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CSHB 183(O&G): "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                       CS FOR HOUSE BILL NO. 183(O&G)                                                                    
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, 14, AND 15 OF THIS ACT. (a) It is the                                             
10 intent of the legislature through secs. 10 and 15 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11 AS 22.10.020(d), or court rules, have superseded inconsistent provisions of AS 31.05.080(b)                             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 the enactment of AS 31.05.150(f) in sec.                         
01 14 of this Act to confirm by clarification the long-standing interpretation of AS 31.05.150(d),                         
02 as that section read before the effective date of this Act, by the Alaska Oil and Gas                                   
03 Conservation Commission that civil penalties may be administratively assessed by the                                    
04 commission and if not paid are recoverable by suit in the appropriate superior court as                                 
05 determined by court rules.                                                                                              
06    * Sec. 2. AS 31.05.030(d) is repealed and reenacted to read:                                                       
07            (d)  The commission may require                                                                              
08                 (1)  identification of ownership of wells, producing leases, tanks,                                     
09       plants, and drilling structures;                                                                                  
10                 (2)  the making and filing of reports, well logs, drilling logs, electric                               
11       logs, lithologic logs, directional surveys, and all other subsurface information on a                             
12       well for which a permit to drill has been issued by the commission, subject to the                                
13       following:                                                                                                        
14                      (A)  the reports required to be filed by the commission under                                      
15            this paragraph shall be filed within 30 days after the completion, abandonment,                              
16            or suspension of the well; and                                                                               
17                      (B)  the well logs, drilling logs, electric logs, lithologic logs,                                 
18            directional surveys, and all other information required to be filed by the                                   
19            commission under this paragraph shall be filed within 90 days after the                                      
20            completion, abandonment, or suspension of the well, unless extended by the                                   
21            commission on request;                                                                                       
22                 (3)  the drilling, casing and plugging of wells in a manner that will                                   
23       prevent the escape of oil or gas out of one stratum into another, the intrusion of water                          
24       into an oil or gas stratum, the pollution of fresh water supplies by oil, gas or salt water,                      
25       and prevent blowouts, cavings, seepages and fires;                                                                
26                 (4)  the furnishing of a reasonable bond with sufficient surety                                         
27       conditions for the performance of the duty to plug each dry or abandoned well or the                              
28       repair of wells causing waste;                                                                                    
29                 (5)  the operation of wells with efficient gas-oil and water-oil ratios,                                
30       and may fix these ratios;                                                                                         
31                 (6)  the gauging or other measuring of oil and gas to determine the                                     
01       quality and quantity of oil and gas;                                                                              
02                 (7)  every person who produces oil or gas in the state to keep and                                      
03       maintain for a period of five years in the state complete and accurate records of the                             
04       quantities of oil and gas produced, which shall be available for examination by the                               
05       commission at all reasonable times;                                                                               
06                 (8)  the measuring and monitoring of oil and gas pool pressures;                                        
07                 (9)  the filing and approval of a plan of development and operation for                                 
08       a field or pool to prevent waste, ensure a greater ultimate recovery of oil and gas, and                          
09       protect the correlative rights of persons owning interests in the tracts of land affected.                        
10    * Sec. 3. AS 31.05.030(e) is amended to read:                                                                      
11            (e)  The commission may regulate                                                                             
12                 (1)  for conservation purposes and, to the extent not in conflict with                              
13       regulation by the Department of Labor and Workforce Development or the                                        
14       Department of Environmental Conservation, for public health and safety                                        
15       purposes,                                                                                                     
16                      (A)  the drilling, producing, and plugging of wells;                                               
17                      (B)  the perforating, fracture simulation, [SHOOTING] and                                      
18            chemical treatment of wells;                                                                                 
19                      (C)  the spacing of wells;                                                                         
20                      (D)  the disposal of salt water, nonpotable water, and oil field                                   
21            wastes;                                                                                                      
22                      (E)  the contamination or waste of underground water;                                              
23                      (F)  the quantity and rate of the production of oil and gas from a                                 
24            well or property; this authority shall also apply to a well or property in a                                 
25            voluntary cooperative or unit plan of development or operation entered into in                               
26            accordance with AS 38.05.180(p);                                                                             
27                      (G)  the underground injection of gas for purposes of                                          
28            storage;                                                                                                 
29                 (2)  the disposal of drilling mud, cuttings, and nonhazardous drilling                                  
30       operation wastes in the annular space of a [AN OIL OR GAS] well for which a                               
