Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Life-of-well and life-of-production facility bonds may be required by the Supervisor in addition to bond coverage specified in the Public Resources Code Sections 3202, 3204, 3205, 3205.2 and 3206.
(b) The Supervisor may order a life-of-well and/or a life-of-production facility bond for an operator with a history of violating Public Resources Code, Division 3, Chapter 1 and the regulations promulgated thereunder, or that has outstanding liabilities to the state associated with a well or production facility. When determining whether to order a life-of-well and/or a life-of-production facility bond the Supervisor shall consider each of the following:
(1) The severity of the cited violations or civil penalties that the operator has received, and the potential for serious damage to health, safety, or natural resources caused by the violations.
(2) Any ongoing failure to address a cited violation and any pattern of recurring or repeated violations by the operator.
(3) Any evidence that the operator's facility maintenance practices are not in compliance with Public Resources Code, Division 3, Chapter 1 and the regulations promulgated thereunder.
(4) Any failure to comply an order of the Supervisor.
(5) The severity of the spills or leaks that have occurred that the operator is responsible for, and the potential for serious damage to health, safety, or natural resources caused by the spills or leaks.
(6) The extent to which any spills or leaks that the operator is responsible for were the result of a violation of any statute or regulation.
(7) The extent to which any spills or leaks that the operator is responsible for were the result of a lack of training or supervision of the operator's employees or contractors.
(8) The extent to which any spills or leaks that the operator is responsible for were the result of a failure to exercise good oilfield practices.
(9) If the operator has any outstanding liability to the state associated with a well or production facility, whether the liability is the result of a violation of a statute or regulations, and whether the operator is making a good faith effort to repay the liability.
(c) The Supervisor shall establish a life-of-well bond amount to cover the cost to properly plug and abandon each well, including site restoration, and the cost to finance a spill response and incident cleanup.
(1) The Supervisor shall estimate the cost to plug and abandon based on the wells condition, total depth, required abandonment operations, site restoration prescribed by regulation, and similar well abandonments within the field or lease.
(2) The life-of-well bond coverage for a well shall be no less than the amount prescribed in Public Resources Code Section 3204.
(3) The Supervisor shall annually review the amount of a life-of-well bond and, if needed, establish a new bond amount to ensure proper plugging and abandonment of the well, and the financing of spill response and incident cleanup.
(d) The Supervisor shall establish a life-of-production facility bond amount to cover the costs to decommission each production facility, and the cost to finance a spill response and incident cleanup.
(1) The Supervisor shall estimate the cost based on the number and volume of tanks, the estimated volume and types of fluids in the tanks, attendant facility equipment and stored materials onsite, the cost of similar facility decommissioning and removal projects, and any estimates received from licensed demolition contractors.
(2) The Supervisor shall annually review the amount of a life-of-production facility bond and, if needed, establish a new bond amount to ensure the safe decommissioning of each production facility, and the financing of spill response and incident cleanup.
(e) Upon failure of an operator to perform appropriate spill response and cleanup, or upon failure of an operator to comply with corrective action as required in an order of the Supervisor, the Supervisor may perform work in accordance with Public Resources Code Section 3226. The Supervisor may levy upon a life-of-well or life-of-production facility bond to pay the cost of the work.
(f) The operator shall replenish the amount levied from a life-of-well or life-of-production facility bond within 30 days from when the Supervisor levied the bond.
1. New section filed 12-30-2010; operative 1-29-2011 (Register 2010, No. 53).
Note: Authority cited: Sections 3013 and 3270.4, Public Resources Code. Reference: Sections 3204, 3226 and 3270.4, Public Resources Code.
