Amended in Assembly July 16, 2015

Amended in Assembly July 1, 2015

Amended in Senate June 1, 2015

Amended in Senate May 5, 2015

Amended in Senate April 6, 2015

Senate Bill No. 248

Introduced by Senator Pavley

February 18, 2015

An act to amend Sections 3108, 3213, and 3227 of, to add Sections 3011, 3106.3, 3113, 3114, 3213.5, and 3227.2 to, and to add Article 2.7 (commencing with Section 3140) to Chapter 1 of Division 3 of, the Public Resources Code, relating to oil and gas.

LEGISLATIVE COUNSEL’S DIGEST

SB 248, as amended, Pavley. Oil and gas.

(1) Existing law requires the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation to regulate the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities attendant to oil and gas production. Existing law requires the State Oil and Gas Supervisor, on or before the first day of October of each year, to make public a report on specified information.

This bill would require the supervisor to establish an inspection program for all activities regulated pursuant to these provisions and would require the total number of inspections and results of the inspections to be included in the above-referenced report. The bill would require the division’s regulations, field rules, notices, manuals, and other requirements to be reviewed and revised, as needed, through a public process at least once every 10 years.

The bill would require the division, as part of the Oil and Gas Data Management System developed pursuant to the Budget Act of 2015, to ensure that required well data and well-related submissions are retained and readily available to the public and that publicly available data are machine readable. Unless otherwise incorporated in the Oil and Gas Data Management System, the bill would require the division to post certain information that it receives on its Internet Web site.

The bill would define “enhanced oil recovery” for purposes of provisions relating to the regulation of oil and gas.

(2) Existing law requires an owner or operator of a well to keep, or cause to be kept, and requires the operator to file with the district deputy at specified times, a careful and accurate log, core record, and history of the drilling of the well. Existing law requires the well history to show the location and amount of sidetracked casings, tools, or other material, the depth and quantity of cement in cement plugs, the shots of dynamite or other explosives, acid treatment data, the results of production and other tests during drilling operations, and all data on well stimulation treatments. Existing law requires the owner of any well to file with the supervisor a monthly statement that provides certain information relating to the well, including the amount of water produced from each well. Existing law provides that a person who fails to comply with specific laws relating to the regulation of oil or gas operations, including failing to furnish a report or record, is guilty of a misdemeanor.

This bill would, in addition, require all operations on or in the well of any form to be systematically, completely, and accurately described and recorded in the well history. The bill would require any fluid injected or emplaced in the well to be fully characterized and reported as part of the history. The bill would require the monthly statement to the supervisor to include the full characterization of the chemical composition of water produced from each well. The bill would also require the operator of a waste disposal well to provide to the supervisor each quarter certain information regarding waste disposal injections. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

(3) The federal Safe Drinking Water Act regulates certain wells as Class II wells. Under existing federal law, the authority to regulate Class II wells in California is delegated to the Division of Oil, Gas, and Geothermal Resources. Under existing regulations, a well operator is required to obtain approval from the supervisor or a district deputy for a subsurface injection or disposal project, including Class II wells, or any change in a project, as provided.

This bill would require the division, on or before January 1, 2018, to update and revise these begin delete regulations end delete begin insert regulations, except as specified, end insert according to specified criteria and would require the division to consult with independent experts and stakeholders in the development and review of the regulations. The bill would require the regulations to include certain requirements, including reporting requirements. begin insert The bill would require injection wells and well projects existing as of December 31, 2017, to be brought into compliance with these regulations on or before January 1, 2020. end insert The bill would require these provisions to be liberally construed in order to meet specified requirements and to provide public transparency. The bill would provide that where the division shares jurisdiction over an injection well with a federal entity, the division’s rules and regulations are to apply in addition to all applicable federal laws and regulations. The bill would require an injection well subject to specified emergency begin delete regulations end delete begin insert regulations, or any successor regulations, end insert of the division regarding aquifer exemptions to immediately cease injection operations, other than those required for plugging and abandonment operations, if the well is not in compliance with those begin delete emergency end delete regulations by the applicable regulatory deadline. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program. begin delete The bill would require specified injection wells and well projects existing as of January 1, 2017, to be brought into compliance with these regulations on or before January 1, 2020. end delete

(4) 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.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) A 2011 audit of the Division of Oil, Gas, and Geothermal
Resources’ injection well program commissioned by the United
States Environmental Protection Agency highlighted numerous
problems with the program.

