AB 1866: Oil and gas: idle wells.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-09-25
Current Status:
Passed
(2024-09-25: Chaptered by Secretary of State - Chapter 548, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (1) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, applicable to wells that have been idle wells for 3 years or longer, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as provided. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would revise and recast these provisions. The bill would, among other things, increase the fees for idle wells, and additionally impose fees for each idle well that has been an idle well for less than 3 years, as provided. By increasing the fees collected from operators of idle wells that are deposited into a continuously appropriated fund, the bill would make an appropriation.
The bill would also revise and recast the provisions of the idle well plan. The bill would, among other things, require operators who do not file the above-described idle well fees to, no later than May 1 of each year, file a plan with the supervisor to provide for the management and elimination of all idle wells, instead of all long-term idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for plugging and abandonment. The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year, as provided. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would exempt from its provisions an idle well (1) for which an operator has made a diligent effort to locate and access the well and has provided documentation demonstrating that it is infeasible to locate or physically access the wellbore, subject to the approval of the division, or (2) that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by this bill.
Existing law requires the supervisor to submit to the Legislature an annual comprehensive report, as specified, on the status of idle and long-term idle wells for the preceding calendar year.
This bill would require that report to also include a list of wells that the division has approved as being inaccessible, as described above.
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.
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (1) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, applicable to wells that have been idle wells for 3 years or longer, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as provided. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would revise and recast these provisions. The bill would, among other things, increase the fees for idle wells, and additionally impose fees for each idle well that has been an idle well for less than 3 years, as provided. By increasing the fees collected from operators of idle wells that are deposited into a continuously appropriated fund, the bill would make an appropriation.
The bill would also revise and recast the provisions of the idle well plan. The bill would, among other things, require operators who do not file the above-described idle well fees to, no later than May 1 of each year, file a plan with the supervisor to provide for the management and elimination of all idle wells, instead of all long-term idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for plugging and abandonment. The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year, as provided. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would exempt from its provisions an idle well (1) for which an operator has made a diligent effort to locate and access the well and has provided documentation demonstrating that it is infeasible to locate or physically access the wellbore, subject to the approval of the division, or (2) that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by this bill.
Existing law requires the supervisor to submit to the Legislature an annual comprehensive report, as specified, on the status of idle and long-term idle wells for the preceding calendar year.
This bill would require that report to also include a list of wells that the division has approved as being inaccessible, as described above.
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.
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (1) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, applicable to wells that have been idle 3 years or longer, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. With respect to the latter option, existing law requires the plan to require that operators with 250 or fewer idle wells eliminate at least 4% of their long-term idle wells each year, operators with 251 to 1,250, inclusive, idle wells eliminate at least 5% of their long-term idle wells each year, and operators with more than 1,250 idle wells eliminate at least 6% of their long-term idle wells each year. wells, as provided. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would eliminate the schedule of fees for idle wells, including all fees for deposit into the fund, and would instead require, on or before July 1, 2025, the operator of any idle well, as defined, to file a plan with the supervisor to provide for the management and elimination of all idle wells. The revise and recast these provisions. The bill would, among other things, increase the fees for idle wells, and additionally impose fees for each idle well that has been an idle well for less than 3 years, as provided. By increasing the fees collected from operators of idle wells that are deposited into a continuously appropriated fund, the bill would make an appropriation.
The bill would also revise and recast the provisions of the idle well plan. The bill would, among other things, require operators who do not file the above-described idle well fees to, no later than May 1 of each year, file a plan with the supervisor to provide for the management and elimination of all idle wells, instead of all long-term idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for testing or plugging and abandonment. The bill would also require operators to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division.
abandonment. The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year from 4% to 10%, from 5% to 15%, and from 6% to 20%, respectively. year, as provided. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would exempt from the above-described its provisions an idle well (1) for which an operator has made a diligent effort to locate and access the well and has provided documentation demonstrating that it is infeasible to locate or physically access the wellbore, subject to the approval of the division, or (2) that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by this bill.
The bill would also make a conforming change.Existing law requires the supervisor to submit to the Legislature an annual comprehensive report, as specified, on the status of idle and long-term idle wells for the preceding calendar year.
This bill would require that report to also include a list of wells that the division has approved as being inaccessible, as described above.
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.
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (1) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. With respect to the latter option, existing law requires the plan to require that operators with 250 or fewer idle wells eliminate at least 4% of their long-term idle wells each year, operators with 251 to 1,250, inclusive, idle wells eliminate at least 5% of their long-term idle wells each year, and operators with more than 1,250 idle wells eliminate at least 6% of their long-term idle wells each year. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would eliminate the schedule of fees for idle wells, including all fees for deposit into the fund, and would instead require, on or before July 1, 2025, the operator of any idle well, as defined, to file a plan with the supervisor to provide for the management and elimination of all idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for testing or plugging and abandonment. The bill would also require operators to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division. The bill would make an operator who fails to comply with the plan subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug, as specified.
The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year from 4% to 10%, from 5% to 15%, and from 6% to 20%, respectively. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would exempt from the above-described provisions an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by this bill.
The bill would also make a conforming change.
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.
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (A) (1) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, or (B) (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. With respect to the latter option, existing law requires the plan to require that operators with 250 or fewer idle wells eliminate at least 4% of their long-term idle wells each year, operators with 251 to 1,250, inclusive, idle wells eliminate at least 5% of their long-term idle wells each year, and operators with more than 1,250 idle wells eliminate at least 6% of their long-term idle wells each year. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would eliminate the schedule of fees for idle wells, including all fees for deposit into the fund, and would instead require, on or before July 1, 2025, the operator of any idle well, as defined, to file a plan with the supervisor to provide for the management and elimination of all idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for testing or plugging and abandonment. The bill would also require operators to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division. The bill would make an operator who fails to comply with the plan subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug, as specified.
The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year from 4% to 10%, from 5% to 15%, and from 6% to 20%, respectively. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would exempt from the above-described provisions an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by this bill.
The bill would also make a conforming change.
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.
Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. A person who violates or fails, neglects, or refuses to comply with any of the oil and gas laws is guilty of a crime.
Existing law requires the operator of any idle well to either (A) no later than May 1 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 according to a specified schedule of fees based on the length of time a well has been idle, or (B) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. With respect to the latter option, existing law requires the plan to require that operators with 250 or fewer idle wells eliminate at least 4% of their long-term idle wells each year, operators with 251 to 1,250, inclusive, idle wells eliminate at least 5% of their long-term idle wells each year, and operators with more than 1,250 idle wells eliminate at least 6% of their long-term idle wells each year. Existing law also establishes the Hazardous and Idle-Deserted Well Abatement Fund, a continuously appropriated fund, for the deposit of all fees received pursuant to these provisions.
This bill would eliminate the schedule of fees for idle wells, including all fees for deposit into the fund, and would instead require, on or before July 1, 2025, the operator of any idle well, as defined, to file a plan with the supervisor to provide for the management and elimination of all idle wells. The bill would require the plan to require the operator to consider specified factors when prioritizing idle wells for testing or plugging and abandonment. The bill would also require operators to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division. The bill would make an operator who fails to comply with the plan subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug, as specified.
The bill would revise the provision requiring operators to eliminate a specified percentage of long-term idle wells by making it applicable to all idle wells and by increasing the minimum percentages of idle wells that operators would be required to eliminate each year from 4% to 10%, from 5% to 15%, and from 6% to 20%, respectively. By expanding the scope of crimes, the bill would impose a state-mandated local program.
The bill would also make a conforming change.
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)No later than May 1 of each year, the operator of any idle well shall do either of the following:
(1)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 thousand dollars ($1,000) for each idle well that has been an idle well for less than three years.
(B)Two thousand five hundred dollars ($2,500) for each idle well that has been an idle well for three years or longer, but less than eight years.
(C)Five thousand dollars ($5,000) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(D)Twelve thousand five hundred dollars ($12,500) for each idle well that has been an idle well 15 years or longer, but less than 20 years.
(E)(i)Until January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer.
(ii)On and after January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer, but less than 25 years.
(F)On and after January 1, 2029, sixty thousand dollars ($60,000) for each idle well that has been an idle well for 25 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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, maintained production of water used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection for a continuous six-month period. The plan shall comply with all of the following:
(A)Specify the calendar year or years that it covers. The plan and any renewal of the plan shall cover a time period of up to eight years.
(B)Require the operator to consider all of the following when prioritizing idle wells for plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(i)The age of the idle well.
(ii)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(iii)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(C)Include notes indicating the basis for prioritizing wells.
(D)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(E)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. An updated plan shall be required if there is a change in ownership or holdings of the operator.
(F)The required rate of 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 subparagraph (G). If the operator has eliminated more wells than required in calendar year 2024 or any subsequent calendar year, the supervisor may deduct from the new requirement the number of idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(G)(i)For calendar years 2025 to 2027, inclusive, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 5 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 6 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 7 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 15 percent of their idle wells each year.
(ii)For calendar years 2028 and 2029, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 6 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 8 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 18 percent of their idle wells each year.
(iii)For calendar year 2030 and all subsequent calendar years, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 8 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 15 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 20 percent of their idle wells each year.
(H)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. 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, the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan. That operator may not propose a new idle well plan under this paragraph for the next two years and then only if the operator has paid all required idle well fees and any associated late payment penalties and interest.
(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)The 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)This section does not prohibit a local agency from collecting a fee for regulation of wells.
(e)Subject to the approval of the division, an idle well shall not be subject to the requirements of this section if the operator has made a diligent effort to locate and access the well, and provided documentation of those efforts demonstrating that it is infeasible to locate or physically access the wellbore.
(f)This section does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this section made by Assembly Bill 1866 of the 202324 Regular Session of the Legislature.
SEC. 2.Section 3206.3 of the Public Resources Code is amended to read:3206.3.(a)(1)Notwithstanding Section 10231.5 of the Government Code, on or before July 1, 2019, and annually thereafter, the supervisor shall, in compliance with Section 9795 of the Government Code, prepare and transmit to the Legislature a comprehensive report on the status of idle and long-term idle wells for the preceding calendar year. The report shall include all of the following:
(A)A list of all idle and long-term idle wells in the state by American Petroleum Institute identification number and indicating the operator, field, and pool.
(B)A list of all wells whose idle or long-term idle status changed in the preceding year by American Petroleum Institute identification number with the disposition and current status of each well.
(C)A list of orphan wells remaining, the estimated costs of abandoning those orphan wells, and a timeline for future orphan well abandonment with a specific schedule of goals. Idle and long-term idle wells that have become orphan wells shall be identified in the list. For the purposes of this report, an orphan well is a well that has no party responsible for it, leaving the state to plug and abandon it.
(D)A list of all operators with plans filed with the supervisor for the management and elimination of all long-term idle wells and the status of those plans.
(E)A list of all wells for which the division has approved a demonstration of inaccessibility under subdivision (e) of Section 3206.
(F)Any additional relevant information as determined by the supervisor.
(2)The report shall be made publicly available and an electronic version shall be available on the divisions internet website.
(b)For the report due on or before July 1, 2022, and each report thereafter, the division shall do both of the following:
(1)Conduct inspections of production facilities attendant to long-term idle wells to ensure compliance with the requirements of this chapter. Information summarizing violations and pertinent findings in these inspections shall be included in the applicable report required to be prepared and transmitted pursuant to subdivision (a).
(2)Identify idle wells by the American Petroleum Institute identification number that are registered to an operator and that have met the definition of an idle well for three years where neither the required annual fee has been paid or the well is part of a valid idle well management plan on file with the supervisor pursuant to subdivision (a) of Section 3206.
(c)For the report due on or before July 1, 2023, and each report thereafter, the division shall provide a description of activities undertaken by the divisions collections unit established pursuant to Section 3243. This description shall include the number of operators and amounts of idle well fees collected by the collections unit in the preceding year, the criteria, including timelines, used by the collections unit to determine a well or attendant facility is deserted, and the amount of costs recovered from operators or responsible parties for work ordered by the supervisor or undertaken by the division. Information related to the divisions use of liens, including, but not limited to, the number of wells and facilities eligible to be subject to a lien, the number of liens placed by the supervisor, and the number of liens released by the supervisor, shall also be provided.
(d)Information on how to access the plans described in subparagraph (D) of paragraph (1) of subdivision (a) shall be made readily available on the divisions internet website.
(e)The division shall continue to regularly provide updated information describing idle and long-term idle wells on the divisions internet website.
SEC. 3.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)No later than May 1 of each year, the operator of any idle well shall do either of the following:
(1)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 thousand dollars ($1,000) for each idle well that has been an idle well for less than three years.
(B)Two thousand five hundred dollars ($2,500) for each idle well that has been an idle well for three years or longer, but less than eight years.
(C)Five thousand dollars ($5,000) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(D)Twelve thousand five hundred dollars ($12,500) for each idle well that has been an idle well 15 years or longer, but less than 20 years.
(E)(i)Until January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer.
(ii)On and after January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer, but less than 25 years.
(F)On and after January 1, 2029, sixty thousand dollars ($60,000) for each idle well that has been an idle well for 25 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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, maintained production of water used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection for a continuous six-month period. The plan shall comply with all of the following:
(A)Specify the calendar year or years that it covers. The plan and any renewal of the plan shall cover a time period of up to eight years.
(B)Require the operator to consider all of the following when prioritizing idle wells for plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(i)The age of the idle well.
(ii)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(iii)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(C)Include notes indicating the basis for prioritizing wells.
(D)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(E)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. An updated plan shall be required if there is a change in ownership or holdings of the operator.
(F)The required rate of 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 subparagraph (G). If the operator has eliminated more wells than required in calendar year 2024 or any subsequent calendar year, the supervisor may deduct from the new requirement the number of idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(G)(i)For calendar years 2025 to 2027, inclusive, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 5 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 6 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 7 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 15 percent of their idle wells each year.
(ii)For calendar years 2028 and 2029, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 6 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 8 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 18 percent of their idle wells each year.
(iii)For calendar year 2030 and all subsequent calendar years, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 8 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 15 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 20 percent of their idle wells each year.
(H)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. 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, the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan. That operator may not propose a new idle well plan under this paragraph for the next two years and then only if the operator has paid all required idle well fees and any associated late payment penalties and interest.
(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)The 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)This section does not prohibit a local agency from collecting a fee for regulation of wells.
(e)Subject to the approval of the division, an idle well shall not be subject to the requirements of this section if the operator has made a diligent effort to locate and access the well, and provided documentation of those efforts demonstrating that it is infeasible to locate or physically access the wellbore.
(f)This section does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this section made by Assembly Bill 1866 of the 202324 Regular Session of the Legislature.
SEC. 2.Section 3206.3 of the Public Resources Code is amended to read:3206.3.(a)(1)Notwithstanding Section 10231.5 of the Government Code, on or before July 1, 2019, and annually thereafter, the supervisor shall, in compliance with Section 9795 of the Government Code, prepare and transmit to the Legislature a comprehensive report on the status of idle and long-term idle wells for the preceding calendar year. The report shall include all of the following:
(A)A list of all idle and long-term idle wells in the state by American Petroleum Institute identification number and indicating the operator, field, and pool.
(B)A list of all wells whose idle or long-term idle status changed in the preceding year by American Petroleum Institute identification number with the disposition and current status of each well.
(C)A list of orphan wells remaining, the estimated costs of abandoning those orphan wells, and a timeline for future orphan well abandonment with a specific schedule of goals. Idle and long-term idle wells that have become orphan wells shall be identified in the list. For the purposes of this report, an orphan well is a well that has no party responsible for it, leaving the state to plug and abandon it.
(D)A list of all operators with plans filed with the supervisor for the management and elimination of all long-term idle wells and the status of those plans.
(E)A list of all wells for which the division has approved a demonstration of inaccessibility under subdivision (e) of Section 3206.
(F)Any additional relevant information as determined by the supervisor.
(2)The report shall be made publicly available and an electronic version shall be available on the divisions internet website.
(b)For the report due on or before July 1, 2022, and each report thereafter, the division shall do both of the following:
(1)Conduct inspections of production facilities attendant to long-term idle wells to ensure compliance with the requirements of this chapter. Information summarizing violations and pertinent findings in these inspections shall be included in the applicable report required to be prepared and transmitted pursuant to subdivision (a).
