HB 183: "An Act relating to the regulation and permitting of drilling and other operations by the Alaska Oil and Gas Conservation Commission, to civil penalties assessed by the commission, to reconsideration and appeal of decisions and the allocation of costs in investigations and hearings before the commission, and to information filed with and fees of the commission; and providing for an effective date."
00 HOUSE BILL NO. 183 01 "An Act relating to the regulation and permitting of drilling and other operations by the 02 Alaska Oil and Gas Conservation Commission, to civil penalties assessed by the 03 commission, to reconsideration and appeal of decisions and the allocation of costs in 04 investigations and hearings before the commission, and to information filed with and 05 fees of the commission; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 LEGISLATIVE INTENT OF SECS. 10, 15, AND 18 OF THIS ACT. (a) It is the 10 intent of the legislature through secs. 10 and 18 of this Act to confirm by clarification that 11 AS 22.10.020(d), or court rules, have superseded inconsistent provisions of AS 31.05.080(b) 12 as they existed the day before the effective date of this Act. 13 (b) It is the intent of the legislature through sec. 15 of this Act to confirm by
01 clarification the long-standing interpretation of AS 31.05.150(d) by the Alaska Oil and Gas 02 Conservation Commission that civil penalties may be administratively assessed by the 03 commission and if not paid are recoverable by suit in the appropriate superior court as 04 determined by court rules. 05 * Sec. 2. AS 31.05.030(d) is amended to read: 06 (d) The commission may require 07 (1) identification of ownership of wells, producing leases, tanks, plants 08 and drilling structures; 09 (2) the making and filing of reports, well logs, drilling logs, electric 10 logs, lithologic logs, directional surveys, and all other subsurface information on a 11 well for which a permit to drill has been issued by the commission [DRILLED 12 FOR OIL OR GAS, OR FOR THE DISCOVERY OF OIL OR GAS, OR FOR 13 GEOLOGIC INFORMATION], and the required reports [AND INFORMATION] 14 shall be filed within 30 days and the logs and other subsurface information shall be 15 filed within 60 days after the completion, abandonment, or suspension of the well; 16 (3) the drilling, casing and plugging of wells in a manner that will 17 prevent the escape of oil or gas out of one stratum into another, the intrusion of water 18 into an oil or gas stratum, the pollution of fresh water supplies by oil, gas or salt water, 19 and prevent blowouts, cavings, seepages and fires; 20 (4) the furnishing of a reasonable bond with sufficient surety 21 conditions for the performance of the duty to plug each dry or abandoned well or the 22 repair of wells causing waste; 23 (5) the operation of wells with efficient gas-oil and water-oil ratios, 24 and may fix these ratios; 25 (6) the gauging or other measuring of oil and gas to determine the 26 quality and quantity of oil and gas; 27 (7) every person who produces oil or gas in the state to keep and 28 maintain for a period of five years in the state complete and accurate records of the 29 quantities of oil and gas produced, which shall be available for examination by the 30 commission [DEPARTMENT OF NATURAL RESOURCES OR ITS AGENTS] at 31 all reasonable times;
01 (8) the measuring and monitoring of oil and gas pool pressures; 02 (9) the filing and approval of a plan of development and operation for 03 a field or pool in order to prevent waste, ensure [INSURE] a greater ultimate recovery 04 of oil and gas, and protect the correlative rights of persons owning interests in the 05 tracts of land affected. 06 * Sec. 3. AS 31.05.030(e) is amended to read: 07 (e) The commission may regulate 08 (1) for conservation purposes and, to the extent not in conflict with 09 regulation by the Department of Labor and Workforce Development or the 10 Department of Environmental Conservation, for public health and safety 11 purposes, 12 (A) the drilling, producing, and plugging of wells; 13 (B) the perforating, fracture simulation, [SHOOTING] and 14 chemical treatment of wells; 15 (C) the spacing of wells; 16 (D) the disposal of salt water, nonpotable water, and oil field 17 wastes; 18 (E) the contamination or waste of underground water; 19 (F) the quantity and rate of the production of oil and gas from a 20 well or property; this authority shall also apply to a well or property in a 21 voluntary cooperative or unit plan of development or operation entered into in 22 accordance with AS 38.05.180(p); 23 (G) the underground injection of gas for purposes of 24 storage; 25 (2) the disposal of drilling mud, cuttings, and nonhazardous drilling 26 operation wastes in the annular space of a [AN OIL OR GAS] well [OR IN THE 27 ANNULAR SPACE OF A WATER WELL ASSOCIATED WITH OIL OR GAS 28 EXPLORATION AND PRODUCTION]; in this paragraph, a "nonhazardous drilling 29 operation waste" means a waste, other than a hazardous waste identified by the 30 Environmental Protection Agency in 40 C.F.R., Part 261, its regulation identifying and 31 listing hazardous wastes, associated with the act of drilling a [AN OIL OR GAS] well
