Illinois General Assembly - Full Text of SB3174
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Full Text of SB3174  100th General Assembly


Sen. David Koehler

Filed: 4/6/2018





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2    AMENDMENT NO. ______. Amend Senate Bill 3174 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Oil and Gas Act is amended by
5changing Sections 1, 6, and 6.1 and by adding Section 6.3 as
7    (225 ILCS 725/1)  (from Ch. 96 1/2, par. 5401)
8    Sec. 1. Unless the context otherwise requires, the words
9defined in this Section have the following meanings as used in
10this Act.
11    "Person" means any natural person, corporation,
12association, partnership, governmental agency or other legal
13entity, receiver, trustee, guardian, executor, administrator,
14fiduciary or representative of any kind.
15    "Oil" means natural crude oil or petroleum and other
16hydrocarbons, regardless of gravity, which are produced at the



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1well in liquid form by ordinary production methods or by the
2use of an oil and gas separator and which are not the result of
3condensation of gas after it leaves the underground reservoir.
4    "Gas" means all natural gas, including casinghead gas, and
5all other natural hydrocarbons not defined above as oil.
6    "Pool" means a natural, underground reservoir containing
7in whole or in part, a natural accumulation of oil or gas, or
8both. Each productive zone or stratum of a general structure,
9which is completely separated from any other zone or stratum in
10the structure, is deemed a separate "pool" as used herein.
11    "Field" means the same general surface area which is
12underlaid or appears to be underlaid by one or more pools.
13    "Permit" means the Department's written authorization
14allowing a well to be drilled, deepened, converted, or operated
15by an owner.
16    "Permittee" means the owner holding or required to hold the
17permit, and who is also responsible for paying assessments in
18accordance with Section 19.7 of this Act and, where applicable,
19executing and filing the bond associated with the well as
20principal and who is responsible for compliance with all
21statutory and regulatory requirements pertaining to the well.
22    When the right and responsibility for operating a well is
23vested in a receiver or trustee appointed by a court of
24competent jurisdiction, the permit shall be issued to the
25receiver or trustee.
26    "Orphan Well" means a well for which: (1) no fee assessment



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1under Section 19.7 of this Act has been paid or no other bond
2coverage has been provided for 2 consecutive years; (2) no oil
3or gas has been produced from the well or from the lease or
4unit on which the well is located for 2 consecutive years; and
5(3) no permittee or owner can be identified or located by the
6Department. Orphaned wells include wells that may have been
7drilled for purposes other than those for which a permit is
8required under this Act if the well is a conduit for oil or
9salt water intrusions into fresh water zones or onto the
10surface which may be caused by oil and gas operations.
11    "Owner" means the person who has the right to drill into
12and produce from any pool, and to appropriate the production
13either for the person or for the person and another, or others,
14or solely for others, excluding the mineral owner's royalty if
15the right to drill and produce has been granted under an oil
16and gas lease. An owner may also be a person granted the right
17to drill and operate an injection (Class II UIC) well
18independent of the right to drill for and produce oil or gas.
19When the right to drill, produce, and appropriate production is
20held by more than one person, then all persons holding these
21rights may designate the owner by a written operating agreement
22or similar written agreement. In the absence of such an
23agreement, and subject to the provisions of Sections 22.2 and
2423.1 through 23.16 of this Act, the owner shall be the person
25designated in writing by a majority in interest of the persons
26holding these rights.