(2)Identify idle wells by the American Petroleum Institute identification number that are registered to an operator and that have met the definition of an idle well for three years where neither the required annual fee has been paid or the well is part of a valid idle well management plan on file with the supervisor pursuant to subdivision (a) of Section 3206.
(c)For the report due on or before July 1, 2023, and each report thereafter, the division shall provide a description of activities undertaken by the divisions collections unit established pursuant to Section 3243. This description shall include the number of operators and amounts of idle well fees collected by the collections unit in the preceding year, the criteria, including timelines, used by the collections unit to determine a well or attendant facility is deserted, and the amount of costs recovered from operators or responsible parties for work ordered by the supervisor or undertaken by the division. Information related to the divisions use of liens, including, but not limited to, the number of wells and facilities eligible to be subject to a lien, the number of liens placed by the supervisor, and the number of liens released by the supervisor, shall also be provided.
(d)Information on how to access the plans described in subparagraph (D) of paragraph (1) of subdivision (a) shall be made readily available on the divisions internet website.
(e)The division shall continue to regularly provide updated information describing idle and long-term idle wells on the divisions internet website.
SEC. 3.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)On or before July 1, 2025, No later than May 1 of each year, the operator of any idle well, as defined in subdivision (d) of Section 3008, well shall file do either of the following:
(1)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 thousand dollars ($1,000) for each idle well that has been an idle well for less than three years.
(B)Two thousand five hundred dollars ($2,500) for each idle well that has been an idle well for three years or longer, but less than eight years.
(C)Five thousand dollars ($5,000) for each idle well that has been an idle well for eight years or longer, but less than 15 years.
(D)Twelve thousand five hundred dollars ($12,500) for each idle well that has been an idle well 15 years or longer, but less than 20 years.
(E)(i)Until January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer.
(ii)On and after January 1, 2029, twenty-two thousand five hundred dollars ($22,500) for each idle well that has been an idle well for 20 years or longer, but less than 25 years.
(F)On and after January 1, 2029, sixty thousand dollars ($60,000) for each idle well that has been an idle well for 25 years or longer.
(2)File a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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 gas, maintained production of water used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection for a continuous six-month period. The plan shall comply with all of the following:
(1)(A)Specify the time period calendar year or years that it covers. The plan and any renewal of the plan shall cover a time period of no more than five up to eight years.
(2)(B)Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(A)(i)The age of the idle well.
(B)(ii)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(C)(iii)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(3)(C)Include notes indicating the basis for prioritizing wells.
(4)(D)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(5)Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division pursuant to Section 3208.(6)(E)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. An updated plan shall be required if there is a change in ownership or holdings of the company. operator.
(7)(F)The required rate of 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 paragraph (8). subparagraph (G). If the operator has eliminated more wells than required in the prior two years, calendar year 2024 or any subsequent calendar year, the supervisor may deduct from the new requirement the net total number of idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(8)Require(G)(i)For calendar years 2025 to 2027, inclusive, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 10 5 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 15 6 percent of their idle wells each year, and, in no case, less than one idle well; and year; operators with more than 1,250 1,251 to 3,000, inclusive, idle wells eliminate at least 20 7 percent of their idle wells each year, and, in no case, less than one idle well, until the operator has eliminated or plugged and abandoned 100 percent of its idle wells identified in the plan. year; and operators with more than 3,000 idle wells eliminate at least 15 percent of their idle wells each year.
(ii)For calendar years 2028 and 2029, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 6 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 8 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 18 percent of their idle wells each year.
(iii)For calendar year 2030 and all subsequent calendar years, unless and until the operator has no idle wells, require that operators with 250 or fewer idle wells eliminate at least 8 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 10 percent of their idle wells each year; operators with 1,251 to 3,000, inclusive, idle wells eliminate at least 15 percent of their idle wells each year; and operators with more than 3,000 idle wells eliminate at least 20 percent of their idle wells each year.
(H)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. 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, the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan. That operator may not propose a new idle well plan under this paragraph for the next two years and then only if the operator has paid all required idle well fees and any associated late payment penalties and interest.
(b)The All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund 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)The failure to file a plan pursuant to file, for any well, the fee required under this section for any idle well is shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)This section does not prohibit a local agency from collecting a fee for regulation of wells.
(e)Subject to the approval of the division, an idle well shall not be subject to the requirements of this section if the operator has made a diligent effort to locate and access the well, and provided documentation of those efforts demonstrating that it is infeasible to locate or physically access the wellbore.
(e)(f)This section does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this section made by Assembly Bill 1866 of the 202324 Regular Session of the Legislature.
SEC. 2.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 before 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)A prior operator is not 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).(6)By July 1, 2022, the supervisor shall provide to the Senate Committee on Natural Resources and Water and the Assembly Committee on Natural Resources the process the supervisor has established to determine 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 pursuant to paragraph (1), or for a previous operator pursuant to paragraphs (1) and (2). The supervisor shall, in a timely manner, post the materials provided to the legislative committees pursuant to this paragraph on a public portion of the divisions internet website.(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at the supervisors or district deputys 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 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. 2.Section 3206.3 of the Public Resources Code is amended to read:3206.3.(a)(1)Notwithstanding Section 10231.5 of the Government Code, on or before July 1, 2019, and annually thereafter, the supervisor shall, in compliance with Section 9795 of the Government Code, prepare and transmit to the Legislature a comprehensive report on the status of idle and long-term idle wells for the preceding calendar year. The report shall include all of the following:
(A)A list of all idle and long-term idle wells in the state by American Petroleum Institute identification number and indicating the operator, field, and pool.
(B)A list of all wells whose idle or long-term idle status changed in the preceding year by American Petroleum Institute identification number with the disposition and current status of each well.
(C)A list of orphan wells remaining, the estimated costs of abandoning those orphan wells, and a timeline for future orphan well abandonment with a specific schedule of goals. Idle and long-term idle wells that have become orphan wells shall be identified in the list. For the purposes of this report, an orphan well is a well that has no party responsible for it, leaving the state to plug and abandon it.
(D)A list of all operators with plans filed with the supervisor for the management and elimination of all long-term idle wells and the status of those plans.
(E)A list of all wells for which the division has approved a demonstration of inaccessibility under subdivision (e) of Section 3206.
(E)(F)Any additional relevant information as determined by the supervisor.
(2)The report shall be made publicly available and an electronic version shall be available on the divisions internet website.
(b)For the report due on or before July 1, 2022, and each report thereafter, the division shall do both of the following:
(1)Conduct inspections of production facilities attendant to long-term idle wells to ensure compliance with the requirements of this chapter. Information summarizing violations and pertinent findings in these inspections shall be included in the applicable report required to be prepared and transmitted pursuant to subdivision (a).
(2)Identify idle wells by the American Petroleum Institute identification number that are registered to an operator and that have met the definition of an idle well for three years where neither the required annual fee has been paid or the well is part of a valid idle well management plan on file with the supervisor pursuant to subdivision (a) of Section 3206.
(c)For the report due on or before July 1, 2023, and each report thereafter, the division shall provide a description of activities undertaken by the divisions collections unit established pursuant to Section 3243. This description shall include the number of operators and amounts of idle well fees collected by the collections unit in the preceding year, the criteria, including timelines, used by the collections unit to determine a well or attendant facility is deserted, and the amount of costs recovered from operators or responsible parties for work ordered by the supervisor or undertaken by the division. Information related to the divisions use of liens, including, but not limited to, the number of wells and facilities eligible to be subject to a lien, the number of liens placed by the supervisor, and the number of liens released by the supervisor, shall also be provided.
(d)Information on how to access the plans described in subparagraph (D) of paragraph (1) of subdivision (a) shall be made readily available on the divisions internet website.
(e)The division shall continue to regularly provide updated information describing idle and long-term idle wells on the divisions internet website.
SEC. 3.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)On or before July 1, 2025, the operator of any idle well, as defined in subdivision (d) of Section 3008, shall file a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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. The plan shall comply with all of the following:
(1)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.
(2)Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(A)The age of the idle well.
(B)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(C)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(3)Include notes indicating the basis for prioritizing wells.
(4)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(5)Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division pursuant to Section 3208.
(6)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. An updated plan shall be required if there is a change in ownership or holdings of the company.
(7)The required rate of 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 paragraph (8). 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 idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(8)Require that operators with 250 or fewer idle wells eliminate at least 10 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 15 percent of their idle wells each year, and, in no case, less than one idle well; and operators with more than 1,250 idle wells eliminate at least 20 percent of their idle wells each year, and, in no case, less than one idle well, until the operator has eliminated or plugged and abandoned 100 percent of its idle wells identified in the plan.
(b)The Hazardous and Idle-Deserted Well Abatement Fund 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)The failure to file a plan pursuant to this section for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)An operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, as determined pursuant to Section 3205.7, multiplied by the number of wells that the operator failed to plug in accordance with the minimum requirements of this section.(e)(d)This section does not prohibit a local agency from collecting a fee for regulation of wells.
(f)(e)This section does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this section made by Assembly Bill 1866 of the 202324 Regular Session of the Legislature.
SEC. 2.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 before 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)A prior operator is not 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).
(6)By July 1, 2022, the supervisor shall provide to the Senate Committee on Natural Resources and Water and the Assembly Committee on Natural Resources the process the supervisor has established to determine 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 pursuant to paragraph (1), or for a previous operator pursuant to paragraphs (1) and (2). The supervisor shall, in a timely manner, post the materials provided to the legislative committees pursuant to this paragraph on a public portion of the divisions internet website.
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at the supervisors or district deputys 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 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. 3.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)On or before July 1, 2025, the operator of any idle well, as defined in subdivision (d) of Section 3008, shall file a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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. The plan shall comply with all of the following:
(1)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.
(2)Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(A)The age of the idle well.
(B)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(C)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(3)Include notes indicating the basis for prioritizing wells.
(4)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(5)Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division pursuant to Section 3208.
(6)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. An updated plan shall be required if there is a change in ownership or holdings of the company.
(7)The required rate of 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 paragraph (8). 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 idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.
(8)Require that operators with 250 or fewer idle wells eliminate at least 10 percent of their idle wells each year, and, in no case, less than one idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 15 percent of their idle wells each year, and, in no case, less than one idle well; and operators with more than 1,250 idle wells eliminate at least 20 percent of their idle wells each year, and, in no case, less than one idle well, until the operator has eliminated or plugged and abandoned 100 percent of its idle wells identified in the plan.
(b)The Hazardous and Idle-Deserted Well Abatement Fund 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)The failure to file a plan pursuant to this section for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)An operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, as determined pursuant to Section 3205.7, multiplied by the number of wells that the operator failed to plug in accordance with the minimum requirements of this section.
(e)This section does not prohibit a local agency from collecting a fee for regulation of wells.
(f)This section does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this section made by Assembly Bill 1866 of the 202324 Regular Session of the Legislature.
SEC. 2.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 before 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)A prior operator is not 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).
(6)By July 1, 2022, the supervisor shall provide to the Senate Committee on Natural Resources and Water and the Assembly Committee on Natural Resources the process the supervisor has established to determine 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 pursuant to paragraph (1), or for a previous operator pursuant to paragraphs (1) and (2). The supervisor shall, in a timely manner, post the materials provided to the legislative committees pursuant to this paragraph on a public portion of the divisions internet website.
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at the supervisors or district deputys 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 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. 3.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.
REVISIONS: HeadingLine 3.(a)On or before July 1, 2025, the operator of any idle well, as defined in subdivision (d) of Section 3008, shall file a plan with the supervisor to provide for the management and elimination of all idle wells. For purposes of the plan, 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. The plan shall comply with all of the following:
(i)The plan shall specify(1)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. years.
(2)Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
(A)The age of the idle well.
(B)Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
(C)Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
(3)Include notes indicating the basis for prioritizing wells.
(4)Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
(5)Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells on the wellpad, or to a condition suitable for alternative use if approved by the division pursuant to Section 3208.
(ii)The plan shall be(6)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. An updated plan shall be required if there is a change in ownership or holdings of the company.
(iii)(7)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). paragraph (8). 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(8)Require that operators with 250 or fewer idle wells eliminate at least 4 10 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 15 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 20 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well. idle well, until the operator has eliminated or plugged and abandoned 100 percent of its idle wells identified in the plan.
(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 The Hazardous and Idle-Deserted Well Abatement Fund, which Fund 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.(c)The failure to file a plan pursuant to this section for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.
(d)An operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, as determined pursuant to Section 3205.7, multiplied by the number of wells that the operator failed to plug in accordance with the minimum requirements of this section.
(e)This section does not prohibit a local agency from collecting a fee for regulation of wells.
SEC. 2.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 before 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 A prior operator is not 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).
(6)By July 1, 2022, the supervisor shall provide to the Senate Committee on Natural Resources and Water and the Assembly Committee on Natural Resources the process the supervisor has established to determine 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 pursuant to paragraph (1), or for a previous operator pursuant to paragraphs (1) and (2). The supervisor shall, in a timely manner, post the materials provided to the legislative committees pursuant to this paragraph on a public portion of the divisions internet website.
