Cost Estimate Regulations for Oil and Gas Operations

2024081310

California Department of Conservation (DOC)

NOE - Notice of Exemption

8/29/2024

8/29/2024

Jan Perez

Department of Conservation, Geologic Energy Management Division

Senior Environmental Scientist

Lead/Public Agency

715 P Street, MS 1803
Sacramento, CA 95818

(916) 445-9686

jan.perez@conservation.ca.gov

This regulation will apply statewide.

Categorical Exemption

14 CCR § 15306

Class 6, Information Collection (14 CCR § 15306): The Project is categorically exempt from CEQA under the Class 6 exemption per the CEQA Guidelines because the Project is administrative and procedural in nature. CalGEM would collect data from operators of the estimated costs to plug and abandon their wells and decommission attendant facilities. CalGEM would then study the data to revise bonding requirements for operators and create a basis for CalGEM to request additional State and federal funds to plug and abandon orphan wells and decommission attendant facilities. The Class 6 exemption therefore applies, as it involves basic data collection for study that would lead to action that CalGEM has not yet approved, adopted, or funded.

Categorical Exemption

14 CCR §§ 15307, 15308):

Classes 7 and 8, Actions by Regulatory Agencies for Protection of Natural Resources and the Environment (14 CCR §§ 15307, 15308): The Project is categorically exempt from CEQA under the Class 7 and Class 8 exemptions per the CEQA Guidelines because the Project consists of regulations to implement. Per Public Resources Code (PRC) section 3250 et. seq., hazardous and idle-deserted oil and gas wells are public nuisances, and it is essential, in order to protect life, health, natural resources, and the environment that such oil and gas wells be plugged and abandoned, re-abandoned, produced, or otherwise remedied to mitigate, minimize, or eliminate their danger to life, health, natural resources, and the environment. CalGEM would undertake the rulemaking as authorized by State statute, including PRC section 3205.7. Moreover, the rulemaking would be undertaken to assure the maintenance, restoration, enhancement, and protection of natural resources and the environment via criteria and reporting that CalGEM, the Legislature, and stakeholders would study and rely upon for decision making and other actions consistent with the Class 7 and Class 8 exemptions. For example, the cost estimates resulting from the rulemaking would inform appropriate bonding requirements for operators, making additional necessary funding available when the State needs to plug and abandon orphan wells and otherwise remediate the well sites to protect life, health, natural resources, and the environment. Further, tracking the changes in the criteria-driven cost estimates over time would facilitate the ability to adjust bond requirements and seek additional State and federal funding to ensure the monies that the State requires for orphan wells are available when needed to perform the protective work.

Categorical Exemption

14 CCR § 15061(b)(3)

General or “Common Sense” Exemption (14 CCR § 15061(b)(3)): CalGEM has determined that the Project is exempt from full review under CEQA under the General Rule or “Common Sense” exemption (14 CCR § 15061(b)(3)), which states that a project is exempt from CEQA if “the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The Project is administrative and procedural in nature, which would not result in significant or potentially significant adverse impacts on the environment because compliance responses to the regulations would not result in any physical change to the existing environment. These administrative and procedural changes consist of establishing criteria for operators to submit cost estimates related to plugging and abandoning their wells and decommission attendant facilities.