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SB-759 Wells: fees and indemnity bonds.(2017-2018)

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Date Published: 04/19/2017 09:00 PM
SB759:v98#DOCUMENT

Amended  IN  Senate  April 19, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 759


Introduced by Senator McGuire

February 17, 2017


An act to amend Sections 3723.5, 3724, 3724.1, and 3724.6 3724.6, and 3726 of the Public Resources Code, relating to wells.


LEGISLATIVE COUNSEL'S DIGEST


SB 759, as amended, McGuire. Geothermal well fees. Wells: fees and indemnity bonds.
Existing law requires a person who acquires the ownership or operation of a well or wells, within 30 days of after acquiring the well or wells, to file with the State Oil and Gas Supervisor an individual indemnity bond in the sum of $25,000 for each well acquired or a blanket indemnity bond of $100,000 for any number of wells acquired.
This bill would require that person to file with the supervisor a financial assurance estimate and individual indemnity bond for each well acquired, with supporting data assessing the true cost of total completion and remediation of each well and well site upon cessation of operation or an individual indemnity bond in the sum of $100,000 for each well acquired.
Existing law establishes fees for the drilling of certain shallow geothermal wells of $25 per well or $200 per program, whichever is less. Existing law requires that fee to be deposited in the Oil, Gas, and Geothermal Administrative Fund and to be available upon appropriation exclusively for the supervision of geothermal resource wells.
This bill would increase those fees to $100 per well or $500 per program, whichever is less. The bill would additionally make the revenue generated by these fees available upon appropriation for the plugging and abandonment of any geothermal well deemed deserted.
Existing law requires the owner or operator of any other geothermal well to pay the appropriate fees before commencing the original drilling of a geothermal well or the redrilling of an abandoned well. Existing law establishes the appropriate fees for the drilling of certain shallow geothermal wells.
This bill would delete the above those fees.
Existing law authorizes a person who engages in the drilling, redrilling, deepening, maintaining, or abandoning of a well to file with the supervisor one bond for $100,000 to cover the person’s operations in the state in lieu of an individual indemnity bond for each of the person’s operations.
This bill would increase that bond amount to $1,000,000.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 3723.5 of the Public Resources Code is amended to read:

3723.5.
 Any person who acquires the ownership or operation of any well or wells, whether by purchase, transfer, assignment, conveyance, exchange, or otherwise, shall, within 30 days after acquiring the well or wells, file with the supervisor a financial assurance estimate and individual indemnity bond for each well acquired, with supporting data assessing the true cost of total completion and remediation of each well and well site upon cessation of operation. In lieu of the financial assurance estimate and individual indemnity bond in accordance with that estimate, an operator may file with the supervisor an individual indemnity bond in the sum of twenty-five thousand dollars ($25,000) for each well acquired, or a blanket indemnity bond in the sum of one hundred thousand dollars ($100,000) for any number of wells each well acquired. The bond shall be stated in substantially the language set forth in Section 3725.

SECTION 1.SEC. 2.

 Section 3724 of the Public Resources Code is amended to read:

3724.
 (a) The owner or operator of any well, before commencing the original drilling of a well or the redrilling of an abandoned well, shall file with the supervisor or the district deputy a written notice of intention to commence drilling. Drilling shall not commence until approval is given by the supervisor or the district deputy. If the supervisor or the district deputy fails to give the owner or operator written response to the notice within 10 working days, the failure shall be considered as an approval of the notice and the notice shall, for the purposes and intents of this chapter, be deemed a written report of the supervisor. The notice shall contain the following:
(1) The location and elevation of the floor of the proposed derrick.
(2) The number or other designation by which the well shall be known. The number or designation shall be subject to the approval of the supervisor.
(3) The owner’s or operator’s estimate of the depths between which production will be attempted.
(4) Other pertinent data as the supervisor may require.
(b) After the completion of any well, this section shall also apply, as far as may be, to the deepening or redrilling of the well, or any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well. The number or designation by which any well heretofore drilled has been known, and the number or designation specified for any well in a notice filed as required by this section, shall not be changed without first obtaining a written consent of the supervisor.

SEC. 2.SEC. 3.

 Section 3724.1 of the Public Resources Code is amended to read:

3724.1.
 (a) An owner or operator may submit to the supervisor for approval a written program to drill a shallow well or wells for temperature-gradient monitoring purposes. In order to qualify under this section, a program shall contain not more than 25 wells and the maximum total depth of each of these wells shall not exceed 250 feet. Each program submitted for approval shall include: include all of the following:

(a)

(1) Well numbers.

(b)

(2) Well locations and elevations.

(c)

(3) Geologic interpretation of the area under investigation, including any known or inferred temperature data.

(d)

(4) Any other data as may be required by the supervisor.
(b) The fee required to be filed for the drilling of these shallow wells shall be one hundred dollars ($100) per well or five hundred dollars ($500) per program, whichever is less. The fee shall be deposited in the Oil, Gas, and Geothermal Administrative Fund, and shall be available, upon appropriation by the Legislature, exclusively for processing of geothermal program applications, regulatory oversight of these shallow wells, and the plugging and abandonment of any well deemed deserted pursuant to Section 3755.

SEC. 3.SEC. 4.

 Section 3724.6 of the Public Resources Code is amended to read:

3724.6.
 The annual well fee established in accordance with Section 3724.5 shall be made payable to the Treasurer. The proceeds from the annual well fees shall be deposited in the Oil, Gas, and Geothermal Administrative Fund, and shall be available for appropriation exclusively for the supervision of geothermal resource wells.

SEC. 5.

 Section 3726 of the Public Resources Code is amended to read:

3726.
 Any person who engages in the drilling, redrilling, deepening, maintaining, or abandoning of one or more wells at any time, may file with the supervisor one bond for one hundred thousand dollars ($100,000) million dollars ($1,000,000) to cover all his or her operations in drilling, redrilling, deepening, maintaining, or abandoning of any of his or her wells in this state in lieu of an individual indemnity bond for each such operation as required by Section 3725 or 3725.5. The bond shall be executed by such person, 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 3725, except as to the difference in the amount.