(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at the supervisors or district deputys 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. 3.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
|
|---|---|
| Sep 25, 2024 | Chaptered by Secretary of State - Chapter 548, Statutes of 2024. |
| Sep 25, 2024 | Approved by the Governor. |
| Sep 11, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 29, 2024 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 48. Noes 17.). |
| Aug 29, 2024 | Assembly Rule 77 suspended. |
| Aug 28, 2024 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 30 pursuant to Assembly Rule 77. |
| Aug 28, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 29. Noes 7.). |
| Aug 26, 2024 | Read second time. Ordered to third reading. |
| Aug 23, 2024 | Read third time and amended. Ordered to second reading. |
| Aug 19, 2024 | Read second time. Ordered to third reading. |
| Aug 15, 2024 | From committee: Do pass. (Ayes 4. Noes 2.) (August 15). |
| Jun 24, 2024 | In committee: Referred to suspense file. |
| Jun 13, 2024 | Withdrawn from committee. |
| Jun 13, 2024 | Re-referred to Com. on APPR. |
| Jun 12, 2024 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD. |
| Jun 11, 2024 | From committee: Do pass and re-refer to Com. on JUD. (Ayes 6. Noes 4.) (June 11). Re-referred to Com. on JUD. |
| May 29, 2024 | Referred to Coms. on N.R. & W. and JUD. |
| May 22, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 21, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 49. Noes 17. Page 5397.) |
| May 20, 2024 | Read second time. Ordered to third reading. |
| May 16, 2024 | From committee: Do pass. (Ayes 10. Noes 4.) (May 16). |
| Apr 10, 2024 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Mar 20, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 3.) (March 19). Re-referred to Com. on APPR. |
| Mar 20, 2024 | Coauthors revised. |
| Mar 12, 2024 | Re-referred to Com. on NAT. RES. |
| Mar 11, 2024 | From committee chair, with author's amendments: Amend, and re-refer to Com. on NAT. RES. Read second time and amended. |
| Jan 29, 2024 | Referred to Com. on NAT. RES. |
| Jan 19, 2024 | From printer. May be heard in committee February 18. |
| Jan 18, 2024 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 29, 2024 | AB 1866 Hart Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 28, 2024 | Assembly 3rd Reading AB1866 Hart et al. By Limón | Senate Floor |
Passed |
|
| Aug 15, 2024 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 24, 2024 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 11, 2024 | Do pass, but first be re-referred to the Committee on [Judiciary] | Senate Standing Committee on Natural Resources and Water |
Passed |
|
| May 21, 2024 | AB 1866 Hart Assembly Third Reading | Assembly Floor |
Passed |
|
| May 16, 2024 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Mar 19, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Natural Resources |
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
|
|---|---|---|
| 350 Bay Area Action | ** Support | |
| 350 Conejo San Fernando Valley | ** Support | |
| 350 Humboldt | ** Support | |
| 350 Sacramento | ** Support | |
| 350 Santa Barbara | ** Support | |
| 350 South Bay Los Angeles | ** Support | |
| 350 Southland Legislative Alliance | ** Support | |
| 350 Ventura County Climate Hub | ** Support | |
| Acterra: Action for A Healthy Planet | ** Support | |
| Alameda County Democratic Party | ** Support | |
| Alliance of Nurses for Healthy Environments | ** Support | |
| Asian Pacific Environmental Network | ** Support | |
| Azul | ** Support | |
| Bay Area-System Change Not Climate Change | ** Support | |
| black women for wellness | ** Support | |
| Breast Cancer Action | ** Support | |
| Breast Cancer Prevention Partners | ** Support | |
| California Central Coast Legislative Caucus | ** Support | |
| California Coalition | * Support | Jun 11, 2024 |
| California Democratic Party | ** Support | |
| California Department of Finance | ** Against | |
| California Environmental Justice Alliance Action | ** Support | |
| California Environmental Voters | ** Support | |
| California Green New Deal Coalition | ** Support | |
| California Independent Petroleum Association | ** Against | |
| California Medical Association | ** Support | |
| California Nurses Association | ** Support | |
| California Nurses for Environmental Health and Justice | ** Support | |
| California Public Interest Research Group California Youth vs. Big Oil | ** Support | |
| California Youth vs. Big Oil | ** Support | |
| CALPIRG Students | ** Support | |
| Center For Biological Diversity | ** Support | |
| Center for Community Action and Environmental Justice | ** Support | |
| Central California Environmental Justice Network | ** Support | |
| Central Coast Alliance United for a Sustainable Economy | ** Support | |
| Central Valley Air Quality Coalition | ** Support | |
| CERBAT.us | ** Support | |
| Chop Wood, Carry Water Daily Actions | ** Support | |
| Citizens Climate Lobby Santa Cruz | ** Support | |
| City of Goleta | ** Support | |
| cleanearth4kids.org | ** Support | |
| Climate Action California | ** Support | |
| Climate First: Replacing Oil & Gas | ** Support | |
| Climate Hawks Vote | ** Support | |
| Climate Health Now | ** Support | |
| Climatebrunch | ** Support | |
| Coalition For Clean Air | ** Support | |
| Communities for a Better Environment | ** Support | |
| Community Environmental Council | ** Support | |
| Consumer Watchdog | ** Support | |
| Corporate Ethics International | ** Support | |
| County Of Kern | ** Against | |
| County of Santa Barbara | ** Support | |
| County of Ventura | ** Support | |
| Earth Justice Ministries | ** Support | |
| Earthjustice | ** Support | |
| Eco Team | ** Support | |
| Elders Climate Action, Northern California Chapter | ** Support | |
| Elders Climate Action, Southern California Chapter | ** Support | |
| Elected Officials to Protect America Code Blue | ** Support | |
| Endangered Habitats League | ** Support | |
| Environment California | ** Support | |
| Environmental Defense Center | ** Support | |
| Environmental Protection Information Center | ** Support | |
| Environmental Working Group | ** Support | |
| Esperanza Community Housing Corporation | ** Support | |
| Facts Families Advocating for Chemical and Toxics Safety | ** Support | |
| Food & Water Watch | ** Support | |
| Fossil Free California | ** Support | |
| FracTracker Alliance | ** Support | |
| Fridays for Future Fresno | ** Support | |
| Fridays for Future Sacramento | ** Support | |
| Friends Of The Earth | ** Support | |
| Glendale Environmental Coalition | ** Support | |
| Good Neighbor Steering Committee of Benicia | ** Support | |
| Greenpeace Usa | ** Support | |
| Ground Game LA | ** Support | |
| High School Divest and Reinvest Coalition | ** Support | |
| Indivisible San Jose | ** Support | |
| Indivisible South Bay LA | ** Support | |
| Interfaith Climate Action Network Contra Costa County | * Support | Jun 11, 2024 |
| Junior Philanthropist Foundation | ** Support | |
| LA Jolla Environmental Action | ** Support | |
| LA Stand LA | * Support | Jun 11, 2024 |
| Labor Network for Sustainability | ** Support | |
| Los Angeles County Sanitation Districts | ** Support | |
| Los Padres ForestWatch | ** Support | |
| Lutheran Office Of Public Policy California | ** Support | |
| Manhattan Beach Huddle | ** Support | |
| Mothers Out Front | ** Support | |
| Natural Resources Defense Council | ** Support | |
| NextGen California | ** Support | |
| Northridge Indivisible | ** Support | |
| Oil and Gas Action Network | ** Support | |
| Pacific Environment | ** Support | |
| Pelican Media | ** Support | |
| peninsula interfaith climate action | ** Support | |
| Physicians for Social Responsibility Los Angeles | ** Support | |
| Physicians for Social Responsibility Sacramento | ** Support | |
| Physicians for Social Responsibility, San Francisco Bay | ** Support | |
| Pilipino Workers Center of Southern California | ** Support | |
| Planning And Conservation League | ** Support | |
| Presente.org | ** Support | |
| Protect Playa Now | ** Support | |
| Queers X Climate | ** Support | |
| Redeemer Community Partnership | ** Support | |
| RootsAction.org | ** Support | |
| Sacramento Area Congregations Together | ** Support | |
| San Diego 350 | ** Support | |
| San Joaquin Valley Democratic Club | ** Support | |
| Santa Cruz Climate Action Network | ** Support | |
| SEHA | * Support | Jun 11, 2024 |
| sequoia forestkeeper | ** Support | |
| Sierra Club California | ** Support | |
| Social Justice Ministry, Live Oak Unitarian Universalist Congregation of Goleta | ** Support | |
| Society of Fearless Grandmothers - Santa Barbara | ** Support | |
| Solano County Democratic Central Committee | ** Support | |
| STAND-LA Coalition | ** Support | |
| Stand.earth | ** Support | |
| State Building and Construction Trades Council of California | ** Against | |
| Sunflower Alliance | ** Support | |
| Sunrise Movement Bay Area | ** Support | |
| Sunrise Movement Long Beach | ** Support | |
| Sunrise Movement Los Angeles | ** Support | |
| Sustainable Rossmoor | ** Support | |
| The Center on Race, Poverty, and the Environment | ** Support | |
| The Climate Center | ** Support | |
| The Climate Reality Project Orange County Chapter | ** Support | |
| The Climate Reality Project San Diego Chapter | ** Support | |
| The Climate Reality Project, Los Angeles Chapter | ** Support | |
| The Climate Reality Project, Monterey Bay, CA | ** Support | |
| The Climate Reality Project, San Fernando Valley, CA Chapter | ** Support | |
| The Climate Reality Project, San Francisco Bay Area Chapter | ** Support | |
| Third Act Bay Area | ** Support | |
| Third ACT SoCal | ** Support | |
| West Berkeley Alliance for Clean Air and Safe Jobs | ** Support | |
| West LA Democratic Club | ** Support | |
| Western States Petroleum Association | ** Against | |
| Working Families Party | ** Support | |
| Youth Climate Strike Los Angeles | ** Support | |
| Youth for Earth | ** Support |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 1866
Author:(Hart)
As Amended Ver:August 23, 2024
Majority vote
SUMMARY
Increases the idle well fees and increases the amount of wells that must be eliminated under an idle well management plan (IWMP).
Senate Amendments
- Reinstate the option for idle well operators to pay idle fell fees; substantially increase the amount of the fees; and, create new $60,000 fee after January 1, 2029, for wells idle longer than 25 years.
- For IWMPs, create tiered idle well elimination percentages for calendar years 2025-2027; 2028-2029; and, 2030 and onward.
- For operators in compliance with the idle well fees or IWMPs, authorize an operator to appeal to the director of the Department of Conservation regarding the supervisor's rejection of a plan and plan amendments and the supervisor's determination of the operator's failure to comply with a plan.
- Provide that, subject to the approval of the Division of Geologic Energy Management (CalGEM), an idle well is not subject to the fees or IWMP requirements if the operator has made a diligent effort to locate and access the well, and provided documentation of those efforts demonstrating that it is infeasible to locate or physically access the wellbore.
- Require CalGEM to include in the annual comprehensive report on the status of idle and long-term idle wells a list of all wells for which CalGEM has approved a demonstration of inaccessibility.
COMMENTS
According to CalGEM, there are more than 37,000 known idle wells in California, all of which will eventually come to their end of life, and their owner/operator will be required to plug the wells with cement and decommission the production facilities, restoring the well site to its prior condition. Idle wells can become orphan wells if they are deserted by insolvent operators. When this happens, there is the risk of shifting responsibilities and costs for decommissioning the wells to the state. As of December 31, 2021, CalGEM had identified more than 5,300 wells as orphan or potentially orphan.
Because of the risk and potential liability posed by idle wells, state law requires well operators to pay idle well fees or submit an IWMP. According to CalGEM's August 2023 annual IWMP report for the 2021 calendar year, there were 38,759 idle wells. In 2021, 162 operators paid $4.9 million in idle well fees, which were deposited into the Hazardous Idle Deserted Well Abatement Fund for CalGEM to use to cover the cost of orphan wells.
This bill increases the idle well fee amounts and increases the amount of wells that must be eliminated under an IWMP.
According to the Author
Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to plug the estimated 40,000 idle oil wells in California. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work.
The facts are clear - this serious problem is getting worse and can't be ignored. AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.
Arguments in Support
More than 1020 environmental, public health, and environmental justice organizations write, "we strongly support AB 1866, to hold oil companies accountable for their legal and financial cleanup obligations, and to protect Californians from the serious health, climate, and fiscal threats of oil and gas wells. Accelerating oil well cleanup brings tremendous triple benefits to our state—it would: (1) reduce methane and other pollution; (2) create tens of thousands of good jobs remediating well sites; and (3) reduce the fiscal risk to the state of the over $20 billion in estimated costs to clean up California's oil and gas well inventory."
Arguments in Opposition
According to the California Independent Petroleum Association (CIPA), its members alone are currently contracted to plug a minimum of 1,999 in the next few years out of a total inventory of 7,168 (28%). CIPA members only constitute 18% of the statewide inventory of idle wells. CIPA argues that the IWMP program is working according to the original intention of the Legislature and the current record annual pace by CIPA members of plugging idle wells per year is a success story in thoughtful and collaborative lawmaking.
FISCAL COMMENTS
Unknown
VOTES:
ASM NATURAL RESOURCES: 7-3-1
YES: Bryan, Bauer-Kahan, Friedman, Kalra, Muratsuchi, Pellerin, Wicks
NO: Flora, Hoover, Mathis
ABS, ABST OR NV: Wood
ASM APPROPRIATIONS: 10-4-1
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin
NO: Sanchez, Dixon, Jim Patterson, Ta
ABS, ABST OR NV: Villapudua
ASSEMBLY FLOOR: 49-17-14
YES: Addis, Aguiar-Curry, Alvarez, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Wendy Carrillo, Connolly, Mike Fong, Garcia, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO: Alanis, Bains, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
ABS, ABST OR NV: Juan Carrillo, Cervantes, Megan Dahle, Friedman, Gabriel, Gipson, Holden, Mathis, Stephanie Nguyen, Quirk-Silva, Ramos, Luz Rivas, Blanca Rubio, Villapudua
SENATE FLOOR: 29-8-3
YES: Allen, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Laird, Limón, McGuire, Menjivar, Min, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NO: Dahle, Grove, Hurtado, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto
ABS, ABST OR NV: Alvarado-Gil, Archuleta, Newman
UPDATED
VERSION: August 23, 2024
CONSULTANT: Paige Brokaw / NAT. RES. / (916) 319-2092 FN: 0004797
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1866 |
THIRD READING
Bill No: AB 1866
Author: Hart (D), et al.
Amended: 8/23/24 in Senate
Vote: 21
SENATE NATURAL RES. & WATER COMMITTEE: 6-4, 6/11/24
AYES: Min, Allen, Laird, Limón, Padilla, Stern
NOES: Seyarto, Dahle, Grove, Hurtado
NO VOTE RECORDED: Eggman
SENATE APPROPRIATIONS COMMITTEE: 4-2, 8/15/24
AYES: Caballero, Ashby, Becker, Wahab
NOES: Jones, Seyarto
NO VOTE RECORDED: Bradford
ASSEMBLY FLOOR: 49-17, 5/21/24 - See last page for vote
SUBJECT: Oil and gas: idle wells
SOURCE: Author
DIGEST:
This bill increases idle well fees payable in lieu of filing an idle well management plan, and revises the requirements of an idle well management plan to increase the rate at which idle wells under the plan have to be either returned to service or plugged and abandoned, among other provisions.
Senate Floor Amendments of 8/23/24 reinstate idle well fees, and phase-in increased idle well elimination rates over five years, among other provisions.
ANALYSIS:
Existing law:
- Provides that the purposes of the state’s oil and gas conservation laws include protecting public health and safety and environmental quality, including the reduction and mitigation of greenhouse gas emissions associated with the development of hydrocarbon and geothermal resources in a manner that meets the energy needs of the state. Requires the State Oil and Gas Supervisor (supervisor), the leader of the state’s oil and gas well regulator, the Geologic Energy Management Division in the Department of Conservation (CalGEM), to coordinate with other state agencies and others to further the goals of the California Global Warming Solutions Act of 2006 and to help support the state’s clean energy goals. (Public Resources Code (PRC) §3011)
- Directs the supervisor to so 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, as specified, so as to prevent, as far as possible, damage to life, health, property, and natural resources, as provided. (PRC §3106)
- Classifies oil and gas wells based upon their use.
- An idle well is a well that is not in use, and has not been in use for at least 24 consecutive months, as specified. (PRC §3008)
- An idle well that has no operator or other responsible party to pay for its costs becomes an “idle-deserted” or “orphan” well, which is then the responsibility of the state to plug and abandon. (PRC §3251, §3206.3)
- Long-term idle wells are those wells that have been idle for at least 8 years. (
- Holds the current operator, or the previous operator, as provided, of an orphan well that produced oil, gas, or other hydrocarbons or was used for injection, responsible for the proper plugging and abandonment of the well or the decommissioning of idle-deserted production facilities. Requires the supervisor or district deputy to determine from credible evidence whether a well or production facility is deserted. (PRC §3237)
- Requires an operator to either file with the supervisor certain annual idle well fees per well that increase the longer the well has been idle, or file an idle well management plan with the supervisor that eliminates between 4% - 6% of the long-term idle wells each year. Failure to pay idle well fees or file a plan is sufficient evidence for the well to be considered legally deserted. (PRC §3206)
- The fee schedule is $150 for an idle well that has been idle for 3 – 8 years, $300 for an idle well that has been idle for 8 – 15 years, $750 for an idle well that has been idle 15 – 20 years, and $1,500 for an idle well that has been idle for 20 years or more.
- The idle well management plan requires an operator with 250 or fewer idle wells to eliminate at least 4% of their long-term idle wells annually; an operator with 251 – 1,250 idle wells to eliminate at least 5% of their long-term idle wells annually, and an operator with 1,250 or more idle wells to eliminate at least 6% of their long-term idle wells annually, as provided.
This bill increases idle well fees payable in lieu of filing an idle well management plan, and revises the requirements of an idle well management plan to increase the rate at which idle wells under the plan have to be either returned to service or plugged and abandoned, among other provisions. Specifically, this bill:
- Requires an operator to either pay annual idle well fees or file an idle well management plan by May 1 of each year.
- Revises annual idle well fees, for those operators paying fees for each of their idle wells, as follows:
- $1,000 for an idle well of less than 3 years.
- $2,500 for an idle well of 3 – up to 8 years.
- $5,000 for an idle well of 8 – up to 15 years.
- $12,500 for an idle well of 15 – up to 20 years.
- Until January 1, 2029, $22,500 for an idle well of over 20 years.
- On and after January 1, 2029, $22,500 for an idle well of 20 – up to 25 years, and $60,000 for an idle well of over 25 years.
- Requires the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells, as provided. Requires the plan to:
- Specify the calendar year or years that it covers. The plan and any renewal of the plan shall cover a time period of no more than eight years.
- Require the operator to consider all of the following when prioritizing idle wells for plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
- The age of the idle well.
- Any indication that the idle well potentially poses a threat to life, health, property, or natural resources, and
- Wells that are located within 3,200 feet of a sensitive receptor, as defined.
- Include notes indicating the basis for prioritizing wells.
- Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
- Require the plan to be updated when there is a change in ownership or holdings of the company.
- Expands those idle wells subject to the required elimination rate to all idle wells from long-term idle wells only. Phases-in increases in the amount of idle wells that must be eliminated annually over five years.
- For operators with 250 or fewer idle wells: 5% (2025 – 2027), 6% (2028 – 2029), 8% (2030 and thereafter).
- For operators with 251 – 1,250 idle wells: 6% (2025 – 2027), 8% (2028 – 2029), 10% (2030 and thereafter).
- For operators with 1,251 – 3,000 idle wells: 7% (2025 – 2027), 10% (2028 – 2029), 15% (2030 and thereafter).