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1    "Department" means the Department of Natural Resources.
2    "Director" means the Director of Natural Resources.
3    "Mining Board" means the State Mining Board in the
4Department of Natural Resources, Office of Mines and Minerals.
5    "Mineral Owner's Royalty" means the share of oil and gas
6production reserved in an oil and gas lease free of all costs
7by an owner of the minerals whether denominated royalty or
8overriding royalty.
9    "Waste" means "physical waste" as that term is generally
10understood in the oil and gas industry, and further includes:
11        (1) the locating, drilling, and producing of any oil or
12    gas well or wells drilled contrary to the valid order,
13    rules and regulations adopted by the Department under the
14    provisions of this Act;
15        (2) permitting the migration of oil, gas, or water from
16    the stratum in which it is found, into other strata,
17    thereby ultimately resulting in the loss of recoverable
18    oil, gas or both;
19        (3) the drowning with water of any stratum or part
20    thereof capable of producing oil or gas, except for
21    secondary recovery purposes;
22        (4) the unreasonable damage to underground, fresh or
23    mineral water supply, workable coal seams, or other mineral
24    deposits in the operations for the discovery, development,
25    production, or handling of oil and gas;
26        (5) the unnecessary or excessive surface loss or



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1    destruction of oil or gas resulting from evaporation,
2    seepage, leakage or fire, especially such loss or
3    destruction incident to or resulting from the escape of gas
4    into the open air in excessive or unreasonable amounts,
5    provided, however, it shall not be unlawful for the
6    operator or owner of any well producing both oil and gas to
7    burn such gas in flares when such gas is, under the other
8    provisions of this Act, lawfully produced, and where there
9    is no market at the well for such escaping gas; and where
10    the same is used for the extraction of casinghead gas, it
11    shall not be unlawful for the operator of the plant after
12    the process of extraction is completed, to burn such
13    residue in flares when there is no market at such plant for
14    such residue gas;
15        (6) permitting unnecessary fire hazards;
16        (7) permitting unnecessary damage to or destruction of
17    the surface, soil, animal, fish or aquatic life or property
18    from oil or gas operations.
19    "Directional drilling" means controlled directional
20drilling where the bottom of the wellbore is intentionally
21directed away from the vertical position.
22    "Drilling Unit" means the surface area allocated by an
23order or regulation of the Department to the drilling of a
24single well for the production of oil or gas from an individual
26    "Enhanced Recovery Method" means any method used in an



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1effort to recover hydrocarbons from a pool by injection of
2fluids, gases or other substances to maintain, restore or
3augment natural reservoir energy, or by introducing immiscible
4or miscible gases, chemicals, other substances or heat or by
5in-situ combustion, or by any combination thereof.
6    "Horizontal well" means a well with a wellbore drilled
7laterally at an angle of at least 80 degrees to the vertical
8and with a horizontal projection exceeding 100 feet measured
9from the initial point of penetration into the productive
10formation through the terminus of the lateral in the same
11common source of hydrocarbon supply.
12    "Survey" means the Illinois State Geological Survey.
13    "Well-Site Equipment" means any production-related
14equipment or materials specific to the well, including motors,
15pumps, pump jacks, tanks, tank batteries, separators,
16compressors, casing, tubing, and rods.
17(Source: P.A. 99-78, eff. 7-20-15.)
18    (225 ILCS 725/6)  (from Ch. 96 1/2, par. 5409)
19    Sec. 6. The Department shall have the authority to conduct
20hearings and to make such reasonable rules as may be necessary
21from time to time in the proper administration and enforcement
22of this Act, including the adoption of rules and the holding of
23hearings for the following purposes:
24        (1) To require the drilling, casing and plugging of
25    wells to be done in such a manner as to prevent the



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1    migration of oil or gas from one stratum to another; to
2    prevent the intrusion of water into oil, gas or coal
3    strata; to prevent the pollution of fresh water supplies by
4    oil, gas or salt water.
5        (2) To require the person desiring or proposing to
6    drill, deepen or convert any well for the exploration or
7    production of oil or gas, for injection or water supply in
8    connection with enhanced recovery projects, for the
9    disposal of salt water, brine, or other oil or gas field
10    wastes, or for input, withdrawal, or observation in
11    connection with the storage of natural gas or other liquid
12    or gaseous hydrocarbons before commencing the drilling,
13    deepening or conversion of any such well, to make
14    application to the Department upon such form as the
15    Department may prescribe and to comply with the provisions
16    of this Section. The drilling, deepening or conversion of
17    any well is hereby prohibited until such application is
18    made and the applicant is issued a permit therefor as
19    provided by this Act. Each application for a well permit
20    shall include the following: (A) The exact location of the
21    well, (B) the name and address of the manager, operator,
22    contractor, driller, or any other person responsible for
23    the conduct of drilling operations, (C) the proposed depth
24    of the well, (D) lease ownership information, and (E)
25    Global Positioning System (GPS) surface and bottom hole
26    locations for all wells drilled utilizing directional or



