California oil and gas regulations are administered by the Geologic Energy Management Division (CalGEM) within the Department of Conservation, under Division 3 of the Public Resources Code and Title 14 of the California Code of Regulations. The rules reach every stage of a well’s life: permitting, construction, testing, idle-well management, plugging, and surface restoration. California also enforces a 3,200-foot setback between new oil and gas activity and homes, schools, and hospitals, and no longer issues permits for hydraulic fracturing.
Who Regulates Oil and Gas in California
CalGEM supervises oil, gas, and geothermal well operations statewide. The Public Resources Code designates it as the “Geologic Energy Management Division in the Department of Conservation.”1California Legislative Information. California Public Resources Code 3000-3017 – Definitions and General Provisions The agency handles permitting, construction oversight, integrity testing, idle-well tracking, and permanent abandonment. It also runs California’s Underground Injection Control program for oil-and-gas-related (Class II) wells, authority the state received from the EPA in 1983 under the Safe Drinking Water Act.2U.S. Environmental Protection Agency. EPA Oversight of California’s Underground Injection Control (UIC) Program The EPA keeps final review authority over requests to exempt an aquifer from drinking-water protection.
Permits and Well Construction
No operator can drill, rework, or deepen a well without CalGEM’s prior written approval. The operator files a Notice of Intention to Drill New Well, or a Rework/Supplementary Notice for modifications, and must wait for approval before any work begins.3Legal Information Institute. California Code of Regulations Title 14 Section 1963 – Notice to Drill New Well or Convert Existing Well Engineering plans showing safe construction must accompany the submission.
Cementing standards are prescriptive. Surface casing is cemented from the casing shoe all the way to the surface. Intermediate and production casings need cement extending at least 500 feet above any oil, gas, or abnormal-pressure zone, and at least 100 feet above the base of any freshwater zone.4Legal Information Institute. California Code of Regulations Title 14 Section 1722.4 – Cementing Casing A district deputy may order cement bond logs or temperature surveys to confirm the seal. A failed primary cement job must be re-cemented before the operator moves on.
The 3,200-Foot Health Protection Zone
Senate Bill 1137 created “health protection zones” extending 3,200 feet from the property line of any sensitive receptor, which includes residences, schools, childcare facilities, and hospitals. Inside that zone, CalGEM cannot approve a notice of intention to drill a new well or permanently alter the casing of an existing well. The narrow exceptions are plugging and abandoning wells, responding to a threat to public health or the environment, or complying with a court order.5California Legislative Information. California Public Resources Code 3281
Operators of existing wells inside a health protection zone must also meet new operational standards as of January 1, 2025. Nighttime noise must stay at or below ambient levels, light must be minimized at the property boundary, dust and particulates must be controlled, and contact information for community complaints must be posted on the site perimeter.6California Legislative Information. SB 1137 – Oil and Gas Operations, Sensitive Receptors The oil industry dropped a ballot referendum challenging the law in 2024, so enforcement is fully in effect.7Governor of California. California Beats Big Oil – Again
Fracking Ban and the 2045 Phase-Out
California stopped issuing new hydraulic fracturing permits, with the full ban taking effect October 1, 2024. Governor Newsom directed CalGEM to begin the rulemaking in April 2021 and asked the California Air Resources Board to analyze pathways to phase out all oil extraction in the state by 2045.8Governor of California. Governor Newsom Takes Action to Phase Out Oil Extraction in California CalGEM can no longer approve permits for hydraulic fracturing or other high-intensity well stimulation. The 2045 phase-out itself is a policy target carried through the CARB Scoping Plan rather than a statutory deadline, and enforcement mechanisms are still being developed.
Integrity Testing During Operation
Testing schedules vary by well type. For underground gas storage wells, operators must run temperature and noise logs at least annually, perform a casing wall thickness inspection at least every 24 months, and pressure-test the production casing on a schedule approved by CalGEM.9Legal Information Institute. California Code of Regulations Title 14 Section 1726.6 – Mechanical Integrity Testing If corrosion will compromise the casing’s pressure capacity within two years, the well must be remediated before injection or withdrawal resumes.