31       permit to drill has been issued by the commission [OR IN THE ANNULAR                                          
01       SPACE OF A WATER WELL ASSOCIATED WITH OIL OR GAS                                                                  
02       EXPLORATION AND PRODUCTION]; in this paragraph, a "nonhazardous drilling                                          
03       operation waste" means a waste, other than a hazardous waste identified by the                                    
04       Environmental Protection Agency in 40 C.F.R., Part 261, its regulation identifying and                            
05       listing hazardous wastes, associated with the act of drilling a [AN OIL OR GAS] well                          
06       for exploratory or production purposes.                                                                           
07    * Sec. 4. AS 31.05.030(f) is amended to read:                                                                      
08            (f)  The commission may classify a well or a specific portion of a well                                  
09       [WELLS] as an exploratory, development, service, or stratigraphic test well and                               
10       may classify a development well as an oil or gas well [WELLS] for purposes                                
11       material to the interpretation or enforcement of this chapter.                                                    
12    * Sec. 5. AS 31.05.030(j) is amended to read:                                                                      
13            (j)  For exploration and development operations involving nonconventional                                    
14       gas, the commission                                                                                               
15                 (1)  may not                                                                                            
16                      (A)  issue a permit to drill under this chapter if the well would                                  
17            be used to produce gas from an aquifer that serves as a source of water for                                  
18            human consumption or agricultural purposes unless the commission                                             
19            determines that the well will not adversely affect the aquifer as a source of                                
20            water for human consumption or agricultural purposes; or                                                     
21                      (B)  allow injection of produced water except at depths below                                      
22            known sources of water for human consumption or agricultural purposes;                                       
23                 (2)  shall                                                                                              
24                      (A)  regulate hydraulic fracturing in nonconventional gas wells                                    
25            to ensure [ASSURE] protection of drinking water quality;                                                 
26                      (B)  regulate the disposal of wastes produced from the                                             
27            operations unless the disposal is otherwise subject to regulation by the                                     
28            Department of Environmental Conservation or the United States                                                
29            Environmental Protection Agency;                                                                             
30                      (C)  [REPEALED                                                                                     
31                      (D)]  as a condition of approval of a permit to drill a well for                                   
01            regular production [OR PRODUCTION TESTING] of coal bed methane,                                          
02            require the operator to design and implement a water well testing program to                                 
03            provide baseline data on water quality and quantity; the commission shall                                    
04            make the results of the water well testing program available to the public.                                  
05    * Sec. 6. AS 31.05.035(a) is amended to read:                                                                      
06            (a)  For all wells for which a permit to drill has been issued by the commission                             
07       [SINCE JANUARY 3, 1959], the commission may require:                                                              
08                 (1)  the making and filing of reports, well logs, drilling logs, electric                               
09       logs, lithologic logs, directional surveys, and all other subsurface information on a                             
10       well for which a permit to drill has been issued by the commission [DRILLED                                   
11       FOR OIL OR GAS, OR FOR THE DISCOVERY OF OIL OR GAS, OR FOR                                                        
12       GEOLOGIC INFORMATION];                                                                                            
13                 (2)  the filing of flow test information and all logs, except experimental                              
14       logs and velocity surveys run on a well and not required by (1) of this subsection; and                           
15                 (3)  the operator to make available for copying the digitized log                                       
16       information, if it is available, on any log required to be filed under (1) or (2) of this                         
17       subsection.                                                                                                       
18    * Sec. 7. AS 31.05.035(c) is amended to read:                                                                      
19            (c)  The reports and information required in (a) of this section that relate to an                       
20       exploratory or stratigraphic test well and those portions of an application for a                             
21       permit to drill an exploratory or stratigraphic test well that the commission                                 
22       determines contain proprietary engineering or geotechnical information shall be                               
23       kept confidential for 24 months following the 30-day filing period unless the owner of                            
24       the well gives written permission to release the application and reports and                                  
25       information at an earlier date. If the commissioner of natural resources finds that the                           
26       required reports and information contain significant information relating to the                                  
27       valuation of unleased land in the same vicinity, the commissioner shall keep the                                  
28       reports and information confidential for a reasonable time after the disposition of all                           
29       affected unleased land, unless the owner of the well gives written permission to                                  
30       release the reports and information at an earlier date. Well surface and bottom hole                          
31       locations [LOCATION], well depth, well status, [AND] production data, and                     
01       production reports required by the commission to be filed subsequent to the 30-day                                
02       filing period shall be considered public information and may not be classified                                    
03       confidential. Production data, as used in this subsection, means volume, gravity and                              
04       gas-oil ratio of all production of oil or gas after the well begins regular production.                           