- For operators with more than 3,000 idle wells: 15% (2025 – 2027), 18% (2028 – 2029), 20% (2030 and thereafter).
- Updates the plan noncompliance provision to prohibit an operator from using a plan to comply with idle well requirements for two years, as provided. Authorizes an operator to appeal a determination of non-compliance by the supervisor, as provided.
- Provides that 1) – 4) do not prohibit a local agency from collecting a fee for regulation of wells.
- Provides that 1) – 5) do not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by 1) – 5).
- Excludes certain inaccessible wells from being subject to fees or a plan, as provided, requires reporting of inaccessible wells annually, makes technical and conforming changes, and establishes a local mandate and provides that no reimbursement is required, as specified.
[Note: Additional information and discussion may be found in the Senate Natural Resources and Water Committee’s bill analysis.]
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee for a previous version:
- The Geologic Energy Management Division (CalGEM) estimates approximately $1.6 million in lost annual idle well fee revenue (Hazardous and Idle-Deserted Well Abatement Fund (HIDWAF)). The division collected approximately $1.62 million in fees for fiscal year (FY) 2022-23 and anticipates collecting a similar amount in FY 2023-24. Current law requires idle well fee revenues be deposited into HIDWAF, which is continuously appropriated to support the plugging and decommissioning of hazardous or potentially hazardous wells and facilities. The bill’s repeal of idle well fees would eliminate this sole revenue source for the fund.
- In addition, CalGEM estimates costs in year one of approximately $1.73 million followed by ongoing annual costs of approximately $1.64 million (Oil, Gas, and Geothermal Administrative (OGGA) Fund) for eight new positions to cover the workload of additional Idle Well Management Plan (IWMP) reviews, annual compliance audits, and enforcement actions, along with an increased number of permitting reviews and on-site witnessing requirements for specified work associated with plugging and abandonment projects.
SUPPORT: (Verified 8/15/24)
350 Bay Area Action
350 Conejo/ San Fernando Valley
350 Humboldt
350 Sacramento
350 Santa Barbara
350 South Bay Los Angeles
350 Southland Legislative Alliance
350 Ventura County Climate Hub
Acterra: Action for a Healthy Planet
Alameda County Democratic Party
Alliance of Nurses for Healthy Environments
Asian Pacific Environmental Network
Azul
Bay Area-System Change not Climate Change
Black Women for Wellness
Breast Cancer Action
Breast Cancer Prevention Partners
California Central Coast Legislative Caucus
California Democratic Party
California Environmental Justice Alliance (CEJA) Action
California Environmental Voters
California Medical Association
California Nurses for Environmental Health and Justice
California Green New Deal Coalition
California Nurses Association
California Public Interest Research Group California Youth vs. Big Oil
CALPIRG Students
Center for Biological Diversity
Center for Community Action and Environmental Justice
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy (CAUSE)
Central Valley Air Quality Coalition
CERBAT.us
Chop Wood, Carry Water Daily Actions
Citizen Climate Lobby Santa Cruz
City of Goleta
CleanEarth4Kids.org
Climate Action California
Climate First: Replacing Oil & Gas (CFROG)
Climate Hawks Vote
Climate Health Now
ClimateBrunch
Coalition for Clean Air
Communities for a Better Environment
Community Environmental Council
Consumer Watchdog
Corporate Ethics International
County of Santa Barbara
County of Ventura
Earth Justice Ministries
Earthjustice
ECO Team
Elders Climate Action, Northern California Chapter
Elders Climate Action, Southern California Chapter
Elected Officials to Protect America – Code Blue
Endangered Habitats League
Environment California
Environmental Defense Center
Environmental Protection Information Center
Environmental Working Group
Esperanza Community Housing Corporation
FACTS Families Advocating for Chemical and Toxics Safety
Food & Water Watch
Fossil Free California
FracTracker Alliance
Fridays for Future Fresno
Fridays for Future Sacramento
Friends of the Earth
Glendale Environmental Coalition
Good Neighbor Steering Committee of Benicia
Greenpeace USA
Ground Game LA
High School Divest and Reinvest Coalition
Indivisible San Jose
Indivisible South Bay LA
Junior Philanthropists Foundation
La Jolla Environmental Action
Labor Network for Sustainability
Los Angeles County Sanitation Districts
Los Padres ForestWatch
Lutheran Office of Public Policy – California
Manhattan Beach Huddle
Mothers Out Front
Natural Resources Defense Council
NextGen California
Northridge Indivisible
Oil and Gas Action Network
Pacific Environment
Pelican Media
Peninsula Interfaith Climate Action (PICA)
Physicians for Social Responsibility – Los Angeles
Physicians for Social Responsibility – Sacramento
Physicians for Social Responsibility – San Francisco Bay
Pilipino Workers Center of Southern California
Planning and Conservation League
Presente.org
Protect Playa Now
Queers X Climate
Redeemer Community Partnership
RootsAction.org
Sacramento Area Congregations Together (SacramentoACT)
San Joaquin Valley Democratic Club
San Diego 350
Santa Cruz Climate Action Network
Sequoia ForestKeeper
Sierra Club California
Social Justice Ministry, Live Oak Unitarian Universalist Congregation of Goleta
Society of Fearless Grandmothers – Santa Barbara
Solano County Democratic Central Committee
STAND-LA Coalition
Stand.earth
Sunflower Alliance
Sunrise Movement Bay Area
Sunrise Movement Long Beach
Sunrise Movement Los Angeles
Sustainable Rossmoor
The Center on Race, Poverty, and the Environment
The Climate Center
The Climate Reality Project, Los Angeles Chapter
The Climate Reality Project, Monterey Bay, CA
The Climate Reality Project, Orange County Chapter
The Climate Reality Project, San Diego Chapter
The Climate Reality Project, San Fernando Valley Chapter
The Climate Reality Project, San Francisco Bay Area Chapter
Third Act Bay Area
Third Act SoCal
West Berkeley Alliance for Clean Air and Safe Jobs
West LA Democratic Club
Working Families Party
Youth Climate Strike Los Angeles
Youth For Earth
OPPOSITION: (Verified 8/15/24)
California Department of Finance
California Independent Petroleum Association
County of Kern
State Building and Construction Trades Council of California
Western States Petroleum Association
ARGUMENTS IN SUPPORT: According to the author, “Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to plug the estimated 40,000 idle oil wells in California. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work.”
“The facts are clear - this serious problem is getting worse and can’t be ignored. AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.”
ARGUMENTS IN OPPOSITION: The Western States Petroleum Association (WSPA), argues, “This bill fails to recognize the robust idle well management system currently in place in California and will now require operators to file a plan for the aggressive phaseout of all of their idle wells, long-term or otherwise, even though the well may still have economic life or could be repurposed for future use.” WSPA continues that current requirements have resulted in the “orderly plugging and closure of thousands of long-term idle wells” since 2018, notes that idle wells have integrity testing requirements, argues for focus on critical wells that are likely orphaned in urban areas, and notes the state’s existing reliance on imported fossil fuels.
The California Independent Petroleum Association adds that its members are contracted to plug almost 2,000 wells in the next few years, the state’s best protection against liability is viable operators, and existing state fund accounts that could be used for orphan wells have record balances.
ASSEMBLY FLOOR: 49-17, 5/21/24
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Wendy Carrillo, Connolly, Mike Fong, Garcia, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Alanis, Bains, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
NO VOTE RECORDED: Juan Carrillo, Cervantes, Megan Dahle, Friedman, Gabriel, Gipson, Holden, Mathis, Stephanie Nguyen, Quirk-Silva, Ramos, Luz Rivas, Blanca Rubio, Villapudua
Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116
8/26/24 11:53:13
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1866 |
THIRD READING
Bill No: AB 1866
Author: Hart (D), et al.
Amended: 6/12/24 in Senate
Vote: 21
SENATE NATURAL RES. & WATER COMMITTEE: 6-4, 6/11/24
AYES: Min, Allen, Laird, Limón, Padilla, Stern
NOES: Seyarto, Dahle, Grove, Hurtado
NO VOTE RECORDED: Eggman
SENATE APPROPRIATIONS COMMITTEE: 4-2, 8/15/24
AYES: Caballero, Ashby, Becker, Wahab
NOES: Jones, Seyarto
NO VOTE RECORDED: Bradford
ASSEMBLY FLOOR: 49-17, 5/21/24 - See last page for vote
SUBJECT: Oil and gas: idle wells
SOURCE: Author
DIGEST:
This bill deletes the option for an oil and gas well operator to pay idle well fees in lieu of filing an idle well management plan, and revises the requirements of an idle well management plan to increase the rate at which idle wells under the plan have to be either returned to service or plugged and abandoned, and make all idle wells subject to that requirement, as provided, among other provisions.
ANALYSIS:
Existing law:
- Provides that the purposes of the state’s oil and gas conservation laws include protecting public health and safety and environmental quality, including the reduction and mitigation of greenhouse gas emissions associated with the development of hydrocarbon and geothermal resources in a manner that meets the energy needs of the state. Requires the State Oil and Gas Supervisor (supervisor), the leader of the state’s oil and gas well regulator, the Geologic Energy Management Division in the Department of Conservation (CalGEM), to coordinate with other state agencies and others to further the goals of the California Global Warming Solutions Act of 2006 and to help support the state’s clean energy goals. (Public Resources Code (PRC) §3011)
- Directs the supervisor to so 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, as specified, so as to prevent, as far as possible, damage to life, health, property, and natural resources, as provided. (PRC §3106)
- Classifies oil and gas wells based upon their use.
- An idle well is a well that is not in use, and has not been in use for at least 24 consecutive months, as specified. (PRC §3008)
- An idle well that has no operator or other responsible party to pay for its costs becomes an “idle-deserted” or “orphan” well, which is then the responsibility of the state to plug and abandon. (PRC §3251, §3206.3)
- Long-term idle wells are those wells that have been idle for at least 8 years. (PRC §3008)
- Holds the current operator, or the previous operator, as provided, of an orphan well that produced oil, gas, or other hydrocarbons or was used for injection, responsible for the proper plugging and abandonment of the well or the decommissioning of idle-deserted production facilities. Requires the supervisor or district deputy to determine from credible evidence whether a well or production facility is deserted. (PRC §3237)
- Requires an operator to either file with the supervisor certain annual idle well fees per well that increase the longer the well has been idle, or file an idle well management plan with the supervisor that eliminates between 4% - 6% of the long-term idle wells each year. Failure to pay idle well fees or file a plan is sufficient evidence for the well to be considered legally deserted. (PRC §3206)
- The fee schedule is $150 for an idle well that has been idle for 3 – 8 years, $300 for an idle well that has been idle for 8 – 15 years, $750 for an idle well that has been idle 15 – 20 years, and $1,500 for an idle well that has been idle for 20 years or more.
- The idle well management plan requires an operator with 250 or fewer idle wells to eliminate at least 4% of their long-term idle wells annually; an operator with 251 – 1,250 idle wells to eliminate at least 5% of their long-term idle wells annually, and an operator with 1,250 or more idle wells to eliminate at least 6% of their long-term idle wells annually, as provided.
This bill deletes the option for an oil and gas well operator to pay idle well fees in lieu of filing an idle well management plan, and revises the requirements of an idle well management plan to increase the rate at which idle wells under the plan have to be either returned to service or plugged and abandoned, and make all idle wells subject to that requirement, as provided, among other provisions. Specifically, this bill:
- Deletes the option for a well operator to pay an idle well fee in lieu of filing an idle well management plan. Removes the corresponding requirement that all collected fees be deposited in the Hazardous and Idle-Deserted Well Abatement Fund.
- Requires, on or before July 1, 2025, the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells. Requires the plan to:
- 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.
- Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
- The age of the idle well.
- Any indication that the idle well potentially poses a threat to life, health, property, or natural resources, and
- Wells that are located within 3,200 feet of a sensitive receptor, as defined.
- Include notes indicating the basis for prioritizing wells.
- Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
- Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells, or to a suitable condition for an alternative use if approved, as provided.
- Require the plan to be updated when there is a change in ownership or holdings of the company.
- Expands those idle wells subject to the required elimination rate to all idle wells from long-term idle wells only. Increases the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%. Increases the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%. Increases the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
- Updates the noncompliance provision to provide that failure to file a plan for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned. Provides that an operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug in accordance with the specified minimum requirements.
- Provides that 1) – 3) do not prohibit a local agency from collecting a fee for regulation of wells.
- Provides that 1) – 4) do not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by 1) – 4).
- Makes technical and conforming changes, and establishes a local mandate and provides that no reimbursement is required, as specified.
[Additional information and discussion may be found in the Senate Natural Resources and Water Committee’s bill analysis.]
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
- The Geologic Energy Management Division (CalGEM) estimates approximately $1.6 million in lost annual idle well fee revenue (Hazardous and Idle-Deserted Well Abatement Fund (HIDWAF)). The division collected approximately $1.62 million in fees for fiscal year (FY) 2022-23 and anticipates collecting a similar amount in FY 2023-24. Current law requires idle well fee revenues be deposited into HIDWAF, which is continuously appropriated to support the plugging and decommissioning of hazardous or potentially hazardous wells and facilities. The bill’s repeal of idle well fees would eliminate this sole revenue source for the fund.
- In addition, CalGEM estimates costs in year one of approximately $1.73 million followed by ongoing annual costs of approximately $1.64 million (Oil, Gas, and Geothermal Administrative (OGGA) Fund) for eight new positions to cover the workload of additional Idle Well Management Plan (IWMP) reviews, annual compliance audits, and enforcement actions, along with an increased number of permitting reviews and on-site witnessing requirements for specified work associated with plugging and abandonment projects.
SUPPORT: (Verified 8/15/24)
350 Bay Area Action
350 Conejo/ San Fernando Valley
350 Humboldt
350 Sacramento
350 Santa Barbara
350 South Bay Los Angeles
350 Southland Legislative Alliance
350 Ventura County Climate Hub
Acterra: Action for a Healthy Planet
Alameda County Democratic Party
Alliance of Nurses for Healthy Environments
Asian Pacific Environmental Network
Azul
Bay Area-System Change not Climate Change
Black Women for Wellness
Breast Cancer Action
Breast Cancer Prevention Partners
California Central Coast Legislative Caucus
California Democratic Party
California Environmental Justice Alliance (CEJA) Action
California Environmental Voters
California Medical Association
California Nurses for Environmental Health and Justice
California Green New Deal Coalition
California Nurses Association
California Public Interest Research Group (CALPIRG)
California Youth vs. Big Oil
CALPIRG Students
Center for Biological Diversity
Center for Community Action and Environmental Justice
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy (CAUSE)
Central Valley Air Quality Coalition
CERBAT.us
Chop Wood, Carry Water Daily Actions
Citizen Climate Lobby Santa Cruz
City of Goleta
CleanEarth4Kids.org
Climate Action California
Climate First: Replacing Oil & Gas (CFROG)
Climate Hawks Vote
Climate Health Now
ClimateBrunch
Coalition for Clean Air
Communities for a Better Environment
Community Environmental Council
Consumer Watchdog
Corporate Ethics International
County of Santa Barbara
County of Ventura
Earth Justice Ministries
Earthjustice
ECO Team
Elders Climate Action, Northern California Chapter
Elders Climate Action, Southern California Chapter
Elected Officials to Protect America – Code Blue
Endangered Habitats League
Environment California
Environmental Defense Center
Environmental Protection Information Center
Environmental Working Group
Esperanza Community Housing Corporation
FACTS Families Advocating for Chemical and Toxics Safety
Food & Water Watch
Fossil Free California
FracTracker Alliance
Fridays for Future Fresno
Fridays for Future Sacramento
Friends of the Earth
Glendale Environmental Coalition
Good Neighbor Steering Committee of Benicia
Greenpeace USA
Ground Game LA
High School Divest and Reinvest Coalition
Indivisible San Jose
Indivisible South Bay LA
Junior Philanthropists Foundation
La Jolla Environmental Action
Labor Network for Sustainability
Los Angeles County Sanitation Districts
Los Padres ForestWatch
Lutheran Office of Public Policy – California
Manhattan Beach Huddle
Mothers Out Front
Natural Resources Defense Council
NextGen California
Northridge Indivisible
Oil and Gas Action Network
Pacific Environment
Pelican Media
Peninsula Interfaith Climate Action (PICA)
Physicians for Social Responsibility – Los Angeles
Physicians for Social Responsibility – Sacramento
Physicians for Social Responsibility – San Francisco Bay
Pilipino Workers Center of Southern California
Planning and Conservation League
Presente.org
Protect Playa Now
Queers X Climate
Redeemer Community Partnership
RootsAction.org
Sacramento Area Congregations Together (SacramentoACT)
San Joaquin Valley Democratic Club
San Diego 350
Santa Cruz Climate Action Network
Sequoia ForestKeeper
Sierra Club California
Social Justice Ministry, Live Oak Unitarian Universalist Congregation of Goleta
Society of Fearless Grandmothers – Santa Barbara
Solano County Democratic Central Committee
STAND-LA Coalition
Stand.earth
Sunflower Alliance
Sunrise Movement Bay Area
Sunrise Movement Long Beach
Sunrise Movement Los Angeles
Sustainable Rossmoor
The Center on Race, Poverty, and the Environment
The Climate Center
The Climate Reality Project, Los Angeles Chapter
The Climate Reality Project, Monterey Bay, CA
The Climate Reality Project, Orange County Chapter
The Climate Reality Project, San Diego Chapter
The Climate Reality Project, San Fernando Valley Chapter
The Climate Reality Project, San Francisco Bay Area Chapter
Third Act Bay Area
Third Act SoCal
West Berkeley Alliance for Clean Air and Safe Jobs
West LA Democratic Club
Working Families Party
Youth Climate Strike Los Angeles
Youth For Earth
OPPOSITION: (Verified 8/15/24)
California Department of Finance
California Independent Petroleum Association
County of Kern
State Building and Construction Trades Council of California
Western States Petroleum Association
ARGUMENTS IN SUPPORT: According to the author, “Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to plug the estimated 40,000 idle oil wells in California. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work.”