Injection wells used for wastewater disposal or enhanced oil recovery must pass a casing pressure test before first injection and at least once every five years after. Gas disposal wells get tested annually.10Legal Information Institute. California Code of Regulations Title 14 Section 1724.10.1 – Mechanical Integrity Testing Part One – Casing Integrity A failed pressure test must be reported to CalGEM immediately, and the well stays offline until the agency gives written approval to resume. Injection into any zone that currently or could potentially serve as a drinking water source requires a formal aquifer exemption with both state and federal review.
Idle Wells
A well that sits inactive can corrode and leak, so California charges escalating annual fees that grow the longer the well remains idle:
- Less than 3 years idle: $1,000 per year
- 3 to under 8 years: $2,500 per year
- 8 to under 15 years: $5,000 per year
- 15 to under 20 years: $12,500 per year
- 20 years or longer: $22,500 per year, rising to $60,000 for wells idle 25 years or more beginning January 1, 2029
Fees are due by May 1 each year. An operator can skip the fees by filing an idle well management plan with CalGEM covering up to eight years, laying out a schedule for either returning wells to production or plugging and abandoning them. The plan must prioritize wells by age, proximity to sensitive receptors, and any threat to life, health, or natural resources.11California Legislative Information. California Public Resources Code 3206
Operators also must run integrity and fluid-level tests on idle wells. A well idle for 15 years or more needs an engineering analysis showing it is still viable to return to production. Failing to comply with idle well requirements is treated as conclusive evidence that the well has been deserted, which lets CalGEM order it plugged and abandoned.12California Legislative Information. California Public Resources Code 3206.1
Plugging, Abandonment, and Bonds
When a well permanently stops producing, the operator must plug and abandon it to CalGEM’s satisfaction. The work must isolate every oil-bearing and gas-bearing formation, protect underground and surface water suitable for irrigation or domestic use, and prevent future damage to life, health, property, or natural resources.13California Legislative Information. California Public Resources Code 3208 In practice, cement plugs are set at multiple intervals in the wellbore to seal each geological zone, and surface facilities are decommissioned.14Legal Information Institute. California Code of Regulations Title 14 Section 1723 – Plugging and Abandonment – General Requirements
Before any drilling, redrilling, deepening, or permanent casing alteration, the operator must post an indemnity bond from an authorized surety company. The per-well amounts are $25,000 for wells under 10,000 feet deep and $40,000 for wells 10,000 feet or deeper. The bond is filed with the notice of intention and guarantees compliance with Division 3 of the Public Resources Code, including costs the state incurs to enforce compliance.15California Legislative Information. California Public Resources Code 3204 CalGEM can require additional security when an operator poses a heightened risk of deserting wells or threatening natural resources.
Production and Water Reporting
Operators file monthly production reports for every well. Each report must show oil, gas, and water volumes from each well; the number of wells drilling, producing, injecting, or idle; and the disposition of gas and water, including anyone the gas was delivered to. Operators also disclose the source of water used in their operations, the volume of water suitable for domestic or irrigation purposes, and the specific disposal method for all water generated.16California Legislative Information. SB 1281 – Oil and Gas Production, Water Use Water data, including treatment and recycling of produced water, is reported quarterly.
Penalties for Violations
CalGEM typically starts with a compliance order or Notice of Violation telling the operator to fix the problem. If that fails, the agency can refer the matter for civil penalties through the Attorney General or a local prosecutor. The civil penalty tiers are:
- Standard violations: up to $50,000 per violation per day, dropping to a maximum of $25,000 per day if the operator shows the violation did not harm or seriously threaten human health, property, or the environment and was not chronic.
- Noncompliance with a CalGEM order: up to $50,000 per day of continued noncompliance.
- Intentional or negligent violations: up to $70,000 per violation per day.
- False statements in permits, reports, or records: up to $70,000 per violation per day.
Civil penalties are assessed after referral by CalGEM’s supervisor.17California Legislative Information. California Public Resources Code 3236.2 Separately, anyone who obstructs a CalGEM inspection, fails to submit required reports, or files a fraudulent report commits a misdemeanor punishable by a fine of $500 to $5,000, up to six months in jail, or both.18California Legislative Information. California Public Resources Code 3236 The most serious cases, involving threats to life, health, or the environment, can go to a district attorney, city attorney, or the Attorney General for criminal prosecution.