05    * Sec. 8. AS 31.05.035 is amended by adding a new subsection to read:                                              
06            (f)  Confidentiality under (d) of this section is not applicable to information                              
07       submitted with or as part of a petition for a commission order or to information                                  
08       submitted for or as part of a hearing before the commission.                                                      
09    * Sec. 9. AS 31.05.080(a) is amended to read:                                                                      
10            (a)  Within 20 days after written notice of the entry of an order or decision of                             
11       the commission, or such further time as the commission grants for good cause shown,                               
12       a person affected by it may file with the commission an application for                                           
13       reconsideration [THE REHEARING IN RESPECT] of the matter determined by the                                    
14       order or decision, setting out [FORTH] the respect in which the order or decision is                          
15       believed to be erroneous. The commission shall grant or refuse the application in                                 
16       whole or in part within 10 days after it is filed, and failure to act on it within this                           
17       period is a refusal of it and a final disposition of the application. If reconsideration                      
18       [THE HEARING] is granted, the commission may enter a new order or decision after                                  
19       reconsideration [REHEARING] as may be required under the circumstances.                                       
20    * Sec. 10. AS 31.05.080(b) is repealed and reenacted to read:                                                      
21            (b)  A person who has applied for reconsideration and is dissatisfied with the                               
22       disposition of the application for reconsideration may appeal to the superior court. The                          
23       questions reviewed on appeal are limited to the questions presented to the commission                             
24       by the application for reconsideration.                                                                           
25    * Sec. 11. AS 31.05.085(a) is amended to read:                                                                     
26            (a)  During a hearing or investigation held under this chapter, the commission                               
27       may allocate the costs of the hearing or investigation among the parties, including the                           
28       commission, as is just under the circumstances. In allocating costs, the commission                               
29       shall consider the regulatory cost charge paid by a person under AS 31.05.093 and                                 
30       may consider the results, evidence of good faith, other relevant factors, and mitigating                          
31       circumstances. The costs allocated may include                                                                    
01                 (1)  the costs of any time devoted to the investigation or hearing by                                   
02       hired consultants, whether or not the consultants appear as witnesses or participants;                            
03       [AND]                                                                                                             
04                 (2)  any out-of-pocket expenses incurred by the commission in the                                       
05       particular proceeding; and                                                                                    
06                 (3)  when the investigation or hearing relates to a violation of a                                  
07       provision of this chapter, a regulation adopted under this chapter, or an order,                              
08       stipulation, or term of a permit issued by the commission, the costs of any time                              
09       devoted to the investigation or hearing by the commission staff.                                              
10    * Sec. 12. AS 31.05.090 is repealed and reenacted to read:                                                         
11            Sec. 31.05.090. Permits to drill wells. (a) A person must apply for and receive                            
12       a permit from the commission before drilling                                                                      
13                 (1)  a well in search of oil or gas;                                                                    
14                 (2)  a well in support of the recovery or production of oil or gas;                                     
15                 (3)  an underground injection well for the purpose of gas storage; or                                   
16                 (4)  an underground injection well for which the state has acquired                                     
17       primary enforcement responsibility under AS 31.05.030(h).                                                         
18            (b)  A person must submit a separate permit application for each well. The                                   
19       permit application must be in the form required by the commission and include all                                 
20       information required by the commission.                                                                           
21            (c)  After receiving an application under (b) of this section, the commission                                
22       shall promptly approve or deny the application for a permit to drill.                                             
23            (d)  In making a determination under (c) of this section, the commissioner shall                             
24       consider whether the                                                                                              
25                 (1)  proposed well is contrary to law, a provision of this chapter, a                                   
26       regulation adopted under this chapter, or an order, stipulation, or term of a permit                              
27       issued by the commission; or                                                                                      
28                 (2)  applicant is in violation of a provision of this chapter, a regulation                             
29       adopted under this chapter, or an order, stipulation, or term of a permit issued by the                           
30       commission and the magnitude of such violation.                                                                   
31    * Sec. 13. AS 31.05.093(c) is amended to read:                                                                     
01            (c)  The commission shall determine the regulatory cost charges levied under                                 
02       this section so that the total amount to be collected approximately equals the                                    
03       appropriations made for the operating costs of the commission under this chapter for                              
04       the fiscal year [, LESS THE ESTIMATED TOTAL OF THE FEES TO BE                                                     
