HB 386

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UNOFFICIAL COPY AS OF 02/10/15 15 REG. SESS. 15 RS BR 1262

AN ACT relating to oil and gas production and reclamation.

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

SECTION 1. A NE SECTION O! "RS #5#.5$$ TO #5#.%2$ IS CREATE&

TO REA& AS !O''OS(

(1) For the purposes of this section and ections !" #" and $ of this Act" a stora%e

tank facility that is not bein% acti&ely used and maintained shall be deemed

abandoned if:

(a) 'he cabinet sends written notice" by certified mail" return receipt reuested"

to the address of the last known owner or operator of the facility or tank or

to the re%istered a%ent of a corporate owner or operator and

(b) 'he owner or operator fails to respond within thirty (#*) days after

recei&in% the notice indicatin% the intent to continue to use the tank or

facility+

(!) ,ithin thirty (#*) days of the owner or operator-s indication of intent to continue

to use the tank or facility" the owner or operator shall restore the status of the

tank or facility to acti&e maintenance and shall implement a spill pre&ention"

control" and countermeasure plan+ .f after thirty (#*) days of an operator-s

indication of intent to continue to use the tank or facility" the operator fails to

restore the status of the facilities to acti&e maintenance" the cabinet shall deem

the tank or facility abandoned+


TO REA& AS !O''OS(

(1) 'here is hereby created the Kentucky Abandoned tora%e 'ank /eclamation

0ro%ram+ 'he purpose of the pro%ram is to reclaim abandoned stora%e tank

facilities in order to return the property to producti&e use+ /eclamation of

abandoned stora%e tank facilities shall include remo&in% necessary tank

infrastructure and remo&in% primary and secondary sources of contamination of

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the land" air" and water+ Abandoned stora%e tank facilities enrolled in the

pro%ram shall be eli%ible for reclamation and clean up funds from the Kentucky

abandoned stora%e tank reclamation fund+

(!) 'he Kentucky abandoned stora%e tank reclamation fund is hereby created as an

interest bearin%" restricted" a%ency account+ 'he fund shall be administered by

the cabinet+ .nterest credited to the account shall be retained in the account+

otwithstandin% K/ $2+!!3" any moneys remainin% in the fund at the close of

the fiscal year shall not lapse but shall be carried forward into the succeedin%

fiscal year to be used for the purposes set forth in this section and ections 1" #"

and $ of this Act+

(#) 4oneys in the fund shall be for carryin% out the purpose pro&ided in subsection

(1) of this section includin% any administrati&e costs" set forth in this section and

ections 1" #" and $ of this Act+ 'he fund may recei&e moneys from federal and

state %rants or appropriations" and from any other proceeds for the purposes of

this section and ections 1" #" and $ of this Act+

($) Funds e5pended for costs incurred in reclaimin% abandoned stora%e tank

facilities shall be in accordance with the pro&isions of this section and after the

cabinet deems that there is:

(a) o person identified or found with continuin% le%al responsibility for the

abandoned stora%e tank facility or

(b) /eclamation measures are necessary to respond to an imminent threat to

the public health" safety" and en&ironment+

(2) /eclamation measures paid for by the fund shall include the followin%:

(a) /emo&al and disposal of abandoned stora%e tank facilities and

(b) /eclamation of lands affected by abandoned stora%e tank facilities

includin%:

1+ /emo&al of abo&e%round flow lines

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!+ /emo&al or treatment of contaminated soil to no more than three (#)

feet in depth

#+ 6limination of all berms" dikes" and other structures utili7ed as spill

pre&ention" control" and countermeasure structures and

$+ Gradin% and seedin% of the surface where the tank or tank battery was

located+

(8) .f durin% the course of remo&in% and reclaimin% an abandoned stora%e tank

facility" the di&ision obser&es e&idence of soil contamination below three (#) feet

depth" the di&ision shall consult with the 9epartment for 6n&ironmental

0rotection to determine whether further action is necessary to protect public

health and the en&ironment+ othin% contained in this section shall be construed

to obli%ate the fund to pro&ide additional moneys for remo&al or treatment of

contaminated soil other than pro&ided in subsection (2)(b)!+ of this section+

() Any person performin% reclamation measures pursuant to this section shall

comply with applicable local" state" and federal laws and re%ulations+

(;) 'he cabinet shall ha&e the authority to:

(a) Contract for ser&ices pro&ided by and en%a%e in cooperati&e pro

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stora%e tank facility and to access any other property for the purpose of remo&al

and reclamation of the abandoned stora%e tank facility if the cabinet makes a

findin% of fact that:

(a) An abandoned stora%e tank facility poses a threat to human health" safety"

and the en&ironment under subsection ($)(b) of ection ! of this Act and is

eli%ible to be enrolled in the Kentucky Abandoned tora%e 'ank

/eclamation 0ro%ram

(b) 'he cabinet determines that action in the public interest should be taken to

dispose of the abandoned stora%e tank facilities and to reclaim the lands

threatened by the abandoned stora%e tank facilities and

(c) 1+ 'he owner or owners of the property are not known or are not readily

a&ailable or

!+ 'he owner or owners will not %i&e permission for the Commonwealth"

political subdi&isions" or their a%ents" employees" or contractors to

enter upon the property+

(!) 0rior to entry on the land for the purpose of conductin% remediation" the cabinet

shall %i&e notice by mail to the all owners of the property" if known+ .f the owners

are unknown" then the cabinet shall post notice upon the premises and shall

ad&ertise once in a newspaper of %eneral circulation in the municipality or

county in which the land where the abandoned stora%e tank facilities are located+

