Bill Text: MI HB5151 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Natural resources; gas and oil; hydraulic fracturing; provide for study and funding of the study. Amends sec. 61501 of 1994 PA 451 (MCL 324.61501) & adds secs. 61528, 61529 & 61530.

Spectrum: Moderate Partisan Bill (Democrat 5-1)

Status: (Introduced - Dead) 2011-11-08 - Printed Bill Filed 11/04/2011 [HB5151 Detail]

Download: Michigan-2011-HB5151-Introduced.html

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HOUSE BILL No. 5151

 

November 3, 2011, Introduced by Reps. Meadows, Dillon, Irwin, Heise, Rutledge and Kandrevas and referred to the Committee on Energy and Technology.

 

     A bill to amend 1994 PA 451, entitled

 

"Natural resources and environmental protection act,"

 

by amending section 61501 (MCL 324.61501), as amended by 1998 PA

 

303, and by adding sections 61528, 61529, and 61530.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 61501. Unless the context requires a different meaning,

 

the words defined in this section have the following meanings when

 

used in this part:

 

     (a) "Department" means the department of environmental

 

quality.

 

     (b) "EPA hydraulic fracturing research study" means the study

 

by the office of research and development at the United States

 

environmental protection agency on the relationship between

 

hydraulic fracturing and drinking water that may be developed and

 

implemented beginning in 2011, with initial research available by

 

the end of 2012.

 

     (c) (b) "Field" means an underground reservoir or reservoirs

 

containing oil or gas, or both. Field also includes the same

 

general surface area that is underlaid or appears to be underlaid

 

by at least 1 pool. Field and pool have the same meaning if only 1

 

underground reservoir is involved. However, field, unlike pool, may

 

relate to 2 or more pools.

 

     (d) "Flow back" means the fracturing fluids that return to the

 

surface after a hydraulic fracture is completed.

 

     (e) "Fracturing fluids" means a mixture of water, proppant,

 

and additives used to hydraulically induce cracks in a geologic

 

formation.

 

     (f) (c) "Fund" means the oil and gas regulatory fund created

 

in section 61525b.

 

     (g) (d) "Gas" means a mixture of hydrocarbons and varying

 

quantities of nonhydrocarbons in a gaseous state which may or may

 

not be associated with oil, and includes those liquids resulting

 

from condensation.

 

     (h) "Hydraulic fracturing" means injecting fracturing fluids

 

into a geologic formation at a force exceeding the parting pressure

 

of the rock, inducing fractures through which oil or natural gas

 

can flow to the wellbore.

 

     (i) (e) "Illegal container" means a receptacle that contains

 

illegal oil or gas or illegal products.

 

     (j) (f) "Illegal conveyance" means a conveyance by or through

 

which illegal oil or gas or illegal products are being transported.

 

     (k) (g) "Illegal oil or gas" means oil or gas that has been

 

produced by an owner or producer in violation of this part, a rule

 

promulgated under this part, or an order of the supervisor issued

 

under this part.

 

     (l) (h) "Illegal product" means a product of oil or gas or any

 

part of a product of oil or gas that was knowingly processed or

 

derived in whole or in part from illegal oil or gas.

 

     (m) (i) "Market demand" means the actual demand for oil or gas

 

from any particular pool or field for current requirements for

 

current consumption and use within or outside the state, together

 

with the demand for such amounts as are necessary for building up

 

or maintaining reasonable storage reserves of oil or gas or the

 

products of oil or gas.

 

     (n) (j) "Oil" means natural crude oil or petroleum and other

 

hydrocarbons, regardless of gravity, that are produced at the well

 

in liquid form by ordinary production methods and that are not the

 

result of condensation of gas after it leaves the underground

 

reservoir.

 

     (o) (k) "Owner" means the person who has the right to drill a

 

well into a pool, to produce from a pool, and to receive and

 

distribute the value of the production from the pool for himself or

 

herself either individually or in combination with others.

 

     (p) (l) "Pool" means an underground reservoir containing a

 

common accumulation of oil or gas, or both. Pool includes a

 

productive zone of a general structure that is completely separated

 

from any other zone in the structure, or is declared to be a pool

 

by the supervisor of wells.

