public Land
Wholly H2O
OPPOSITION: (Verified 5/25/17)
None received
ARGUMENTS IN SUPPORT: According to the author, “California has a long history of oil production. In the early 1900’s, the Los Angeles Basin produced one-quarter of the world’s oil. Many of the areas where oil and gas development occurred are now covered with residential and commercial development. […] Many oil wells were constructed prior to the development of effective laws and regulations and were not plugged in accordance with modern standards. Others were simply buried. Additionally, over the past century, many wells across the state have been ‘orphaned’ or deserted by financially struggling operators without being properly remediated.”
“Given the number of potentially problematic wells, the current funding level is woefully insufficient to meet the substantial unmet need. In the past, plugging these wells has been driven by complaints about the hazards these sites present, but the division is now developing a program to tackle this problem systematically.”
The author notes that SB 724 increases annual funding for the division “for programs related to the plugging of hazardous orphan oil and gas wells that can threaten public health and the environment” and that it “clarifies the division’s existing regulatory authority to remediate deserted production facilities near any orphan well.”
“SB 724 will help ensure that the state can further reduce the public health, safety, and environmental risks posed by orphan wells.”
5/27/17 16:46:14
SENATE COMMITTEE ON
Senator Ricardo Lara, Chair
2017 - 2018 Regular Session
SB 724 (Lara) - Oil and gas: wells and production facilities
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on May 25, 2017
Bill Summary:
SB 724 substantially revises the Division of Oil, Gas and Geothermal Resources’ (DOGGR) processes for addressing hazardous and deserted wells and facilities, and increases the cap on expenditures for plugging and abandoning wells $3 million for the plugging and abandonment of these wells.
Fiscal Impact:
- $3 million appropriated annually to DOGGR (Oil, Gas, and Geothermal Administration Fund) to fund the plugging and abandonment of the state’s hazardous and deserted wells and facilities.
- Approximately $685,000 in the first year and approximately $640,000 ongoing (Oil, Gas, and Geothermal Administration Fund) for DOGGR staff necessary perform regulatory and administrative functions.
Author Amendments:
- Reduces form $5 million to $2 million, the maximum amount that can be spent annually, in fiscal years 2018 through 2021, on plugging and abandoning wells.
- Allows an operator to deduct from the current year’s requirement, the number of long-term idle well plugged and abandoned in excess of the requirements for up to two years.
- Requires DOGGR to develop criteria for determining the priority of plugging and abandoning hazardous and idle-deserted wells.
- Requires a legislative report and specifies certain information that must be included.
- - END - -
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2017 - 2018 Regular Session
SB 724 (Lara) - Oil and gas: wells and production facilities
Version: April 27, 2017 | Policy Vote: N.R. & W. 9 - 0 |
Urgency: No | Mandate: Yes |
Hearing Date: May 15, 2017 | Consultant: Narisha Bonakdar |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
SB 724 substantially revises the Division of Oil, Gas and Geothermal Resources’ (DOGGR) processes for addressing hazardous and deserted wells and facilities, and appropriates $5 million for the plugging and abandonment of these wells.
Fiscal Impact:
- $5 million appropriated annually to DOGGR (Oil, Gas, and Geothermal Administration Fund) to fund the plugging and abandonment of the state’s hazardous and deserted wells and facilities.
- Approximately $685,000 in the first year and approximately $640,000 ongoing (Oil, Gas, and Geothermal Administration Fund) for DOGGR staff necessary perform regulatory and administrative functions.
Background:
Oil and Gas in California. California has 470 oil and gas operators operating more than 227,000 wells. DOGGR, a division within the Department of Conservation, regulates the state’s oil and gas production under the direction of the Oil and Gas Supervisor (Supervisor). The Supervisor has broad authority to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, among other things, to prevent, as far as possible, damage to life, health, property, and natural resources.
Current oil and gas operations are subject to a variety of statutes and regulations to protect public health and the environment. Prior to drilling a well, an operator must secure all necessary state and local permits, undergo an environmental review, provide proof of financial assurance sufficient to cover plugging and abandonment, and get approval from DOGGR. Once entered into service, requirements are based on the well’s production status; however, all wells must be properly plugged and abandon after production ceases. If production or injection may occur in the future, and operator can “idle” the well.