(#) Additionally" the cabinet and its authori7ed representati&es" a%ents" and

contractors shall ha&e the ri%ht to enter upon any property for the purpose of

conductin% field inspections or in&esti%ations to determine the e5istence and

status of abandoned stora%e tank facilities and to determine the feasibility of

remo&al and reclamation of the abandoned stora%e tank facility+

($) 6ntry upon the land under this section shall be construed as an e5ercise of the

Commonwealth-s police power for the protection of the public health" safety" and

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%eneral welfare+ 6ntry shall not be construed as an act of condemnation of

property or of trespass thereon+

(2) 'he cabinet may initiate" in addition to any other remedies pro&ided in K/

Chapter #2#" in any court of competent

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(!) 'he cabinet may initiate an action for reimbursement of costs in any court of

competent

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(!) 'he operator shall" for the purpose of %i&in% notice" secure a certification from

the property &aluation administrator-s office" which shall identify the name and

address of any surface property owner entitled to notice under this section+ 'he

property &aluation administrator-s written certification shall be conclusi&e

e&idence of the surface ownership for the purposes of %i&in% notice under this

section+ 'he notice to the surface property owners shall be deli&ered by re%istered

or certified mail+ Copies of the notice to surface property owners shall be filed

with the 9i&ision of >il and Gas within fifteen (12) days of mailin% the notice+

(#) 'he notice to surface property owners shall include:

(a) 'he name and address of the operator

(b) 'he surface location of the proposed well and

(c) 'he name and location of the cabinet office where the permit and related

documents are a&ailable for public inspection and" if the documents are

a&ailable electronically" the ,eb site where the permit and related

documents may be inspected+


TO REA& AS !O''OS(

(1) At least twenty (!*) days prior to the commencement of a hi%h=&olume hori7ontal

fracturin% treatment on a deep hori7ontal well" an operator shall conduct a

baseline water uality test of any down=%radient surface water impoundment or

water supply from a %roundwater source that is used for domestic" a%riculture"

industrial" or other le%itimate use located within one thousand (1"***) feet of the

surface location of the proposed deep hori7ontal well+ Between three (#) and si5

(8) months followin% the completion of the deep hori7ontal well" a subseuent

water uality test shall be conducted of the water supply where a baseline sample

was collected+

(!) 'he water uality tests shall be conducted by a laboratory certified by the cabinet

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for drinkin% water uality samplin%" and the test analysis shall be submitted to

the 9i&ision of >il and Gas and to the water supply owner within thirty (#*) days

of the receipt of the analysis+ 6ach set of samples collected under this section

shall include analysis for:

(a) p?

(b) 'otal dissol&ed solids" dissol&ed methane" dissol&ed propane" dissol&ed

ethane" alkalinity" and specific conductance

(c) Chloride" sulfate" arsenic" barium" calcium" chromium" iron" ma%nesium"

selenium" cadmium" lead" man%anese" mercury" and sil&er

(d) urfactants

(e) Ben7ene" toluene" ethyl ben7ene" and 5ylene and

(f) Gross alpha and beta particles to determine the presence of any naturally

occurrin% radioacti&e materials+

(#) 'he 9i&ision of >il and Gas shall de&elop a form for an operator to document a

water supply owner-s permission to collect a water sample+ An operator is e5empt

from the reuirements of this section if a water supply owner refuses to %rant

access despite an operator-s %ood faith efforts to obtain consent to acuire the

necessary water uality samples+ An operator shall document the %ood faith

efforts used to seek consent from the water supply owner who refused access to

conduct the water uality samplin%+ 'he operator shall submit the documented

%ood faith efforts to the 9i&ision of >il and Gas+

SECTION %. A NE SECTION O! "RS #5#.5$$ TO #5#.%2$ IS CREATE&

TO REA& AS !O''OS(

(1) A &endor or ser&ice pro&ider performin% any part of a hi%h=&olume hori7ontal

fracturin% treatment shall furnish the operator with the information reuired by

subsection (!) of this section" as applicable" and with any information as needed

for the operators to comply with this section+ 'he information shall be pro&ided

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as soon as possible and in no case later than forty=fi&e ($2) days after the

completion of a hi%h=&olume hori7ontal fracturin% treatment+

(!) ,ithin ninety (3*) days of concludin% a hi%h=&olume hori7ontal fracturin%

treatment" the operator of the hori7ontal well shall complete the chemical

disclosure re%istry form and post the form on the chemical disclosure re%istry+

'he followin% information shall be reuired to be furnished:

(a) >perator-s name

(b) 'he date of the hi%h=&olume hori7ontal fracturin% treatment

(c) 'he county in which the well is located

(d) 'he A0. number for the well

(e) 'he well name and number

(f) 'he lon%itude and latitude of the wellhead

(%) 'he true &ertical depth of the well

(h) 'he total water &olume used

(i) 6ach chemical additi&e used in the fracturin% treatment" includin% the

chemical abstract ser&ice number added" if applicable

(

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!+ 4ay be the incidental result of a chemical reaction or chemical

process or

#+ 4ay be constituents of naturally occurrin% materials that become part

of a hi%h=&olume hori7ontal fracturin% treatment" where the

chemicals are unknown to the &endor" ser&ice pro&ider" or operator+


TO REA& AS !O''OS(

(1) .f the &endor" ser&ice pro&ider" or operator of a hi%h=&olume hori7ontal

fracturin% treatment claims that the &olume of a chemical or relati&e

concentration of chemical is a trade secret" the operator of the hori7ontal well

shall indicate that claim on the chemical disclosure re%istry form and" as

applicable" the &endor" ser&ice pro&ider" or operator shall submit a reuest to the

director to desi%nate the information as a trade secret+

(!) At the time of claimin% entitlement to trade secret protection" the &endor" ser&ice

pro&ider" or operator shall file with the director the followin% information on a

form prescribed by the di&ision+ 'he form shall include:

(a) 'he claimant-s name" authori7ed representati&e" mailin% address" and

phone number

(b) 'he specific information claimed to be entitled to trade secret protection

(c) ,hether there has been a pre&ious determination by a court" or by a

%o&ernmental a%ency that the information is or is not entitled to

confidential treatment and

(d) 'he measures taken by the &endor" ser&ice pro&ider" or operator to protect

the confidentiality of the information+

(#) Any information claimed to be a trade secret shall be disclosed by the director

only:

(a) .n accordance with this section and ections 3 and 1* of this Act or

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(b) .f ordered by a court to do so+

($) @endors" ser&ice pro&iders" and operators shall identify the &olume and relati&e

concentration of any chemicals used in the hi%h=&olume hori7ontal fracturin%

treatment that are claimed to be a trade secret to the cabinet+ 'he cabinet shall

release that information to any health professional who reuest the information

if:

(a) 'he reuest is in writin%

(b) 'he health professional pro&ides a written statement of the need for the

information and

(c) 'he health professional e5ecutes a confidentiality a%reement+

(2) 'he health professional-s written statement of need under subsection ($)(b) of

this section shall be a statement that the health professional has a reasonable

basis to belie&e that:

(a) 'he information is needed for purposes of dia%nosis or treatment of an

indi&idual and

(b) 'he indi&idual bein% dia%nosed or treated may ha&e been e5posed to the

chemical concerned+

(8) 'he confidentiality a%reement shall state:

(a) 'he health professional shall not use the information for purposes other

than the health needs asserted in the written statement of need and

(b) 'he health professional shall otherwise maintain the information as

confidential+

() ,here a health professional determines that a medical emer%ency e5ists" and the

amount or mi5ture of any chemicals claimed to be a trade secret are necessary

for emer%ency treatment" the director shall:

(a) .mmediately direct the &endor" ser&ice pro&ider" or operator" as applicable"

to disclose the information to the health professional upon &erbal

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acknowled%ement by the health professional that:

1+ 'he information shall not be used for purposes other than the health

needs asserted and

!+ 'he health professional shall otherwise maintain the information as

confidential and

(b) /euest a written statement of need and a confidentially a%reement from

all health professionals to whom the information re%ardin% the

concentration or mi5ture of any chemicals claimed to be a trade secret was

disclosed" as soon as circumstances permit+

(;) .nformation disclosed to a health professional under this section shall not be

construed as publicly a&ailable by &irtue of the disclosure of the information to a

health care professional+ /elease of the information under this section shall not

be construed as a wai&er of a trade secret claim by the party who has asserted

that claim+

(3) 'he di&ision shall de&elop a form for the &endor" ser&ice pro&ider" or operator to

claim trade secret status under subsections (1) and (!) of this section and a

standard confidentiality a%reement for medical professionals under subsections

(2)" (8)" and () of this section+

SECTION -. A NE SECTION O! "RS #5#.5$$ TO #5#.%2$ IS CREATE&

TO REA& AS !O''OS(

(1) 'he director shall direct a &endor" ser&ice pro&ider" or operator" as applicable" to

immediately disclose information re%ardin% the concentration or mi5ture of a

chemical claimed to be a trade secret to the e5tent that the disclosure is necessary

to assist in respondin% to an emer%ency spill or dischar%e" e5cept that the

indi&iduals recei&in% the information shall not disseminate the information

further+ .n addition" the director upon reuest may disclose the specific

information concernin% the &olume of a chemical or relati&e concentration of

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chemicals" or both" which are claimed to be a trade secret for the purpose of

respondin% to an emer%ency spill or dischar%e if reuest is made by letter or

electronic mail from:

(a) 'he Kentucky 9epartment for 6n&ironmental 0rotection

(b) 'he Kentucky 9epartment for atural /esources

(c) 'he Kentucky 9epartment for 0ublic ?ealth or

(d) A local public health department+

(!) Any information disclosed under this section shall not be construed as publicly

a&ailable by &irtue of the disclosure to any entity listed in this section" and release

of the information under this section shall not be construed as a wai&er of a

trade secret claim by the party who has asserted that claim+

SECTION 1$. A NE SECTION O! "RS #5#.5$$ TO #5#.%2$ IS CREATE&

TO REA& AS !O''OS(

(1) 'he director shall notify the &endor" ser&ice pro&ider" or operator" as applicable"

within ten (1*) days of receipt of a reuest pursuant to the Kentucky >pen

/ecords Act for disclosure of information for which trade secret status has been

asserted+ 'he director may reuest additional information from the &endor"

ser&ice pro&ider" or operator" as applicable" to determine whether to %rant or

repen /ecords Act" the director may call upon the owner or operators to

assist in the defense of that determination+

(#) .f the cabinet makes a determination that the information is not entitled to

confidential treatment" notwithstandin% K/ 81+;* to 81+;;$" the director shall:

(a) otify the &endor" ser&ice pro&ider" or operator" as applicable" who asserted

the trade secret status and

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(b) 9elay release of the information for a period of ten (1*) workin% days after

mailin% the notice+

($) udicial re&iew of any determination under this section shall be undertaken in

accordance with the Kentucky >pen /ecords Act" and administrati&e re&iew of

the determination to release or to withhold information shall not be reuired+

Section 11. "RS #5#.10$ is amended to read as *ollos(

13 No person s4all aandon or remoe casings *rom an7 oil or gas ell8 eit4er dr7 or

producing8 it4out *irst plugging t4e ell in a secure manner approed 7 t4e

department and consistent it4 its administratie regulations. 9pon t4e department:s

plugging o* an aandoned ell in accordance it4 t4e re;uirements o* t4is

susection8 t4e department ma7 sell8 7 sealed id8 or include as part o*

compensation in t4e contract *or t4e plugging o* t4e ell8 all e;uipment remoed

*rom t4at ell and deposit t4e proceeds o* t4e sale into t4e oil and gas ell plugging

*und8 estalis4ed in "RS #5#.5-$(!;)

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manner descried in t4is susection or a person deemed to e an interest 4older *ails

to remoe t4e e;uipment e*ore a ell is plugged8 t4e department ma7 sell or

ot4erise dispose o* t4e e;uipment in accordance it4 t4is susection.

#3 I* a person *ails to compl7 it4 susection 13 o* t4is section8 an7 person la*ull7 in

possession o* land ad>acent to t4e ell or t4e department ma7 enter on t4e land upon

4ic4 t4e ell is located and plug t4e ell in t4e manner proided in susection 13

o* t4is section8 and ma7 maintain a ciil action against t4e oner or person

aandoning t4e ell8 >ointl7 or seerall78 to recoer t4e cost o* plugging t4e ell.

T4is susection s4all not appl7 to persons oning t4e land on 4ic4 t4e ell is

situated8 and drilled 7 ot4er persons.

Section 12. "RS #5#.51$ is amended to read as *ollos(

As used in "RS #5#.5$$ to #5#.%2$8 unless t4e conte?t ot4erise re;uires(

13 @&epartment@ means t4e &epartment *or Natural Resources

23 @Commissioner@ means t4e commissioner o* t4e &epartment *or Natural Resources

#3 @&irector@ means t4e director o* t4e &iision o* Oil and as as proided in "RS

#5#.5#$

+3 @Commission@ means t4e "entuc/7 Oil and as Conseration Commission as

proided in "RS #5#.565

53 @)erson@ means an7 natural person8 corporation8 association8 partners4ip8 receier8

goernmental agenc7 su>ect to "RS #5#.5$$ to #5#.%2$8 trustee8 so,called

common,la or statutor7 trust8 guardian8 e?ecutor8 administrator8 or *iduciar7 o* an7

/ind8 *ederal agenc78 state agenc78 cit78 commission8 political sudiision o* t4e

Commonealt48 or an7 interstate od7

63 @Correlatie rig4ts@ means t4e reasonale opportunit7 o* eac4 person entitled t4ereto

to recoer and receie or recei&e" it4out aste " t4e oil and gas in and under or

produced from a tract or tracts in which the person owns or controls an interest"

or proceeds thereof

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%3 @Oil@ means natural crude oil or petroleum and ot4er 47drocarons8 regardless o*

grait78 4ic4 are produced at t4e ell in li;uid *orm 7 ordinar7 production

met4ods and 4ic4 are not t4e result o* condensation o* gas a*ter it leaes t4e

underground reseroir

03 @as@ means all natural gas8 including casing4ead gas8 and all ot4er 47drocarons

not de*ined in susection %3 o* t4is section as oil

-3 @)ool@ means:

(a) An underground reseroir containing a common accumulation o* oil or gas or

ot4 or

(b) An area established by the commission as a pool .