“The facts are clear - this serious problem is getting worse and can’t be ignored. AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.”
ARGUMENTS IN OPPOSITION: The Western States Petroleum Association (WSPA), argues, “This bill fails to recognize the robust idle well management system currently in place in California and will now require operators to file a plan for the aggressive phaseout of all of their idle wells, long-term or otherwise, even though the well may still have economic life or could be repurposed for future use.” WSPA continues that current requirements have resulted in the “orderly plugging and closure of thousands of long-term idle wells” since 2018, notes that idle wells have integrity testing requirements, argues for focus on critical wells that are likely orphaned in urban areas, and notes the state’s existing reliance on imported fossil fuels.
The California Independent Petroleum Association (CIPA) adds that its members are contracted to plug almost 2,000 wells in the next few years, the state’s best protection against liability is viable operators, and existing state fund accounts that could be used for orphan wells have record balances.
ASSEMBLY FLOOR: 49-17, 5/21/24
AYES: Addis, Aguiar-Curry, Alvarez, Arambula, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Wendy Carrillo, Connolly, Mike Fong, Garcia, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Pellerin, Petrie-Norris, Rendon, Reyes, Rodriguez, Santiago, Schiavo, Soria, Ting, Valencia, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NOES: Alanis, Bains, Chen, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Lackey, Jim Patterson, Joe Patterson, Sanchez, Ta, Waldron, Wallis
NO VOTE RECORDED: Juan Carrillo, Cervantes, Megan Dahle, Friedman, Gabriel, Gipson, Holden, Mathis, Stephanie Nguyen, Quirk-Silva, Ramos, Luz Rivas, Blanca Rubio, Villapudua
Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116
8/18/24 8:51:03
**** END ****
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
AB 1866 (Hart) - Oil and gas: idle wells
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
This bill would eliminate the option for an oil and gas well operator to pay idle well fees, require a well operator to submit an idle well management plan that meets specified requirements, and increase the percentage of idle wells that must be plugged and abandoned or returned to service annually, among other provisions.
Fiscal Impact:
- The Geologic Energy Management Division (CalGEM) estimates approximately $1.6 million in lost annual idle well fee revenue (Hazardous and Idle-Deserted Well Abatement Fund (HIDWAF)). The division collected approximately $1.62 million in fees for fiscal year (FY) 2022-23 and anticipates collecting a similar amount in FY 2023-24. Current law requires idle well fee revenues be deposited into HIDWAF, which is continuously appropriated to support the plugging and decommissioning of hazardous or potentially hazardous wells and facilities. The bill’s repeal of idle well fees would eliminate this sole revenue source for the fund.
- In addition, CalGEM estimates costs in year one of approximately $1.73 million followed by ongoing annual costs of approximately $1.64 million (Oil, Gas, and Geothermal Administrative (OGGA) Fund) for eight new positions to cover the workload of additional Idle Well Management Plan (IWMP) reviews, annual compliance audits, and enforcement actions, along with an increased number of permitting reviews and on-site witnessing requirements for specified work associated with plugging and abandonment projects.
Background:
California is a major oil and gas producing state. According to the U.S. Energy Information Administration, the state was 7th and 15th for oil and marketed natural gas production, respectively, among the 50 states . Oil exploration and production in California started in the 19th century. Production of oil was about 123 million barrels in 2023 , and continues to decline from the 1985 peak.
The Geologic Energy Management Division (CalGEM ) in the Department of Conservation is the state’s oil and gas regulator. The State Oil and Gas Supervisor (supervisor) leads CalGEM.
There are approximately 101,250 active, new , and idle oil and gas wells in the state and related production facilities . Of these, about 59,300 are active, and 40,100 are idle. In addition, there are on the order of 131,300 wells that have been plugged-and-abandoned in various manners .
Active wells are those currently in use that either produce or inject fluids related to hydrocarbon production. Wells are expensive to drill, and to seal when they are no longer needed (“plug and abandon”). Therefore, operators may prefer to keep wells idle – sometimes for extended periods of time. In the 2021 idle well report, CalGEM reported that about half of all idle wells were long-term idle wells (idle for 15 years or more) and that less than 2% of idle wells returned to active status during that year.
Operators are required either to pay a fee for each idle well to a state fund annually or submit an idle well management plan (IWMP) with certain annual minimum targets for the plugging and abandonment or return to service of long-term idle wells to CalGEM for approval. The required fees increase the longer a well has been idle.
According to CalGEM’s 2021 idle well report, there were 38,759 idle wells, of which 17,888 met the definition of long-term idle well. For those idle wells, 57 operators submitted IWMPs and CalGEM approved 51 of those plans. Forty-nine of the 51 operators were found to be in compliance with the terms of their approved IWMPs at the conclusion of CalGEM’s annual review. Based upon the terms of the approved IWMPs, operators were expected to eliminate a minimum of 485 long-term idle wells. Operators eliminated 464 long-term idle wells, and, including credits for eliminating more long-term idle wells than were required by an operator’s IWMP, CalGEM considers the total long-term idle wells that were effectively eliminated in 2021 to be 613. In addition to the plugged and abandoned long-term idle wells, a further 3,271 wells no longer met the definition of an idle well, mostly by also being plugged and abandoned, but about 17% returned to active use in some form.
CalGEM’s 2021 idle well report also reported that 162 operators paid $4.9 million in idle well fees. Of all the covered operators required to comply with the IWMP program, 1,031 operators failed to either file an IWMP or pay the fees, leaving $3,656,250 in unpaid fees. It is important to note that the 57 operators that operated under IWMPs in 2021 are only about 4% of the total number of operators of long-term idle wells.
Idle wells do not generate oil production revenue for the operator, and are more likely to become orphan wells. Orphan wells are deserted wells that the state has to address because no responsible operator has been found to do so. Orphan wells are likely to not be maintained consistently, and emissions from wells that fail or are failing may be hazardous to the surrounding environment, and public health and safety.
By multiple estimates, the orphan well problem the state faces already is on the order of billions of dollars. While recent reforms at CalGEM have resulted in operators plugging and abandoning more wells and long-term idle wells, CalGEM recently estimated a total cost of almost $1 billion to plug and abandon about 5,400 orphaned, deserted, and potentially deserted wells.
According to a 2020 study by the California Council on Science and Technology (CCST) the difference between the cost to plug and abandon potentially orphan oil and gas wells and related decommissioning costs and the value of the indemnity bonds held by the state was on the order of $9 billion. A 2023 estimate by the Carbon Tracker Initiative estimated onshore decommissioning liability to be $13.2 billion with an increase to as much as $21 billion when incorporating site remediation and inflation in the estimates. To offset that liability, the oil industry has provided financial surety on the order of about 1% to the state. In addition, the Carbon Tracker Initiative study estimated that dedicating all remaining projected profits from hydrocarbon production to decommissioning the wells would still lead to a multi-billion dollar shortfall.
Proposed Law:
This bill would eliminate the option for an oil and gas well operator to pay idle well fees, require a well operator to submit an idle well management plan that meets specified requirements, and increase the percentage of idle wells that must be plugged and abandoned or returned to service annually, among other provisions. Specifically, this bill would:
- Delete the option for a well operator to pay an idle well fee in lieu of filing an idle well management plan. Remove the corresponding requirement that all collected fees be deposited in the Hazardous and Idle-Deserted Well Abatement Fund.
- Require, on or before July 1, 2025, the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells. Require the plan to:
- 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.
- Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
- The age of the idle well.
- Any indication that the idle well potentially poses a threat to life, health, property, or natural resources, and
- Wells that are located within 3,200 feet of a sensitive receptor, as defined.
- Include notes indicating the basis for prioritizing wells.
- Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
- Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells, or to a suitable condition for an alternative use if approved, as provided.
- Require the plan to be updated when there is a change in ownership or holdings of the company.
- Increase the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%. Increase the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%. Increase the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
- Update the noncompliance provision to provide that failure to file a plan for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned.
- Provide that #1) – #3) do not prohibit a local agency from collecting a fee for regulation of wells.
- Provide that #1) – #4) do not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by #1) – #4).
- Make technical and conforming changes, and establish a local mandate and provide that no reimbursement is required, as specified.
Related Legislation:
SB 1433 (Limón, 2024) would authorize a gravity energy well pilot program at CalGEM, among other provisions.
SB 1425 (Gonzalez, 2024) would increase the monthly contribution from certain offshore oil revenues to the Oil Trust Fund to up to $13 million, as provided.
SB 1304 (Limón, 2024) would require that the California Environmental Quality Act apply to the aquifer exemption process required to designate locations where injection wells operate, and require the State Water Resources Control Board to lead the aquifer exemption process, as provided, among other provisions.
SJR 12 (Min, 2024) would ask the federal government to modify federal bankruptcy laws to not allow the discharge of oil and gas well clean-up and decommissioning obligations.
AB 3233 (Addis, 2024) would authorize a local jurisdiction to limit or prohibit oil and gas operations or development in its jurisdiction, as provided, among other things.
AB 2716 (Bryan, 2024) would identify low production oil and gas wells within 3,200 feet of a sensitive reception and prohibit their operation as a low-production well for more than 24 months, among other things.
AB 1167 (W. Carillo, Chapter 359, Statutes of 2023) requires a person who acquires the right to operate a well or production facility by purchase, transfer, assignment, conveyance, exchange, or other disposition, to file with the State Oil and Gas Supervisor an individual indemnity bond for the well or production facility or a blanket indemnity bond for multiple wells or facilities in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning, and site restoration, with certain exceptions, as provided, among other provisions.
AB 631 (Hart, Chapter 337, Statutes of 2023) enhanced CalGEM’s authority to take certain actions or impose various penalties on oil and gas operators and property owners for violations of the state’s oil and gas conservation laws and regulations, as specified.
SB 1137 (Gonzalez, Chapter 365, Statutes of 2022) provided for health protection zones around oil and gas wellheads, among other provisions. (Implementation of this bill is stayed pending a November 2024 referendum.)
SB 84 (Hurtado, Chapter 758, Statutes of 2021) required CalGEM to identify wells that are registered to an operator and have met the definition of an idle well for three years where neither the annual fee has been paid nor is the well part of a valid idle well management plan.
SB 47 (Limón, Chapter 238, Statutes of 2021) increased the annual expenditure limit from the Oil, Gas and Geothermal Administration Fund, the principal source of funding for CalGEM from a production fee assessed on oil and gas production in the state, for the plugging and abandonment of hazardous or idle-deserted wells to $5 million.
SB 551 (Jackson, Chapter 774, Statutes of 2019) required oil and gas well operators to provide estimates of the cost to plug and abandon wells and decommission attendant oil and gas production facilities, and requires CalGEM to establish criteria for these estimates and perform certain related inspections, among other things
SB 724 (Lara, Chapter 652, Statutes of 2017) authorized CalGEM to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities.
AB 2729 (Williams, Chapter 272, Statutes of 2016) substantially revised and reformed the state’s idle well requirements with certain other accompanying revisions to the current law governing oil and gas operations.
-- END --
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Dave Min, Chair
2023 - 2024 Regular
Bill No: AB 1866 Hearing Date: June 11, 2024
Author: | Hart | ||
Version: | March 11, 2024 Amended | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Katharine Moore | ||
Subject: Oil and gas: idle wells
SUMMARY
This bill would eliminate the option for an oil and gas well operator to pay idle well fees, require a well operator to submit an idle well management plan that meets specified requirements, and increase the percentage of idle wells that must be plugged and abandoned or returned to service annually, among other provisions.
BACKGROUND AND EXISTING LAW
California is a major oil and gas producing state. According to the U.S. Energy Information Administration, the state was 7th and 15th for oil and marketed natural gas production, respectively, among the 50 states[1]. Oil exploration and production in California started in the 19th century. Production of oil was about 123 million barrels in 2023[2], and continues to decline from the 1985 peak.
The Geologic Energy Management Division (CalGEM[3]) in the Department of Conservation is the state’s oil and gas regulator. The State Oil and Gas Supervisor (supervisor) leads CalGEM.
There are approximately 101,250 active, new[4], and idle oil and gas wells in the state and related production facilities[5]. Of these, about 59,300 are active, and 40,100 are idle. In addition, there are on the order of 131,300 wells that have been plugged-and-abandoned in various manners[6].
Active wells are those currently in use that either produce or inject fluids related to hydrocarbon production. Wells are expensive to drill, and to seal when they are no longer needed (“plug and abandon”). Therefore, operators may prefer to keep wells idle – sometimes for extended periods of time. In the 2021 idle well report, CalGEM reported that about half of all idle wells were long-term idle wells (idle for 15 years or more) and that less than 2% of idle wells returned to active status during that year.
Operators are required either to pay a fee for each idle well to a state fund annually or submit an idle well management plan (IWMP) with certain annual minimum targets for the plugging and abandonment or return to service of long-term idle wells to CalGEM for approval. The required fees increase the longer a well has been idle.
According to CalGEM’s 2021 idle well report, there were 38,759 idle wells, of which 17,888 met the definition of long-term idle well. For those idle wells, 57 operators submitted IWMPs and CalGEM approved 51 of those plans. Forty-nine of the 51 operators were found to be in compliance with the terms of their approved IWMPs at the conclusion of CalGEM’s annual review. Based upon the terms of the approved IWMPs, operators were expected to eliminate a minimum of 485 long-term idle wells. Operators eliminated 464 long-term idle wells, and, including credits for eliminating more long-term idle wells than were required by an operator’s IWMP, CalGEM considers the total long-term idle wells that were effectively eliminated in 2021 to be 613. In addition to the plugged and abandoned long-term idle wells, a further 3,271 wells no longer met the definition of an idle well, mostly by also being plugged and abandoned, but about 17% returned to active use in some form.
CalGEM’s 2021 idle well report also reported that 162 operators paid $4.9 million in idle well fees. Of all the covered operators required to comply with the IWMP program, 1,031 operators failed to either file an IWMP or pay the fees, leaving $3,656,250 in unpaid fees. It is important to note that the 57 operators that operated under IWMPs in 2021 are only about 4% of the total number of operators of long-term idle wells.
Idle wells do not generate oil production revenue for the operator, and are more likely to become orphan wells. Orphan wells are deserted wells that the state has to address because no responsible operator has been found to do so. Orphan wells are likely to not be maintained consistently, and emissions from wells that fail or are failing may be hazardous to the surrounding environment, and public health and safety.
By multiple estimates, the orphan well problem the state faces already is on the order of billions of dollars. While recent reforms at CalGEM have resulted in operators plugging and abandoning more wells and long-term idle wells, CalGEM recently estimated a total cost of almost $1 billion to plug and abandon about 5,400 orphaned, deserted, and potentially deserted wells.