Idle, orphan, and hazardous wells. An “idle well” is a well that has not been used for the production of oil or gas (including specified related activities) for 24 consecutive months, and is not being used for injection, subject to DOGGR verification. Idle wells are subject to idle well fees, financial assurances (bonds), and testing requirements. After 8 years without production or injection, an idle well becomes a “long-term idle well”.
California has approximately 20,000 idle oil and gas wells, half of which have been idle for more than 10 year. Idle wells can pose a risk to public health and the environment, generally by leaking. The longer a well remains idle, the more likely it will be deserted by the operator.
A well with no responsible operator is known as an “idle-deserted well” (or “orphaned well”), and is designated a “hazardous well” if the Supervisor determines it presents a potential danger to life, health, or natural resources. Many existing orphaned wells pose a serious and ongoing hazard to public health and the environment by leaking greenhouse gases and contaminating groundwater. The state is generally responsible for plugging and abandoning both orphan wells and hazardous well in the state. The costs to remediate orphaned wells can vary greatly, from a few thousand dollars to hundreds of thousands of dollars. DOGGR is aware of 108 orphaned wells in the state, and estimates the need for at least up to $3.8 million to plug and abandon the existing orphan well inventory. This figure excludes wells that are orphaned in the coming years, and does not consider unexpected costs to plug and abandon a well, which can be significant.
Proposed Law:
This bill:
- Establishes a $5 million annual expenditure limit for the plugging and abandonment of hazardous or idle-deserted wells and the decommissioning of hazardous or deserted facilities, as specified.
- Extends the valid time period for notices of intention issued to drill or re-work wells to two years from one year. Added language cancels the notice after two years and limits extensions.
- Clarifies that DOGGR generally must treat the decommissioning of deserted production facilities similarly to the plugging and abandonment of deserted wells. Among other things, this includes the procedures DOGGR follows to establish desertion, as specified.
- Clarifies that DOGGR’s hazardous wells program includes hazardous and deserted facilities, as defined, and that the Supervisor may undertake, as well as order, operations to address hazardous and idle-deserted wells and hazardous and deserted facilities.
- Defines terms for the purposes of the bill.
- Establishes a new process for DOGGR and a city or county to collaborate to address hazardous and idle-deserted wells and hazardous and deserted facilities. The process requires DOGGR to provide a list of known hazardous wells and facilities to the city or county upon request, and allows the city or county to enter into a contract with DOGGR to receive funding or reimbursement for its plugging and abandonment or decommissioning cost, subject to certain conditions.
- Makes further technical and clarifying changes, including to more fully incorporate recent statutory changes regarding idle wells into additional applicable law.
Related Legislation:
SB 724 (Lara, 2017) would, among other things, require greater disclosure of orphan, hazardous and idle-deserted oil and gas wells and related production facilities. Pending hearing in Senate Appropriations Committee.
SB 465 (Jackson, 2017) would, among other provisions, update the supervisor’s authority to regulate oil and gas wells and related facilities and establish a new advisory body for the supervisor to consult with. Pending hearing in Senate Appropriations Committee.
AB 1378 (Limón, 2017) would, among other provisions, require quarterly reporting to the division on the chemicals injected into oil and gas wells. Pending hearing in Assembly Appropriations Committee.
AB 2729 (Williams, Chapter 272, Statutes 2016), among other things, phased-in an increase in idle oil and gas well fees and blanket indemnity bonds to provide a disincentive for operators to maintain large numbers of idle wells.
AB 2756 (Thurmond, Chapter 274, Statutes 2016), among other changes related to its enforcement actions, substantially revised the division’s civil penalty structure for violations and procedures for appeals of its orders.
SB 545 (Jackson, 2015) would have revised the supervisor’s authority among other updates to the division’s statute. Held in the Senate Appropriations Committee.
SB 248 (Pavley, 2015), among other things, would have revised and updated the division’s UIC program. Held in the Senate Appropriations Committee.
SB 1281 (Pavley, Chapter 561, Statutes 2014) revised oil and gas well operator reporting requirements with respect to water.
SB 4 (Pavley, Chapter 313, Statutes 2013) instituted permitting and reporting requirements for well stimulation treatments on oil and gas wells.
