HB4989eng 102ND GENERAL ASSEMBLY

HB4989 Engrossed LRB102 25856 AMQ 35208 b

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Oil and Gas Act is amended by changing Sections 1, 6, 8c, 14, 19.1, and 19.7 as follows:

(225 ILCS 725/1) (from Ch. 96 1/2, par. 5401)

Sec. 1. Unless the context otherwise requires, the words defined in this Section have the following meanings as used in this Act.

"Person" means any natural person, corporation, association, partnership, governmental agency or other legal entity, receiver, trustee, guardian, executor, administrator, fiduciary or representative of any kind.

"Oil" means natural crude oil or petroleum and other hydrocarbons, regardless of gravity, which are produced at the well in liquid form by ordinary production methods or by the use of an oil and gas separator and which are not the result of condensation of gas after it leaves the underground reservoir.

"Gas" means all natural gas, including casinghead gas, and all other natural hydrocarbons not defined above as oil.

"Pool" means a natural, underground reservoir containing in whole or in part, a natural accumulation of oil or gas, or both. Each productive zone or stratum of a general structure, which is completely separated from any other zone or stratum in the structure, is deemed a separate "pool" as used herein.

"Field" means the same general surface area which is underlaid or appears to be underlaid by one or more pools.

"Permit" means the Department's written authorization allowing a well to be drilled, deepened, converted, or operated by an owner.

"Permittee" means the owner holding or required to hold the permit, and who is also responsible for paying assessments in accordance with Section 19.7 of this Act and, where applicable, executing and filing the bond associated with the well as principal and who is responsible for compliance with all statutory and regulatory requirements pertaining to the well.

When the right and responsibility for operating a well is vested in a receiver or trustee appointed by a court of competent jurisdiction, the permit shall be issued to the receiver or trustee.

"Orphan Well" means a well for which: (1) no fee assessment under Section 19.7 of this Act has been paid or no other bond coverage has been provided for 2 consecutive years; (2) no oil or gas has been produced from the well or from the lease or unit on which the well is located for 2 consecutive years; and (3) no permittee or owner can be identified or located by the Department. Orphaned wells include wells that may have been drilled for purposes other than those for which a permit is required under this Act if the well is a conduit for oil or salt water intrusions into fresh water zones or onto the surface which may be caused by oil and gas operations.

"Owner" means the person who has the right to drill into and produce from any pool, and to appropriate the production either for the person or for the person and another, or others, or solely for others, excluding the mineral owner's royalty if the right to drill and produce has been granted under an oil and gas lease. An owner may also be a person granted the right to drill and operate an injection (Class II UIC) well independent of the right to drill for and produce oil or gas. When the right to drill, produce, and appropriate production is held by more than one person, then all persons holding these rights may designate the owner by a written operating agreement or similar written agreement. In the absence of such an agreement, and subject to the provisions of Sections 22.2 and 23.1 through 23.16 of this Act, the owner shall be the person designated in writing by a majority in interest of the persons holding these rights.

"Department" means the Department of Natural Resources.

"Director" means the Director of Natural Resources.

"Mining Board" means the State Mining Board in the Department of Natural Resources, Office of Mines and Minerals.

"Mineral Owner's Royalty" means the share of oil and gas production reserved in an oil and gas lease free of all costs by an owner of the minerals whether denominated royalty or overriding royalty.

"Waste" means "physical waste" as that term is generally understood in the oil and gas industry, and further includes:

(1) the locating, drilling, and producing of any oil or gas well or wells drilled contrary to the valid order, rules and regulations adopted by the Department under the provisions of this Act;

(2) permitting the migration of oil, gas, or water from the stratum in which it is found, into other strata, thereby ultimately resulting in the loss of recoverable oil, gas or both;

(3) the drowning with water of any stratum or part thereof capable of producing oil or gas, except for secondary recovery purposes;

(4) the unreasonable damage to underground, fresh or mineral water supply, workable coal seams, or other mineral deposits in the operations for the discovery, development, production, or handling of oil and gas;

(5) the unnecessary or excessive surface loss or destruction of oil or gas resulting from evaporation, seepage, leakage or fire, especially such loss or destruction incident to or resulting from the escape of gas into the open air in excessive or unreasonable amounts, provided, however, it shall not be unlawful for the operator or owner of any well producing both oil and gas to burn such gas in flares when such gas is, under the other provisions of this Act, lawfully produced, and where there is no market at the well for such escaping gas; and where the same is used for the extraction of casinghead gas, it shall not be unlawful for the operator of the plant after the process of extraction is completed, to burn such residue in flares when there is no market at such plant for such residue gas;

(6) permitting unnecessary fire hazards;

(7) permitting unnecessary damage to or destruction of the surface, soil, animal, fish or aquatic life or property from oil or gas operations.