05       COLLECTED UNDER AS 31.05.090. IF THE AMOUNT THE COMMISSION                                                        
06       EXPECTS TO COLLECT UNDER THIS SECTION AND UNDER AS 31.05.090                                                      
07       EXCEEDS THE APPROPRIATIONS MADE FOR THE OPERATING COSTS OF                                                        
08       THE COMMISSION UNDER THIS CHAPTER, THE COMMISSION SHALL, BY                                                       
09       ORDER, ADJUST THE REGULATORY COST CHARGES SO THAT THE TOTAL                                                       
10       AMOUNT OF THE REGULATORY COST CHARGES AND FEES THAT ARE                                                           
11       COLLECTED APPROXIMATELY EQUALS THE APPROPRIATIONS MADE                                                            
12       FOR THE OPERATING COSTS OF THE COMMISSION UNDER THIS CHAPTER                                                      
13       FOR THE FISCAL YEAR].                                                                                             
14    * Sec. 14. AS 31.05.150 is repealed and reenacted to read:                                                         
15            Sec. 31.05.150. Penalties. (a) In addition to the penalties in (b) - (e) of this                           
16       section, a person who violates a provision of this chapter, a regulation adopted under                            
17       this chapter, or an order, stipulation, or term of a permit issued by the commission is                           
18       liable for a civil penalty of not more than $100,000 for the initial violation and not                            
19       more than $10,000 for each day thereafter on which the violation continues.                                       
20            (b)  A person who knowingly commits an act specified in AS 11.46.630(a) for                                  
21       the purpose of evading a provision of this chapter, a regulation adopted under this                               
22       chapter, or an order, stipulation, or term of a permit issued by the commission, is                               
23       guilty of a class A misdemeanor.                                                                                  
24            (c)  A person who knowingly aids or abets another person in the violation of a                               
25       provision of this chapter, a regulation adopted under this chapter, or an order,                                  
26       stipulation, or term of a permit issued by the commission, is subject to the same                                 
27       penalty as that prescribed in this chapter for the violation by the other person.                                 
28            (d)  In addition to the penalties in (a) - (c) and (e) of this section, the                                  
29       commission may impose a civil penalty for each 1,000 cubic feet of natural gas flared,                            
30       vented, or otherwise determined to be waste as defined in AS 31.05.170. The penalty                               
31       shall be twice the fair market value of the natural gas at the point of waste.                                    
01            (e)  A person who knowingly violates a provision of this chapter, a regulation                               
02       adopted under this chapter, or an order, stipulation, or term of a permit issued by the                           
03       commission is guilty of a misdemeanor punishable by a fine of not more than $10,000                               
04       a day for each day of violation.                                                                                  
05            (f)  The commission may assess the civil penalties provided in this section and,                             
06       if not paid, the penalties are recoverable by suit filed by the attorney general in the                           
07       name and on behalf of the commission in the superior court. The payment of a penalty                              
08       does not relieve a person on whom the penalty is imposed from liability to any other                              
09       person for damages arising out of the violation.                                                                  
10            (g)  In determining the amount of a penalty assessed under (a) of this section,                              
11       the commission shall consider                                                                                     
12                 (1)  the extent to which the person committing the violation was acting                                 
13       in good faith in attempting to comply;                                                                            
14                 (2)  the extent to which the person committing the violation acted in a                                 
15       wilful or knowing manner;                                                                                         
16                 (3)  the extent and seriousness of the violation and the actual or                                      
17       potential threat to public health or the environment;                                                             
18                 (4)  the injury to the public resulting from the violation;                                             
19                 (5)  the benefits derived by the person committing the violation from                                   
20       the violation;                                                                                                    
21                 (6)  the history of compliance or noncompliance by the person                                           
22       committing the violation with the provisions of this chapter, the regulations adopted                             
23       under this chapter, and the orders, stipulations, or terms of permits issued by the                               
24       commission;                                                                                                       
25                 (7)  the need to deter similar behavior by the person committing the                                    
26       violation and others similarly situated at the time of the violation or in the future;                            
27                 (8)  the effort made by the person committing the violation to correct                                  
28       the violation and prevent future violations; and                                                                  
29                 (9)  other factors considered relevant to the assessment that are adopted                               
30       by the commission in regulation.                                                                                  
31    * Sec. 15. AS 31.05.080(c) and 31.05.080(d) are repealed.                                                        
01    * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03       REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the                                        
04 heading of AS 31.05.080 from "Rehearings and appeals" to "Reconsiderations and appeals."                                
05    * Sec. 17. This Act takes effect immediately under AS 01.10.070(c).