Staff Comments:
Current funding for abandonment of idle-deserted and hazardous wells is insufficient. Two funds are available for plugging and abandoning orphan wells: (1) the Oil, Gas, and Geothermal Administrative Fund (OGGAF), and (2) the Hazardous and Idle-Deserted Well Abatement Fund (HIDWAF). Expenditures from the HIDWAF may only be used to mitigate hazardous or potentially hazardous wells; the OGGAF has less restrictive requirements. Both are supported by fees assessed on the oil industry. Currently, DOGGR can spend up to $1 million to abandon orphaned wells though this was temporarily increased to $2 million dollars for the 2014-15 and 2016-17 fiscal years. Given the high, and often unpredictable, cost to plug and abandon wells, along with the number throughout the state, the annual allowance prevented DOGGR from most effectively addressing the orphan well problem.
Fiscal impact. According to the DOC, "Much of the physical work required to plug and abandon wells and decommission facilities is conducted by third-party contractors who are specialists in oil and gas well remediation work.” However, the DOC anticipates the need for four new positions to perform the regulatory and administrative work such as determining if a responsible party can be located for suspected orphan wells, issuing orders to responsible parties, prioritizing orphan wells for plugging and abandonment, verifying the location of orphan wells, assessing risks and potential costs with orphan wells, drafting contracts with local entities and contractors, and overseeing work performed by contractors.
State Mandate not reimbursable. This bill constitutes a state mandate. However, under the California Constitution, legislative mandates requested by the local agency affected are not reimbursable.
-- END --
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Robert Hertzberg, Chair
2017 - 2018 Regular
Bill No: SB 724 Hearing Date: April 25, 2017
Author: | |||
Version: |
| ||
Urgency: | Fiscal: | ||
Consultant: | |||
Subject: Oil and gas: wells and production facilities
BACKGROUND AND EXISTING LAW
- Existing law establishes the Division of Oil, Gas and Geothermal Resources (division), located in the Department of Conservation (department), as the state’s oil and gas regulator. The division’s leader – the state oil and gas supervisor (supervisor) – is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, and the operation, maintenance and removal or abandonment of tanks and facilities related to oil and gas production, as specified.
- Existing law requires the supervisor to undertake these activities in order to prevent damage to life, health, property, and natural resources, as provided.
- Existing law requires the operator of an oil and gas well to file a written notice of intention to commence drilling, reworking or other operations on a well. Existing law cancels an approved notice of intention if the work described is not undertaken within a year. Existing regulation appears to allow for a notice of intention to be extended beyond one year through the submission of (a) supplementary notice(s) (see Title 14, California Code of Regulations, §1722).
- Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury and directs fee moneys collected from operators of idle wells to be deposited in this fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning certain production facilities, or both, as specified.
- Idle wells, as the name suggests, are those wells that are not engaged in the active production of oil and gas for a specified period, “idle-deserted” wells are idle wells with no responsible operator, and well “plugging and abandonment” is the decommissioning process for a well. Idle-deserted wells are sometimes referred to as orphan wells.
- Existing law authorizes a city or county to request from the supervisor a list of those oil and gas wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period, as specified.
- Existing law authorizes the supervisor or division district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.
- Existing law authorizes the supervisor to order certain operations to be carried out, as specified, on any well that the supervisor determines to be either a hazardous or idle-deserted well.
- Existing law prohibits the division from expending more than $1 million in any given year for purposes related to hazardous or idle-deserted wells. (Historic funding levels have varied and are discussed below in the comments.)
- Starting in around 2010, the department and the division began to acknowledge publicly the need to substantially review and reform the division’s practices in order to improve oversight of oil and gas production and related activities in the state. Before then, technical staff levels, division regulations and the implementation of division regulations had been largely unchanged for many years despite substantial advances in industry technology and practices.
- In 2012 the division released a “road map” of planned reforms followed by the 2015 release of a “renewal plan” for the division. While progress has been made, with repeated and substantial Legislative support, many identified deadlines in the renewal plan have slipped.
- The division’s reforms seek, in part, to respond to a critical audit commissioned by the U.S. Environmental Protection Agency of the division’s Class II Underground Injection Control (UIC) program wells that was released in 2011, the 2015 acknowledgement that thousands of UIC wells were improperly permitted, and poor recordkeeping and data retention practices, among other things.
