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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11 AS 22.10.020(d), or court rules, have superseded inconsistent provisions of AS 31.05.080(b)                             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).