Bill Text: CA SB665 | 2013-2014 | Regular Session | Amended

California Senate Bill 665 (Prior Session Legislation)

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

Bill Title: Oil and gas: drilling: indemnity bonds: wells.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-09-20 - Chaptered by Secretary of State. Chapter 315, Statutes of 2013. [SB665 Detail]

Download: California-2013-SB665-Amended.html

BILL NUMBER: SB 665	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  SEPTEMBER 4, 2013
	AMENDED IN ASSEMBLY  AUGUST 30, 2013
	AMENDED IN ASSEMBLY  AUGUST 5, 2013
	AMENDED IN ASSEMBLY  JUNE 24, 2013
	AMENDED IN SENATE  APRIL 30, 2013
	AMENDED IN SENATE  APRIL 16, 2013

INTRODUCED BY   Senator Wolk

                        FEBRUARY 22, 2013

   An act to amend Sections 3204, 3205, 3205.1, and 3205.2 of the
Public Resources Code, relating to oil and gas.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 665, as amended, Wolk. Oil and gas: drilling: wells.
   (1) Existing law requires an operator of an oil or gas well, or a
well located on submerged lands under ocean waters, who engages in
the drilling, redrilling, deepening, or in any operation altering the
casing, of any well to file with the State Oil and Gas Supervisor an
indemnity bond in an amount based on the depth of the well or a
blanket indemnity bond in a specified amount, but permits the
operator, with the approval of the supervisor, to make certain
deposits in lieu of the bond.
   This bill would instead require the amount of the indemnity bond
to be $25,000 for each well that is less than 10,000 feet deep, and
$40,000 for each well that is 10,000 or more feet deep. The bill
would also require the bond to be filed with the supervisor at the
time of the filing of the notice of intention to perform work on a
well, as specified. The bill would authorize an operator operating 20
or more wells at any time to file a blanket indemnity bond to cover
the operation of all the operator's wells, in lieu of an individual
indemnity bond for each well, in an amount of  either
$2,000,000,   $400,000,  which would not include
bonds or fees required for idled wells,  or $5,000,000,
  $200,000, for an operator having 50 or fewer wells in
the state, which wo   uld not include bonds or fees required
for idled wells, or $2,000,000,  which would include bonds or
fees required for idled wells. The bill would increase the amount of
the blanket indemnity bond required to be filed by an operator
operating one or more wells located on submerged lands under ocean
waters to $1,000,000.
   (2) Existing law requires any person who engages in the operation
of a class II commercial wastewater disposal well to file an
indemnity bond with the supervisor for $50,000.
   This bill would raise the amount of the required bond to $100,000.

   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 3204 of the Public Resources Code is amended to
read:
   3204.  (a) An operator who, on or after January 1, 2014, engages
in the drilling, redrilling, deepening, or in any operation
permanently altering the casing, of a well shall file with the
supervisor an individual indemnity bond for each well so drilled,
redrilled, deepened, or permanently altered, in the following amount:

   (1) Twenty-five thousand dollars ($25,000) for each well that is
less than 10,000 feet deep.
   (2) Forty thousand dollars ($40,000) for each well that is 10,000
or more feet deep.
   (b) The bond shall be filed with the supervisor at the time of the
filing of the notice of intention to perform work on the well, as
provided in Section 3203. The bond shall be executed by the operator,
as principal, and by an authorized surety company, as surety, on the
condition that the principal named in the bond shall faithfully
comply with all the provisions of this chapter, in drilling,
redrilling, deepening, or permanently altering the casing in any well
or wells covered by the bond, and shall secure the state against all
losses, charges, and expenses incurred by it to obtain the
compliance by the principal named in the bond.
   (c) The conditions of the bond shall be stated in substantially
the following language: "If the ____, the above bounden principal,
shall well and truly comply with all the provisions of Division 3
(commencing with Section 3000) of the Public Resources Code and shall
obey all lawful orders of the State Oil and Gas Supervisor or the
district deputy or deputies, subject to subsequent appeal as provided
in that division, and shall pay all charges, costs, and expenses
incurred by the supervisor or the district deputy or deputies in
respect of the well or wells or the property or properties of the
principal, or assessed against the well or wells or the property or
properties of the principal, in pursuance of the provisions of that
division, then this obligation shall be void; otherwise, it shall
remain in full force and effect."
  SEC. 2.  Section 3205 of the Public Resources Code is amended to
read:
   3205.   (a)    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, may file with
the supervisor one blanket indemnity bond to cover all the operations
in any of its wells in the state in lieu of an individual indemnity
bond for each operation as required by Section 3204. The bond shall
be executed by the operator, as principal, and by an authorized
surety company, as surety, and shall be in substantially the same
language and upon the same conditions as provided in Section 3204,
except as to the difference in the amount. The bond shall be provided
in one of the following amounts, as applicable: 
   (a) 
    (1)  The sum of  two million dollars
($2,000,000),   four hundred thousand dollars
($400,000),  which does not include the bond or fee required in
Section 3206.  A blanket cash bond or blanket surety bond
provided prior to January 1, 2014, shall be increased to comply with
this subdivision on or before January 1, 2016.  
   (2) The sum of two hundred thousand dollars ($200,000), which does
not include the bond or fee required in Section 3206, for any
operator having 50 or fewer wells in the state, exclusive of properly
abandoned wells.  
   (b) 
    (3)  The sum of  five   two 
million dollars  ($5,000,000),   ($2,000,000),
 which does include the bond or fee required in Section 3206.