(b) The division has repeatedly acknowledged that it has failed
to follow applicable regulations in permitting injection wells and
that its injection well regulations are out of date. Among other
reasons, the division has cited antiquated data management
practices.

(c) The division’s ability to regulate depends upon full
understanding and knowledge of practices occurring under its
jurisdiction.

(d) Public transparency and regulatory accountability are
necessary to restore the public’s confidence in the division.

SEC. 2.  

Section 3011 is added to the Public Resources Code,
to read:

3011.  

“Enhanced oil recovery” means any process to enhance
the displacement of oil or other hydrocarbons from a reservoir,
including, but not limited to, the injection or subsurface
emplacement of fluids or other materials into the productive strata,
the application of pressure, heat, or other means for the reduction
of viscosity of the hydrocarbons, and the supplying of additional
motive force.

SEC. 3.  

Section 3106.3 is added to the Public Resources Code,
to read:

3106.3.  

(a) The supervisor shall establish an inspection
program for all activities regulated pursuant to Section 3106.

(b) In establishing the inspection program, the supervisor shall
do, but is not limited to doing, all of the following:

(1) Identify activities subject to inspection.

(2) Create forms or checklists associated with each type of
inspection.

(3) Establish the time or time period in which each inspection
shall be performed.

(4) Establish procedures for how an inspection shall be
conducted.

(c) The inspection program shall be available to the public on
the division’s Internet Web site.

SEC. 4.  

Section 3108 of the Public Resources Code is amended
to read:

3108.  

(a) On or before the first day of October of each year
the supervisor shall make public, for the benefit of all interested
persons, a report in writing containing all of the following:

(1) The total amounts of oil and gas produced in each county
in the state during the previous calendar year.

(2) The total cost of the division for the previous fiscal year.

(3) The total amount delinquent and uncollected from any
assessments or charges levied pursuant to this chapter.

(4) The total number of inspections and the results of the
inspections.

(b) The report shall also include other information as the
supervisor deems advisable.

SEC. 5.  

Section 3113 is added to the Public Resources Code,
to read:

3113.  

(a) It is the policy of the state that the division regularly
review and update its regulations, field rules, notices, manuals,
and other requirements to ensure that technological advances and
other changes in the exploration, development, and production of
oil and gas are incorporated begin delete in order end delete to ensure that life, health,
property, and natural resources are protected pursuant to Section
3106.

(b) The division’s regulations, field rules, notices, manuals, and
other requirements shall be reviewed and revised, as needed,
through a public process. The regulations, field rules, notices,
manuals, and other requirements need not be reviewed all at once,
but each of them shall be reviewed at least once every 10 years.
A revision is not required pursuant to this section if the supervisor
makes a public written finding indicating that the existing
regulation, field rule, manual, or other requirement is appropriate
and reflects best management practices.

(c) The supervisor shall prepare and transmit reports to the
Legislature describing the results of the reviews required by this
section and any revisions made or planned to the division’s
regulations, field rules, notices, manuals, and other requirements.
A report required by this subdivision shall be submitted in
compliance with Section 9795 of the Government Code.

(d) The division shall develop and disseminate in a timely
manner training materials related to any revisions made pursuant
to this section.

SEC. 6.  

Section 3114 is added to the Public Resources Code,
to read:

3114.  

