AB 1057

Bill Subjects

Abstract

(1) Existing law establishes the Division of Oil, Gas, and Geothermal Resources within the Department of Conservation. Under existing law, the division regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. This bill would change the name of the Division of Oil, Gas, and Geothermal Resources within the Department of Conservation to the Geologic Energy Management Division and make conforming changes. This bill would specify that the purposes of provisions relating to oil and gas conservation include protecting public health and safety and environmental quality, including 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. The bill would require the State Oil and Gas Supervisor to coordinate with other state agencies and certain entities in furtherance of the goals of the California Global Warming Solutions Act of 2006 and to help support the state's clean energy goals. (2) Existing law requires an operator who engages in the drilling, redrilling, deepening, or in any operation permanently altering the casing, of a well, or who acquires a well, to file with the supervisor an individual indemnity bond for each well so drilled, redrilled, deepened, permanently altered, or acquired in specified amounts depending on the depth of the well. Existing law authorizes an operator who engages in the drilling, redrilling, deepening, or in any operation permanently altering the casing, of 20 or more wells at any time to file with the supervisor one blanket indemnity bond to cover all the operations in any of its wells in the state, in a specified amount depending on the total number of wells in the state, in lieu of the above-described requirement for an individual indemnity bond for each operation. Existing law provides that a person who fails to comply with these and other specific laws relating to the regulation of oil or gas operations is guilty of a misdemeanor. This bill would authorize the division to require an operator filing an individual or blanket indemnity bond, as applicable, to provide an additional amount of security acceptable to the division based on the division's evaluation of the risk that the operator will desert its well or wells and the potential threats the operator's well or wells pose to life, health, property, and natural resources, and would prohibit that amount from exceeding the lesser of the division's estimation of the reasonable costs of properly plugging and abandoning all of the operator's wells and decommissioning any attendant production facilities, or $30,000,000. The bill would require the division, when making an estimation of the reasonable costs of properly plugging and abandoning an operator's well or wells and decommissioning any attendant production facilities, to provide the operator with an opportunity to submit the operator's own estimation and to consider specified factors. The bill would require the division, in evaluating the risk that the operator will desert its well or wells and the potential threats the operator's well or wells pose to life, health, property, and natural resources, to consider specified factors. The bill would require the division to provide the operator with notice of the requirement to provide additional security, as specified, and would require the operator to provide the additional security within 180 days of service of notice. The bill would require the division to increase or decrease the amount of additional security required under these provisions to account for changed circumstances or new information. The bill would authorize the operator to, at any time, petition the division to reevaluate the division's evaluation of the risk or cost estimates, and would require the division to respond to the petition in writing within 60 days of receipt of the petition. The bill would require an operator to provide the additional security using one of specified methods, including, among others, an indemnity bond or an equally effective means of financial assurance approved by the division. The bill would authorize the division to approve self-insurance as an equally effective means of financial assurance only if certain conditions are satisfied, and would require the division to maintain as confidential any financial information received from an operator pursuant to these provisions that is not otherwise publicly available. The bill would authorize any 2 or more operators to elect to enter into a liability sharing agreement and would require the division to treat all operators that participate in the liability sharing agreement as a single operator when requiring additional security under these provisions, as provided. Because a violation of these provisions relating to providing an additional amount of security would be a crime, the bill would impose a state-mandated local program. (3) Existing law requires the operator of a well or production facility to notify the supervisor or the district deputy, in writing, in the form that the supervisor or the district deputy may direct, of the sale, assignment, transfer, conveyance, exchange, or other disposition of the well or production facility by the operator of the well or production facility within a prescribed time period and requires that notice to contain specified information. This bill would require, upon request of the supervisor, a former operator to provide certain additional information about the disposition to the division, as specified. Because a violation of these provisions relating to providing additional information would be a crime, the bill would impose a state-mandated local program. Existing law requires a person who acquires the right to operate a well or production facility, whether by purchase, transfer, assignment, conveyance, exchange, or other disposition, to notify the supervisor or the district deputy, in writing, of the person's operation within a prescribed time period and requires that person to provide specified material. This bill would require, upon request of the supervisor, a new operator to provide certain additional information about the disposition to the division, as specified. The bill would require the new operator, after notice of operations and until another person acquires the well or production facility, to notify the supervisor, in writing and by July 1 every other year, whether any of the rights have changed, and would require the new operator to also notify the supervisor within 30 days of any quitclaim of a well or production facility. Because a violation of these provisions relating to providing additional information and notice would be a crime, the bill would impose a state-mandated local program. (4) Existing law provides that a person who violates certain requirements related to the regulation of oil and gas is subject to specified civil penalties. Existing law authorizes the supervisor to allow a supplemental environmental project in lieu of a portion of the civil penalty amount. Existing law, until January 1, 2021, requires the portion of the civil penalty amount that is not allocated for a supplemental environmental project be deposited in the Oil and Gas Environmental Remediation Account and, after January 1, 2021, in the Oil, Gas, and Geothermal Administrative Fund. Existing law, until January 1, 2021, establishes that account in the Oil, Gas, and Geothermal Administrative Fund to be administered and managed by the division, and requires that the moneys in the account be used, upon appropriation by the Legislature, to plug and abandon oil and gas wells, decommission attendant facilities, or otherwise remediate sites that the supervisor determines could pose a danger to life, health, water quality, wildlife, or natural resources if there is no operator determined by the supervisor to be responsible for remediation or who is able to respond. This bill would indefinitely establish the Oil and Gas Environmental Remediation Account as well as the requirements of how the moneys in the account are to be used, upon appropriation by the Legislature. The bill would indefinitely require the portion of the civil penalty amount that is not allocated for a supplemental environmental project to be deposited in the Oil and Gas Environmental Remediation Account. (5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.