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1    horizontal drilling techniques, (F) a list of chemicals and
2    additives intended to be used in the drilling or completion
3    operations as identified in Section 6.3, and (G) (E) such
4    other relevant information as the Department may deem
5    necessary or convenient to effectuate the purposes of this
6    Act.
7        Additionally, each applicant who has not been issued a
8    permit that is of record on the effective date of this
9    amendatory Act of 1991, or who has not thereafter made
10    payments of assessments under Section 19.7 of this Act for
11    at least 2 consecutive years preceding the application,
12    shall execute, as principal, and file with the Department a
13    bond, executed by a surety authorized to transact business
14    in this State, in an amount estimated to cover the cost of
15    plugging the well and restoring the well site, but not to
16    exceed $5000, as determined by the Department for each
17    well, or a blanket bond in an amount not to exceed $100,000
18    for all wells, before drilling, deepening, converting, or
19    operating any well for which a permit is required that has
20    not previously been plugged and abandoned in accordance
21    with the Act. The Department shall release the bond if the
22    well, or all wells in the case of a blanket bond, is not
23    completed but is plugged and the well site restored in
24    accordance with the Department's rules or is completed in
25    accordance with the Department's rules and the permittee
26    pays assessments to the Department in accordance with



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1    Section 19.7 of this Act for 2 consecutive years.
2        In lieu of a surety bond, the applicant may provide
3    cash, certificates of deposit, or irrevocable letters of
4    credit under such terms and conditions as the Department
5    may provide by rule.
6        The sureties on all bonds in effect on the effective
7    date of this amendatory Act of 1991 shall remain liable as
8    sureties in accordance with their undertakings until
9    released by the Department from further liability under the
10    Act. The principal on each bond in effect on the effective
11    date of this amendatory Act of 1991 shall be released from
12    the obligation of maintaining the bond if either the well
13    covered by a surety bond has been plugged and the well site
14    restored in accordance with the Department's rules or the
15    principal of the surety has paid the initial assessment in
16    accordance with Section 19.7 and no well or well site
17    covered by the surety bond is in violation of the Act.
18        No permit shall be issued to a corporation incorporated
19    outside of Illinois until the corporation has been
20    authorized to do business in Illinois.
21        No permit shall be issued to an individual,
22    partnership, or other unincorporated entity that is not a
23    resident of Illinois until that individual, partnership,
24    or other unincorporated entity has irrevocably consented
25    to be sued in Illinois.
26        (3) To require the person assigning, transferring, or



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1    selling any well for which a permit is required under this
2    Act to notify the Department of the change of ownership.
3    The notification shall be on a form prescribed by the
4    Department, shall be executed by the current permittee and
5    by the new permittee, or their authorized representatives,
6    and shall be filed with the Department within 30 days after
7    the effective date of the assignment, transfer or sale.
8    Within the 30 day notification period and prior to
9    operating the well, the new permittee shall pay the
10    required well transfer fee and, where applicable, file with
11    the Department the bond required under subsection (2) of
12    this Section.
13        (4) To require the filing with the State Geological
14    Survey of all geophysical logs, a well drilling report and
15    drill cuttings or cores, if cores are required, within 90
16    days after drilling ceases; and to file a completion report
17    with the Department within 30 days after the date of first
18    production following initial drilling or any reworking, or
19    after the plugging of the well, if a dry hole. A copy of
20    each completion report submitted to the Department shall be
21    delivered to the State Geological Survey. The Department
22    and the State Geological Survey shall keep the reports
23    confidential, if requested in writing by the permittee, for
24    2 years after the date the permit is issued by the
25    Department. Horizontal wells or wells drilled utilizing
26    directional drilling, including, but not limited to, oil



