BILL NUMBER: SB 2007 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 5, 1996
AMENDED IN ASSEMBLY JUNE 25, 1996
INTRODUCED BY Senator Costa
FEBRUARY 23, 1996
An act to amend Sections 3009, 3201, 3202, 3208.1, 3237, 3251,
3352, 3353, and 3354 of, to add Section 3238 to, and to repeal
Sections 3010 and 3011 of, the Public Resources Code, relating to oil
and gas.
LEGISLATIVE COUNSEL'S DIGEST
SB 2007, as amended, Costa. Oil and gas wells.
(1) Existing law regulates the drilling, operation, maintenance,
and abandonment of oil or gas wells, and defines an operator to mean
any person drilling, maintaining, operating, pumping, or in control
of a well.
This bill would revise that definition to specify that an operator
means any person who, by virtue of ownership, or under the authority
of a lease or any other agreement, has the right to drill, operate,
maintain, or control a well.
(2) Under existing law, a person who acquires ownership or
operation of an oil or gas well is required to notify the State Oil
and Gas Supervisor or the district deputy, in writing. Acquisition
of the well is not final until the operator provides specified
information and a bond or deposit for any well that has not produced
oil or gas or has not been used for injection for 5 years prior to
the date of acquisition.
This bill would specify that the operator is not relieved of
responsibility for a well , and the facilities attendant to
the well, until the supervisor or district deputy
acknowledges the change of ownership in writing, and the person
acquiring the well or facilities provides the
required information and bond or deposit.
(3) Existing law authorizes the supervisor, to prevent damage to
life, health, and property, to order the reabandonment of any
previously abandoned oil or gas well when the future construction of
any structure over or in the proximity of the well could result in a
hazard, and requires that the owner of the property upon which the
structure will be located be responsible for the cost of the
reabandonment operations. Existing law further provides that, if the
well was not abandoned in accordance with specified procedures in
effect at the time of the abandonment, the last operator having an
economic interest in, or receiving any benefit from, the well, if
still in business in this state, is responsible for those costs
associated with reabandonment.
This bill would authorize the supervisor or district deputy to
instead order the plugging and reabandonment of any previously
abandoned well if the supervisor or district deputy has reason to
question the integrity of the previous abandonment and proposed
construction, if any, as specified.
(4) Existing law authorizes the supervisor or district deputy to
order the abandonment of any well that has been deserted whether or
not any damage is occurring or threatened by reason of that well, and
specifies that the suspension of drilling operations and removal of
drilling machinery is prima facie evidence of desertion after the
elapse of 6 months, except as specified.
This bill would delete those provisions pertaining to prima facie
evidence of desertion and would require the supervisor or district
deputy to instead determine from credible evidence, as specified,
whether a well is deserted. The bill would specify that, if the
supervisor determines that the current operator of a well does not
have the financial resources to fully cover the cost of plugging and
abandoning the well, the immediately preceding operator shall be
responsible for the costs if the operator acquired ownership of the
well after January 1, 1996, except as provided. The bill would
authorize the supervisor to undertake the plugging and abandoning of
a well if the supervisor is unable to determine that an operator that
acquired ownership of the well after January 1, 1996, has the
financial resources to fully cover the costs of plugging and
abandoning the well.
(5) Existing law requires that an annual production charge on oil
and gas be imposed upon the person operating each oil or gas well in
the state, based on a specified formula for computing the rate of the
production charge.
This bill would require the production charge to be reduced to
zero for a period of 10 years for specified types of wells, or wells
that have been inactive for a period of at least 5
consecutive years.
(6) Existing law provides procedures for the appeal of orders
issued by the supervisor or a district deputy, and requires the
Director of Conservation, within 10 days from the taking of the
appeal, to give an appellant 10 days notice in writing of the time
and place of a hearing, except for good cause, and requires the
director to make a written decision with respect to the order
appealed from within 10 days after hearing the evidence.
This bill would increase to a minimum of 20 days the
time period for that written notice, except in cases where the
director determines that there is an immediate threat to human health
and safety or to the environment, and increase to 20 days the time
period after hearing evidence within which the director is required
to make a written decision on an order that has been appealed from
, except as specified .
The bill would make various technical and clarifying changes in
those provisions.
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 3009 of the Public Resources Code is amended to
read:
3009. "Operator" means any person who, by virtue of ownership, or
under the authority of a lease or any other agreement, has the right
to drill, operate, maintain, or control a well.
SEC. 2. Section 3010 of the Public Resources Code is repealed.
SEC. 3. Section 3011 of the Public Resources Code is repealed.