According to a 2020 study by the California Council on Science and Technology (CCST) the difference between the cost to plug and abandon potentially orphan oil and gas wells and related decommissioning costs and the value of the indemnity bonds held by the state was on the order of $9 billion. A 2023 estimate by the Carbon Tracker Initiative estimated onshore decommissioning liability to be $13.2 billion with an increase to as much as $21 billion when incorporating site remediation and inflation in the estimates. To offset that liability, the oil industry has provided financial surety on the order of about 1% to the state. In addition, the Carbon Tracker Initiative study estimated that dedicating all remaining projected profits from hydrocarbon production to decommissioning the wells would still lead to a multi-billion dollar shortfall.
Existing law:
- Provides that the purposes of the state’s oil and gas conservation laws include protecting public health and safety and environmental quality, including the reduction and mitigation of greenhouse gas emissions associated with the development of hydrocarbon and geothermal resources in a manner that meets the energy needs of the state. Requires the supervisor to coordinate with other state agencies and others to further the goals of the California Global Warming Solutions Act of 2006 and to help support the state’s clean energy goals. (Public Resources Code (PRC) §3011)
- Directs the supervisor to so 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, as specified, so as to prevent, as far as possible, damage to life, health, property, and natural resources, as provided. (PRC §3106)
- Classifies oil and gas wells based upon their use.
- An idle well is a well that is not in use, and has not been in use for at least 24 consecutive months, as specified. (PRC §3008)
- An idle well that has no operator or other responsible party to pay for its costs becomes an “idle-deserted” or “orphan” well, which is then the responsibility of the state to plug and abandon. (PRC §3251, §3206.3)
- Long-term idle wells are those wells that have been idle for at least 8 years. (PRC §3008)
- Holds the current operator, or the previous operator, as provided, of an orphan well that produced oil, gas, or other hydrocarbons or was used for injection, responsible for the proper plugging and abandonment of the well or the decommissioning of idle-deserted production facilities. Requires the supervisor or district deputy to determine from credible evidence whether a well or production facility is deserted. (PRC §3237)
- Authorizes the supervisor to order the plugging and abandonment, or decommissioning of a hazardous or idle-deserted well or facility, as specified. (PRC §3251, §3255)
- Requires an operator to either file with the supervisor certain annual idle well fees per well that increase the longer the well has been idle, or file an idle well management plan with the supervisor that eliminates between 4% - 6% of the long-term idle wells each year. Failure to pay idle well fees or file a plan is sufficient evidence for the well to be considered legally deserted. (PRC §3206)
PROPOSED LAW
This bill would delete the option for an oil and gas well operator to pay an idle well fee in lieu of filing an idle well management plan, and accelerate the rate at which idle wells have to be either returned to service or plugged and abandoned, among other provisions. Specifically, this bill would:
- Delete the option for a well operator to pay an idle well fee in lieu of filing an idle well management plan. Remove the corresponding requirement that all collected fees be deposited in the Hazardous and Idle-Deserted Well Abatement Fund.
- Require, on or before July 1, 2025, the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells. Require the plan to:
- 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.
- Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
- The age of the idle well.
- Any indication that the idle well potentially poses a threat to life, health, property, or natural resources, and
- Wells that are located within 3,200 feet of a sensitive receptor, as defined.
- Include notes indicating the basis for prioritizing wells.
- Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
- Require the operator to restore the surface of the wellpad to as near a natural state as practicable if there are no remaining unplugged wells, or to a suitable condition for an alternative use if approved, as provided.
- Require the plan to be updated when there is a change in ownership or holdings of the company.
- Increase the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%. Increase the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%. Increase the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
- Update the noncompliance provision to provide that failure to file a plan for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned. Provide that an operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug in accordance with the specified minimum requirements.
- Provide that #1) – #3) do not prohibit a local agency from collecting a fee for regulation of wells.
- Provide that #1) – #4) do not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by #1) – #4).
- Make technical and conforming changes, and establish a local mandate and provide that no reimbursement is required, as specified.
ARGUMENTS IN SUPPORT
According to the author, “Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to plug the estimated 40,000 idle oil wells in California. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work.”
“The facts are clear - this serious problem is getting worse and can’t be ignored. AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.”
ARGUMENTS IN OPPOSITION
The Western States Petroleum Association (WSPA), taking an oppose unless amended position, writes, “This bill fails to recognize the robust idle well management system currently in place in California and will now require operators to file a plan for the aggressive phaseout of all of their idle wells, long-term or otherwise, even though the well may still have economic life or could be repurposed for future use.” WSPA continues that current requirements have resulted in the “orderly plugging and closure of thousands of long-term idle wells” since 2018, notes that idle wells have integrity testing requirements, argues for focus on critical wells that are likely orphaned in urban areas, and notes the state’s existing reliance on imported fossil fuels.
The California Independent Petroleum Association (CIPA) adds that its members are contracted to plug almost 2,000 wells in the next few years, the state’s best protection against liability is viable operators, and existing state fund accounts that could be used for orphan wells have record balances.
COMMENTS
This bill is double-referred. This bill is double-referred to both this Committee and the Senate Judiciary Committee. Elements of this bill under the Senate Judiciary Committee’s jurisdiction are included here for completeness and context, and will be discussed before that Committee.
Reforms idle well management. A series of reforms during the previous Administration have helped to ensure progress in addressing the hazard, including potential liability to the state, of idle wells, and long-term idle wells, in particular. While progress has been made, there remain tens of thousands of idle wells in the state of which about half are long-term idle wells. While wells may become idle for periods of time for maintenance or other reasons and then return to active status, it is far from clear that many of the current idle wells will realistically return to service. According to the Sierra Club, “Since the [IWMP] began, the total number of idle wells in California has grown from 29,292 in 2018 to 38,759 in 2021, outpacing the number of wells being plugged and abandoned.” In view of this, it is increasingly clear that there is merit to revisiting the existing idle well requirements in order to improve upon existing shortcomings.
The original legislation anticipated that additional reforms might be required as more information was obtained about the status of wells and operators in the state. For example, hundreds of smaller operators have neither paid the required fees nor submitted an idle well management plan for approval to CalGEM and adhered to its requirements. Current projections indicate that it will take decades for some larger operators to fully address their idle wells if they eliminate them at a rate no higher than the minimum requirements.
Under existing law, the focus on the number of wells to be eliminated annually was long-term idle wells. Here the required fraction to be eliminated annually is increased by about a factor of 2.5 – 3.33 and is generalized to all idle wells. There is merit in requiring that IWMPs be submitted by all operators. Removing the fee requirement – as IWMPs would be uniformly required – will decrease revenue to CalGEM that has been used to address hazardous and orphan wells (on the order of $4 million annually in the most recent data available). In the near term, this will be more than offset by available federal funds. The per well fees – ranging from $150 (for a well idle from 3 – 8 years) to $1,500 (for a long-term idle well) – did not incentivize the majority of operators to file IWMPs as they were much less than the cost of plugging and abandonment.
The author continues to negotiate with opponents and other stakeholders on various elements of this bill. In view of this, the Committee may wish to direct staff to work with the author and stakeholders as these discussions continue.
Should the bill be substantially amended in the future, the Committee may wish to re-hear the bill.
Cost to address orphan wells. According to the Assembly Natural Resources Committee, the cost to plug a well is highly variable depending on well and facility condition, size, location, and other factors. A recent CalGEM analysis found the average cost to be about $95,000 per well.
This estimate, however, does not represent the full cost to remediate the supporting area of the well. According to CalGEM’s recent cost estimate report required by SB 551 (Jackson, Chapter 774, Statutes of 2019), the average cost per well was calculated to be $93,427 for plugging and abandonment; $26,994 for production facility decommissioning; $29,506 for well site remediation; and, $15,684 for production facility site remediation, resulting in a total liability per well of $165,611. Remediating urban wells can incur significant additional costs – in 2016 two leaking wells in the Echo Park neighborhood of Los Angeles ended up costing about $1 million each to remediate after all necessary measures to ensure public health and safety were taken into consideration.
Funding for orphan well remediation. CalGEM is authorized to spend up to $5 million annually from the production fees paid by operators on well plugging and abandonment. This industry funding has been significantly supplemented recently by state and federal taxpayer funding. In fiscal years 2022/2023 and 2023/2024, $50 million in General Fund dollars are appropriated to CalGEM to plug and abandon orphan wells – for a total of $100 million dollars over the two years.
In addition, in August 2022, California was awarded $25 million in initial grant funding from the federal government's orphan well program authorized in the bipartisan Infrastructure Investment and Jobs Act. California is potentially eligible for an additional $140 million in future grants.
While these are significant amounts of largely one-time funding, this will, using current estimates, only address about 30% of the likely orphan wells already identified in the state. The potential liability would remain in the billions of dollars to address all of the remaining wells, as noted above.
In addition, any available indemnity bonds filed by the operator prior to deserting a well would be available to CalGEM to help pay for well remediation. The minimum bond amounts – where available – are generally insufficient to fully cover the costs of plugging and abandoning a well and decommissioning the associated facilities. CalGEM has been slow to implement the authority provided to it 5 years ago to seek up to an additional $30 million in surety from operators at risk of deserting their wells.
Prioritizing wells impacting communities. The California Oil and Gas Public Health Rulemaking Scientific Advisory Panel, an advisory body to CalGEM, has noted that close proximity to oil and gas development causes significant adverse health effects, including poor birth outcomes, asthma, and reduced lung function. Hazardous air pollutants that are known to be emitted from oil and gas development sites include benzene, toluene, ethylbenzene, xylenes, hexane and formaldehyde – many of which are known, probable, or possible carcinogens and/or teratogens and which have other adverse health effects.
FracTrackerAlliance, a non-profit organization that provides data and analyses to help better understand the harms posed by hydrocarbon extraction, reports approximately 2.7 million Californians live within 3,200 feet of an oil well. These individuals experience higher concentrations of “health-damaging air pollutants” and “measurably higher” exposure to noise and vibration.
The initial screening criteria in CalGEM’s orphan well prioritization methodology take into consideration numerous factors – including whether a well is a critical well, open to the environment and located in an urban setting – to help ensure that orphan wells that present the most risk are addressed as soon as possible. (A critical well is one within 300 feet of a building or an airport runway, or within 100 feet of a street or highway, body of water, public recreational facility, or wildlife preserve.)
Who can afford to plug and abandon idle wells? According to the Assembly Natural Resources Committee, the three of the biggest profit-earning oil companies in California, Chevron, Aera Energy and California Resources Corporation, hold 68% of idle wells in California. The estimated cost of a full remediation of their idle wells would cost them on the order of a few percent of their combined world-wide profits for 2022.
These large companies have the necessary resources to fulfill their financial and environmental remediation obligations. It is the financially smaller and less diversified oil well owner that runs the greatest risk of deserting a well. Given the smaller operators apparent lack of compliance with current idle well management requirements, it may be that their wells are already on the path to being orphaned. Of CalGEM’s list of 5,300 orphan wells, 95% of the wells on that list were “potentially deserted wells” where the owner/operator did not pay idle well fees over a period of time.
Culver City settlement. On December 7, 2023, Culver City and Sentinel Peak Resources California LLC executed a Settlement Agreement to resolve Sentinel’s potential legal claims relating to the City’s Oil Termination Ordinance. Under the agreement, Sentinel must plug and abandon a minimum of 15 wells by December 31, 2027, at a rate of a minimum of three wells per calendar year from 2023 to 2027.
The bill contains language to assure the requirements of this bill do not interfere with that agreement if the terms of that agreement are more stringent than the requirements of this bill.
Should the bill move forward, the author should continue to take into consideration the potential impact of the bill on other local requirements.
Multiple idle well bills. There are at least two other active bills that impact CalGEM’s idle well program. The authors may need to coordinate with each other to ensure no chaptering out issues arise. Committee staff note that under existing law, CalGEM does not have the authority to allow the re-purposing of an oil and gas well for a non-oil and gas-related purpose.
Recent related legislation.
SB 1433 (Limón, 2024) would authorize a gravity energy well pilot program at CalGEM, among other provisions. (This bill is pending referral in the Assembly.)
SB 1425 (Gonzalez, 2024) would increase the monthly contribution from certain offshore oil revenues to the Oil Trust Fund to up to $13 million, as provided. (This bill is pending referral in the Assembly.)
SB 1304 (Limón, 2024) would require that the California Environmental Quality Act apply to the aquifer exemption process required to designate locations where injection wells operate, and require the State Water Resources Control Board to lead the aquifer exemption process, as provided, among other provisions. (This bill is pending referral in the Assembly.)
SJR 12 (Min, 2024) would ask the federal government to modify federal bankruptcy laws to not allow the discharge of oil and gas well clean-up and decommissioning obligations. (This resolution is pending on the Senate floor.)
AB 3233 (Addis, 2024) would authorize a local jurisdiction to limit or prohibit oil and gas operations or development in its jurisdiction, as provided, among other things. (This bill is pending referral in the Senate.)
AB 2716 (Bryan, 2024) would identify low production oil and gas wells within 3,200 feet of a sensitive reception and prohibit their operation as a low-production well for more than 24 months, among other things. (This bill is pending before this Committee.)
AB 1167 (W. Carillo, Chapter 359, Statutes of 2023) requires a person who acquires the right to operate a well or production facility by purchase, transfer, assignment, conveyance, exchange, or other disposition, to file with the State Oil and Gas Supervisor an individual indemnity bond for the well or production facility or a blanket indemnity bond for multiple wells or facilities in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning, and site restoration, with certain exceptions, as provided, among other provisions.
AB 631 (Hart, Chapter 337, Statutes of 2023) enhanced CalGEM’s authority to take certain actions or impose various penalties on oil and gas operators and property owners for violations of the state’s oil and gas conservation laws and regulations, as specified.
SB 1137 (Gonzalez, Chapter 365, Statutes of 2022) provided for health protection zones around oil and gas wellheads, among other provisions. (Implementation of this bill is stayed pending a November 2024 referendum.)
SB 84 (Hurtado, Chapter 758, Statutes of 2021) required CalGEM to identify wells that are registered to an operator and have met the definition of an idle well for three years where neither the annual fee has been paid nor is the well part of a valid idle well management plan.
SB 47 (Limón, Chapter 238, Statutes of 2021) increased the annual expenditure limit from the Oil, Gas and Geothermal Administration Fund, the principal source of funding for CalGEM from a production fee assessed on oil and gas production in the state, for the plugging and abandonment of hazardous or idle-deserted wells to $5 million.
SB 551 (Jackson, Chapter 774, Statutes of 2019) required oil and gas well operators to provide estimates of the cost to plug and abandon wells and decommission attendant oil and gas production facilities, and requires CalGEM to establish criteria for these estimates and perform certain related inspections, among other things
SB 724 (Lara, Chapter 652, Statutes of 2017) authorized CalGEM to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities.
AB 2729 (Williams, Chapter 272, Statutes of 2016) substantially revised and reformed the state’s idle well requirements with certain other accompanying revisions to the current law governing oil and gas operations.
