AMENDED IN SENATE JULY 6, 2026

AMENDED IN ASSEMBLY MAY 18, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

97

Introduced by Assembly Member Hart

February 20, 2026

An act to amend Sections 3202 and 3205.8 of the Public Resources Code, relating to oil and gas.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

Under existing law, the Geologic Energy Management Division in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. The State Oil and Gas Supervisor supervises the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities related to oil and gas production, as provided. Existing law divides the state into districts and requires the supervisor to appoint one chief deputy and at least one district deputy for each of the districts.

Existing law requires a person who acquires the right to operate a well or production facility, as soon as it is reasonably possible, but no later than the date when the acquisition of the well or production facility becomes final, to notify the supervisor or the district deputy, in writing, of the person’s operation, as provided. Existing law further requires a person who acquires the right to operate a well or production facility to file with the 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. Existing law requires a person who intends to acquire the right to operate a well or production facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition, to submit a request to the supervisor for a determination of the amount of the bond required before completing the acquisition and prohibits that person from completing the acquisition until the determination is received and the bond has been filed with the supervisor.

A person who violates, fails, neglects, or refuses to comply with requirements of the oil and gas laws, including the bonding requirements described above, is guilty of a misdemeanor, as provided.

This bill would make the above-described requirements applicable to a person who acquires, or intends to acquire, as applicable, the right to control a well or production facility and would make conforming changes, as provided. The bill would provide that, for purposes of filing an indemnity bond, a person who “acquires a right to operate or control a well or production facility” includes, but is not limited to, the rights a person acquires through the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the operator resulting in the acquisition of more than 50% of the voting stock of the operator and or through a liquidation or dissolution of the operator, among other transactions. By expanding the scope of a crime, the bill would impose a state-mandated local program.

Existing law exempts from the above-described requirements relating to filing an indemnity bond 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, as provided.

This bill would delete that exemption.

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.

This bill would make the operation of its provisions contingent upon the enactment of AB 2716 of the 2025–26 Regular Session.

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

SECTION 1.

Section 3202 of the Public Resources Code is amended to read:

3202.

(a) A person who acquires the right to operate or control a well or production facility, whether by purchase, transfer, assignment, conveyance, exchange, or other disposition, shall, as soon as it is reasonably possible, but no later than the date when the acquisition of the well or production facility becomes final, notify the supervisor or the district deputy, in writing, of the person’s acquisition of the right to operate or control a well or production facility. The acquisition of a well or production facility shall not be recognized as complete by the supervisor or the district deputy until the new operator or person who has acquired control of the well or production facility provides all of the following material:

(1) The name and address of the person from whom the well or production facility was acquired.

(2) The name and location of the well or production facility, and a description of the land upon which the well or production facility is situated.

(3) The date when the acquisition becomes final.

(4) The date when possession was or will be acquired.

(5) An indemnity bond for each well as required pursuant to Section 3204, 3205, or 3205.8, as applicable.

(b) (1) Upon request of the supervisor, the new operator or person who has acquired control of the well or production facility shall, within 15 days, provide to the division copies of the documents recorded with a governmental office involving the sale, assignment, transfer, conveyance, exchange, or other disposition of the well or production facility.

(2) If, after reviewing the documents submitted pursuant to paragraph (1), the division determines additional documentation is needed to validate the sale, assignment, transfer, conveyance, exchange, or other disposition of the well or production facility, the division shall notify the new operator or person who has acquired control of the well or production facility.

(3) Upon receiving notice pursuant to paragraph (2), the new operator or person who has acquired control of the well or production facility shall, within 30 days, provide to the division documents necessary to identify the operator of the well or production facility or the person who has acquired control of the well or production facility. If the documents are not otherwise publicly available, the new operator or the person who has acquired control of the well or production facility may redact information from the documents before submitting them to the division if the division agrees the information is not relevant to identification of the current operator of the well or production facility.

(c) After notice is given pursuant to subdivision (a) and until another person acquires the well or production facility, the new operator or the person who has acquired control of the well or production facility shall notify the supervisor whether any of the rights have changed. That notification shall be in writing and occur every other year by July 1.

(d) The new operator or the person who has acquired control of the well or production facility shall also notify the supervisor within 30 days of any quitclaim of a well or production facility.

(e) The supervisor shall maintain records of all transfers recognized as complete pursuant to subdivision (a), including all materials required to be provided by the new operator or person who has acquired control of the well or production facility under that subdivision, and shall make those records available on the division’s internet website.

SEC. 2.

Section 3205.8 of the Public Resources Code is amended to read:

3205.8.

(a) (1) Notwithstanding any other provision of this chapter, a person who acquires the right to operate or control a well or production facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition shall, as soon as possible, but no 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.

(2) A person who acquires the right to operate or control more than one well or production facility, by purchase, transfer, assignment, conveyance, exchange, or other disposition, or who operates or controls 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 or person in control, 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.

(b) A person who intends to acquire the right to operate or control 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.

(c) 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.

(d) In lieu of the bond required to be provided pursuant to subdivision (a), the operator or person who acquires the right to control 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, or a fully funded trust fund, but does not include self-insurance or corporate guarantees. The required financial assurance may be obtained or funded by the transferor of the covered well.

(e) 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.

(f) For purposes of this section, a person who “acquires a right to operate or control a well or production facility” includes, but is not limited to, the rights a person acquires through any of the following transactions involving an operator:

(1) The direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the operator resulting in the acquisition of more than 50 percent of the voting stock of the operator.

(2) A merger, reverse merger, acquisition, or consolidation in which the person is a party.

(3) The sale, exchange, or transfer of all or substantially all of the assets of the operator.

(4) A liquidation or dissolution of the operator.

(5) Any other event in which multiple related sales or exchanges of the voting securities or assets of the operator result in a party acquiring functional ability to control, direct, or manage a well or production facility.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.

SEC. 4.

This act shall become operative only if Assembly Bill 2716 of the 2025–26 Regular Session is enacted and becomes effective on or before January 1, 2027.