S. B. No. 212 As Introduced

To amend section 1509.74 and to enact sections 1509.031, 1509.191, 1509.192, 1509.227, and 6111.70 of the Revised Code to establish requirements governing well stimulation, brine disposal, and water that is used in the drilling and operation of oil and gas wells on state land, including a requirement that oil and gas permittees pay a five per cent overriding royalty for each well that is stimulated.

Section 1. That section 1509.74 be amended and sections 1509.031, 1509.191, 1509.192, 1509.227, and 6111.70 of the Revised Code be enacted to read as follows:

Sec. 1509.031. The director of environmental protection or the director's designee and the health commissioner of the health district in which a well is located or the commissioner's designee may enter at any time on lands, public or private, to sample and analyze fluids used to stimulate a well.

Sec. 1509.191. Not later than ten days before an owner commences drilling a well, the owner shall submit to the environmental protection agency and to the board of health of the health district in which the well is or is to be located a complete listing of all of the chemicals and other substances that will be used to stimulate the well. The list shall be submitted on a form or in a manner prescribed by the chief of the division of oil and gas resources management.

Sec. 1509.192. On and after the effective date of this section, if well stimulation is used in a well, the person who has been issued a permit under section 1509.05 of the Revised Code for the well shall pay a five per cent overriding royalty to the director of environmental protection who shall deposit the money from the royalty in the state treasury to the credit of the clean water restoration fund created in section 6111.70 of the Revised Code. The director shall adopt rules in accordance with Chapter 119. of the Revised Code establishing procedures and requirements that are necessary for the implementation of this section.

Sec. 1509.227. An owner that commences drilling of a well shall submit to the chief of the division of oil and gas resources management documentation identifying where and how the owner will dispose of brine or other waste substances resulting from, obtained from, or produced from oil and gas production at the well. The chief shall establish appropriate procedures for the purpose of implementing this section.

Sec. 1509.74. Not later than two hundred seventy days after ~~the effective date of this section~~ September 30, 2011, the oil and gas leasing commission shall adopt rules in accordance with Chapter 119. of the Revised Code establishing all of the following:

(A) The form of and the information to be included in nominations that are submitted under section 1509.73 of the Revised Code;

(B) Procedures for the submission of nominations to the commission and the amount of nomination fees to be charged. The rules shall require that if a person who has paid a nomination fee does not enter into a lease regarding the parcel of land that the person nominated, the fee shall be refunded to the person, and, if applicable, the person that enters into the lease shall pay the nomination fee. In addition, the rules shall provide that a state agency is exempt from nomination fees and that a person who enters into a lease regarding a parcel of land nominated by a state agency shall pay the nomination fee.

(C) Factors that the commission may consider when determining whether to approve or disapprove a nomination submitted under section 1509.73 of the Revised Code;

(E) The amount of bid fees to be charged for the submission of bids to enter into leases under section 1509.73 of the Revised Code;

(F) A standard lease form that is consistent with the practices of the oil and natural gas industries and that contains at least a one-eighth landowner royalty, which standard lease form shall be used by a state agency for leases entered into under section 1509.73 of the Revised Code;

(G) A requirement that, prior to drilling a well in accordance with a lease entered into under section 1509.73 of the Revised Code and prior to conducting well stimulation of such a well, the person who has entered into the lease conduct baseline testing of surface water and ground water for quantity and quality in the leased area;

(H) A requirement that a person who has entered into a lease under section 1509.73 of the Revised Code recycle, capture, or treat all water used by the person when drilling and operating a well under the lease. The rules shall require the person to document the quantity of water used and to submit periodic reports identifying all chemicals used in well stimulation fluid during the term of the lease.

(I) Any other procedures and requirements that the commission determines necessary to implement sections 1509.70 to 1509.77 of the Revised Code.

Sec. 6111.70. There is hereby created in the state treasury the clean water restoration fund consisting of money credited to the fund under section 1509.192 of the Revised Code. The director of environmental protection shall use money in the fund to remediate and repair any water well or ground water adversely affected by hydraulic fracturing used in an oil or natural gas well.