- In the last legislative session as part of its ongoing reform efforts, the department sponsored a bill to substantially revise and reform the division’s idle well program. AB 2729 (Williams, c. 272, Stats. 2016), among other things, phased-in additional disincentives for operators to maintain large numbers of idle wells.
- There are currently approximately 20,000 idle wells in the state, and, as the AB 2729 reforms are implemented, that number is anticipated to increase by up to 10,000. (For context, there are about 90,000 active or idle oil and gas wells in the state.) It is likely that these reforms will also result in more idle-deserted wells, particularly given the economic pressures on small operators. Provisions in AB 2729 should provide some funds for the division to address these idle-deserted wells. The division’s ability to seek funds from earlier operators of these wells is constrained by statute.
- The division reports that there are currently approximately 2,000 potential idle-deserted wells in the state. Each year “a handful” of these wells become hazardous. These wells may lead to contamination of groundwater, methane or hydrogen sulfide emissions, oil or contaminated fluids leaks, and, in some instances, may present a fire hazard. Remediating these wells can be expensive, particularly in urban areas.
PROPOSED LAW
This bill would substantially revise the division’s processes related to addressing hazardous and deserted wells and facilities and make additional related changes pertaining to division reform. Specifically, this bill would:
- Extend the valid time period for notices of intention issued to drill or re-work wells to two years from one year. Added language cancels the notice after two years and limits extensions.
- Clarify and make explicit that the division generally shall treat the decommissioning of deserted production facilities similarly to the plugging and abandonment of deserted wells. Among other things, this includes the procedures the division follows to establish desertion, as specified.
- Clarify and make explicit that the division’s hazardous wells program includes hazardous and deserted facilities, as defined, and that the supervisor may undertake, as well as order, operations to address hazardous and idle-deserted wells and hazardous and deserted facilities.
- Repeal the existing definition of “hazardous well” and define “deserted facility,” “decommission,” “hazardous facility,” “hazardous well,” and “idle-deserted well” for the purposes of the division’s hazardous wells and facilities program.
- Establish a $5 million annual fiscal expenditure limit for the plugging and abandonment of hazardous or idle-deserted wells and the decommissioning of hazardous or deserted facilities, as specified.
- Establish a new process for the division and a city or county to interact in order to address hazardous and idle-deserted wells and hazardous and deserted facilities, as follows:
- The division shall provide a list of known hazardous wells and facilities to the city or county upon request.
- The city or county may request to enter into a contract with the division to receive funding or reimbursement for its costs related to plugging and abandonment or decommissioning or for the division to undertake those efforts, as specified. The request must meet certain conditions, including that:
- The city or county’s legislative body has approved the request.
- All non-well and non-facility costs related to the plugging and abandonment and decommissioning are identified and the city or county will pay for them. These include relocation expenses, site restoration and business and transportation impacts, among other things.
- The planned remediation is justified on the basis of potential harm to public health and environmental safety, as specified.
- Estimated costs and necessary permits are identified, and certain contracting standards are met and commitments undertaken by the city or county.
- The division will follow certain procedures in evaluating these requests, as specified, based upon specified minimum criteria, including the risk to an economically disadvantaged community from a specific well or facility; the risk to life, health or natural resources from this well or facility; the potential benefits of addressing the well or facility; and the availability of additional funding, among other things.
- If a city or county’s request is approved, the division and the city or county shall enter into a contract (memorandum of understanding), as specified, including specifying the costs each party will be responsible for and the required approval procedures by both parties.
- A memorandum of understanding shall be required on or after July 1, 2018 for the division to undertake work in a jurisdiction to plug and abandon wells or decommission facilities with specified exceptions that include a substantial threat to public health and environmental safety.
- Two reports will be submitted to the Legislature regarding hazardous and idle-deserted wells and hazardous and deserted facilities. The reports shall include, among other things, the estimated costs of abandoning and decommissioning these wells and facilities and a timeline and schedule for future abandonment and decommissioning activities, as specified. The first report is due October 1, 2019 and an update is due October 1, 2022.
- Make further technical and clarifying changes, including to more fully incorporate recent statutory changes regarding idle wells into additional applicable law.
