Bill Text: IL SB3424 | 2013-2014 | 98th General Assembly | Amended

---

Bill Title: Amends the Oil and Gas Wells on Public Lands Act. Provides that on and after January 1, 2015, no new permits shall be issued for surface extraction activities on lands owned by the Department of Natural Resources or the federal government. Prohibits the Department of Natural Resources from entering into contracts in writing designating any person as the permittee of the State of Illinois with the exclusive right to prospect and explore public lands of the State of Illinois for the occurrence of petroleum. Repeals provisions governing certain petroleum leases, right of way over public lands and preferential rights to prospecting permits. Effective immediately.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Failed) 2015-01-13 - Session Sine Die [SB3424 Detail]

Download: Illinois-2013-SB3424-Amended.html

---

Sen. Michael W. Frerichs

Filed: 3/25/2014

09800SB3424sam001 LRB098 19999 OMW 56902 a
AMENDMENT TO SENATE BILL 3424
AMENDMENT NO. ______. Amend Senate Bill 3424 by replacing
everything after the enacting clause with the following:
"Section 5. The Oil and Gas Wells on Public Lands Act is
amended by changing Sections 1, 2, 3, 5, 7, 8, 12, 13, 14, 16,
19, 20, and 22 as follows:
(5 ILCS 615/1) (from Ch. 96 1/2, par. 5001)
Sec. 1. Whenever used in this Act, unless the context
otherwise requires, words and terms shall have the meaning
attributed to them herein:
(1) "Commence to drill a well": The institution of work in
good faith with drilling equipment adequate for the drilling of
a well to a depth that will reasonably test the oil and gas
productiveness of the public lands where such well is
commenced.
(2) "Petroleum": Any liquid or gaseous hydrocarbon

09800SB3424sam001 - 2 - LRB098 19999 OMW 56902 a
occurring in nature beneath the surface of the earth.
(3) "Proven territory": Territory so situated with
reference to known producing wells as to establish the general
opinion that, because of its relation to them, petroleum is
contained in it.
(4) "Public lands": Lands and areas belonging to, or
subsequently acquired by the State or the United States,
including lands of every kind and nature.
(5) "Gross value": The value of petroleum at the well
produced and saved, without deduction for expense of
production.
(6) "Person": Any citizen of the United States or person
who has, in good faith, declared his intention of becoming a
citizen of the United States, or any such association of such
persons, or any corporation organized and existing under and by
virtue of the laws of any state or territory of the United
States and authorized to do business in this State.
(7) "Department": The Department of Natural Resources.
(8) "United States": Lands and areas belonging to, or
subsequently acquired by, the federal government within the
State of Illinois.
(Source: P.A. 89-445, eff. 2-7-96.)
(5 ILCS 615/2) (from Ch. 96 1/2, par. 5002)
Sec. 2. State issuance of extraction permits; prohibited
activities. On and after the effective date of this amendatory

09800SB3424sam001 - 3 - LRB098 19999 OMW 56902 a
Act of the 98th General Assembly:
(a) No permits shall be issued for The Department of
Natural Resources shall be empowered with respect to public
lands to grant permits and leases in the name of the State of
Illinois, with the approval of the Governor in writing, for the
extraction of oil, gas and other petroleum deposits, except
that no surface extraction activities shall be performed nor
production equipment located on lands owned by the Department
of Natural Resources if the State owns 100% of the underlying
mineral interests of those lands.
(b) No permits shall be issued for surface extraction
activities on lands owned by the United States government.
(c) Extraction activities underlying lands owned by the
Department of Natural Resources or the United States that
utilize directional drilling techniques shall be prohibited.
may be permitted at the discretion of the Department. However,
the
(d) The Department shall not grant permits on leases for
the extraction of oil, gas, and other petroleum deposits from
State or federal public lands, including, but not limited to,
the following classifications of lands of if the State or
federal government owns 100% of the underlying mineral
interests: (1) lands where threatened or endangered species
occur, as determined pursuant to the federal Endangered Species
Act or the Illinois Endangered Species Protection Act, (2)
Illinois Natural Area Inventory sites, (3) nature preserves

09800SB3424sam001 - 4 - LRB098 19999 OMW 56902 a
dedicated under the Illinois Natural Areas Preservation Act,
(4) lands containing a wild and scenic river as designated
under the Wild and Scenic River Area Act, (5) lands registered
under the Register of Land and Water Reserves under Part 4010
of Title 17 of the Illinois Administrative Code, and (6) lands
on which federal or State laws or regulations prohibit the
surface extraction or production facility activity, (7) State
parks, recreation areas, fish and wildlife areas, forests, and
historic sites, and (8) national forests, national grasslands,
and national wildlife refuges.
(e) The grant of such permits or leases shall be subject to
the terms and conditions hereinafter set forth in this Act.
(Source: P.A. 89-445, eff. 2-7-96; 90-490, eff. 8-17-97.)
(5 ILCS 615/3) (from Ch. 96 1/2, par. 5003)
Sec. 3. The Department shall not is hereby authorized to
enter into contracts in writing designating any person as the
permittee of the State of Illinois with the exclusive right to
prospect and explore not to exceed three sections, or an
equivalent area, of the public lands of the State of Illinois
for the occurrence of petroleum therein; such contract to
contain such conditions as may be prescribed by the rules and
regulations adopted by the Department in accordance with the
terms of this Act. Such permit shall be for a period of one (1)
year or less, in the discretion of the Department, and shall be
granted free of any monetary consideration whatsoever, except