(a) The division shall, as part of the Oil and Gas Data
Management System developed pursuant to the Budget Act of
2015 (Chapter 10 of the Statutes of 2015), ensure that required
well data and well-related submissions are retained and readily
available to the public and that publicly available data are machine
readable. Unless otherwise incorporated in the Oil and Gas Data
Management System, the division shall make available to the
public on its Internet Web site at least all of the following:

(1) Any notice received pursuant to Section 3203 within five
days of receipt.

(2) Any changes in status of any notice received pursuant to
Section 3203 within five days of the change.

(3) The log, history, and core record of a well within 10 days
of receipt.

(b) The division shall consult with local, state, and federal
regulators in the development of the begin delete data management plan end delete begin insert Oil
and Gas Data Management System end insert to facilitate timely sharing of
data.

SEC. 7.  

Article 2.7 (commencing with Section 3140) is added
to Chapter 1 of Division 3 of the Public Resources Code, to read:

 

Article 2.7.  Injection Wells

 

3140.  

(a)  begin insert (1) end insert begin insert   end insert On or before January 1, 2018, the division shall
update and revise its regulations for all injection wells and well
projects for which the division has received primacy from the
United States Environmental Protection Agency pursuant to Section
1425 of the federal Safe Drinking Water Act (42 U.S.C. Sec.
300h-4).

begin insert

(2) Injection well and well project regulations that the division
is in the process of adopting as of January 1, 2016, and that
address issues identified in subdivision (c), shall not be subject to
update and revision pursuant to this section.

end insert

(b) In adopting regulations pursuant to this section, the division
shall, in consultation with independent experts and stakeholders
through a public process, do all of the following:

(1) Develop best management practices for injection wells and
well projects.

(2) Review cement and cementing requirements, including
factors influencing the aging of cement.

(3)  begin delete Review and identify end delete begin insert Identify the end insert impacts begin insert and potential
impacts end insert of injection on the geologic begin delete formation specific to each
type of enhanced oil recovery, waste disposal, and other
well-related processes, including end delete begin insert formations in which injection
wells are located to ensure that well and formation integrity is
maintained and groundwater with a beneficial use is protected,
consider the range of injection practices for different purposes,
including, but not limited to, waste disposal, cyclic steam injection,
steam flooding, and water flooding, and clearly identify end insert when
fracturing of the formation begin delete occurs. end delete begin insert is deemed to occur or is likely
to occur that may result in surface movement, including, the
development of sinkholes and the loss of well and formation
integrity. end insert

begin insert

(c) Injection well and well project regulations adopted pursuant
to this section may do one or more of the following:

end insert begin insert

(1) Clarify standards for ensuring zonal isolation of injection
projects.

end insert begin insert

(2) Expressly define the quality of water to be protected when
constructing wells.

end insert begin insert

(3) Codify best practices for well construction.

end insert begin insert

(4) Establish permitting and regulatory requirements specific
to cyclic steam operations.

end insert begin insert

(5) Establish requirements specific to cyclic steam in diatomite,
including a regulatory framework for responding to surface
expressions and provide clarification regarding injection above
fracture gradient.

end insert begin insert

(6) Clarify the process and standards for establishing maximum
allowable surface pressure for injection operations.

end insert

3141.  

The regulations begin delete developed end delete begin insert adopted end insert pursuant to Section
3140 shall ensure that the integrity of the well, wellbore, and
formation are maintained. In order to accomplish this requirement,
the regulations shall do both of the following:

(a) Be specific to each type of injection well and well project
used for any purpose, including, but not limited to, enhanced oil
recovery and waste disposal.

(b) Include any operation, treatment, process, and activity
performed to enhance oil recovery on, in, or in the vicinity of, any
well, wellbore, or hydrocarbon-bearing formation.