01 for exploratory or production purposes. 02 * Sec. 4. AS 31.05.030(f) is amended to read: 03 (f) The commission may classify a well [WELLS] as an exploratory, 04 development, service, or stratigraphic test well and may classify a development 05 well as an oil or gas well [WELLS] for purposes material to the interpretation or 06 enforcement of this chapter. 07 * Sec. 5. AS 31.05.030(j) is amended to read: 08 (j) For exploration and development operations involving nonconventional 09 gas, the commission 10 (1) may not 11 (A) issue a permit to drill under this chapter if the well would 12 be used to produce gas from an aquifer that serves as a source of water for 13 human consumption or agricultural purposes unless the commission 14 determines that the well will not adversely affect the aquifer as a source of 15 water for human consumption or agricultural purposes; or 16 (B) allow injection of produced water except at depths below 17 known sources of water for human consumption or agricultural purposes; 18 (2) shall 19 (A) regulate hydraulic fracturing in nonconventional gas wells 20 to ensure [ASSURE] protection of drinking water quality; 21 (B) regulate the disposal of wastes produced from the 22 operations unless the disposal is otherwise subject to regulation by the 23 Department of Environmental Conservation or the United States 24 Environmental Protection Agency; 25 (C) [REPEALED 26 (D)] as a condition of approval of a permit to drill a well for 27 regular production [OR PRODUCTION TESTING] of coal bed methane, 28 require the operator to design and implement a water well testing program to 29 provide baseline data on water quality and quantity; the commission shall 30 make the results of the water well testing program available to the public. 31 * Sec. 6. AS 31.05.035(a) is amended to read:
01 (a) For all wells for which a permit to drill has been issued by the commission 02 [SINCE JANUARY 3, 1959], the commission may require: 03 (1) the making and filing of reports, well logs, drilling logs, electric 04 logs, lithologic logs, directional surveys, and all other subsurface information on a 05 well for which a permit to drill has been issued by the commission [DRILLED 06 FOR OIL OR GAS, OR FOR THE DISCOVERY OF OIL OR GAS, OR FOR 07 GEOLOGIC INFORMATION]; 08 (2) the filing of flow test information and all logs, except experimental 09 logs and velocity surveys run on a well and not required by (1) of this subsection; and 10 (3) the operator to make available for copying the digitized log 11 information, if it is available, on any log required to be filed under (1) or (2) of this 12 subsection. 13 * Sec. 7. AS 31.05.035(c) is amended to read: 14 (c) The application for a permit to drill an exploratory or stratigraphic 15 test well and the reports and information required in (a) of this section that relate to 16 an exploratory or stratigraphic test well shall be kept confidential for 24 months 17 following the 30-day filing period unless the owner of the well gives written 18 permission to release the reports and information at an earlier date. If the 19 commissioner of natural resources finds that the required reports and information 20 contain significant information relating to the valuation of unleased land in the same 21 vicinity, the commissioner shall keep the reports and information confidential for a 22 reasonable time after the disposition of all affected unleased land, unless the owner of 23 the well gives written permission to release the reports and information at an earlier 24 date. Well surface and bottom hole locations [LOCATION], well depth, well status, 25 [AND] production data, and production reports required by the commission to be filed 26 subsequent to the 30-day filing period shall be considered public information and may 27 not be classified confidential. Production data, as used in this subsection, means 28 volume, gravity and gas-oil ratio of all production of oil or gas after the well begins 29 regular production. 30 * Sec. 8. AS 31.05.035 is amended by adding a new subsection to read: 31 (f) Subsection (d) of this section does not apply to information submitted in
01 connection with a petition for a commission order or a hearing before the commission. 02 * Sec. 9. AS 31.05.080(a) is amended to read: 03 (a) Within 20 days after written notice of the entry of an order or decision of 04 the commission, or such further time as the commission grants for good cause shown, 05 a person affected by it may file with the commission an application for 06 reconsideration [THE REHEARING IN RESPECT] of the matter determined by the 07 order or decision, setting out [FORTH] the respect in which the order or decision is 08 believed to be erroneous. The commission shall grant or refuse the application in 09 whole or in part within 10 days after it is filed, and failure to act on it within this 10 period is a refusal of it and a final disposition of the application. If reconsideration 11 [THE HEARING] is granted, the commission may enter a new order or decision after 12 reconsideration [REHEARING] as may be required under the circumstances. 13 * Sec. 10. AS 31.05.080(b) is repealed and reenacted to read: 14 (b) A person who has applied for reconsideration and is dissatisfied with the 15 disposition of the application for reconsideration may appeal to the superior court. The 16 questions reviewed on appeal are limited to the questions presented to the commission 17 by the application for reconsideration. 18 * Sec. 11. AS 31.05.085(a) is amended to read: 19 (a) During a hearing or investigation held under this chapter, the commission 20 may allocate the costs of the hearing or investigation among the parties, including the 21 commission, as is just under the circumstances. In allocating costs, the commission 22 shall consider the regulatory cost charge paid by a person under AS 31.05.093 and 23 may consider the results, evidence of good faith, other relevant factors, and mitigating 24 circumstances. The costs allocated may include 25 (1) the costs of any time devoted to the investigation or hearing by 26 hired consultants, whether or not the consultants appear as witnesses or participants; 27 [AND] 28 (2) any out-of-pocket expenses incurred by the commission in the 29 particular proceeding; and 30 (3) when the investigation or hearing relates to a violation of this 31 chapter, a regulation adopted under this chapter, or an order of the commission,
