BILL NUMBER: SB 665	INTRODUCED
	BILL TEXT


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 introduced, Wolk. Oil and gas: drilling: indemnity
bonds.
   Existing law requires an operator of an oil or gas well, or a well
located on submerged lands under ocean waters, or a class II
commercial wastewater disposal well, who engages in the drilling,
redrilling, deepening, or in any operation altering the casing, of
any well, or in maintaining or abandoning the well or attendant
facilities in regard to the wastewater disposal wells, to file with
the State Oil and Gas Supervisor an 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 delete the amounts specified in these provisions
for indemnity bonds and deposits in lieu of indemnity bonds, leaving
those amounts unspecified.
   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.  Any operator who, on or after January 1,  1999
  2014  , engages in the drilling, redrilling,
deepening, or in any operation permanently altering the casing, of
any well shall file with the supervisor an individual indemnity bond
in the specified sum for each well so drilled, redrilled, deepened,
or permanently altered. This sum shall be  fifteen thousand
dollars ($15,000)   ______  for each well less than
5,000 feet deep,  twenty thousand dollars ($20,000)
  ______  for each well at least 5,000 feet but
less than 10,000 feet deep, and  thirty thousand dollars
($30,000)   ______  for each well 10,000 or more
feet deep. 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, conditioned 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
such compliance by the principal named in the bond.
   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.  Any operator who engages in the drilling, redrilling,
deepening, or in any operation permanently altering the casing, of
one 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) The sum of  two hundred fifty thousand dollars
($250,000)   ______  , which does not include the
bond or fee required in Section 3206. A blanket surety bond provided
prior to January 1,  1999   2014  , shall
be increased to comply with this subdivision on or before January 1,
 2001   2016  . A blanket cash bond
provided prior to January 1,  1999   2014 
, shall be increased by a minimum of  thirty thousand
dollars ($30,000)   ______  per year, initially
payable January 1,  2000   2015  , and
yearly on January 1, thereafter, until the amount on deposit is
sufficient to comply with this subdivision.
   (b) The sum of  one hundred thousand dollars ($100,000)
  ______  , 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.
   (c) The sum of  one million dollars ($1,000,000) 
 ______  , which does include the bond or fee required in
Section 3206.
  SEC. 3.  Section 3205.1 of the Public Resources Code is amended to
read:
   3205.1.  (a) Notwithstanding Sections 3204 and 3205, any 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  two hundred fifty thousand dollars ($250,000)
  ______  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),
any 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  fifty thousand dollars ($50,000) 
 ______  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 (c) 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.