SEC. 4. Section 3201 of the Public Resources Code is amended to
read:
3201. The operator of any well shall notify the
supervisor or the district deputy, in writing, in such form as the
supervisor or the district deputy may direct, of the sale,
assignment, transfer, conveyance, exchange, or other disposition of
the well or facilities attendant to the well by
the operator of the well as soon as is reasonably
possible, but in no event later than the date that the sale,
assignment, transfer, conveyance, exchange, or other disposition
becomes final. The operator shall not be relieved of responsibility
for the well and the facilities attendant to the well
until the supervisor or the district deputy acknowledges
the sale, assignment, transfer, conveyance, exchange, or
other disposition, in writing, and the person acquiring the well
or facilities is in compliance with Section 3202.
The operator's notice shall contain all of the following:
(a) The name and address of the person to whom the well
or facilities was or will be sold, assigned,
transferred, conveyed, exchanged, or otherwise disposed.
(b) The name and location of the well, and a description of the
land upon which the well is situated.
(c) The date that the sale, assignment, transfer, conveyance,
exchange, or other disposition became becomes
final.
(d) The date when possession was or will be
relinquished by the operator as a result of that disposition.
SEC. 5. Section 3202 of the Public Resources Code is amended to
read:
3202. Every person who acquires the right to operate a well,
whether by purchase, transfer, assignment, conveyance, exchange, or
other disposition, shall, as soon as it's reasonably possible, but in
no event later than the date that the acquisition of the well
or facilities attendant to the well becomes final,
notify the supervisor or the district deputy, in writing, of the
person's operation. The acquisition of a well or facilities
shall not be recognized as complete by the supervisor or
the district deputy until the new operator provides all of the
following:
(a) The name and address of the person from whom the well
or facilities was acquired.
(b) The name and location of the well, and a description of the
land upon which the well is situated.
(c) The date that the acquisition became
becomes final.
(d) The date when possession was or will be acquired.
(e) A bond or deposit for any well that has not produced oil or
gas or has not been used for injection during the five years
immediately prior to the date of acquisition. The bond or deposit
shall be in an amount as provided in Section 3204 or 3205. The
conditions of the bond or deposit shall be the same as the conditions
stated in Section 3204. An operator that has provided the bond
required by this subdivision shall not be required additionally to
provide the bond or pay the fee required by Section 3206. However,
the bond or fee required by Section 3206 shall not be substituted for
the bond required by this subdivision.
SEC. 6. Section 3208.1 of the Public Resources Code is amended to
read:
3208.1. (a) To prevent, as far as possible, damage to life,
health, and property, the supervisor or district deputy may order the
reabandonment of any previously abandoned well if the supervisor or
the district deputy has reason to question the integrity of the
previous abandonment and any proposed construction, including the
erection of a structure or the placement of fill over or near the
abandoned well that may prevent or impede access
to the abandoned well for purposes of remedying
any hazard. The cost of the reabandonment operations shall be the
responsibility of the owner of the property upon which the
abandoned well or proposed construction will be located.
However, if the well was not abandoned in accordance with the
requirements of the division in effect at the time of the
abandonment, the last operator having an economic interest in, or
receiving any benefit from, the well, if the operator is still in
business in this state, shall be responsible for the reabandonment;
otherwise the owner of the property shall be responsible.
(b) This section does not preclude the application of Article 4.2
(commencing with Section 3250), except in the following cases:
(1) To remedy any problem posing a danger to life, health, or
property from a previously abandoned well where construction over or
near the well has been permitted begun on or
after January 1, 1988 , and the property owner, developer, or
local agency permitting the construction failed to obtain an opinion
from the supervisor or district deputy as to whether the previously
abandoned well is required to be reabandoned. In those situations,
responsibility for correcting problems posing a danger to life,
health, or property from the previously abandoned well shall rest
with the developer or the owner of the property at the time of
construction, unless that developer or owner is deceased, defunct, or
no longer in business in, or a resident of, this state.
(2) To remedy any problems posing danger to life, health, or
property, if the supervisor or district deputy finds, from evidence
obtained by, or made available to, the supervisor or district deputy,
that (A) after the well was properly abandoned, development of the
surface of the property on which the well is located by someone other
than the operator or an affiliate of the operator likely disturbed
the integrity of the abandonment, and (B) the supervisor can identify
the party or parties responsible for disturbing the integrity of the
abandonment.
SEC. 7. 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 any well that has been deserted whether
or not any damage is occurring or threatened by reason of that
deserted well. The supervisor or district deputy shall determine
from credible evidence whether a well is deserted.
(2) For purposes of paragraph (1), "credible evidence" includes,
but is not limited to, the operational history of the well, 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.
(3) A rebuttable presumption of desertion shall arise in any of
the following situations:
(A) If a well has not been completed to production and
drilling machinery has or injection and drilling
machinery have been removed from the well site for at least six
months.