01 the costs of any time devoted to the investigation or hearing by the commission 02 staff. 03 * Sec. 12. AS 31.05.090 is repealed and reenacted to read: 04 Sec. 31.05.090. Permits to drill wells. (a) A person must apply for and receive 05 a permit from the commission before drilling 06 (1) a well in search of oil or gas; 07 (2) a well in support of the recovery or production of oil or gas; 08 (3) an underground injection well for which the state has acquired 09 primary enforcement responsibility under AS 31.05.030(h). 10 (b) A person must submit a separate permit application for each well. The 11 permit application must be in the form required by the commission and include all 12 information required by the commission. 13 (c) After receiving an application under (b) of this section, the commission 14 shall promptly issue a permit to drill unless the 15 (1) proposed well is contrary to law or an order of the commission; or 16 (2) person is in violation of this chapter, a regulation adopted under 17 this chapter, or a commission order. 18 * Sec. 13. AS 31.05.093(c) is amended to read: 19 (c) The commission shall determine the regulatory cost charges levied under 20 this section so that the total amount to be collected approximately equals the 21 appropriations made for the operating costs of the commission under this chapter for 22 the fiscal year [, LESS THE ESTIMATED TOTAL OF THE FEES TO BE 23 COLLECTED UNDER AS 31.05.090. IF THE AMOUNT THE COMMISSION 24 EXPECTS TO COLLECT UNDER THIS SECTION AND UNDER AS 31.05.090 25 EXCEEDS THE APPROPRIATIONS MADE FOR THE OPERATING COSTS OF 26 THE COMMISSION UNDER THIS CHAPTER, THE COMMISSION SHALL, BY 27 ORDER, ADJUST THE REGULATORY COST CHARGES SO THAT THE TOTAL 28 AMOUNT OF THE REGULATORY COST CHARGES AND FEES THAT ARE 29 COLLECTED APPROXIMATELY EQUALS THE APPROPRIATIONS MADE 30 FOR THE OPERATING COSTS OF THE COMMISSION UNDER THIS CHAPTER 31 FOR THE FISCAL YEAR].
01 * Sec. 14. AS 31.05.150(a) is amended to read: 02 (a) A person who wilfully or negligently violates a provision of this chapter, 03 or a regulation or order of the commission adopted under this chapter, is liable for a 04 civil penalty of no more than $100,000 for a single violation or, in the commission's 05 discretion, no more than $25,000 [$5,000] a day for each day of violation [, 06 UNLESS THE PENALTY FOR VIOLATION IS OTHERWISE PROVIDED FOR 07 AND MADE EXCLUSIVE IN THIS CHAPTER]. 08 * Sec. 15. AS 31.05.150(d) is amended to read: 09 (d) The civil penalties provided in this section may be assessed by the 10 commission and if not paid are recoverable by suit filed by the attorney general in 11 the name and on behalf of the commission in the superior court [OF THE JUDICIAL 12 DISTRICT IN WHICH THE DEFENDANT RESIDES OR IN WHICH ANY 13 DEFENDANT RESIDES, IF THERE IS MORE THAN ONE DEFENDANT, OR IN 14 THE SUPERIOR COURT OF THE JUDICIAL DISTRICT IN WHICH THE 15 VIOLATION OCCURS]. The payment of a penalty does not relieve a person on 16 whom the penalty is imposed from liability to any other person for damages arising 17 out of the violation. 18 * Sec. 16. AS 31.05.150(e) is amended to read: 19 (e) In addition to the penalties in (a) - (d) and (f) of this section, the [THE] 20 commission may impose a civil penalty payment on every 1,000 cubic feet of natural 21 gas flared, vented or otherwise determined to be waste as defined in AS 31.05.170. 22 The penalty shall be two times the fair market value of the natural gas at the point of 23 waste. 24 * Sec. 17. AS 31.05.150 is amended by adding a new subsection to read: 25 (g) In determining the amount of a penalty assessed under this section, the 26 commission shall consider 27 (1) whether the person committing the violation was acting in good 28 faith or bad faith; 29 (2) the extent and seriousness of the violation and the actual or 30 potential threat to public health or the environment; 31 (3) the injury to the public resulting from the violation;
01 (4) the benefits derived by the person from the violation; 02 (5) the history of compliance or noncompliance by the person with the 03 requirements of this chapter, a regulation under this chapter, and commission orders; 04 (6) the need to deter similar behavior by the person and others 05 similarly situated in the future; 06 (7) the effort made by the person to correct the violation and prevent 07 future violations; and 08 (8) other factors considered relevant to the assessment that are adopted 09 by the commission in regulation. 10 * Sec. 18. AS 31.05.080(c) and 31.05.080(d) are repealed. 11 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 14 heading of AS 31.05.080 from "Rehearings and appeals" to "Reconsiderations and appeals." 15 * Sec. 20. This Act takes effect immediately under AS 01.10.070(c).