 

     (q) (m) "Producer" means the operator, whether owner or not,

 

of a well or wells capable of producing oil or gas or both in

 

paying quantities.

 

     (r) (n) "Product" means any commodity or thing made or

 

manufactured from oil or gas, and all derivatives of oil or gas,

 

including refined crude oil, crude tops, topped crude, processed

 

crude petroleum, residue treated crude oil, residuum, gas oil,

 

naphtha, distillate, gasoline, casing-head gasoline, natural gas

 

gasoline, kerosene, benzine, wash oil, waste oil, lubricating oil,

 

and blends or mixtures of oil or gas or any derivatives of oil or

 

gas whether enumerated or not.

 

     (s) (o) "Supervisor" or "supervisor of wells" means the

 

department.

 

     (t) (p) "Tender" means a permit or certificate of clearance,

 

approved and issued or registered under the authority of the

 

supervisor, for the transportation of oil or gas or products.

 

     (u) (q) "Waste" in addition to its ordinary meaning includes

 

all of the following:

 

     (i) "Underground waste", as those words are generally

 

understood in the oil business, and including all of the following:

 

     (A) The inefficient, excessive, or improper use or dissipation

 

of the reservoir energy, including gas energy and water drive, of

 

any pool, and the locating, spacing, drilling, equipping,

 

operating, or producing of a well or wells in a manner to reduce or

 

tend to reduce the total quantity of oil or gas ultimately

 

recoverable from any pool.

 

     (B) Unreasonable damage to underground fresh or mineral

 

waters, natural brines, or other mineral deposits from operations

 

for the discovery, development, and production and handling of oil

 

or gas.

 

     (ii) "Surface waste", as those words are generally understood

 

in the oil business, and including all of the following:

 

     (A) The unnecessary or excessive surface loss or destruction

 

without beneficial use, however caused, of gas, oil, or other

 

product, but including the loss or destruction, without beneficial

 

use, resulting from evaporation, seepage, leakage, or fire,

 

especially a loss or destruction incident to or resulting from the

 

manner of spacing, equipping, operating, or producing a well or

 

wells, or incident to or resulting from inefficient storage or

 

handling of oil.

 

     (B) The unnecessary damage to or destruction of the surface;

 

soils; animal, fish, or aquatic life; property; or other

 

environmental values from or by oil and gas operations.

 

     (C) The unnecessary endangerment of public health, safety, or

 

welfare from or by oil and gas operations.

 

     (D) The drilling of unnecessary wells.

 

     (iii) "Market waste", which includes the production of oil or

 

gas in any field or pool in excess of the market demand as defined

 

in this part.

 

     Sec. 61528. (1) The department and the department of natural

 

resources jointly shall undertake a study of the public health,

 

environmental, and natural resource impacts associated with the

 

extraction of natural gas from shale formations in this state.

 

     (2) In designing and undertaking the study, the department and

 

the department of natural resources jointly shall consult, as

 

appropriate, other state agencies, other states in the region, and

 

federal agencies.

 

     (3) The study shall include a review of the results of the EPA

 

hydraulic fracturing research study and other available studies of

 

potential impacts to the public health, safety, environment, or

 

natural resources.

 

     (4) The study shall address all of the following:

 

     (a) The probability of and natural resource impacts of

 

contamination to groundwater and surface water by fracturing fluids

 

and gas.

 

     (b) The probability of and natural resource impacts of

 

contamination to water and other natural resources from the

 

transportation, storage, and handling of liquids, including

 

fracturing fluids.

 

     (c) The probability of and natural resource impacts of

 

contamination to water and other natural resources from the

 

handling and disposal of flow back and other wastewater and wastes.

 

     (d) The risks of trespass and the taking of property rights

 

through contamination of, negative impacts to, or trespass on water

 

and other natural resources from the handling and disposal of flow

 

back and other wastewater and wastes.

 

     (e) The long-term consequences of the potential number of oil

 

or gas wells that could be located within a watershed, to the water

 

cycle of that watershed, including recharge from precipitation and

 

discharge to streams, and other large-scale inputs and outputs.