(B) If a well's production equipment or facilities have
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 that is subject to a
purchase, transfer, assignment, conveyance, exchange, or other
disposition fails to comply with Section 3202.
(4) The operator may rebut the presumptions of desertion set forth
in paragraph (3) by demonstrating with credible evidence
compliance with the division and that the well 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.
(b) An order to plug and abandon a deserted well 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 shall be responsible for the
proper plugging and abandonment of the well. 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, the immediately preceding operator shall be responsible for the
cost of plugging and abandoning the well.
(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. However, the supervisor may not hold an
operator responsible that has made a valid transfer of ownership of
the well prior to January 1, 1996.
(3) For purposes of this subdivision, "operator" shall include a
mineral interest owner who shall be held jointly liable for the well
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 prior operator shall be liable for any of the costs of
plugging and abandoning a well by a subsequent operator if those
costs are necessitated by the subsequent operator's illegal operation
of a well.
(5) If the supervisor is unable to determine that an operator that
acquired ownership of a well after January 1, 1996, has the
financial resources to fully cover the costs of plugging and
abandonment, the supervisor may undertake plugging and abandonment
pursuant to Article 4.2 (commencing with Section 3250).
SEC. 8. Section 3238 is added to the Public Resources Code, to
read:
3238. (a) For oil and gas produced in this state from a well that
qualifies under Section 3251 or which has been inactive for a period
of five or more at least the preceding five
consecutive years, the rate of the charges imposed pursuant to
Sections 3402 and 3403 shall be reduced to zero for a period of 10
years. The supervisor or district deputy shall not permit an
operator to undertake any work on wells qualifying under Section 3251
unless the mineral rights owner consents, in writing, to the work
plan.
(b) An operator who undertakes any work on a well qualifying under
Section 3251 shall have up to 90 days from the date the operator
receives written consent from the supervisor to evaluate the well.
On or before the the 90 day evaluation period
ends, the operator shall file with the supervisor a bond or deposit
in an amount specified in Section 3204, 3205, or 3205.1, in
accordance with the requirements of whichever of those sections is
applicable to the well . If , if the
well operations are to continue for a period in excess of the 90 day
evaluation period , the . The
conditions of the bond shall be the same as the conditions stated in
Section 3204.
SEC. 9. Section 3251 of the Public Resources Code is amended to
read:
3251. For the purposes of this article, an oil or gas well is a
"hazardous well" if the supervisor determines that the well is a
potential danger to life, health, or natural resources and there is
no operator determined by the supervisor to be responsible for
plugging and abandoning the well under subdivision (c) of Section
3237. Also, for the purposes of this article, an oil or gas well is
an "idle-deserted well" if the supervisor determines that the
well is deserted under Section 3237 and there is no operator
responsible for its plugging and abandonment under Section 3237.
SEC. 10. Section 3352 of the Public Resources Code is amended to
read:
3352. Within 10 days from the date of the taking of the appeal,
a minimum 20 days notice in writing shall be given to the
appellant of the time and place of the hearing. In cases where the
director determines that there is an immediate threat to human health
and safety or to the environment, the director may shorten the
notice period to 10 days. For good cause, and if the director
determines that there is not such an immediate threat, the director
may postpone the hearing, on the application of the appellant, the
supervisor, or the district deputy, for a period not to exceed 10
days.
SEC. 11. Section 3353 of the Public Resources Code is amended to
read:
3353. (a) The director, after hearing, shall affirm, set aside,
or modify the order from which the appeal is taken.
(b) Within 20 days from the date of hearing the evidence, the
director shall make a written decision with respect to the order
appealed from , unless the appellant and the director agree to a
longer period within which the decision may be made . The
decision of the director shall forthwith be filed with the
supervisor, and upon that filing shall be final. In case the order
is affirmed or modified, the director shall retain jurisdiction until
such time as the work ordered to be done by the order is finally
completed.
(c) The written decision shall be served upon the appellant and
shall supersede the previous order of the supervisor or district
deputy. In case no written decision is made by the director
within 20 days from the date of the hearing pursuant
to subdivision (b) , the order of the supervisor or district
deputy shall be effective and subject only to review by writ of
administrative mandamus from the superior court as provided in this
article.
SEC. 12. Section 3354 of the Public Resources Code is amended to
read:
3354. The decision of the director may be reviewed by writ of
administrative mandamus from the superior court of the county in
which the district is situated, if taken within 10 days from the date
of the service of the decision upon the appellant, as provided in
Section 3353 , or within 10 days from the date of the
decision by the director upon a petition by the supervisor. The writ
shall be made returnable not later than 10 days from the date of its
issuance, and it shall direct the director to certify the record in
the cause to the court. On the return day, the cause shall be heard
by the court, unless for good cause it is continued, but no
continuance shall be permitted for a longer period than 30 days.
.