3142.  

begin delete The end delete begin insert (a) end insert begin insert   end insert begin insert It is the intent of this section to provide specific
direction to the division to include certain components in the
development of the regulations required by this article in order to
promote public transparency and regulatory accountability, and
address public concerns about potential seismicity, surface
instability, and the fracturing of the formation induced by injection
wells and their operation. Additional state and federal law and
regulations apply. end insert

begin insert (b) end insert begin insert   end insert begin insert The end insert regulations begin delete developed end delete begin insert adopted end insert pursuant to Section 3140
shall include, but are not limited to, the following:

begin delete

(a)

end delete

begin insert (1) end insert  An opportunity for public participation in the well and well
project review begin delete process. end delete begin insert process, if not otherwise provided through
local land use planning and zoning requirements. end insert

begin delete

(b)

end delete

begin insert (2) end insert  Full and complete geologic and hydrologic characterization
and reporting of the formation surrounding the well, including the
fracture pressure. begin insert This characterization shall include determination
of the area of review pursuant to Section 146.6 of Title 40 of the
Code of Federal Regulations, and the performance of a step-rate
test or tests to evaluate fracture pressure or pressures. end insert

begin delete

(c)

end delete

begin insert (3) end insert  Full and complete characterization and reporting of all well
operations with appropriate begin delete monitoring, including of surface
movement and seismic activity. end delete begin insert monitoring of surface movement
such as the development of sinkholes or seismic activity. To the
extent practicable, monitoring requirements shall be standardized
and explicit in the regulations. end insert

begin delete

(d)

end delete

begin insert (4) end insert  Establishment of limits on operations, and procedures to
follow in the event of surface begin delete movement end delete begin insert movement, including, but
not limited to, the development of sinkholes end insert and seismic activity.

3143.  

Injection wells and well projects existing as of December
31, 2017, shall be brought into compliance with the regulations
begin delete developed end delete begin insert adopted end insert pursuant to Section 3140 on or before January
1, 2020.

3144.  

This article shall be liberally construed pursuant to
Section 3013 in order to meet the requirements of Section 3106
and to provide public transparency.

3145.  

Where the division shares jurisdiction over an injection
well with a federal entity, the division’s rules and regulations shall
apply in addition to all applicable federal laws and regulations.

3146.  

An injection well subject to the division’s emergency
regulations regarding aquifer exemptions (Sections 1760.1 and
1779.1 of Title 14 of the California Code of Regulations, effective
on April 20, begin delete 2015) end delete begin insert 2015), or any successor regulations, end insert shall
immediately cease injection operations other than those required
for plugging or abandonment operations if the well is not in
compliance with those regulations by the applicable regulatory
deadline.

SEC. 8.  

Section 3213 of the Public Resources Code is amended
to read:

3213.  

(a) The history shall show the location and amount of
sidetracked casings, tools, or other material, the depth and quantity
of cement in cement plugs, the shots of dynamite or other
explosives, all acid treatment data of any amount and concentration,
and the results of production and other tests during drilling
operations. All operations on or in the well of any form, including,
but not limited to, the injection or emplacement of any material in
the well for any purpose during the drilling, operation,
maintenance, or abandonment of the well shall be systematically,
completely, and accurately described and recorded in the history.
All data on well stimulation treatments pursuant to Section 3160
shall be recorded in the history.

(b) The well history reporting requirements shall not be waived.

SEC. 9.  

Section 3213.5 is added to the Public Resources Code,
to read:

3213.5.  

The chemical composition of any fluid injected or
emplaced in the well shall be fully characterized and reported as
part of the history. The chemical composition shall include any
phase present as part of, or suspended in, the fluid. The analytical
method used in the determination shall also be reported. Analytical
methods established by the United States Environmental Protection
Agency to determine chemical composition shall be used where
applicable. For purposes of this section, fluid means a liquid or
gas of any chemical composition. Subdivision (j) of Section 3160
shall apply to any claim of trade secret protection for information
described in this section.

SEC. 10.  

Section 3227 of the Public Resources Code is
amended to read:

3227.  

(a) The owner of any well shall file with the supervisor,
on or before the last day of each month, for the last preceding
calendar month, a statement, in the form designated by the
supervisor, showing all of the following:

(1) (A) The amount of oil and gas produced from each well
during the period indicated, together with the gravity of the oil,
the amount of water produced from each well, estimated in
accordance with methods approved by the supervisor, and the
number of days during which fluid was produced from each well.

