Bill Text: CA AB1866 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Oil and gas: idle wells.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2024-09-25 - Chaptered by Secretary of State - Chapter 548, Statutes of 2024. [AB1866 Detail]

Download: California-2023-AB1866-Amended.html

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Amended  IN  Senate  August 23, 2024

Amended  IN  Senate  June 12, 2024

Amended  IN  Assembly  March 11, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 1866

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Introduced by Assembly Member Hart
(Principal coauthor: Senator Smallwood-Cuevas)
(Coauthor: Assembly Member Friedman)
(Coauthor: Senator Limón)

January 18, 2024

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An act to amend Sections 3206 and 3237 3206.3 of the Public Resources Code, relating to oil and gas. gas, and making an appropriation therefor.

LEGISLATIVE COUNSEL'S DIGEST

AB 1866, as amended, Hart. Oil and gas: idle wells.

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.

Digest Key

Vote: MAJORITY   Appropriation: NOYES   Fiscal Committee: YES   Local Program: YES  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 3206 of the Public Resources Code is amended to read:

3206.

 (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 division’s 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 supervisor’s rejection of a plan and plan amendments and the supervisor’s determination of the operator’s failure to comply with a plan. If the supervisor’s determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisor’s 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 2023–24 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 well’s 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 operator’s 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 division’s internet website.

(d)(1)Notwithstanding any other provision of this chapter, the supervisor or district deputy, at the supervisor’s or district deputy’s 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 supervisor’s or district deputy’s determination of an operator’s 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 division’s 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 division’s 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 division’s 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 division’s internet website.

(e) The division shall continue to regularly provide updated information describing idle and long-term idle wells on the division’s internet website.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B 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 XIII B of the California Constitution.