"Drilling Unit" means the surface area allocated by an order or regulation of the Department to the drilling of a single well for the production of oil or gas from an individual pool.

"Enhanced Recovery Method" means any method used in an effort to recover hydrocarbons from a pool by injection of fluids, gases or other substances to maintain, restore or augment natural reservoir energy, or by introducing immiscible or miscible gases, chemicals, other substances or heat or by in-situ combustion, or by any combination thereof.

"Well-Site Equipment" means any production-related equipment or materials specific to the well, including motors, pumps, pump jacks, tanks, tank batteries, separators, compressors, casing, tubing, and rods.

"Temporary abandonment status" means a well that has received an authorization for temporary abandonment status from the Department and is in compliance with the administrative rules for temporary abandonment status.

(Source: P.A. 99-78, eff. 7-20-15.)

(225 ILCS 725/6) (from Ch. 96 1/2, par. 5409)

Sec. 6. The Department shall have the authority to conduct hearings and to make such reasonable rules as may be necessary from time to time in the proper administration and enforcement of this Act, including the adoption of rules and the holding of hearings for the following purposes:

(1) To require the drilling, casing and plugging of wells to be done in such a manner as to prevent the migration of oil or gas from one stratum to another; to prevent the intrusion of water into oil, gas or coal strata; to prevent the pollution of fresh water supplies by oil, gas or salt water.

(2) To require the person desiring or proposing to drill, deepen or convert any well for the exploration or production of oil or gas, for injection or water supply in connection with enhanced recovery projects, for the disposal of salt water, brine, or other oil or gas field wastes, or for input, withdrawal, or observation in connection with the storage of natural gas or other liquid or gaseous hydrocarbons before commencing the drilling, deepening or conversion of any such well, to make application to the Department upon such form as the Department may prescribe and to comply with the provisions of this Section. The drilling, deepening or conversion of any well is hereby prohibited until such application is made and the applicant is issued a permit therefor as provided by this Act. Each application for a well permit shall include the following: (A) The exact location of the well, (B) the name and address of the manager, operator, contractor, driller, or any other person responsible for the conduct of drilling operations, (C) the proposed depth of the well, (D) lease ownership information, and (E) such other relevant information as the Department may deem necessary or convenient to effectuate the purposes of this Act.

Additionally, each applicant who has not been issued a permit that is of record on the effective date of this amendatory Act of 1991, or who has not thereafter made payments of assessments under Section 19.7 of this Act for at least 2 consecutive years preceding the application, shall execute, as principal, and file with the Department a bond, executed by a surety authorized to transact business in this State, in an amount estimated to cover the cost of plugging the well and restoring the well site, but not to exceed $5000, as determined by the Department for each well, or a blanket bond in an amount not to exceed $100,000 for all wells, before drilling, deepening, converting, or operating any well for which a permit is required that has not previously been plugged and abandoned in accordance with the Act. The Department shall release the bond if the well, or all wells in the case of a blanket bond, is not completed but is plugged and the well site restored in accordance with the Department's rules or is completed in accordance with the Department's rules and the permittee pays assessments to the Department in accordance with Section 19.7 of this Act for 2 consecutive years.

In lieu of a surety bond, the applicant may provide cash, certificates of deposit, or irrevocable letters of credit under such terms and conditions as the Department may provide by rule.

The sureties on all bonds in effect on the effective date of this amendatory Act of 1991 shall remain liable as sureties in accordance with their undertakings until released by the Department from further liability under the Act. The principal on each bond in effect on the effective date of this amendatory Act of 1991 shall be released from the obligation of maintaining the bond if either the well covered by a surety bond has been plugged and the well site restored in accordance with the Department's rules or the principal of the surety has paid the initial assessment in accordance with Section 19.7 and no well or well site covered by the surety bond is in violation of the Act.

No permit shall be issued to a corporation incorporated outside of Illinois until the corporation has been authorized to do business in Illinois.

No permit shall be issued to an individual, partnership, or other unincorporated entity that is not a resident of Illinois until that individual, partnership, or other unincorporated entity has irrevocably consented to be sued in Illinois.