 

     (f) The long-term availability of water resources to support

 

hydraulic fracturing activities.

 

     (g) Risks to habitat of endangered or threatened or rare

 

species, or to closed-canopy dependent species, or any other

 

specific-habitat dependent species, from habitat fragmentation and

 

other environmental impacts due to the construction of drilling

 

platforms, gathering lines, transmission pipelines, and other oil

 

and gas development infrastructure.

 

     (h) Increased risks of traffic accidents and damage to roads

 

and bridges from truck traffic and additional costs to communities

 

due to traffic accidents.

 

     (i) Long-term impacts to local land use patterns and the

 

character of rural areas and small cities and villages.

 

     (j) The adequacy of and additional costs associated with

 

adding capacity of local emergency responders to quickly and

 

effectively respond to and manage any oil and gas development

 

associated accident or spill.

 

     (k) Impacts to state resources and recreation lands.

 

     (l) The projected positive and negative economic impact of

 

hydraulic fracturing activities to this state.

 

     (m) The feasibility of enacting a state-level severance tax to

 

generate revenues for research, remediation, and other activities

 

relating to hydraulic fracturing.

 

     (n) The establishment of an industry-funded escrow account to

 

fund the cost of remediation and regulatory enforcement.

 

     (o) The potential impacts of varying hydraulic fracturing

 

waste disposal methods including risks to groundwater and surface

 

water from the presence of, and potential spilling or other

 

accidents involving radioactive materials in flow back water, and

 

including the risks to groundwater and surface water from the deep

 

injection, or any other disposal method, of oil and gas wastewater

 

containing these materials.

 

     (p) Well construction standards, including construction

 

methods and materials used.

 

     (q) Needed water quantity protections that include at least

 

the following:

 

     (i) Recommendations for the development of a documented public

 

standard operating procedure for site-specific reviews of hydraulic

 

fracturing related water withdrawal proposals when the water

 

withdrawal assessment tool under part 327 has shown that adverse

 

resource impacts are likely. This standard operating procedure

 

recommendation shall include a process for public participation and

 

input that includes a comment period on these water withdrawals.

 

     (ii) The identification of water conservation practices and

 

technology that recycles hydraulic fracturing water using a fully

 

contained system with minimal air pollution.

 

     (r) Recommendations for new regulations to protect water

 

quality, including both of the following:

 

     (i) The establishment of a process for full public disclosure

 

of all chemicals to be used at least 30 days before any drilling or

 

hydraulic fracturing is to begin. This process shall place the

 

burden of proof on the permittee to prove the confidential nature

 

of proprietary mixtures, but shall require disclosure of all

 

chemical constituents.

 

     (ii) Enforceable water quality protections, including, but not

 

limited to, the following:

 

     (A) Secondary containment for chemicals, including those

 

stored prior to mixing.

 

     (B) Appropriate setbacks for wells from surface water

 

resources, residences, and public buildings and other institutions.

 

     (C) Identification of, and recommendations for, nontoxic

 

hydraulic fracturing fluids and processes.

 

     (s) Impacts on air, including air pollution and other related

 

issues such as flaring, methane venting, diesel engine pollution,

 

and VOC condensate, and other recommendations for new regulations

 

to protect the health and well-being of residents of this state.

 

     (t) The identification of and use of most effective methods

 

and technology for reducing noise.

 

     (u) A public participation process including both of the

 

following:

 

     (i) A process that allows for public participation with notice

 

60 days in advance of the permitting process and enables all

 

persons to comment on, protest, or appeal the issuance of new or

 

substantially changed permits for natural gas drilling or

 

extraction.

 

     (ii) Alternatives to compulsory pooling requirements.

 

     (v) Monitoring and enforcement of seismic activity, existing

 

pipelines and wells, including plugged and abandoned wells.

 

     (w) An ongoing study of cumulative impacts to public health

 

and natural resources from hydraulic fracturing operation in this

 

state.

 

     (x) Any other issues identified by the advisory commission

 

convened under section 61529.

