Bill Text: CA SB940 | 2025-2026 | Regular Session | Amended
Bill Title: Geologic Energy Management Division: New Technology Program: oil and gas wells: geothermal wells.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced) 2026-05-14 - May 14 hearing: Held in committee and under submission. [SB940 Detail]
Download: California-2025-SB940-Amended.html
|
Amended
IN
Senate
April 23, 2026 |
CALIFORNIA LEGISLATURE—
2025–2026 REGULAR SESSION
Senate Bill
No. 940
| Introduced by Senator Grove |
January 29, 2026 |
An act to amend Section 3701 of the Public Resources Code, relating to geothermal resources. add Sections 3403.7 and 3724.7 to, and to add Chapter 8 (commencing with Section 3870) to Division 3 of, the Public Resources Code, relating to geothermal resources.
LEGISLATIVE COUNSEL'S DIGEST
SB 940, as amended, Grove.
Geothermal resources: oil and gas reservoirs. Geologic Energy Management Division: New Technology Program: oil and gas wells: geothermal wells.
Existing law vests the State Oil and Gas Supervisor with regulatory authority over wells for the discovery of geothermal resources or wells on land producing geothermal resources. Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells in the state and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production within an oil and gas field, so as to prevent damage to life, health, property, and natural resources. Under existing law, a person who fails to comply with requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
Existing law imposes, among other things, an annual charge upon each person operating or owning an interest in an oil or gas well, with respect to the production of the well, which charge is payable to the Treasurer for deposit into the Oil, Gas, and Geothermal Administrative Fund. Existing law requires funds from those charges to be used exclusively for the support and maintenance of the Department of Conservation, which is charged with the supervision of oil and gas operations, for the State Water Resources Control Board and the regional water quality control boards for their activities related to oil and gas operations that may affect water resources, and for the support of the State Air Resources Board and the Office of Environmental Health Hazard Assessment for their activities related to oil and gas operations that may affect air quality, public health, or public safety. Existing law imposes annual limits on expenditures by the division from the Oil, Gas, and
Geothermal Administrative Fund, as provided.
This bill would establish the New Technology Program within the division to facilitate the evaluation of repurposing oil and gas wells or geothermal wells for renewable energy storage or generation purposes. The bill would require the supervisor to approve or deny project proposals from operators to repurpose oil and gas wells or geothermal wells for energy storage or renewable energy generation, including synthetic geothermal resources, as provided. The bill would require, upon approval of a project by the supervisor, the oil and gas wells or geothermal wells that are part of the project to be designated as experimental wells, as defined, for the duration of the project. The bill would impose an annual charge on operators of experimental wells to defray the regulatory costs incurred by the state, as provided. The
bill would require the proceeds of the annual charge to be deposited into the Oil, Gas, and Geothermal Administrative Fund. The bill would require the division to, on or before an unspecified date, and annually thereafter, provide a report to the applicable legislative policy and budget committees on program activities for the preceding calendar year, highlighting accomplishments and including recommendations for statutory and regulatory changes to more readily achieve program goals.
Existing law vests the State Oil and Gas Supervisor with regulatory authority over wells for the discovery of geothermal resources or wells on land producing geothermal resources. Existing law defines “geothermal resources” for purposes of the supervisor’s authority. Under existing law, an owner or operator or employee of the owner or operator who refuses to permit the supervisor to the supervisor’s agent to inspect a geothermal resources well or who violation regulations related to geothermal resources under the jurisdiction of the supervisor is guilty of a crime.
This bill would expand the definition of “geothermal resources” to include oil or gas reservoirs that are used principally for thermal energy storage or geothermal energy generation. Because the bill would expand the scope of a crime, this bill would impose a state-mandated local
program.
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: NO Fiscal Committee: YES Local Program:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
The Legislature finds and declares all of the following:(a) It is imperative that all potential technologies to generate or store renewable energy be evaluated.
(b) Federal and state law and regulations for the development of oil and gas or geothermal resources were largely written decades ago, and do not anticipate that an oil and gas well or geothermal well will be used for any other purpose.
(c) The repurposing of
existing oil and gas or geothermal wells for new energy generation or storage uses is of increasing interest. Multiple ideas are being explored by both academia and the industry. Well repurposing, however, is held back by outdated laws and regulations.
(d) This is a missed opportunity. New uses of these existing wells, reservoirs, and associated infrastructure, if they prove out, have the potential to help reduce the cost of energy for Californians.
(e) Providing the framework to the Geologic Energy Management Division to authorize the evaluation of these new uses of wells under its jurisdiction is a much needed step.
SEC. 2.