(3) To require the person assigning, transferring, or selling any well for which a permit is required under this Act to notify the Department of the change of ownership. The notification shall be on a form prescribed by the Department, shall be executed by the current permittee and by the new permittee, or their authorized representatives, and shall be filed with the Department within 30 days after the effective date of the assignment, transfer or sale. Within the 30 day notification period and prior to operating the well, the new permittee shall pay the required well transfer fee and, where applicable, file with the Department the bond required under subsection (2) of this Section.

(4) To require the filing with the State Geological Survey of all geophysical logs, a well drilling report and drill cuttings or cores, if cores are required, within 90 days after drilling ceases; and to file a completion report with the Department within 30 days after the date of first production following initial drilling or any reworking, or after the plugging of the well, if a dry hole. A copy of each completion report submitted to the Department shall be delivered to the State Geological Survey. The Department and the State Geological Survey shall keep the reports confidential, if requested in writing by the permittee, for 2 years after the date the permit is issued by the Department. This confidentiality requirement shall not prohibit the use of the report for research purposes, provided the State Geological Survey does not publish specific data or identify the well to which the completion report pertains.

(5) To prevent "blowouts", "caving" and "seepage" in the same sense that conditions indicated by such terms are generally understood in the oil and gas business.

(6) To prevent fires.

(7) To ascertain and identify the ownership of all oil and gas wells, producing leases, refineries, tanks, plants, structures, and all storage and transportation equipment and facilities.

(8) To regulate the use of any enhanced recovery method in oil pools and oil fields.

(9) To regulate or prohibit the use of vacuum.

(10) To regulate the spacing of wells, the issuance of permits, and the establishment of drilling units.

(11) To regulate directional drilling of oil or gas wells.

(12) To regulate the plugging of wells.

(13) To require that wells for which no logs or unsatisfactory logs are supplied shall be completely plugged with cement from bottom to top.

(14) To require a description in such form as is determined by the Department of the method of well plugging for each well, indicating the character of material used and the positions and dimensions of each plug.

(15) To prohibit waste, as defined in this Act.

(16) To require the keeping of such records, the furnishing of such relevant information and the performance of such tests as the Department may deem necessary to carry into effect the purposes of this Act.

(17) To regulate the disposal of salt or sulphur-bearing water and any oil field waste produced in the operation of any oil or gas well.

(18) To prescribe rules, conduct inspections and require compliance with health and safety standards for the protection of persons working underground in connection with any oil and gas operations. For the purposes of this paragraph, oil and gas operations include drilling or excavation, production operations, plugging or filling in and sealing, or any other work requiring the presence of workers in shafts or excavations beneath the surface of the earth. Rules promulgated by the Department may include minimum qualifications of persons performing tasks affecting the health and safety of workers underground, minimum standards for the operation and maintenance of equipment, and safety procedures and precautions, and shall conform, as nearly as practicable, to corresponding qualifications, standards and procedures prescribed under the Coal Mining Act.

(19) To deposit the amount of any forfeited surety bond or other security in the Plugging and Restoration Fund, a special fund in the State treasury which is hereby created; to deposit into the Fund any amounts collected, reimbursed or recovered by the Department under Sections 19.5, 19.6 and 19.7 of this Act; to accept, receive, and deposit into the Fund any grants, gifts or other funds which may be made available from public or private sources and all earnings received from investment of monies in the Fund; and to make expenditures from the Fund for the purposes of plugging, replugging or repairing any well, and restoring the site of any well, determined by the Department to be abandoned or ordered by the Department to be plugged, replugged, repaired or restored under Sections 8a, 19 or 19.1 of this Act, including expenses in administering the Fund.

(20) To create, by administrative rule, the authorization criteria, fees, maintenance requirements, and monitoring rules for an authorization for temporary abandonment status.

(21) To create, by administrative rule, the permit criteria, fees, and maintenance requirements for an oil lease road permit where the road is located on a well lease.

For the purposes of this Act, the State Geological Survey shall co-operate with the Department in making available its scientific and technical information on the oil and gas resources of the State, and the Department shall in turn furnish a copy to the State Geological Survey of all drilling permits as issued, and such other drilling and operating data received or secured by the Department which are pertinent to scientific research on the State's mineral resources.

(Source: P.A. 86-205; 86-364; 86-1177; 87-744.)

(225 ILCS 725/8c) (from Ch. 96 1/2, par. 5414.1)

Sec. 8c. (a) No person shall operate a liquid oil field waste transportation system without a liquid oil field waste transportation permit. The liquid oil field waste transporter assumes legal responsibility for the liquid oil field waste when it first enters the liquid oil field waste transportation system, until it is disposed of in a manner authorized and approved by the Department.