09800SB3424sam001 - 5 - LRB098 19999 OMW 56902 a
as provided in Section 13 of this Act, and except that if more
than one application for a permit is received with respect to
the same public lands the Department shall grant such permit to
the person offering the highest cash bonus therefor, and such
permittee, pursuant to such contract, shall have the right to
enter in and upon such lands and prospect and explore the same
to determine the occurrence of petroleum therein.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/5) (from Ch. 96 1/2, par. 5005)
Sec. 5. For existing permits in effect prior to the
effective date of this amendatory Act of the 98th General
Assembly, no No permittee shall commence any operation upon
lands covered by his permit until he has compensated the owners
of private rights therein according to law and has compensated
the State of Illinois for damage to the surface rights of the
State in accordance with the rules and regulations adopted by
the Department.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/7) (from Ch. 96 1/2, par. 5007)
Sec. 7. Every permittee with an existing permit in effect
prior to the effective date of this amendatory Act of the 98th
General Assembly shall have the option of surrendering his
permit at any time and shall be relieved of all liability
thereunder except for physical damage to the premises embraced

09800SB3424sam001 - 6 - LRB098 19999 OMW 56902 a
by his permit which have been occasioned by his operations.
(Source: Laws 1941, vol. 1, p. 943.)
(5 ILCS 615/8) (from Ch. 96 1/2, par. 5008)
Sec. 8. A permittee with an existing permit in effect prior
to the effective date of this amendatory Act of the 98th
General Assembly, at any time during the life of the permit or
upon the termination thereof, shall be entitled to a lease for
the extraction of petroleum from not to exceed one section, or
an equivalent area, of such land to be selected by such
permittee. Such lease shall be at a royalty of not more than
twelve and one-half (12 1/2%) per centum of all petroleum
produced and saved therefrom or the market value of such
petroleum at the option of the Department, and shall provide
for an annual rental, payable in advance, of from one ($1.00)
dollar to ten ($10.00) dollars per acre, as the Department may
determine, which rentals shall be credited against future
royalties. Such leases shall be for a primary term of ten (10)
years and as long thereafter as oil in commercial quality and
commercial quantity can be produced from the lands embraced in
the lease. The form and terms of such leases shall be the same
as the standard commercial petroleum lease generally in use in
the territory in which the oil, gas or other petroleum deposits
are located, with the addition thereto of such terms as in this
Act and the rules and regulations of the Department are
provided. Whenever the conditions contained in such standard

09800SB3424sam001 - 7 - LRB098 19999 OMW 56902 a
commercial lease are in conflict with the provisions of this
Act, the provisions of this Act shall control.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/12) (from Ch. 96 1/2, par. 5012)
Sec. 12. For existing permits prior to the effective date
of this amendatory Act of the 98th General Assembly, the The
Department is hereby authorized to cancel any permit or lease
issued as provided herein for nonpayment of royalties or
nonperformance by the permittee or lessee of any provision or
requirement of the permit or lease: Provided, that before any
such cancellation shall be made, the Department shall mail to
the permittee or lessee by registered mail, addressed to the
post office address of such permittee or lessee shown by the
records of the office of the Department, a notice of intention
to cancel such permit or lease specifying the default for which
the permit or lease is subject to cancellation, and if, within
thirty (30) days after the mailing of said notice to the
permittee or lessee, he shall remedy the default specified in
such notice, then no cancellation of the permit or lease shall
be entered by the Department, but otherwise, the said
cancellation shall be made and all rights of the permittee or
lessee under the permit or lease shall thereupon automatically
terminate: Provided, further, that failure to pay fees required
under permits within the time prescribed therein shall
automatically and without notice work a forfeiture of such

09800SB3424sam001 - 8 - LRB098 19999 OMW 56902 a
permits and of all rights thereunder.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/13) (from Ch. 96 1/2, par. 5013)
Sec. 13. Upon the expiration or forfeiture of any existing
permit prior to the effective date of this amendatory Act of
the 98th General Assembly, no new permit covering the lands, or
any of them, embraced by such expired or forfeited permit shall
be issued for a period of thirty (30) days following the date
of such expiration or forfeiture. If more than one application
for a permit covering such lands, or any of them, shall be made
during such thirty-day period, the Department shall issue a
permit to such lands, or any of them, to the person offering
the greatest cash bonus for such permit at a public auction to
be held at the time and place and in the manner as the
Department shall by regulation prescribe. Such auction shall be
held at any time after the expiration of such thirty-day period
and the only notice thereof shall be by entering in a book kept
at the office of the Department for the purpose, which book
shall be a public record, the date, place and hour of the
holding of such auction.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/14) (from Ch. 96 1/2, par. 5014)
Sec. 14. Whenever the Department shall find it is in the
best interest of the State and of the production of petroleum,