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1    and gas wells, coalbed methane wells, and coal mine methane
2    wells, shall be prohibited from classification as
3    confidential. This confidentiality requirement shall not
4    prohibit the use of the report for research purposes,
5    provided the State Geological Survey does not publish
6    specific data or identify the well to which the completion
7    report pertains. Well drilling reports and completion
8    reports for horizontal wells or wells drilled utilizing
9    directional drilling shall be subject to the requirements
10    of Section 6.3.
11        (5) To prevent "blowouts", "caving", "frac hits", and
12    "seepage" in the same sense that conditions indicated by
13    such terms are generally understood in the oil and gas
14    business.
15        (6) To prevent fires.
16        (7) To ascertain and identify the ownership of all oil
17    and gas wells, producing leases, refineries, tanks,
18    plants, structures, and all storage and transportation
19    equipment and facilities.
20        (8) To regulate the use of any enhanced recovery method
21    in oil pools and oil fields.
22        (9) To regulate or prohibit the use of vacuum.
23        (10) To regulate the spacing of wells, the issuance of
24    permits, and the establishment of drilling units.
25        (11) To regulate directional drilling of oil or gas
26    wells.



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1        (12) To regulate the plugging of wells.
2        (13) To require that wells for which no logs or
3    unsatisfactory logs are supplied shall be completely
4    plugged with cement from bottom to top.
5        (14) To require a description in such form as is
6    determined by the Department of the method of well plugging
7    for each well, indicating the character of material used
8    and the positions and dimensions of each plug.
9        (15) To prohibit waste, as defined in this Act.
10        (16) To require the keeping of such records, the
11    furnishing of such relevant information and the
12    performance of such tests as the Department may deem
13    necessary to carry into effect the purposes of this Act.
14        (17) To regulate the disposal of salt or
15    sulphur-bearing water and any oil field waste produced in
16    the operation of any oil or gas well.
17        (18) To prescribe rules, conduct inspections and
18    require compliance with health and safety standards for the
19    protection of persons working underground in connection
20    with any oil and gas operations. For the purposes of this
21    paragraph, oil and gas operations include drilling or
22    excavation, production operations, plugging or filling in
23    and sealing, or any other work requiring the presence of
24    workers in shafts or excavations beneath the surface of the
25    earth. Rules promulgated by the Department may include
26    minimum qualifications of persons performing tasks



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1    affecting the health and safety of workers underground,
2    minimum standards for the operation and maintenance of
3    equipment, and safety procedures and precautions, and
4    shall conform, as nearly as practicable, to corresponding
5    qualifications, standards and procedures prescribed under
6    the Coal Mining Act.
7        (19) To deposit the amount of any forfeited surety bond
8    or other security in the Plugging and Restoration Fund, a
9    special fund in the State treasury which is hereby created;
10    to deposit into the Fund any amounts collected, reimbursed
11    or recovered by the Department under Sections 19.5, 19.6
12    and 19.7 of this Act; to accept, receive, and deposit into
13    the Fund any grants, gifts or other funds which may be made
14    available from public or private sources and all earnings
15    received from investment of monies in the Fund; and to make
16    expenditures from the Fund for the purposes of plugging,
17    replugging or repairing any well, and restoring the site of
18    any well, determined by the Department to be abandoned or
19    ordered by the Department to be plugged, replugged,
20    repaired or restored under Sections 8a, 19 or 19.1 of this
21    Act, including expenses in administering the Fund.
22    For the purposes of this Act, the State Geological Survey
23shall co-operate with the Department in making available its
24scientific and technical information on the oil and gas
25resources of the State, and the Department shall in turn
26furnish a copy to the State Geological Survey of all drilling