(B) The full characterization of the chemical composition of
water produced from each well, based on a representative sample,
which shall include any phase present as part of, or suspended in,
the water, and the analytical method used in making the
characterization. Analytical methods established by the United
States Environmental Protection Agency to determine chemical
composition shall be used where applicable.

(2) The number of wells drilling, producing, injecting, or idle,
that are owned or operated by the person.

(3) What disposition was made of the gas produced from each
field, including the names of persons, if any, to whom the gas was
delivered, and any other information regarding the gas and its
disposition that the supervisor may require.

(4) What disposition was made of water produced from each
field and the amount of fluid or gas injected into each well used
for enhanced recovery, underground storage of hydrocarbons, or
wastewater disposal, and any other information regarding those
wells that the supervisor may require.

(5) The source of water, and volume of any water, reported in
paragraph (4), including the water used to generate or make up the
composition of any injected fluid or gas. Water volumes shall be
reported by water source if more than one water source is used.
The volume of untreated water suitable for domestic or irrigation
purposes shall be reported. Commingled water shall be
proportionally assigned to individual wells, as appropriate.

(6) The treatment of water and the use of treated or recycled
water in oil and gas field activities, including, but not limited to,
exploration, development, and production.

(7) (A) The specific disposition of all water used in or generated
by oil and gas field activities, including water produced from each
well reported pursuant to paragraph (1). Water volumes shall be
reported by disposition method if more than one disposition method
is used. Commingled water shall be proportionally assigned to
individual wells, as appropriate.

(B) This information shall also include the temporary onsite
storage of water, as or if appropriate, and the ultimate specific use,
disposal method or method of recycling, or reuse of this water.

(b) Any operator that produces oil by the application of mining
or other unconventional techniques shall file a report with the
supervisor, on or before March 1 of each year, showing the amount
of oil produced by those techniques in the preceding calendar year.

(c) (1) Upon request and making a satisfactory showing
therefor, a longer filing period may be established by the supervisor
for any particular owner or operator.

(2) Notwithstanding subdivision (a), the owner of any well shall
file with the supervisor, on a quarterly basis, a statement containing
the information required to be reported pursuant to paragraphs (5),
(6), and (7) of subdivision (a) in the form designated by the
supervisor.

(d) The division shall use a standardized form or format to
facilitate reporting required pursuant to this section.

(e) The division shall use noncustom software, as feasible, to
implement online reporting by the operator of the information
required pursuant to paragraphs (5), (6), and (7) of subdivision
(a). This information may be reported separately from other
information required to be reported pursuant to this section.

(f) For purposes of this section, the following terms have the
following meanings:

(1) “Source of water” or “water source” means any of the
following:

(A) The well or wells, if commingled, from which the water
was produced or extracted.

(B) The water supplier, if purchased or obtained from a supplier.

(C) The point of diversion of surface water.

(2) “Specific disposition of all water” means the identification
of the ultimate specific use, disposal method or method of
recycling, or reuse of the water. This includes, but is not limited
to, the identification of any treatment or recycling method used,
injection of the water into specific injection or disposal well or
wells, if commingled, discharge of the water to surface water or
sumps, and sale or transfer of the water to a named entity.

SEC. 11.  

Section 3227.2 is added to the Public Resources Code,
to read:

3227.2.  

(a) The operator of a waste disposal well shall provide
to the supervisor each quarter information described in subdivision
(b) from the preceding quarter that is specific to each waste disposal
injection performed at the well and that fully characterizes each
waste disposal injection performed at the well. The information
shall be reported in a machine-readable format.

(b) The information to be provided shall include, but is not
limited to, the date and time of the injection, the duration of the
injection, the volume of material injected, the rate of injection,
and the applied pressure of the injection.

SEC. 12.  

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.