(b) No person shall engage, employ or contract with any other person except a permittee under this Section, to remove liquid oil field waste from his premises.

(c) Every person who engages, employs or contracts with any other person to remove liquid oil field waste from his premises shall maintain detailed records of all such liquid oil field waste removal effectuated on forms provided by the Department and shall submit such information in such detail and with such frequency, as the Department may require.

(d) Before engaging in the business of removing liquid oil field waste from the on-site collection point, a person shall apply for and obtain a permit from the Department. The application shall be accompanied by a permit fee of $300 $100 and by a surety bond covering the period and any renewal thereof for which the permit is issued by a surety company registered in the State, to indemnify the Department for the abatement of pollution of waters which result from any improper disposal of liquid oil field waste by the permittee. The bonds shall be $10,000. The Department shall be the obligee and the bond shall be for the benefit and purpose to indemnify the State for the elimination of harmful or nuisance conditions and for the abatement of any pollution of waters which result from the improper disposal of liquid oil field waste by the permittee.

In lieu of the surety bond, the applicant may provide cash, certificates of deposit, or irrevocable letters of credit under such terms and conditions as the Department may provide by rule.

The surety of any bond posted for the issuance of a liquid oil field waste transportation permit, upon 30 days notice in writing to the Department and to the permittee, may cancel any such bond, but such cancellation shall not affect any rights which shall have accrued on the bond before the effective date of the cancellation.

(e) If the Department, after such investigation as it deems necessary, is satisfied that the applicant has the qualifications, experience, reputation, and equipment to perform the services in a manner not detrimental to the public interest, in a way that will not cause unlawful pollution of the waters of the State and meets the bonding requirements of subsection (d), it shall issue a permit to the applicant.

(f) (1) All trucks or other vehicles used to transport or carry liquid oil field waste shall carry a permit issued by the Department for inspection by its representative or any law enforcement agent. The application for the vehicle permit shall state the make, model and year of the vehicle as well as the capacity of the tank used in transporting liquid oil field waste and such other information as the Department requires. Each application shall be accompanied by a biennial permit fee of $100 for each vehicle sought to be licensed, payable to the State, and if the Department, after such investigation as it deems necessary, finds the truck or vehicle and equipment is proper and adequate for the purpose, it shall issue a permit for the use of the vehicle. The permit is not transferable from one vehicle to another. The vehicle permit number shall be printed on a decal furnished by the Department which shall designate the years for which the permit was issued. This decal shall be affixed to the upper right hand corner of the inside of the windshield.

(2) All vehicle permits shall be valid for 2 years. Application for renewal of a permit must be made 30 days prior to the expiration date of the permit. The fee for renewal shall be the same as for the original permit.

(g) (1) The tank shall be kept tightly closed in transit, to prevent the escape of contents.

(2) The permittee shall dispose of all liquid oil field waste in conformance with the provisions of this Section.

(3) The permittee shall not dispose of liquid oil field waste onto or into the ground except at locations specifically approved and permitted by the Department. No liquid oil field waste shall be placed in a location where it could enter any public or private drain, pond, stream or other body of surface or ground water.

(h) Any person who violates or refuses to comply with any of the provisions of this Section shall be subject to the provisions of Sections 8a and 19.1 of this Act. In addition, any person who gathers, handles, transports, or disposes of liquid oil field waste without a liquid oil field waste transportation permit or utilizes the services of an unpermitted person shall upon conviction thereof by a court of competent jurisdiction be fined not less than $2,000 for a violation and costs of prosecution, and in default of payment of fine and costs, imprisoned for not less than 10 days nor more than 30 days. When the violation is of a continuing nature, each day upon which a violation occurs is a separate offense.

(i) For the purposes of this Section:

(1) "Liquid oil field waste" means oil field brines, tank and pit bottom sediments, and drilling and completion fluids, to the extent those wastes are now or hereafter exempt from the provisions of Subtitle C of the federal Resource Conservation and Recovery Act of 1976.

(2) "Liquid oil field waste transportation system" means all trucks and other motor vehicles used to gather, handle or transport liquid oil field waste from the point of any surface on-site collection to any subsequent off-site storage, utilization or disposal.

(Source: P.A. 87-744.)