09800SB3424sam001 - 9 - LRB098 19999 OMW 56902 a
it is declared to be lawful for the State, the permittees,
lessees, operator or any person owning or controlling royalty
or other interest in separate properties of the same producing
or prospective petroleum field, to enter into agreements with
themselves or among each other, subject to the approval of the
Department, for the purpose of cooperative exploration,
development and operation of all or a part or parts of such
field, or for the purpose of the exploration, development or
operation of all or part or parts of such field as a pool or
unit, and for the purpose of fixing the time, location and
manner of drilling and for the purpose of drilling and for the
purpose of regulating the location, sequence and number of
exploratory wells required in the case of permits under unit
operations and leases, and operating of wells for the
exploration of petroleum on State and private lands and for the
apportionment and division of the petroleum between the State
and the several owners of land embraced within the field so
placed in such pool, taking into consideration the relative
character and geological showing in respect of said several
tracts of land so far as the same is reasonably ascertainable,
the apparent probability of producing petroleum from the whole
or any part thereof and any and all other apparent factors that
may tend to aid in arriving at a fair, just and equitable
participation by the State and the several owners in the
apportionment and distribution of all the petroleum that shall
be recovered and saved therefrom. The purpose of this section

09800SB3424sam001 - 10 - LRB098 19999 OMW 56902 a
is to prohibit encourage the development and exploration of
petroleum upon State and federal lands by and through the unit
plan of development. When it is in the best interests of the
State, the Department shall compel the adoption of unit plans
of operation in so far as State lands are included in any
productive pool or pools if the permittees or lessees of such
lands shall fail to agree upon a plan of unit operation
acceptable to the Department, the Department is empowered to
fix the terms of such unit plan or plans and any permittees or
lessees affected who fail to abide by such plan shall suffer
forfeiture of their permits or leases upon notice as herein
provided.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/16) (from Ch. 96 1/2, par. 5016)
Sec. 16. The Department is hereby required to prescribe and
publish, for the information of the public, all reasonable
rules and regulations necessary for carrying out the provisions
of this Act, and it may amend or rescind any rule or regulation
promulgated by it under the authority contained herein:
Provided, that no rule or regulation or amendment of the same
or any order rescinding any rule or regulation shall become
effective until after fifteen (15) days from the promulgation
of the same by publication in a newspaper of general
circulation published at the State capital and shall take
effect and be in force at times specified therein. All rules

09800SB3424sam001 - 11 - LRB098 19999 OMW 56902 a
and regulations of the Department and all amendments or
revocations of existing rules and regulations shall be recorded
in an appropriate book or books, shall be adequately indexed
and shall be kept in the office of the Department and shall be
and constitute a public record. Such rules and regulations of
the Department shall be printed in pamphlet form and furnished
to the public free of cost on the Department's website.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/19) (from Ch. 96 1/2, par. 5019)
Sec. 19. For After the issuance of any petroleum lease in
effect before the effective date of this amendatory Act of the
98th General Assembly, the lessee shall proceed to develop the
petroleum in the lands covered thereby through the drilling of
such wells as will efficiently extract the petroleum therefrom
and such development shall take into account the productiveness
of the producing horizon, the depth at which it occurs, the
average cost of wells, the market requirements obtaining at any
given time, and the maintenance of proper oil and gas ratios.
The Department shall determine, either by rule or regulation,
or by inclusion in the terms of any lease, the rapidity and
extent of development of the oil, gas or other petroleum field
embraced by such lease.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/20) (from Ch. 96 1/2, par. 5020)

09800SB3424sam001 - 12 - LRB098 19999 OMW 56902 a
Sec. 20. All existing leases prior to the effective date of
this amendatory Act of the 98th General Assembly shall provide
that the lessee shall drill an offset well to any well on
adjoining land which is within three hundred fifty (350) feet
of any outer boundary of the land covered by the lease, and
which well on adjoining lands is producing petroleum in paying
quantities and draining the lands covered by the lease, such
offset to be begun within ninety (90) days from the completion
of the adjoining well and drilled with due diligence to
completion.
(Source: Laws 1941, vol. 1, p. 943.)
(5 ILCS 615/22) (from Ch. 96 1/2, par. 5022)
Sec. 22. Nothing contained in this Act shall be construed
as requiring the Department to offer any tract or tracts of
land for prospecting or lease, but the Department shall have
power to withhold any tract or tracts from prospecting or
leasing for petroleum purposes, if in its judgment the best
interest of the State will be served by so doing.
(Source: Laws 1951, p. 1167.)
(5 ILCS 615/6 rep.)
(5 ILCS 615/9 rep.)
(5 ILCS 615/11 rep.)
(5 ILCS 615/17 rep.)
(5 ILCS 615/18 rep.)

09800SB3424sam001 - 13 - LRB098 19999 OMW 56902 a
(5 ILCS 615/21 rep.)
Section 10. The Oil and Gas Wells on Public Lands Act is
amended by repealing Sections 6, 9, 11, 17, 18, and 21.
Section 99. Effective date. This Act takes effect upon
becoming law.".