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1permits as issued, and such other drilling and operating data
2received or secured by the Department which are pertinent to
3scientific research on the State's mineral resources.
4(Source: P.A. 86-205; 86-364; 86-1177; 87-744.)
5    (225 ILCS 725/6.1)  (from Ch. 96 1/2, par. 5410)
6    Sec. 6.1. When the applicant has complied with all
7applicable provisions of this Act and the rules of the
8Department, the Department shall issue the permit. All
9applications for a permit submitted to the Department shall
10either be granted, denied, or a deficiency letter issued in
11writing within 20 business days after the date of receipt by
12the Department, unless the applicant and Department mutually
13agree to extend the 20-day period. If granted, the written
14permit shall be issued. If a deficiency letter is issued, the
15Department shall provide specific requirements for additional
16information or documentation needed for the application to be
17considered and the permit issued. Upon submission of the
18required information and documentation, the same process and
19timeframe as provided in this Section shall continue until
20either the permit is issued or it is determined that the permit
21cannot be issued because of legal or regulatory impediments.
22The Department shall respond in a timely manner to any
23application or submission of additional information and
24documentation after initial submission.
25    On a weekly basis, the Department shall post on its website



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1a notice indicating all permits issued during the preceding
2week. The weekly permit notice shall include the surface and
3bottom hole locations for all wells drilled utilizing
4directional or horizontal drilling techniques in Global
5Positioning System (GPS) decimal degree format.
6(Source: P.A. 98-926, eff. 9-1-14; 99-131, eff. 1-1-16.)
7    (225 ILCS 725/6.3 new)
8    Sec. 6.3. Horizontal and directional well; drilling and
9completion reports; trade secret.
10    (a) Well drilling and completion reports for horizontal
11wells or wells drilled using directional drilling shall contain
12the following information:
13        (1) the permittee's name as listed in the permit
14    application;
15        (2) the dates of the drilling or completion operations;
16        (3) the county where the well is located;
17        (4) the well name and Department reference number;
18        (5) the Global Positioning System (GPS) surface and
19    bottom hole locations for the well;
20        (6) a chemical disclosure report identifying each
21    chemical and additive used during drilling or completion
22    operations that includes the following information:
23            (A) the total volume of water used in the drilling
24        or completion of the well or the type and total volume
25        of the base fluid used, if the base fluid used is



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1        something other than water;
2            (B) each additive used during the drilling or
3        completion of the well, including the trade name,
4        vendor, a brief descriptor of the intended use or
5        function of each additive, and the Material Safety Data
6        Sheet, if applicable;
7            (C) each chemical intentionally added to any base
8        fluid used during the drilling or completion of the
9        well, including the Chemical Abstracts Service number
10        for each chemical, if applicable; and
11            (D) the actual concentration in the base fluid, in
12        percent by mass, of each chemical intentionally added
13        to the base fluid.
14    (b) The Survey and the Department shall make all well
15drilling and completion reports subject to this Section public
16by posting them on their respective websites within 30 days
17after receipt of the reports.
18    (c) When an applicant, permittee, or a person subject to
19this Act furnishes chemical disclosure information to the
20Survey or Department under this Section under a claim of trade
21secret, the person shall submit redacted and un-redacted copies
22of the documents containing the information to the Survey or
23Department, and the Survey or Department shall use the redacted
24copies when posting materials on its website.
25    (d) Upon submission or within 5 calendar days after
26submission of chemical disclosure information to the Survey or