Eac4 productie one o* a general structure 4ic4 is completel7 separated *rom an7

ot4er one in t4e structure8 or 4ic4 *or t4e purpose o* "RS #5#.5$$ to #5#.%2$

ma7 e so declared 7 t4e department8 is coered 7 t4e ord @pool@< as used

4erein=

1$3 @!ield@ means t4e general area 4ic4 is underlaid or appears to e underlaid 7 at

least one 13 pool and @*ield@ includes t4e underground reseroir containing oil or

gas or ot4. T4e ords @*ield@ and @pool@ mean t4e same t4ing 4en onl7 one 13

underground reseroir is inoled 4oeer8 @*ield8@ unli/e @pool8@ ma7 relate to to

23 or more pools

113 @ust and e;uitale s4are o* production@ means8 as to eac4 person8 an amount o* oil

or gas or ot4 sustantiall7 e;ual to t4e amount o* recoerale oil and gas in t4at

part o* a pool underl7ing 4is tract or tracts

123 @Aandoned8@ 4en used in connection it4 a ell or 4ole8 means a ell or 4ole

4ic4 4as neer een used8 or 4ic48 in t4e opinion o* t4e department8 ill no

longer e used *or t4e production o* oil or gas or *or t4e in>ection or disposal o* *luid

t4erein

1#3 @or/ale ed@ means(

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a3 A coal ed actuall7 eing operated commerciall7

3 A coal ed t4at t4e department decides can e operated commerciall7 and t4e

operation o* 4ic4 can reasonal7 e e?pected to commence it4in not more

t4an ten 1$3 7ears or

c3 A coal ed 4ic48 *rom outcrop indications or ot4er de*inite eidence8 proes

to t4e satis*action o* t4e commissioner to e or/ale8 and 4ic48 4en

operated8 ill re;uire protection i* ells are drilled t4roug4 it

1+3 @ell@ means a ore4ole:

(a) &rilled or proposed to be drilled

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(a) For a deep well" an7 oner o* t4e rig4t to deelop8 operate8 and produce oil

and gas *rom a pool and to appropriate t4e oil and gas produced t4ere*rom8

eit4er *or 4imsel* or *or 4imsel* and ot4ers +

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e**icientl7 7 one 13 ell so as to produce t4e reasonale ma?imum< recoerale=

oil or gas reasonably reco&erable in theection o* natural gas *or purposes

o* storage

223 @Endangerment o* underground sources o* drin/ing ater@ means underground

in>ection 4ic4 ma7 result in t4e presence in underground ater8 4ic4 supplies or

can reasonal7 e e?pected to suppl7 an7 pulic ater s7stem8 o* an7 contaminant

and i* t4e presence o* theection

3 !or en4anced recoer7 o* oil or natural gas and

c3 !or storage o* 47drocarons 4ic4 are li;uid at standard temperature and

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pressure

2+3 @!luid@ means an7 material or sustance 4ic4 *los or moes 4et4er in a

semisolid8 li;uid8 sludge8 gas8 or an7 ot4er *orm or state

(!2) ?ori7ontal well means a well" the wellbore of which is initially drilled on a

&ertical or directional plane and which is cur&ed to become hori7ontal or nearly

hori7ontal" in order to parallel a particular %eolo%ical formation and which may

include multiple hori7ontal or stacked laterals

(!8) @ertical well means a well" the wellbore of which is drilled on a &ertical or

directional plane into a formation and is not turned or cur&ed hori7ontally to

allow the wellbore additional access to the oil and %as reser&es in the formation

(!) 0re&ailin% royalty means the royalty rate or percenta%e that the commission

determines is the royalty most commonly applicable with re%ard to the tract or

unit in the issue+ 'he royalty rate set by the commission shall not be less than

one=ei%hth (1;) or twel&e and one=half percent (1!+2D)

(!;) Best mana%ement practices means demonstrated practices intended to control

site run=off and pollution of surface water and %roundwater to pre&ent or reduce

the pollution of waters of the Commonwealth

(!3) Abandoned stora%e tank facility means any abo&e%round stora%e tank or

interconnected %roupin% of tanks that is no lon%er bein% acti&ely used and

maintained in con

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substances

(##) Chemical abstracts ser&ice number means the uniue identification number

assi%ned to a chemical by the Chemical Abstracts er&ice

(#$) Chemical means any element" chemical compound" or mi5ture of elements or

compounds that has its own specific name or identity" such as a chemical

abstracts ser&ice number

(#2) Chemical disclosure re%istry means the chemical re%istry known as FraFocus

de&eloped by the Groundwater 0rotection Council and the .nterstate >il and Gas

Compact Commission+ .f that re%istry becomes permanently inoperable" the

chemical disclosure re%istry shall mean another publicly accessible ,eb site that

is desi%nated by the commissioner

(#8) 9i&ision means the Kentucky 9i&ision of >il and Gas

(#) 6mer%ency spill or dischar%e means an uncontrolled release" spill" or dischar%e

associated with an oil or %as well or production facility that has an immediate

ad&erse impact to public health" safety" or the en&ironment as declared by the

secretary of the cabinet

(#;) ?ealth professional means a physician" physician assistant" nurse practitioner"

re%istered nurse" or emer%ency medical technician licensed by the

Commonwealth of Kentucky

(#3) ?i%h=&olume hori7ontal fracturin% treatment means the stimulated treatment

of a hori7ontal well by the pressuri7ed application of more than ei%hty thousand

(;*"***) %allons of water" chemical" and proppant" combined for any sta%e of the

treatment or three hundred twenty thousand (#!*"***) %allons in the a%%re%ate

for the treatment used to initiate or propa%ate fractures in a %eolo%ical formation

for the purpose of enhancin% the e5traction or production of oil or natural %as

($*) 0roppant means sand or any natural or man=made material that is used in a

hydraulic fracturin% treatment to prop open the artificially created or enhanced

)age 21 o* +5BR1262$$.1$$ , 1262 , ##-# ac/eted

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fractures once the treatment is completed