ARGUMENTS IN SUPPORT
According to the author, “California has a long history of oil production. In the early 1900’s, the Los Angeles Basin produced one-quarter of the world’s oil. Many of the areas where oil and gas development occurred are now covered with residential and commercial development. […] Many oil wells were constructed prior to the development of effective laws and regulations and were not plugged in accordance with modern standards. Others were simply buried. Additionally, over the past century, many wells across the state have been ‘orphaned’ or deserted by financially struggling operators without being properly remediated.”
“Given the number of potentially problematic wells, the current funding level is woefully insufficient to meet the substantial unmet need. In the past, plugging these wells has been driven by complaints about the hazards these sites present, but the division is now developing a program to tackle this problem systematically.”
“SB 724 increases annual funding for the [division] from $1 million to $5 million for programs related to the plugging of hazardous orphan oil and gas wells that can threaten public health and the environment. This bill also revises and recasts the process the division must undertake when working with city and county governments to ensure that wells are properly plugged. Finally, it clarifies the division’s existing regulatory authority to remediate deserted production facilities near any orphan well.”
“SB 724 will help ensure that the state can further reduce the public health, safety, and environmental risks posed by orphan wells.”
Writing in support, the Center for Biological Diversity raises questions about some elements of the design of the process established for the interaction between the division and local entities, as well as the extension of the notices of intention to 2 years.
ARGUMENTS IN OPPOSITION
None received
COMMENTS
This bill is a work-in-progress. There are late-breaking and ongoing discussions between the author’s office, the sponsor and a stakeholder regarding the process this bill seeks to establish between local jurisdictions and the division to address deserted and hazardous wells and facilities. These discussions may result in substantive amendments as the bill progresses through the legislative process. The committee may wish to re-hear this bill should that occur.
The time extension for notices of intention. In at least historic practice, the division has apparently allowed repeated time extensions for notices of intention regardless of seemingly clear statutory language through the regulatory use of supplementary notices or other means. In the relevant regulation, PRC §3013, which authorizes the liberal interpretation of the division’s statutes to meet its goals, is cited. In view of this, the division’s goal to limit the validity of the notices to two years may not be achieved given the conditional language used and PRC §3013. Therefore, the committee may wish to clarify and provide more certainty to this language to achieve the division’s goal. [Amendment 1]
Explicit inclusion of production facilities. The bill repeatedly explicitly adds production facilities to existing statutory language addressing hazardous and deserted wells. This is consistent with the existing definition of production facility (see PRC §3010) where the association of a facility with any one particular well, while likely, is not required. In the process to establish whether a well or facility is deserted (specifically in the “rebuttable presumption of desertion” criteria established in PRC §3237(a)), the proposed bill language reverts to treating facilities implicitly. To provide clarity, the committee may wish to explicitly include production facilities here as well as certain additional minor technical conforming changes to PRC §3237(b) and (c). [Amendment 2]
Information on hazardous and deserted wells and facilities for local entities. While acknowledging that there may be limited additional information available regarding known idle-deserted wells and deserted facilities, what information is known should be made available to the local entities that request it. The committee may wish to restore some of the existing law to this provision to ensure this occurs. [Amendment 3]
Regarding the scale of the problem identified by this bill. According to the division, plugging and abandonment costs on deserted wells are “highly variable” and can be difficult to predict. Hazardous and deserted wells may be 100 years old and have significant gaps in their known history. These factors can drive up the costs of formal plugging and abandonment to modern standards. In Kern County a straight-forward plugging and abandonment operation for a well could be as little as $11 per foot, but in an urban environment the cost can rise by a factor of 20 for a difficult job when all related costs are accounted for.
Recent data provided by the division report that from 2007 – 2011, the division plugged and abandoned 142 orphan wells at a total cost of $5 million or an average cost per well of just over $35,000. These wells were largely in less populated regions of the state. In the last four years, the average cost has increased to $81,000 per well and fewer (41) wells were remediated. In the current fiscal year, nine additional wells are likely to be plugged and abandoned at an estimated to cost on average about $57,000 each.
