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<ns0:Id>20250AB__271699INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-20</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Ávila Farías</ns0:AuthorText>
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<ns0:Legislator>
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<ns0:Name>Ávila Farías</ns0:Name>
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<ns0:Title> An act to amend Section 3205.8 of the Public Resources Code, relating to oil and gas. </ns0:Title>
<ns0:RelatingClause>oil and gas</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Oil and gas: bonding requirements.</ns0:Subject>
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<html:p>Existing law authorizes the Geologic Energy Management Division in the Department of Conservation to require an operator of an oil and gas well to provide, in addition to specified types of required indemnity bonds, 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, as provided. Existing law authorizes this additional amount of security to be an indemnity bond, specified forms of deposit, or any other means of equally effective financial assurance approved by the division, including a demonstration of self-insurance pursuant to a specified process.</html:p>
<html:p>Existing law requires a person who acquires the right to operate a well or production
facility to file with the State Oil and Gas Supervisor an individual indemnity bond or a blanket indemnity bond in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning the facility, and site restoration, as provided. Under existing law, an operator may, in lieu of this bonding requirement and with the written approval of the supervisor, provide the required security through an equally effective means of financial assurance, including specified types of deposits, an irrevocable letter of credit, or a fully funded trust fund, and excluding self-insurance or corporate guarantees, as provided. A person who violates or fails to comply with this provision, or any related law concerning oil and gas, is guilty of a crime.</html:p>
<html:p>This bill would repeal the exclusion of self-insurance or corporate guarantee, as described above. The bill would additionally authorize an operator to, in lieu of the bonding
requirement and with the written approval of the supervisor, provide the required security through a specified means of financial assurance, as provided.</html:p>
<html:p>This bill would exempt a person who has acquired the rights to a well or production facility for the sole purpose of plugging and abandoning that well or decommissioning the production facility from the above-described bonding and financial assurance requirements. The bill would prohibit the use of that well or production facility for oil or gas production or injection. By creating a new crime, the bill would impose a state-mandated local program.</html:p>
<html:p>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.</html:p>
<html:p>This bill would provide that no reimbursement is required by
this act for a specified reason.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 3205.8 of the
<ns0:DocName>Public Resources Code</ns0:DocName>
is amended to read:
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<ns0:Num>3205.8.</ns0:Num>
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(a)
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(1)
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Notwithstanding any other provision of this chapter, a person who acquires the right to operate a well or production facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition, except a well that has an average daily production level that exceeds 15 barrels of oil or 60,000 cubic feet of natural gas during the 12 months preceding the date of acquisition or a natural gas storage well, shall, as soon as possible, but not later than the date when the acquisition of the well or production facility becomes final, file with the supervisor an individual indemnity bond for the well or production facility, or a blanket indemnity bond for multiple wells or production facilities, in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and
abandonment, decommissioning of the facility, and site restoration pursuant to Section 3208 and regulations implementing this chapter.
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(2)
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A person who acquires the right to operate more than one well or production facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition, or who operates more than one well or production facility 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. The blanket indemnity 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 for the difference in the amount.
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<html:p>
(b)
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A person who intends to acquire the right to operate a well or production
facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition, shall submit a request to the supervisor for a determination of the amount of the bond required pursuant to subdivision (a) before completing the acquisition and shall not complete the acquisition until the determination is received and the bond has been filed with the supervisor.
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(c)
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The supervisor shall determine the amount of an individual indemnity bond required pursuant to subdivision (a) based on the supervisor’s determination of the full costs of plugging and abandonment, decommissioning the facility, and site restoration using any reasonable method, including, but not limited to, consideration of the factors listed in subdivision (b) of Section 3205.3, or the cost estimation criteria described in subdivision (b) of Section 3205.7, or consultation with a contractor to obtain an estimate of the cost to plug and abandon the wells, decommission the
facility, and complete site restoration. The supervisor shall determine the amount of a blanket indemnity bond required pursuant to subdivision (a) based on the sum total of combining the costs from the same determinations as individual indemnity bonds for each well or production facility covered by the blanket indemnity bond.
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(d)
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(1)
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In lieu of the bond required to be provided pursuant to subdivision (a), the operator may, with the written approval of the supervisor, provide the required security through an equally effective means of financial assurance, which includes a deposit pursuant to Section 3205.5, an irrevocable letter of credit,
a fully funded trust fund,
a means of financial assurance listed in subdivision (f) of Section 3205.3, or any other equally effective means of financial assurance that has been approved by the division as described in paragraph (2). The required financial assurance may be obtained or funded by the transferor of the covered well.
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(2)
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The division may approve equally effective means of financial assurance in the same manner as described in paragraphs (1) and (2) of subdivision (f) of Section 3205.3.
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(e)
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(1)
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This section does not a apply to a person who acquires the rights to a well or production facility for the sole purpose of plugging and abandoning that well
or decommissioning that production facility.
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(2)
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This subdivision does not affect any other requirement of this chapter, nor does it relieve a person of any other responsibility pursuant to this chapter.
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<html:p>
(3)
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A person shall not use a well or production facility acquired for the sole purpose of plugging and abandoning that well or decommissioning that production facility for oil or gas production or injection.
</html:p>
<html:p>
(f)
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The department shall post on its internet website the information on all indemnity bond determinations made
by the supervisor, and shall include for each determination the bond amount and calculations used.
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<ns0:Num>SEC. 2.</ns0:Num>
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No reimbursement is required by this act pursuant to Section 6 of Article XIII
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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
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B of the California Constitution.
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