(225 ILCS 725/14) (from Ch. 96 1/2, par. 5420)

Sec. 14. Each application for a permit to drill, deepen, convert, or amend, oil lease road, or an authorization for temporary abandonment status shall be accompanied by the required fee, not to exceed $1,000 $300, which the Department shall establish by rule. A fee not to exceed $500 of $50 per well, as established by administrative rule, shall be paid by the new owner for each transfer of well ownership. The fee for a temporary abandonment status authorization shall be deposited in the Plugging and Restoration Fund. Except for the assessments required to be deposited in the Plugging and Restoration Fund under Section 19.7 of this Act and any other deposits required to be deposited in the Plugging and Restoration Fund under this Act, all fees assessed and collected under this Act shall be deposited in the Underground Resources Conservation Enforcement Fund. The monies deposited into the Plugging and Restoration Fund or the Underground Resources Conservation Enforcement Fund under this Section shall not be subject to administrative charges or chargebacks unless otherwise authorized by this Act.

(Source: P.A. 97-1136, eff. 1-1-13.)

(225 ILCS 725/19.1) (from Ch. 96 1/2, par. 5426)

Sec. 19.1. If, after notice and an opportunity for a hearing, the Department finds that a well drilled for the exploration, development, storage or production of oil or gas, or as injection, salt water disposal, salt water source, observation, and geological or structure test has been abandoned or is leaking salt water, oil, gas or other deleterious substances into any fresh water formation or onto the surface of the land in the vicinity of the well, or is in violation of the administrative rules regarding temporary abandonment status, the Department shall issue an order that the well be properly plugged, replugged or repaired to remedy such situation. If the permittee fails to do so within 30 days from the date of the order, then any person duly authorized by the Department may enter upon the land on which the well is located and plug, replug, or repair the well as may be reasonably required to remedy the condition. The costs and expenses incurred by the Department under this Act shall be a debt due by the permittee to the Department together with interest at the rate set forth in Section 2-1303 of the Code of Civil Procedure. The permittee's failure to comply with the Department's order is a violation of this Act.

If the Department determines that any condition or practice exists, or that any person or permittee is in violation of any requirement of this Act or the rules adopted hereunder or any permit condition, which condition, practice or violation creates an imminent danger to the health or safety of the public, or an imminent danger of significant environmental harm or significant damage to property, any authorized employee or agent of the Department may order the immediate cessation of operation. If a responsible party cannot be readily located in the judgment of the employee or agent issuing the order, the employee or agent may take any action he deems necessary to cause a cessation of operations and abatement of any condition. The cessation order shall be served by mailing it certified mail-return receipt requested to the last known address of the person or permittee as soon as is practicably possible but in no event later than 5 days after its issuance.

Pending completion of the investigation and any hearing under Section 8a of this Act, the person or permittee may file with the Department a written request for temporary relief from the cessation order, together with a detailed statement giving reasons for granting such relief. The Department shall commence a hearing within 5 days after receipt of the request and may grant such relief, under such conditions as it may prescribe, if the applicant shows a substantial likelihood that the findings of the Department will be favorable to him and such relief will not adversely affect the health or safety of the public or cause significant environmental harm or significant damage to property.

(Source: P.A. 89-243, eff. 8-4-95.)

(225 ILCS 725/19.7) (from Ch. 96 1/2, par. 5430.2)

Sec. 19.7. The Department shall assess and collect annual well fees from each permittee in the amount of $100 $75 per well for the first 100 wells and a $75 $50 fee for each well in excess of 100 for which a permit is required under this Act.

Fees shall be assessed for each calendar year commencing in 1991 for all wells of record as of July 1, 1991 and July 1 of each year thereafter. The fees assessed by the Department under this Section are in addition to any other fees required by law. All fees assessed under this Section shall be submitted to the Department no later than 30 days from the date listed on the annual fee assessment letter sent to the permittee. Of the fees assessed and collected by the Department each year under this Section, 50% shall be deposited into the Underground Resources Conservation Enforcement Fund, and 50% shall be deposited into the Plugging and Restoration Fund unless, total fees assessed and collected for any calendar year exceed $1,500,000; then, $750,000 shall be deposited into the Underground Resources Conservation Enforcement Fund and the balance of the fees assessed and collected shall be deposited into the Plugging and Restoration Fund. Upon request of the Department to the Comptroller and Treasurer, the Comptroller and Treasurer shall make any interfund transfers necessary to effect the allocations required by this Section.

The monies deposited into the Plugging and Restoration Fund or the Underground Resources Conservation Enforcement Fund under this Section shall not be subject to administrative charges or chargebacks unless otherwise authorized by this Act.

(Source: P.A. 97-1136, eff. 1-1-13.)