SUGGESTED AMENDMENTS: none
SUPPORT
350 Bay Area Action
350 Conejo/ San Fernando Valley
350 Humboldt
350 Sacramento
350 South Bay Los Angeles
350 Southland Legislative Alliance
350 Ventura County Climate Hub
Acterra: Action for a Healthy Planet
Alameda County Democratic Party
Alliance of Nurses for Healthy Environments
Asian Pacific Environmental Network
Azul
Bay Area-System Change not Climate Change
Black Women for Wellness
Breast Cancer Action
Breast Cancer Prevention Partners
California Democratic Party
California Environmental Justice Alliance (CEJA) Action
California Environmental Voters
California Medical Association
California Nurses for Environmental Health and Justice
California Green New Deal Coalition
California Nurses Association
California Public Interest Research Group (CALPIRG)
California Youth vs. Big Oil
CALPIRG Students
Center for Biological Diversity
Center for Community Action and Environmental Justice
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy (CAUSE)
Central Valley Air Quality Coalition
CERBAT.us
Chop Wood, Carry Water Daily Actions
Citizen Climate Lobby Santa Cruz
City of Goleta
CleanEarth4Kids.org
Climate Action California
Climate First: Replacing Oil & Gas (CFROG)
Climate Hawks Vote
Climate Health Now
Climate Reality San Fernando Valley, CA Chapter
ClimateBrunch
Coalition for Clean Air
Communities for a Better Environment
Community Environmental Council
Consumer Watchdog
Corporate Ethics International
County of Santa Barbara
County of Ventura
Earth Justice Ministries
Earthjustice
ECO Team
Elders Climate Action, Northern California Chapter
Elders Climate Action, Southern California Chapter
Elected Officials to Protect America – Code Blue
Endangered Habitats League
Environment California
Environmental Defense Center
Environmental Protection Information Center
Environmental Working Group
Esperanza Community Housing Corporation
FACTS Families Advocating for Chemical and Toxics Safety
Food & Water Watch
Fossil Free California
FracTracker Alliance
Fridays for Future Fresno
Fridays for Future Sacramento
Friends of the Earth
Glendale Environmental Coalition
Good Neighbor Steering Committee of Benicia
Greenpeace USA
Ground Game LA
High School Divest and Reinvest Coalition
Indivisible San Jose
Indivisible South Bay LA
Junior Philanthropists Foundation
La Jolla Environmental Action
Labor Network for Sustainability
Los Angeles County Sanitation Districts
Los Padres ForestWatch
Lutheran Office of Public Policy – California
Manhattan Beach Huddle
Mothers Out Front
Natural Resources Defense Council
NextGen California
Northridge Indivisible
Oil and Gas Action Network
Pacific Environment
Pelican Media
Peninsula Interfaith Climate Action (PICA)
Physicians for Social Responsibility – Los Angeles
Physicians for Social Responsibility – Sacramento
Physicians for Social Responsibility – San Francisco Bay
Pilipino Workers Center of Southern California
Planning and Conservation League
Presente.org
Protect Playa Now
Queers X Climate
Redeemer Community Partnership
RootsAction.org
Sacramento Area Congregations Together (SacramentoACT)
San Joaquin Valley Democratic Club
San Diego 350
Santa Cruz Climate Action Network
Sequoia ForestKeeper
Sierra Club California
Social Justice Ministry, Live Oak Unitarian Universalist Congregation of Goleta
Society of Fearless Grandmothers – Santa Barbara
Solano County Democratic Central Committee
STAND-LA Coalition
Stand.earth
Sunflower Alliance
Sunrise Movement Bay Area
Sunrise Movement Long Beach
Sunrise Movement Los Angeles
Sustainable Rossmoor
The Center on Race, Poverty, and the Environment
The Climate Center
The Climate Reality Project, Los Angeles Chapter
The Climate Reality Project, Monterey Bay, CA
The Climate Reality Project, Orange County Chapter
The Climate Reality Project, San Diego Chapter
The Climate Reality Project, San Francisco Bay Area Chapter
Third Act SoCal
West Berkeley Alliance for Clean Air and Safe Jobs
West LA Democratic Club
Working Families Party
Youth Climate Strike Los Angeles
Youth For Earth
OPPOSITION
California Independent Petroleum Association
County of Kern
Western States Petroleum Association (unless amended)
One individual
-- END --
Ranking based upon 2022 data. ↑
According to the WellSTAR data dashboard (accessed March 22, 2024) ↑
The state’s oil and gas regulator was renamed CalGEM in 2020 and CalGEM is used uniformly herein. ↑
“Permitted” according to the WellSTAR data dashboard (accessed March 22, 2024) ↑
Active (59,283), idle (40,062), permitted (1,899), plugged-and-abandoned (131,320) according to the WellSTAR data dashboard (accessed March 22, 2024). ↑
Compiled well data obtained from CalGEM’s website by Committee staff and aggregated well information reported by CalGEM in various documents do not always appear to be entirely consistent, even while making allowance for varying reporting periods. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 1866
Author:(Hart)
As Amended Ver:March 11, 2024
Majority vote
SUMMARY
Eliminates the option for a well operator to pay idle well fees and requires a well operator to submit an idle well management plan that meets specified requirements.
Major Provisions
- Strikes the option for a well operator to pay an idle well fee in lieu of filing an idle well management plan.
- Requires, on or before July 1, 2025, the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells. Requires the plan to be updated when there is a change in ownership or holdings of the company.
- Increases the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%; increases the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%; and, increases the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
- Provides that this bill does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this bill.
COMMENTS
According to the Division of Geologic Energy Management (CalGEM), there are more than 37,000 known idle wells in California, all of which will eventually come to their end of life, and their owner/operator will be required to plug the wells with cement and decommission the production facilities, restoring the well site to its prior condition. Idle wells can become orphan wells if they are deserted by insolvent operators. When this happens, there is the risk of shifting responsibilities and costs for decommissioning the wells to the state. As of December 31, 2021, CalGEM had identified more than 5,300 wells as orphan or potentially orphan.
Because of the risk and potential liability posed by idle wells, state law requires well operators to pay idle well fees or submit Idle Well Management Plans (IWMP). According to CalGEM's August 2023 annual IWMP report for the 2021 calendar year, there were 38,759 idle wells. In 2021, 162 operators paid $4.9 million in idle well fees, which were deposited into the Hazardous Idle Deserted Well Abatement Fund for CalGEM to use to cover the cost of orphan wells.
AB 1866 deletes the option for a well operator to pay a fee and requires all idle well operators to submit IWPMs with an increased amount of wells owners would be required to plug and abandon in their IWMPs based on the number of wells an owner owns.
According to the Author
Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to expeditiously plug the estimated 40,000 idle oil wells in California within the next decade. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work. AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.
Arguments in Support
Natural Resources Defense Council writes that tens of thousands of wells are sitting idle in California with no prospect of being plugged any time soon. These idle wells leak methane and dangerous air toxics into surrounding communities, and every year they sit idle are at greater risk of being left orphaned without a financially viable operator to close them. AB 1866 creates brisk but reasonable timelines for plugging and abandonment that apply to all idle wells, not just the oldest ones; and eliminates the ability of oil companies to escape those timelines by agreeing to (but usually not even paying) a paltry fee.
Arguments in Opposition
The Western States Petroleum Association writes that California's current Idle Well programs work, requiring operators to inventory, evaluate, test, and abandon idle wells under CalGEM's direction. For one of the programs, since 2018, CalGEM has managed operators' IWMP, resulting in the orderly plugging and closure of thousands of long-term idle wells. More broadly, the usage of the IWMP has provided the state and operators with critical flexibility to maintain the availability of wells that, while not presently producing, still retain potential future production capacity to benefit Californians. Additionally, idle wells are required to be tested for well integrity to enhance public safety and mitigate environmental concerns.
FISCAL COMMENTS
According to the Assembly Appropriations Committee, CalGEM estimates approximately $1.6 million in lost annual idle well fee revenue (Hazardous and Idle-Deserted Well Abatement Fund). In addition, CalGEM estimates costs in year one of approximately $1.73 million followed by ongoing annual costs of approximately $1.64 million (Oil, Gas, and Geothermal Administrative Fund) for eight new positions to cover the workload of additional IWMP reviews, annual compliance audits, and enforcement actions, along with an increased number of permitting reviews and on-site witnessing requirements.
VOTES
ASM NATURAL RESOURCES: 7-3-1
YES: Bryan, Bauer-Kahan, Friedman, Kalra, Muratsuchi, Pellerin, Wicks
NO: Flora, Hoover, Mathis
ABS, ABST OR NV: Wood
ASM APPROPRIATIONS: 10-4-1
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin
NO: Sanchez, Dixon, Jim Patterson, Ta
ABS, ABST OR NV: Villapudua
UPDATED
VERSION: March 11, 2024
CONSULTANT: Paige Brokaw / NAT. RES. / (916) 319-2092 FN: 0003020
Date of Hearing: April 10, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 1866
Author:(Hart) – As Amended Ver:March 11, 2024
Policy Committee: | Natural Resources | Vote: | 7 - 3 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill eliminates the option for an idle well operator to pay idle well fees and requires the operator to, on or before July 1, 2025, file a plan with the State Oil and Gas Supervisor (supervisor) for the management and elimination of all idle wells.
In addition, this bill, among other things:
1) Requires the idle well operator to consider specified criteria when prioritizing idle wells for testing or plugging and abandonment, including the age of the well; any indication that the well potentially poses a threat to life, health, property, or natural resources; and wells that are located within 3,200 feet of a sensitive receptor.
2) Increases the percentage of idle wells that operators are required to eliminate annually, as follows: (a) from 4% of wells to 10% of wells for any operator with 250 or fewer idle wells; (b) from 5% of wells to 15% of wells for any operator with 251 to 1,250 idle wells; and (c) from 6% of wells to 20% of wells for any operator with more than 1,250 idle wells – until each operator has eliminated or plugged and abandoned 100% of its idle wells identified in its plan.
3) Provides that failure to file a plan for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned, and provides that an operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells the operator failed to plug in accordance with the minimum requirements of this bill.
FISCAL EFFECT:
The Geologic Energy Management Division (CalGEM) estimates approximately $1.6 million in lost annual idle well fee revenue (Hazardous and Idle-Deserted Well Abatement Fund (HIDWAF)). The division collected approximately $1.62 million in fees for fiscal year (FY) 2022-23 and anticipates collecting a similar amount in FY 2023-24. Current law requires idle well fee revenues be deposited into HIDWAF, which is continuously appropriated to support the plugging and decommissioning of hazardous or potentially hazardous wells and facilities. The bill’s repeal of idle well fees would eliminate this sole revenue source for the fund.
In addition, CalGEM estimates costs in year one of approximately $1.73 million followed by ongoing annual costs of approximately $1.64 million (Oil, Gas, and Geothermal Administrative (OGGA) Fund) for eight new positions to cover the workload of additional Idle Well Management Plan (IWMP) reviews, annual compliance audits, and enforcement actions, along with an increased number of permitting reviews and on-site witnessing requirements for specified work associated with plugging and abandonment projects.
COMMENTS:
1) Purpose. According to the author:
Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to expeditiously plug the estimated 40,000 idle oil wells in California within the next decade. The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work…This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.
2) Background.
a) Idle Wells. According to CalGEM’s August 2023 “Idle Well Program Legislative Report,” which covered the 2021 calendar year, there are over 38,000 known idle wells in the state, each of which will eventually come to the end of its life. If these wells are not properly plugged and abandoned, they can contaminate waterways and soil, serve as a source of climate and air pollution, and present physical hazards to people and wildlife. Idle wells can become orphan wells if they are deserted by insolvent operators. As of December 31, 2021, CalGEM had identified more than 5,300 wells as orphan or potentially orphan. CalGEM estimates the potential liability to the state for plugging and abandoning these 5,300 wells to be approximately $974 million.
b) Idle Well Fees and Management. State law requires the operator of any idle well to either pay a specified annual fee for each idle well or file an IWMP to manage or eliminate all the operator’s long-term idle wells (LTIW). According to CalGEM’s 2023 report, in 2021, there were 1,200 unique operators for the state’s 17,888 LTIWs, of which 1,149 (96%) chose not to file IWMPs and 1,066 (93%) failed to pay fees. Of all the covered operators required to comply with the IWMP program, 1,031 operators failed to either file an IWMP or pay the fees, leaving approximately $3.7 million in unpaid fees. According to the report, 613 LTIWs were eliminated in 2021.
According to the Assembly Natural Resources Committee analysis of this bill, on a per-well basis, the current idle well fee amounts fail to provide any incentive for operators to plug their wells, because the fees are so much lower than the average cost to fully remediate a single well site and associated infrastructure. This bill eliminates the option for a well operator to pay an idle well fee in lieu of filing an IWMP, increases the percentage of wells owners are required to plug in their IWMPs based on the number of wells an owner owns, and subjects an operator who fails to file an IWMP to additional civil penalties.
c) Funding. OGGA is funded by operator assessment fees, and expenditures from this fund are statutorily capped at $5 million per year. Since FY 2016-17, CalGEM has expended over $12.7 million from the OGGA Fund to depressurize 21 wells, plug and abandon 247 wells, and remediate 17 facilities, and has allocated an additional $1.9 million for contracts to plug and abandon facilities, pipelines, and appurtenances. The FY 2022-23 budget allocated an additional $100 million (General Fund and Greenhouse Gas Reduction Fund) to CalGEM over two years to plug and abandon well and to decommission facilities, and for site remediation. As part of the Governor’s FY 2024-25 budget, CalGEM is requesting $7.5 million in FY 2024-25 and $7.5 million in FY 2025-26 from the OGGA Fund as a match to the aforementioned $100 million appropriation.
As of March 1, 2024, HIDWAF had a fund balance of $25.5 million. In the last five FYs, beginning in FY 2018-19, CalGEM has spent a little over $4 million from HIDWAF to plug and abandon 46 wells clean up the sties of 21 wells, 5 facilities, and 208 well repairs.
In August 2022, California was awarded $25 million in initial grant funding from the federal government's orphan well program authorized in the Infrastructure Investment and Jobs Act. California is potentially eligible for an additional $140 million in future federal grants.
d) Support and Opposition. A large coalition of organizations writing in support of the bill contends that, as oil production continues to wind down in the state, the risk of stranded assets grows: “Should companies attempt to walk away from their financial obligations, the multibillion-dollar burden will fall yet again to the public, devastating state coffers.”
Writing in opposition, the California Independent Petroleum Association (CIPA) contends the state has several tools to ensure the state is not financially responsible for plugging and abandoning orphan wells, including utilizing existing bonding companies maintain and utilizing existing orphan well funds, which “currently enjoy record balances.” CIPA writes:
In the extremely unlikely event that all orphan well funds were drained by the State in plugging and abandoning deserted wells and all past operators in the chain of title were pursued yet the State still had a deficit, any remaining operator in the State would be on the hook for funding orphan well abandonment through the oil and gas assessment fee. CalGEM is a specially funded department that receives no General Fund allocations. Therefore, any budgetary shortcoming can be added to the oil and gas assessment operators pay annually to fund CalGEM.
Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081
Date of Hearing: March 19, 2024
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Isaac G. Bryan, Chair
ABPCA Bill Id:AB 1866 (
Author:Hart) – As Amended Ver:March 11, 2024
SUBJECT: Oil and gas: idle wells.
SUMMARY: Eliminates the option for a well operator to pay idle well fees and requires a well operator to submit an idle well management plan that meets specified requirements.
EXISTING LAW:
- Establishes the Division of Geologic Energy Management (CalGEM) in the Department of Conservation, under the direction of the State Oil and Gas Supervisor (supervisor), who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. (Public Resources Code (PRC) 3000, et seq.)
- Establishes the Oil, Gas, and Geothermal Administrative Fund (Administrative Fund) in the State Treasury for specified purposes, subject to appropriation by the Legislature, except as provided. (PRC 3110)
- Defines “idle well” as any well that for a period of 24 consecutive months has not either produced oil or natural gas, produced water to be used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection. (PRC 3008(d))
- Defines “long-term idle well” (LTIW) as any well that has been an idle well for eight or more years. (PRC 3008(e))
- Requires an operator of any idle well to either pay an annual fee for each idle well based on the length of time the well was idle or file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. (PRC 3206)
- Requires CalGEM to require each operator of an oil or gas well to submit a report to the supervisor that demonstrates the operator’s total liability to plug and abandon all wells and to decommission all attendant production facilities, including any needed site remediation. Requires CalGEM to develop criteria to be used by operators for estimating costs to plug and abandon wells and decommission attendant production facilities, including site remediation. (PRC 3205.7)
- Requires the supervisor to annually report to the Legislature with a list of all idle and LTIWs in the state; a list of orphan wells remaining, the estimated costs of abandoning those orphan wells, and a timeline for future orphan well abandonment with a specific schedule of goals; and, a list of all operators with plans filed with the supervisor for the management and elimination of all long-term idle wells and the status of those plans. (PRC 3206.3)
- Authorizes the supervisor or district deputy to 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.
- Requires the supervisor or district deputy to determine from credible evidence whether a well or production facility is deserted. (PRC 3237)
- Defines a “health protection zone” as the area within 3,200 feet of a sensitive receptor. Defines “sensitive receptor” as a residence, an education resource, a community resource center, including a youth center, a health care facility, including a hospital, retirement home, and nursing home, live-in housing, and any building housing a business that is open to the public. (PRC 3280)
THIS BILL:
- Strikes the option for a well operator to pay an idle well fee in lieu of filing an idle well management plan.