 

     (5) The department and the department of natural resources

 

jointly shall prepare a draft report based on the study required

 

under this section and shall make that draft report publicly

 

available and open to public comment. Prior to completion of the

 

study, the public shall have a right to comment on the study

 

design.

 

     (6) Following the public comment period under subsection (5),

 

the department and the department of natural resources jointly

 

shall prepare a final report based upon the study under this

 

section. After receiving the public comment on the draft report,

 

the department shall make a formal response document to address

 

each concern, before preparing a final report.

 

     Sec. 61529. (1) The department and the department of natural

 

resources jointly shall convene an advisory committee that includes

 

representatives of local governments, the science and engineering

 

experts, industry groups, environmental organizations, businesses

 

and private citizens, academics from state universities including

 

sociologists, anthropologists, biologists, ecologists, as well as

 

geologists, limnologists, and other specialists as needed, and

 

public health officials from the department of community health,

 

and any other state agencies or other persons the agencies consider

 

necessary.

 

     (2) The advisory committee convened under subsection (1) after

 

reviewing the study under section 61528 shall make recommendations

 

to the department and the department of natural resources on both

 

of the following:

 

     (a) Conditions that should be included in permits issued under

 

this part for hydraulic fracturing.

 

     (b) Appropriate changes, if any, that should be made to state

 

law and rules governing hydraulic fracturing.

 

     Sec. 61530. (1) On or before July 1, 2012, or within 30 days

 

after acquiring a gas interest, whichever is later, an owner that

 

acquires a gas interest for the purpose of drilling for natural gas

 

shall file a notice with the department identifying all of the

 

following:

 

     (a) Each parcel, by parcel number or other legal description,

 

on which the owner has a gas interest.

 

     (b) A statement of the total acreage of the parcels identified

 

under subdivision (a).

 

     (c) A map showing the parcels identified under subdivision

 

(a).

 

     (2) On or before August 1, 2012, or within 30 days after

 

notification by the department, whichever is later, an owner that

 

files a notice under subsection (1) shall pay to the department, as

 

a fee for calendar year 2012, an amount equal to $10.00 per acre of

 

the total acreage reported.

 

     (3) On or before August 1, 2013, or within 30 days after

 

notification by the department, whichever is later, an owner that

 

files a notice under subsection (1) shall pay to the department, as

 

a fee for calendar year 2013, an amount equal to $10.00 per acre of

 

the total acreage reported.

 

     (4) Except as provided in subsection (9), a fee shall not be

 

assessed under this section after calendar year 2013.

 

     (5) This section does not apply to an owner that demonstrates,

 

to the satisfaction of the department, good cause for the failure

 

to meet the requirements otherwise provided in this section.

 

     (6) The failure to file the notice required under subsection

 

(1) when due, or failure to pay the amounts required under

 

subsections (2) and (3) when due, may be grounds for denial of a

 

permit to explore for or produce gas from formations under the

 

parcel in which the fee has not been paid.

 

     (7) An owner shall not pass the payment of costs required

 

under subsections (2) and (3) through to, or recover them from, the

 

person who owns the surface rights of the property.

 

     (8) The department shall deposit the money collected under

 

this section in the fund.

 

     (9) Upon issuance of the final report under section 61528, the

 

department shall compare the actual costs of the study conducted

 

under section 61528 with the money paid by persons that file a

 

notice under subsection (1). If the actual cost of the study is

 

less than the amount paid under subsections (2) and (3), the

 

department shall refund the difference, prorated by acreage, to the

 

owners who paid a fee. If the actual cost of the study is more than

 

the amount paid under subsections (2) and (3), each owner that

 

filed a notice under subsection (1) shall pay, within 90 days after

 

notification by the department, an amount determined by the

 

department, prorated by acreage, to fully fund the cost of the

 

study conducted under section 61528.

 

     (10) As used in this section, "gas interest" means the right

 

to explore for gas on, or produce gas from, real property. However,

 

gas interest does not include a fee simple interest in the surface

 

rights of real property regardless of whether the fee interest

 

includes the mineral rights.