($1) 'otal water &olume means the total uantity of water from all sources used in

a hi%h=&olume hydraulic fracturin% treatment

($!) 'rade secret means information concernin% the &olume of a chemical or

relati&e concentration of chemicals used in a hydraulic fracturin% treatment that:

(a) .s known only to the hydraulic fracturin% treatment-s owners" employees"

former employees" or persons under contractual obli%ation to hold the

information in confidence

(b) ?as been perfected and appropriated by the e5ercise of indi&idual in%enuity

which %i&es the hydraulic fracturin% treatment-s owner an opportunity to

retain or obtain an ad&anta%e o&er competitors who do not know the

information and

(c) .s not reuired to be disclosed or otherwise made a&ailable to the public

under any federal or state law or administrati&e re%ulation and

($#) Cabinet means the 6ner%y and 6n&ironment Cabinet .

Section 1#. "RS #5#.5-$ is amended to read as *ollos(

13 An7 person see/ing a permit re;uired 7 "RS #5#.5%$ s4all sumit to t4e

department a ritten application in a *orm prescried 7 t4e department.

23 Eac4 application s4all e accompanied 7 a speci*ied *ee as *ollos(

a3 T4e *ee s4all e t4ree 4undred dollars #$$3 *or eac4 ell to e drilled8

deepened8 or reopened *or an7 purpose relating to t4e production8

repressuring8 or storage o* oil or gas8 and *or eac4 ater suppl7 ell8

oseration ell8 and geological or structure test 4ole.

3 I* t4e department receies delegation o* aut4orit7 *or administration o* t4e

underground in>ection control program under Section 1+25 o* t4e Sa*e

&rin/ing ater Act )u. '. -#,52# as amended38 t4e department ma78 7

administratie regulation8 estalis4 a *ee or sc4edule o* *ees in an amount not

)age 22 o* +5BR1262$$.1$$ , 1262 , ##-# ac/eted

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to e?ceed *i*t7 dollars 5$3 per ell8 in addition to t4e *ees imposed 7

paragrap4 a3 o* t4is susection8 upon eac4 application to drill8 deepen8 or

reopen a ell *or an7 purpose relating to t4e production8 repressuring8 or

storage o* oil or gas8 and *or eac4 ater suppl7 ell8 oseration ell8 and

geological or structure test 4ole. T4e *ees or sc4edule o* *ees to e estalis4ed

7 administratie regulation s4all not e?ceed an amount su**icient to recoer

t4e costs incurred 7 t4e department in administering t4e 9nderground

In>ection Control )rogram less an7 ot4er state or *ederal *unds 4ic4 are made

aailale *or t4is purpose.

c3 All mone7 paid to t4e State Treasurer *or *ees re;uired 7 paragrap4 3 o* t4is

susection s4all e *or t4e sole use o* t4e department in t4e administration o*

t4e 9nderground In>ection Control )rogram under Section 1+25 o* t4e Sa*e

&rin/ing ater Act )u. '. -#,52# as amended3.

#3 Applications for each deep well shall be assessed a fee accordin% to the followin%

schedules:

(a) For a &ertical deep well:

1+ ,ith a total &ertical depth of se&en thousand ("***) feet or less" the

fee shall be fi&e hundred dollars (2**) and

!+ ,ith a total &ertical depth %reater than se&en thousand ("***) feet"

the fee shall be si5 hundred dollars (8**) and

(b) For a hori7ontal deep well:

1+ ,ith a total measured well depth of ten thousand (1*"***) feet" or

less" the fee shall be fi&e thousand dollars (2"***)

!+ ,ith a total measured well depth %reater than ten thousand (1*"***)

feet" the fee shall be si5 thousand dollars (8"***) and

#+ Fi&e hundred dollars (2**) for each additional lateral+

($) For a hori7ontal deep well" each additional deep hori7ontal well located on the

)age 2# o* +5BR1262$$.1$$ , 1262 , ##-# ac/eted

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same well pad shall be assessed the followin% fee:

(a) 'hree thousand dollars (#"***) for a total measured well depth up to ten

thousand (1*"***) feet and

(b) Four thousand dollars ($"***) for a total measured well depth %reater

than ten thousand (1*"***) feet+

(2) All mone7 paid to t4e State Treasurer *or licenses and *ees re;uired 7 "RS #5#.5$$

to #5#.%2$ s4all e *or t4e sole use o* t4e department and s4all e in addition to an7

mone7s appropriated 7 t4e eneral Asseml7 *or t4e use o* t4e department.

(8)

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285$1 *eet to #8$$$ *eet.................................................................................#8$$$.$$

#8$$1 *eet to #85$$ *eet.................................................................................#85$$.$$

#85$1 *eet to +8$$$ *eet.................................................................................+8$$$.$$

+8$$1 *eet to $"2** feet

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#+

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operator o* t4e ells coered under t4e ond. T4e corporate guarantee s4all

proide(

a3 T4at i* t4e operator *ails to per*orm it4 t4e proper plugging and

aandonment o* an7 ell coered 7 t4e lan/et ond8 t4e guarantor s4all do

so or proide *or alternate *inancial assurance and

3 T4e corporate guarantee s4all remain in *orce unless t4e guarantor sends notice

o* t4e cancellation 7 certi*ied mail to t4e operator and to t4e department.