- Requires, on or before July 1, 2025, the operator of any idle well to file a plan with the supervisor to provide for the management and elimination of all idle wells. Requires the plan to:
- 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.
- Require the operator to consider all of the following when prioritizing idle wells for testing or plugging and abandonment, in addition to priorities identified by the supervisor in regulations:
- The age of the idle well.
- Any indication that the idle well potentially poses a threat to life, health, property, or natural resources.
- Wells that are located within 3,200 feet of a sensitive receptor, as defined in Section 3280.
- Include notes indicating the basis for prioritizing wells.
- Be subject to approval by the supervisor, who may prioritize the order in which idle wells are addressed.
- Requires the plan to be updated when there is a change in ownership or holdings of the company.
- Increases the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%; increase the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%; and, increase the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
- Repeals the requirement that all idle well fees received be deposited in the Hazardous and Idle-Deserted Well Abatement Fund.
- Updates the noncompliance provision to provide that failure to file a plan for any idle well is conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned, and provides that an operator who fails to comply with the plan is subject to an additional civil penalty equivalent to the average cost to plug a well, multiplied by the number of wells that the operator failed to plug in accordance with the minimum requirements.
- Provides that this bill does not prohibit a local agency from collecting a fee for regulation of wells.
- Provides that this bill does not apply to an idle well that is the subject of a court-approved settlement agreement entered into on or before December 31, 2024, between a local governmental entity and the operator of the idle well, if that settlement agreement imposes more stringent requirements relating to the management and elimination of idle wells than the requirements imposed by the amendments to this bill.
- Makes technical and conforming changes.
- Provides that no reimbursement is required by this act pursuant to the California Constitution.
FISCAL EFFECT: Unknown
COMMENTS:
- Author’s statement:
Assembly Bill 1866 addresses the urgent climate and public health crisis of idle oil wells. The bill requires oil operators to develop a comprehensive plan to expeditiously plug the estimated 40,000 idle oil wells in California within the next decade.
The bill also requires operators to prioritize plugging wells within 3,200 feet of where communities live, play and work.
AB 1866 is necessary to solve the idle well crisis in California. This proactive solution will protect taxpayers, create thousands of jobs, and safeguard communities.
- Oil and gas in California. Commercial oil production started in the middle of the 19th century. In 1929, at the peak of oil development in the Los Angeles Basin, California accounted for more than 22% of total world oil production. California’s oil production reached an all-time high of almost 400 million barrels in 1985 and has generally declined since then. Despite that decline, California remains the third largest oil and gas producing state, and as of 2022, produced 3% of the crude oil of the nation. That same year, California supplied about 26% of all oil going into the state’s 17 oil refineries.
- Idle wells. An idle well is a well that has not been used for two years or more and has not yet been properly plugged and abandoned (sealed and closed). Plugging and abandonment involves permanently sealing the well with a cement plug to isolate the hydrocarbon-bearing formation from water sources and prevent leakage to the surface. If a well is not properly sealed and closed, it may provide a pathway for hydrocarbons or other contaminants to migrate into drinking water or to the surface, and can leak pollutants into nearby communities.
According to CalGEM, there are more than 37,000 known idle wells in California, all of which will eventually come to their end of life, and their owner/operator will be required to plug the wells with cement and decommission the production facilities, restoring the well site to its prior condition. Idle wells can become orphan wells if they are deserted by insolvent operators. When this happens, there is the risk of shifting responsibilities and costs for decommissioning the wells to the state. As of December 31, 2021, CalGEM had identified more than 5,300 wells as orphan or potentially orphan.
- Financial impact of orphaned wells. The cost to plug a well is highly variable depending on well and facility condition, size, location, and other factors, but a recent CalGEM analysis found the average cost to be about $95,000 per well.
Similarly, a 2021 study published by Resources for the Future analyzed 19,500 wells and expounded on the variability of well abandonment costs. The researchers found that the costs of plugging wells goes up with the age of the well itself. Compared with wells that were more than 60 years old when decommissioned, wells aged 40 to 60 years old were 9% less expensive, and wells aged from 0 to 40 were roughly 20% less expensive to plug. The study also noted that each additional 1,000 feet of well depth increases costs by 20%.
These costs, however, don’t represent the full costs to remediate the supporting area of the well. According to CalGEM’s cost estimate report required by, SB 551 (Jackson), Chapter 774, Statutes of 2019, from the 100 operators evaluated, the average cost per well was calculated to be $93,427 for plugging and abandonment; $26,994 for production facility decommissioning; $29,506 for well site remediation; and, $15,684 for production facility site remediation, resulting in a total liability per well of $165,611.
In the last five years, CalGEM has spent, on average, $2 million annually from the Administrative Fund and the Hazardous and Idle‑Deserted Well Abatement Fund to remediate roughly 11 deserted wells per year.
In fiscal years 2022/2023 and 2023/2024, $50 million in General Fund dollars – taxpayer dollars – are appropriated to CalGEM to plug and abandon orphan wells – for a total of $100 million dollars over the two years.
In August 2022, California was awarded $25 million in initial grant funding from the federal government's orphan well program authorized in the bipartisan Infrastructure Investment and Jobs Act. California is potentially eligible for an additional $140 million in future grants. Again, these are taxpayer dollars that would be used to plug and abandon a well financially deserted by its owner.
Operators are required to file indemnity bonds when drilling, reworking, or acquiring a well, to support the cost of plugging a well should it be deserted; however, the minimum bond amounts required by statute are generally insufficient to fully cover the costs of plugging and abandonment of the well and decommissioning the associated facilities. Recognizing this may increase the potential state liability associated with orphan and potentially orphan wells and associated facilities, AB 1057 (Limon), Chapter 771, Statutes of 2019, authorizes CalGEM to evaluate the risk of the operator deserting its well or wells and the potential threats the operator’s well or wells pose to life, health, property, and natural resources, and based on that evaluation, undertake a process to require additional financial security if deemed necessary. The additional security required by CalGEM must be based on CalGEM’s estimation of the reasonable costs of properly plugging and abandoning all the operator’s wells and decommissioning any attendant production facilities, not to exceed $30 million. CalGEM has begun to develop its process for evaluating risks and its method for estimating costs.
Accounting for rising costs and prevailing wage, the potential liability to the state for plugging and abandoning the known orphan 5,300 wells is estimated at approximately $974 million.
Using state and industry data from April 2022, Carbon Tracker estimates the total cost for plugging all current unplugged wells and related infrastructure such as separation vessels, storage tanks, pipelines, pumps, and compressors at $13.2 billion in direct plugging and remediation costs, and $21.5 billion once “known but unquantified costs and inflation” are factored in.
- Idle Well Management Plans. Because of the risk and potential liability posed by idle wells, AB 2729 (Williams), Chapter 272, Statutes of 2016, was enacted to discourage operators from leaving their wells in an idle state by increasing bonding requirements, requiring operators to maintain bonds for the life of the well, increasing idle well fees, revising the parameters for the use of Idle Well Management Plans (IWMP). Under the program, well owners can pay an annual fee or submit an IWMP.
According to CalGEM’s August 2023 annual IWMP report for the 2021 calendar year, there were 38,759 idle wells, of which 17,888 met the definition of LTIW.
Of those idle wells, 57 operators submitted IWMPs and CalGEM approved 51 of those plans. Forty-nine of the 51 operators were found to be in compliance with the terms of their approved IWMPs at the conclusion of CalGEM’s annual review.
Based upon the terms of the approved IWMPs, operators were expected to eliminate a minimum of 485 long-term idle wells. Operators eliminated 464 long-term idle wells, and including credits for eliminating more long-term idle wells than were required by an operator’s IWMP, CalGEM considers the total long-term idle wells that were effectively eliminated in 2021 to be 613.
There are 1,200 unique operators for the state’s 17,888 LTIWs. A total of 1,149 operators failed to file IWMPs (96%). The report also identifies 1,066 (93%) LTIWs that have not paid their fees. This included a total of 1,066 operators managing 3,262 wells, which constituted more than 88% of the operators who have LTIW obligations.
Aside from the eliminated wells, a total of 3,271 wells no longer met the definition of an idle well and 2,703 wells changed status from idle to plugged, as they were plugged and sealed. The other 568 wells changed status from idle to active by maintaining production of oil or natural gas, maintaining production of water used in production stimulation, or being used for enhanced oil recovery, reservoir pressure management, or injection for six continuous months.
- Who’s paying the fees instead of doing the plans? CalGEM’s IWMP report cites that in 2021, 162 operators paid $4.9 million in idle well fees, which were deposited into the Hazardous Idle Deserted Well Abatement Fund for CalGEM to use to cover the cost of orphan wells. The balance of that fund, as of December 2021, was just more than $8 million.
Of all the covered operators required to comply with the IWMP program, 1,031 operators failed to either file an IWMP or pay the fees, leaving $3,656,250 in unpaid fees.
Under current law, well owners can pay fees ranging from $150 to $1,500. A review of CalGEM’s programmatic data shows an overwhelming number of cases where operators are assessed only the lowest fees. As implemented, the statute enables operators for the most part to opt to pay either the small $150 annual fee per well for non-long-term idle wells on the books for three to eight years or no annual fee for those on the books for less than three years. The highest rate of $1,500 per year is only imposed for long-term idle wells that sit idle for eight years or more. On a per-well basis, these annual rates fail to provide any incentive for operators to plug the wells, because the fees are so much lower than the average cost to fully remediate a single well site and associated infrastructure.
Under current law, failure to file the fee for any well is considered conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned.
Under this bill, an operator who fails to file an IWMP will be subject to an additional civil penalty equivalent to the average cost to plug a well multiplied by the number of wells that the operator failed to plug in accordance with the minimum requirements.
- Increasing the rate to eliminate idle wells. The bill would increase the amount of wells owners would be required to plug in their IWMPs based on the number of wells an owner owns.
In 2021, there were roughly 17,888 LTIWs, which suggests that at the current rate, and with no changes to regulations or to the rate at which operators submit IWMPs in lieu of idle well fees, the timeframe for operators to plug and abandon their long-term idle wells in California could take decades or even more than a century for some operators with more than 250 wells.
AB 1866 would require the amount of idle wells that operators with 250 or fewer idle wells are required to eliminate annually from 4% to 10%; increase the amount of idle wells that operators with 251 to 1,250 idle wells are required to eliminate annually from 5% to 15%; and, increase the amount of idle wells that operators with more than 1,250 idle wells are required to eliminate annually from 6% to 20%.
According to Sierra Club, “Since the [IWMP] began, the total number of idle wells in California has grown from 29,292 in 2018 to 38,759 in 2021, outpacing the number of wells being plugged and abandoned.” This is likely due to the decline in the oil industry and the reduced oil and gas capacity, yet underscores the need to have more aggressive elimination requirements.
Requiring IWMPs and increasing the rate at which wells are sealed is intended to expedite the goal to reduce idle wells.
- Prioritizing wells impacting communities. The California Oil and Gas Public Health Rulemaking Scientific Advisory Panel (Panel), an advisory body to CalGEM, has noted that close proximity to oil and gas development causes significant adverse health effects, including poor birth outcomes, asthma, and reduced lung function. Hazardous air pollutants that are known to be emitted from oil and gas development sites include benzene, toluene, ethylbenzene, xylenes, hexane and formaldehyde – many of which are known, probable, or possible carcinogens and/or teratogens and which have other adverse health effects.
FracTrackerAlliance, a non-profit organization that provides data and analyses to help better understand the harms posed by hydrocarbon extraction, reports approximately 2.7 million Californians live within 3,200 feet of an oil well. These individuals experience higher concentrations of “health-damaging air pollutants” and “measurably higher” exposure to noise and vibration.
Of CalGEM’s list of 5,300 orphan wells, 95% of the wells on that list were “potentially deserted wells” where the owner/operator did not pay idle well fees over a period of time. Many of these wells are located in urban areas throughout the state, and some are labeled as “critical wells,” which means a well within 300 feet of a building and an airport runway and 100 feet of a street or highway, body of water, and public recreational facility, and a wildlife preserve.
SB 1137 (Gonzales), Chapter 365, Statutes of 2022, was enacted to prohibit permits for most new oil and gas wells being drilled in setback zones (“health protection zones”) – areas within 3,200 feet of a sensitive receptor, which includes schools, health care centers, businesses open to the public, and more.
AB 1866 bill requires an operator to prioritize wells for testing and plugging and abandonment that are located within 3,200 feet of a sensitive receptor, as defined by SB 1137.
- Who can afford to plug and abandon idle wells? Exxon posted full-year net income of $36 billion, down from $55.7 billion the previous year, but otherwise its biggest profit since 2012. Chevron’s net income of $21.4 billion was down from $35.5 billion the previous year, but otherwise its strongest since 2013.
The three of the biggest profit-earning oil companies in California, Chevron, Aera Energy and California Resources Corporation, hold 68% of idle wells in California. To do a full remediation of their idle wells, it would cost them 3.4% of their combined profits for 2022. Sierra Club opines that, “Total profits for the companies directly responsible for the majority of the state’s idle wells in 2022 were greater than 14 times higher than the cost to plug orphan and idle wells in the state ($10 billion), and more than six times higher than the amount needed to plug and remediate the state’s entire inventory of unplugged wells at $22.9 billion.”
The oil majors, however, have the necessary resources to fulfill their financial and environmental remediation obligations. It is the financially smaller and less diversified oil well owner that runs the greatest risk to abandoning a well.
- Culver City settlement. On December 7, 2023, Culver City and Sentinel Peak Resources California LLC executed a Settlement Agreement to resolve Sentinel’s potential legal claims relating to the City’s Oil Termination Ordinance. Under the agreement, Sentinel must plug and abandon a minimum of 15 wells by December 31, 2027, at a rate of a minimum of three wells per calendar year from 2023 to 2027.
The bill contains language to assure the requirements of this bill do not interfere with that agreement if the terms of that agreement are more stringent than the requirements of this bill.
- Relevant legislation:
AB 1167 (Carillo), Chapter 359, Statutes of 2023, requires a person who acquires the right to operate a well or production facility to file with CalGEM a bond for the well or production facility in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment and site restoration.
SB 1137 (Gonzalez), Chapter 365, Statutes of 2022, establishes health protection zones that are 3,200 feet in all directions from a sensitive receptor; prohibits CalGEM from approving the drilling of new oil or gas wells or the reworking of existing oil or gas wells within a health protection zone with certain exceptions, such as to plug-and-abandon a well; and, establishes additional monitoring and other requirements for existing oil and gas operations in a health protection zone, among other things.
SB 84 (Hurtado), Chapter 758, Statutes of 2021, requires CalGEM to identify wells by the American Petroleum Institute identification number that are registered to an operator and have met the definition of an idle well for three years where neither the annual fee has been paid nor is the well part of a valid idle well management plan.
SB 47 (Limón), Chapter 238, Statutes of 2021, increased the annual expenditure limit from the Oil, Gas and Geothermal Administration Fund, the principal source of funding for the Geologic Energy Management Division from a production fee assessed on oil and gas production in the state, for the plugging and abandonment of hazardous or idle-deserted wells to $5 million.
SB 551 (Jackson), Chapter 774, Statutes of 2019, requires oil and gas well operators to provide estimates of the cost to plug and abandon wells and decommission attendant oil and gas production facilities, and requires [CalGEM] to establish criteria for these estimates and perform certain related inspections, among other things
SB 724 (Lara), Chapter 652, Statutes of 2017, authorized the Division of Oil, Gas, and Geothermal Resources (now CalGEM) to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities.
AB 2729 (Williams), Chapter 272, Statutes of 2016, substantially revised and reformed the state’s idle well requirements with certain other accompanying revisions to the current law governing oil and gas operations.
REGISTERED SUPPORT / OPPOSITION:
Support
Center for Biological Diversity
Climate Reality Project, Los Angeles Chapter
Climate Reality San Fernando Valley, CA Chapter
Los Angeles County Sanitation Districts
Natural Resources Defense Council
Sustainable Rossmoor
Opposition
California Independent Petroleum Association
Western States Petroleum Association
Analysis Prepared by: Paige Brokaw / NAT. RES. /
Discussed in Hearing
4MIN
Assembly Floor
7MIN
Senate Floor
2MIN
Senate Standing Committee on Appropriations
42MIN
Senate Standing Committee on Natural Resources and Water
3MIN
Assembly Floor
19MIN
Assembly Standing Committee on Natural Resources
Bill Author