Section 3403.7 is added to the Public Resources Code, to read:3403.7.
(a) To support the regulatory efforts of the supervisor, there shall be imposed an annual charge, that shall be payable to the Treasurer, on an operator of an experimental well, as defined in Section 3870, that is an oil and gas well, in order to defray the regulatory costs incurred by the state in maintaining surveillance of the well, ensuring that testing is conducted properly, and ensuring that no damage occurs to the environment by reason of conversion.(b) An experimental well operator, as described in subdivision (a), shall pay a proportionate share of the total regulatory costs for each fiscal year based on the operator’s number of experimental wells. For each experimental well, the portion owed by the operator shall be computed by
dividing the statewide sum of reasonably incurred regulatory costs across all experimental wells by the number of experimental wells.
SEC. 3.
Section 3724.7 is added to the Public Resources Code, to read:3724.7.
(a) To support the regulatory efforts of the supervisor, there shall be imposed an annual charge, that shall be payable to the Treasurer, on an operator of an experimental well, as defined in Section 3870, that is a geothermal well, in order to defray the regulatory costs incurred by the state in maintaining surveillance of the well, ensuring that testing is conducted properly, and ensuring that no damage occurs to the environment by reason of conversion.(b) An experimental well operator, as described in subdivision (a), shall pay a proportionate share of the total regulatory costs for each fiscal year based on the operator’s number of experimental wells. For each experimental well, the portion owed by the operator shall be computed by
dividing the statewide sum of reasonably incurred regulatory costs across all experimental wells by the number of experimental wells.
(c) Proceeds from the annual charge shall be deposited in the Oil, Gas, and Geothermal Administrative Fund, established pursuant to Section 3110.
SEC. 4.
Chapter 8 (commencing with Section 3870) is added to Division 3 of the Public Resources Code, to read:CHAPTER 8. New Technology Program
3870.
For purposes of this chapter, the following definitions apply:(a) “Experimental well” means an existing oil and gas well or geothermal well used for renewable energy storage or generation purposes pursuant to this chapter.
(b) “Geothermal well” means a well, as defined in Section 3703.
(c) “Oil and gas well” means a well, as defined in Section 3008.
(d) “Program” means the New Technology Program established pursuant to Section 3871.
(e) “Synthetic geothermal resources” means an oil or gas reservoir,
including a depleted oil or gas reservoir, that is used primarily for thermal energy storage.
(f) “Water boards” means the State Water Resources Control Board and any applicable regional water quality control board.
3871.
There is within the division the New Technology Program. The goal of the program shall be to facilitate the evaluation of repurposing oil and gas wells or geothermal wells for renewable energy storage or generation purposes.3872.
There shall be no more than 250 experimental wells in the state at any time.3873.
(a) The division shall issue public guidelines on the types of projects involving repurposed oil and gas wells or geothermal wells that may be eligible to participate in the program.(b) Projects including Class VI underground injection control wells shall not be eligible to participate in the program.
3874.
(a) The division shall accept proposals from operators to repurpose oil and gas wells or geothermal wells for energy storage or renewable energy generation, including synthetic geothermal resources.(b) Program personnel shall evaluate the submitted proposals and determine if the proposal can be implemented as a underground injection control project pursuant to the division’s jurisdiction and authority.
(c) (1) The supervisor shall approve or deny project proposals.
(2) Upon approval of a project by the supervisor, the oil and gas wells or geothermal wells that are part of the project shall
be designated as experimental wells for the duration of the project, and program personnel shall facilitate the obtainment of any necessary permits for the project pursuant to the division’s authority and jurisdiction.
3875.
(a) Except as specified, an experimental well shall meet all requirements applicable to an oil and gas well or geothermal well pursuant to this division.(b) An oil and gas well designated as an experimental well is not an idle well for the purposes of Section 3206.
3876.
On or before ____, the division shall develop and make publicly available guidelines on requirements for transitioning an oil and gas well to a geothermal well, and for transitioning a geothermal well to an oil and gas well, including, but not limited to, well construction requirements.3877.
(a) On or before ____, and annually thereafter, the division shall provide a report to the applicable legislative policy and budget committees on program activities for the preceding calendar year, highlighting accomplishments and including recommendations for statutory and regulatory changes to more readily achieve program goals.(b) The report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.
3878.
(a) The program shall be implemented in coordination with the water boards.(b) The division shall invite the participation of federal agencies with relevant jurisdiction in the development of the program.
For the purposes of this chapter, “geothermal resources” shall mean either of the following:
(a)Geothermal resources as defined in Section 6903.
(b)An oil or gas reservoir that is used principally for thermal energy storage or geothermal energy generation.
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.
