Plain English Breakdown
The official text does not specify what happens if AB 2716 fails to pass, only that the operation of these provisions is contingent on it.
AB-2461: New Rules for Oil and Gas Bonds
This law expands bonding requirements to people who gain control of oil or gas wells, removes an exemption for high-producing wells, but only takes effect if another bill is passed.
What This Bill Does
- Expands existing bonding rules to apply to anyone who acquires the right to control a well or facility, not just those with operating rights.
- Defines acquiring control to include buying more than 50% of an operator's voting stock through sales or exchanges.
- Includes liquidation or dissolution of an operator as events that trigger bonding requirements for new owners.
- Removes the current exemption from filing a bond for wells producing over 15 barrels of oil daily, natural gas storage wells, and high-producing natural gas wells.
- Makes it a crime to fail, neglect, or refuse to follow these updated bonding rules.
Who It Names or Affects
- People who buy more than half the voting stock of an oil and gas operator.
- Companies that acquire control through liquidation or dissolution of another company.
- Owners of high-producing wells that were previously exempt from filing bonds.
- The Geologic Energy Management Division in the Department of Conservation.
Terms To Know
- Indemnity bond
- A financial guarantee filed with the state to cover costs for plugging wells, removing facilities, and restoring land.
- Voting stock
- Shares of a company that give the owner the right to vote on business decisions; buying over 50% gives control under this bill.
- Liquidation or dissolution
- The process of closing down and selling off all assets of a company, which can transfer rights to new owners.
Limits and Unknowns
- This law only takes effect if Assembly Bill 2716 from the 2025–26 session is also passed.
- The bill states that no state reimbursement will be provided for costs mandated by this act.