The limited number of wells to be plugged and abandoned this fiscal year is due, in part, to the recent plugging and abandonment of two leaking wells by homes on Firmin Street in Los Angeles. While the Firmin Street plugging and abandonment started in the last fiscal year, total costs for the two wells are on the order of $2 million and are split between the two fiscal years. The discovery of one or two hazardous wells in similar locations annually could use of all of the division’s existing expenditure authority in any one year. As the author noted above, there are many “buried” or “buried-idle” wells that could present a risk or become hazardous in the future.
According to the division, prior to the FY 2008-2009 budget, a statutory limit of $500,000 annually was imposed on funding available for the remediation of hazardous wells. This annual limit was temporarily raised to $2 million for several years. However, the expenditure limit reverted to $1 million in FY 2015-2016 before being temporarily increased to $2 million again. Given the potential scale of the problem, the increase to $5 million appears justified and should allow reasonable annual progress to addressing the problem of these wells. This is particularly given the department’s stated commitment to taking a more proactive approach to identifying and resolving these wells.
Recent related legislation.
SB 773(Stern, 2017) would establish state policy supporting revised data handling and retention at the division (pending before the Senate Natural Resources and Water Committee).
SB 465 (Jackson, 2017) would, among other provisions, update the supervisor’s authority to regulate oil and gas wells and related facilities and establish a new advisory body for the supervisor to consult with (pending before the Senate Natural Resources and Water Committee)
SB 44 (Jackson, 2017) would create and provide funding for a program to address hazardous wells in coastal areas (pending before the Senate Appropriations Committee).
AB 1378 (Limón, 2017) would, among other provisions, require quarterly reporting to the division of the chemicals injected into oil and gas wells (pending before the Assembly Natural Resources Committee).
SB 900 (Jackson, 2016) would have created and provided funding for a program to address hazardous wells in coastal areas (vetoed by Governor Brown).
AB 2729 (Williams, c. 272, Stats. 2016) substantially revised and reformed the division’s idle well program, among other things.
AB 2756 (Thurmond, c. 274, Stats. 2016) substantially revised the division’s civil penalty structure for violations and procedures for appeals of its orders among other changes related to its enforcement actions.
AB 1882 (Williams, 2016) would have revised groundwater monitoring requirements at the division, among other things (held on suspense in the Assembly Appropriations Committee).
SB 545 (Jackson, 2015) would have revised the supervisor’s authority among other updates to the division’s statute (held on suspense in the Senate Appropriations Committee).
SB 248 (Pavley, 2015) would have revised and updated the division’s UIC program, among other things (held on suspense in the Assembly Appropriations Committee).
AB 356 (Williams, 2015) would have revised the division’s groundwater monitoring requirements, among other things (failed on the Assembly Floor).
SUGGESTED AMENDMENTS
AMENDMENT 1
Revise Page 4, lines 12 – 14 inclusive to read:
“supervisor. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, and may shall not be extended., and the cancellation noted in division records. The notice shall contain the pertinent data”
AMENDMENT 2
Modify Section 4 (PRC §3237(a) – (c)) to explicitly make production facilities subject to the “rebuttable presumption of desertion” criteria, and other minor technical and conforming changes to standardize the language regarding production facilities in this section.
AMENDMENT 3
Revise Page 13, line 26 to read:
“a list of known idle-deserted wells and deserted facilities and known hazardous wells and hazardous facilities”.
SUPPORT
Department of Conservation (sponsor)
Asian Pacific Environmental Network
California Environmental Justice Coalition
California League of Conservation Voters
Center for Biological Diversity
Center for Environmental Health
Center for Food Safety
Central California Environmental Justice Coalition
Citizens Coalition for a Safe Community
Clean Water Action
Earthworks
Environmental Defense Fund
Environmental Working Group
Environmental Justice Coalition for Water
Environment California
Friends of the Earth - US
Grassroots Coalition
Los Padres Forest Watch
Natural Resources Defense Council
Rootskeeper
Save the Sespe
Sierra Club California
The Trust for Public Land
Wholly H2O
OPPOSITION
None Received
-- END --
Discussed in Hearing
1MIN
Assembly Floor
1H
Assembly Standing Committee on Appropriations
3MIN
Assembly Standing Committee on Natural Resources
1MIN
Senate Floor
48MIN
Senate Standing Committee on Appropriations
16MIN
Senate Standing Committee on Natural Resources and Water
Bill Author
Bill Co-Author(s):