   (b) A blanket cash bond or blanket surety bond provided prior to
January 1, 2014, shall be increased to comply with this section on or
before January 1, 2016. 
  SEC. 3.  Section 3205.1 of the Public Resources Code is amended to
read:
   3205.1.  (a) Notwithstanding Sections 3204 and 3205, a person who
engages in the drilling, redrilling, deepening, or in any operation
permanently altering the casing, of one or more wells located on
submerged lands under ocean waters within the jurisdiction of this
state, shall file with the supervisor a blanket indemnity bond for
one million dollars ($1,000,000) to cover all his or her operations
in drilling, redrilling, deepening, or permanently altering the
casing in any of his or her wells located on those submerged lands.
The bond shall be executed by the person, as principal, and by an
authorized surety company, as surety, and the conditions of the bond
shall be the same as the conditions stated in Section 3204, except
for the difference in the amount.
   (b) In addition to providing the bond required by subdivision (a),
a person who operates one or more wells that are located on tide or
submerged lands within the jurisdiction of this state shall provide
an additional amount of security acceptable to the supervisor,
covering the full costs of plugging and abandoning all of the
operator's wells. The supervisor shall determine the amount of the
security required of each operator, based on his or her determination
of the reasonable costs of that plugging and abandonment. The
supervisor may not adjust the amount of security required of each
operator more frequently than once every three years, to reflect
changes in those costs. An operator may self-insure this security
obligation if the supervisor, at his or her discretion, determines
that the operator has sufficient financial resources to plug and
abandon the wells for which the operator is responsible. The security
shall remain in effect until all wells are plugged and abandoned in
accordance with Section 3208, but the supervisor shall reduce the
amount of the security required of an operator to reflect reduced
obligations as wells are plugged and abandoned.
   (c) If the state lease or other agreement that sets forth
obligations or performance requirements under the lease provides
security that is equal to, or greater than, the total of the
additional security required pursuant to subdivision (b), plus all
other liabilities under the lease or other agreement, the supervisor
shall not require the additional security.
  SEC. 4.  Section 3205.2 of the Public Resources Code is amended to
read:
   3205.2.  (a) Notwithstanding Section 3204, any person who engages
in the operation of a class II commercial wastewater disposal well,
as defined in subdivision (d), shall file an indemnity bond with the
supervisor for one hundred thousand dollars ($100,000) for each well
so used. The bond shall cover all operations of drilling, redrilling,
deepening, altering casing, maintaining, or abandoning the well and
attendant facilities. The bond shall be executed by the person as the
principal, and by an authorized surety company as the surety, and,
except for differences in the amount, shall be in substantially the
same language and upon the same conditions as provided in Section
3204.
   (b) A blanket bond submitted under subdivision (a)  or (b)
 of Section 3205 may be used in lieu of the bond required
in subdivision (a), except that the termination and cancellation
shall be in accordance with subdivision (c) of this section.
   (c) Notwithstanding Section 3207, any bond issued in compliance
with this section may be terminated and canceled and the surety
relieved of all obligations thereunder when the well is properly
abandoned or another valid bond has been substituted therefor.
   (d) A class II commercial wastewater disposal well is a well that
is used to dispose of oilfield wastewater for a fee and that is
regulated by the division pursuant to this chapter and Subpart F
(commencing with Section 147.250) of Part 147 of Title 40 of the Code
of Federal Regulations.