Cancellation s4all not occur8 4oeer8 during t4e one 4undred tent7 12$3

da7 period eginning on t4e *irst da7 t4at ot4 t4e operator and t4e department

4ae receied notice o* cancellation8 as eidenced 7 t4e certi*ied mail return

receipts.

(18)

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(!#)

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3 I* t4e operator 4as not reac4ed an agreement it4 t4e department or 4as not

complied it4 t4e re;uirements set *ort4 7 it it4in *ort7,*ie +53 da7s a*ter

mailing o* t4e notice8 t4e ond s4all e *or*eited to t4e department.

(!)

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a3 An7 outstanding8 unaated iolations o* "RS C4apter #5# or t4e regulations

adopted pursuant t4ereto8 4ic4 4ae not een appealed

3 A *or*eiture o* a ond8 4et4er an indiidual ond or portion o* a lan/et

ond8 on an7 permit 4ere t4e operator 4as not entered into an agreed order

it4 t4e department *or t4e plugging and proper aandonment o* t4e ell or

ells on t4e *or*eited permit or permits or

c3 A permit or permits upon 4ic4 a ond or portion o* a ond 4as een *or*eited8

and t4e proceeds t4ere*rom 4aing een spent 7 t4e department to plug or

reclaim t4e permitted ell8 or ells8 unless t4e operator 4as made restitution to

t4e department *or all costs associated it4 t4e *or*eiture8 plugging8 and

proper aandonment.

Section 1+. "RS #5#.5-2 is amended to read as *ollos(

In addition to t4e poers con*erred upon t4e department 7 "RS #5#.5$$ to #5#.%2$ and

notit4standing an7 proision o* "RS #5#.5$$ to #5#.%2$8 t4e department is aut4oried

ut not oligated to deelop and promulgate a regulator7 program *or t4e purpose o*

accepting primar7 responsiilit7 *or administration o* t4e 9nderground In>ection Control

)rogram under Section 1+25 o* t4e Sa*e &rin/ing ater Act )ulic 'a -#,52# as

amended3. To t4at end8 t4e department s4all include in an7 regulator7 program deeloped

and promulgated under t4is proision(

13 Regulations regarding t4e drilling8 casing8 operation8 plugging8 construction8

conersion8 maintenance8 and aandonment o* class II ells to protect underground

sources o* drin/ing ater and to preent t4eir endangerment

23 Regulations pro4iiting underground in>ection t4roug4 class II ells e?cept as

aut4oried 7 suc4 regulations or 7 a permit issued pursuant t4ereto

#3 Regulations re;uiring oners or operators o* class II ells to demonstrate *inancial

responsiilit7 *or t4e costs o* closure o* all class II ells. Suc4 demonstration o*

*inancial responsiilit7 ma7 include ut need not e limited to t4e ell plugging ond

)age #2 o* +5BR1262$$.1$$ , 1262 , ##-# ac/eted

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re;uired 7 "RS #5#.5-$()ection Control

)rogram o* t4e Sa*e &rin/ing ater Act8 +2 9.S.C. sec. #$$* et se;.

Section 15. "RS #5#.5-$1 is amended to read as *ollos(

13

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*acilities8 and an7 ot4er in*ormation t4at ma7 e re;uired 7 t4e department.

Accompan7ing t4is narratie description s4all e a plat depicting t4e location

on t4e land o* all o* t4ese disturances or *acilities and

c3

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section and

3 A notice to read as *ollos( @I* 7ou do not agree it4 t4e proposed use o* 7our

land 7 t4e ell operator8 t4e ell operator ma7 re;uest mediation o* 7our

dispute 7 t4e eneral Counsel:s O**ice o* t4e &epartment *or Natural

Resources. I* mediation is re;uested8 and 7ou decide to participate8 eac4 part7

to t4e mediation ill e c4arged one 4undred dollars 1$$3 to 4elp coer t4e

cost o* mediation. Hou ill e noti*ied o* t4e time and place *or mediation8 i*

t4e ell operator c4ooses mediation8 and o* 7our rig4t to participate.@

T4e certi*ied mail receipt8 4en returned8 s4all e *iled 7 t4e ell operator it4 t4e

department and made part o* t4e permit application.

(2)

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return receipt re;uested. T4e department s4all conduct mediation at t4e site

proposed to e distured it4in *i*teen 153 da7s *rom t4e date re;uested8 i*

practicale. At t4e mediation8 t4e mediator ill attempt to *acilitate an agreement

eteen t4e ell operator and t4e sur*ace oner. I* an agreement is not *ort4coming

a*ter mediation8 t4e mediator s4all8 it4in *ie 53 da7s a*ter mediation8 issue a

report to t4e director o* t4e &iision o* Oil and as recommending t4at t4e director(

a3 Accept t4e plan

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13 &rilling units for &ertical deep wells(

a3 T4e commission s4all8 a*ter notice and a 4earing8 to e conducted in

accordance it4 "RS C4apter 1#B8 regulate t4e drilling and location o*

&ertical deep ells in a

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commission8 t4at t4e unit is partl7 outside t4e pool or *or some ot4er