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1Department under this Section under a claim of trade secret,
2the person claiming trade secret protection shall provide a
3statement of justification of the claim that contains the
4following: (i) a detailed description of the procedures used by
5the person to safeguard the information from becoming available
6to persons other than those selected by the person to have
7access to the information for limited purposes; (ii) a detailed
8statement identifying the persons or class of persons to whom
9the information has been disclosed; (iii) a certification
10indicating that the person has no knowledge that the
11information has ever been published or disseminated or has
12otherwise become a matter of general public knowledge; (iv) a
13detailed discussion of why the person believes that the
14information has competitive value; and (v) any other
15information that shall support the claim.
16    (e) Chemical disclosure information furnished under this
17Section under a claim of trade secret shall be protected from
18disclosure as a trade secret if the Survey or Department
19determines that the statement of justification demonstrates
21        (1) the information has not been published,
22    disseminated, or otherwise become a matter of general
23    public knowledge; and
24        (2) the information has competitive value.
25    There is a rebuttable presumption that the information has
26not been published, disseminated, or otherwise become a matter



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1of general public knowledge if the person has taken reasonable
2measures to prevent the information from becoming available to
3persons other than those selected by the person to have access
4to the information for limited purposes, and the statement of
5justification contains a certification indicating that the
6person has no knowledge that the information has ever been
7published, disseminated, or otherwise become a matter of
8general public knowledge.
9    (f) Denial of a trade secret request under this Section
10shall be appealable under the Administrative Review Law.
11    (g) A person whose request to inspect or copy a public
12record is denied, in whole or in part, because of a grant of
13trade secret protection, may file a request for review with the
14Public Access Counselor under Section 9.5 of the Freedom of
15Information Act or for injunctive or declaratory relief under
16Section 11 of the Freedom of Information Act for the purpose of
17reviewing whether the Survey or Department properly determined
18that the trade secret protection should be granted.
19    (h) Except as otherwise provided in subsections (i) and (j)
20of this Section, the Survey or Department must maintain the
21confidentiality of chemical disclosure information furnished
22under this Section until the Survey or Department receives
23official notification of a final order by a reviewing body with
24proper jurisdiction that is not subject to further appeal
25rejecting a grant of trade secret protection for that



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1    (i) The Survey or Department shall adopt rules for the
2provision of information furnished under a claim of trade
3secret to a health professional who states a need for the
4information and articulates why the information is needed. The
5health professional may share that information with other
6persons as may be professionally necessary, including, but not
7limited to, the affected patient, other health professionals
8involved in the treatment of the affected patient, the affected
9patient's family members if the affected patient is unconscious
10or a minor who is unable to make medical decisions, the Centers
11for Disease Control and Prevention, and other government public
12health agencies. Except as otherwise provided in this Section,
13any recipient of the information shall not use the information
14for purposes other than the health needs asserted in the
15request and shall otherwise maintain the information as
16confidential. Information so disclosed to a health
17professional shall not be construed as publicly available. The
18holder of the trade secret may request a confidentiality
19agreement consistent with the requirements of this Section from
20all health professionals to whom the information is disclosed
21as soon as circumstances permit. The rules adopted by the
22Survey or Department shall also establish procedures for
23providing the information in both emergency and non-emergency
25    (j) When there is a release of a chemical or additive used
26for drilling or completing a well and it is necessary to



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1protect public health or the environment, the Survey or
2Department shall disclose information furnished under a claim
3of trade secret to the relevant county public health director
4or emergency manager, the relevant fire department chief, the
5Director of Public Health, the Director of Agriculture, and the
6Director of the Illinois Environmental Protection Agency upon
7request by that individual. The Director of Public Health, the
8Director of the Illinois Environmental Protection Agency, and
9the Director of Agriculture may disclose this information to
10staff members under the same terms and conditions as apply to
11the Survey and Director of Natural Resources. Except as
12otherwise provided in this Section, any recipient of the
13information shall not use the information for purposes other
14than to protect public health or the environment and shall
15otherwise maintain the information as confidential.
16Information disclosed to staff members shall not be construed
17as publicly available. The holder of the trade secret
18information may request a confidentiality agreement consistent
19with the requirements of this Section from all persons to whom
20the information is disclosed as soon as circumstances permit.".