reason a ell ot4erise located on t4e unit ould not e li/el7 to

produce in pa7ing ;uantities8 or topograp4ical conditions are suc4 as to

ma/e t4e drilling at t4e location undul7 urdensome " or other similar

cause. 4eneer an e?ception is granted8 t4e commission s4all ta/e

action as ill o**set an7 adantage 4ic4 t4e person securing t4e

e?ception ma7 4ae oer ot4er oners 7 reason o* t4e drilling o* t4e

ell as an e?ception

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(c) 'he establishment of any hori7ontal deep well unit shall be on terms that

are fair" reasonable" euitable" and which are necessary or proper to protect

and safe%uard the respecti&e ri%hts and obli%ations of the workin% interest

owners and the royalty owners based on the e&idence before the

commission+

(#) )ooling o* interests in drilling units(

a3 4en to 23 or more separatel7 oned tracts are emraced it4in a drilling

unit8 or 4en t4ere are separatel7 oned interests in all or a part o* a drilling

unit8 t4e interested persons ma7 pool t4eir tracts or interests *or t4e

deelopment and operation o* t4e drilling unit. In t4e asence o* oluntar7

pooling and upon application o* an7 operator 4aing an interest in t4e drilling

unit8 and a*ter t4e commission 4as gien notice to all persons reasonal7

/non to on an interest in t4e oil or gas in t4e drilling unit8 and a*ter a

4earing conducted in accordance it4 "RS C4apter 1#B8 t4e commission s4all

enter an order pooling all tracts or interests in t4e drilling unit *or t4e

deelopment and operation t4ereo* and *or t4e s4aring of production

t4ere*rom. Eac4 pooling order s4all e upon terms and conditions 4ic4 are

>ust and reasonale

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s4all aut4orie t4e drilling and operation o* a deep ell *or t4e production o*

oil or gas *rom t4e pooled acreage s4all designate t4e operator to drill and

operate theust and reasonale

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or portions t4ereo* accruing to t4e interest o* t4e nonparticipating oner8

e?clusie o* an7 ro7alt7 or oerriding ro7alt7 resered in an7 leases8

assignments t4ereo* or agreements relating t4ereto8 o* t4e tracts or portions

t4ereo*8 or e?clusie o* the pre&ailin% royalty

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proceeds *rom t4e sale o* t4e production accruing to t4e interest o* t4e operator

e?clusie o* an7 ro7alt7 or oerriding ro7alt7 interest.

#3 T4e commission8 a*ter notice and 4earing as proided aoe ma7 *rom time to time

7 entr7 o* a ne or amending *inal order enlarge t4e unit area 7 approing

agreements adding to t4e area a pool or an7 portion or cominations t4ereo* not

preiousl7 included. An7 ne or amended *inal order s4all not ecome e**ectie

unless and until(

a3 All o* t4e terms and proisions o* t4e unitiation agreement relating to t4e

e?tension or enlargement o* t4e unit area or to t4e addition o* pools or

portions or cominations t4ereo* to unit operations 4ae een *ul*illed and

satis*ied and eidence t4ereo* 4as een sumitted to t4e commission and

3 T4e e?tension or addition e**ected 7 t4e order 4as een agreed to in riting

7 t4e oners o* at least seent7,*ie percent %53 in interest in the pool as

costs are s4ared in t4e pool or pools or portions or cominations t4ereo* to e

added to unit operations 7 t4e order and 7 seent7,*ie percent %53 in

interest in the pool as production is to e allocated o* t4e ro7alt7 oners in t4e

pool8 pools8 portions8 or cominations and eidence t4ereo* 4as een sumitted

to t4e commission.

+3 An7 agreement8 in proiding *or allocation o* production *rom t4e unit area8 s4all

*irst allocate to eac4 pool or added portion a portion o* t4e total production o* oil

and gas8 or ot48 *rom all pools a**ected it4in t4e area8 as enlarged8 t4e allocation

to e in proportion to t4e contriution 4ic4 added pool or portions or e?tensions

t4ereo* are e?pected to ma/e8 during t4e remaining course o* unit operations8 to t4e

total production o* oil or gas8 or ot48 o* t4e unit as enlarged. T4e remaining portion

o* unit production s4all e allocated among t4e separatel7,oned tracts it4in t4e

preiousl7 estalis4ed unit area in t4e same proportions as t4ose speci*ied prior to

t4e enlargement.

)age +# o* +5BR1262$$.1$$ , 1262 , ##-# ac/eted

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)ro>ection as t4ose terms are de*ined in "RS #5#.$1$.

23 A ell s4all e deemed to e in compliance it4 applicale permit re;uirements i*

t4e as,drilled location o* t4e ell is(

a3 At t4e sur*ace8 it4in *i*teen 153 *eet o* t4e location speci*ied in t4e permit to

drill and

3 &rilled t4roug4 t4e ase o* t4e loest or/ale coal ed it4in one 4undred

*i*t7 15$3 *eet *rom t4e true ertical o* t4e as,drilled sur*ace location.

Section 2$. T4is section s4all e /non as t4e "entuc/7 Oil and as Regulator7

Goderniation Act o* 2$15.

Documents

HB 386