Florida Senate - 2015                                    SB 1468
       By Senator Richter
       23-00633C-15                                          20151468__
    1                        A bill to be entitled                      
    2         An act relating to the regulation of oil and gas
    3         resources; amending s. 377.19, F.S.; applying the
    4         definitions of certain terms to additional sections of
    5         ch. 377, F.S.; conforming a cross-reference; defining
    6         the term “high pressure well stimulation”; amending s.
    7         377.22, F.S.; revising the rulemaking authority of the
    8         Department of Environmental Protection; providing that
    9         certain information may be considered proprietary
   10         business information; amending s. 377.24, F.S.;
   11         requiring that a permit be obtained before the
   12         performance of any high pressure well stimulation;
   13         specifying that a permit may authorize single or
   14         multiple activities; amending s. 377.241, F.S.;
   15         requiring the Division of Resource Management to give
   16         consideration to and be guided by certain additional
   17         criteria when issuing permits; amending s. 377.242,
   18         F.S.; authorizing the department to issue permits for
   19         the performance of high pressure well stimulation;
   20         clarifying provisions relating to division inspection;
   21         amending s. 377.2425, F.S.; requiring an applicant or
   22         operator to provide surety that performance of a high
   23         pressure well stimulation will be conducted in a safe
   24         and environmentally compatible manner; amending s.
   25         377.37, F.S.; increasing the maximum amount for civil
   26         penalties; creating s. 377.45, F.S.; requiring the
   27         department to designate the national chemical registry
   28         as the state’s registry; requiring service providers,
   29         vendors, or well owners or operators to report certain
   30         information to the registry; providing applicability;
   31         providing an effective date.
   33  Be It Enacted by the Legislature of the State of Florida:
   35         Section 1. Subsection (5) of section 377.19, Florida
   36  Statutes, is amended, present subsections (6) through (32) of
   37  that section are redesignated as subsections (7) through (33),
   38  respectively, and a new subsection (6) is added to that section,
   39  to read:
   40         377.19 Definitions.—As used in ss. 377.06, 377.07, and
   41  377.10-377.45 377.10-377.40, the term:
   42         (5) “Gas” means all natural gas, including casinghead gas,
   43  and all other hydrocarbons not defined as oil in subsection (16)
   44  (15).
   45         (6) High pressure well stimulation” means a well
   46  intervention performed by injecting more than 100,000 gallons of
   47  fluids into a rock formation at high pressure that exceeds the
   48  fracture gradient of the rock formation in order to propagate
   49  fractures in such formation to increase production at an oil or
   50  gas well by improving flow of hydrocarbons from the formation
   51  into the wellbore.
   52         Section 2. Subsection (2) of section 377.22, Florida
   53  Statutes, is amended to read:
   54         377.22 Rules and orders.—
   55         (2) The department shall issue orders and adopt rules
   56  pursuant to ss. 120.536 and 120.54 to implement and enforce the
   57  provisions of this chapter. Such rules and orders shall ensure
   58  that all precautions are taken to prevent the spillage of oil or
   59  any other pollutant in all phases of the drilling for, and
   60  extracting of, oil, gas, or other petroleum products, including
   61  high pressure well stimulations, or during the injection of gas
   62  into and recovery of gas from a natural gas storage reservoir.
   63  The department shall revise such rules from time to time as
   64  necessary for the proper administration and enforcement of this
   65  chapter. Rules adopted and orders issued in accordance with this
   66  section are for, but not limited to, the following purposes:
   67         (a) To require the drilling, casing, and plugging of wells
   68  to be done in such a manner as to prevent the pollution of the
   69  fresh, salt, or brackish waters or the lands of the state and to
   70  protect the integrity of natural gas storage reservoirs.
   71         (b) To prevent the alteration of the sheet flow of water in
   72  any area.
   73         (c) To require that appropriate safety equipment be
   74  installed to minimize the possibility of an escape of oil or
   75  other petroleum products in the event of accident, human error,
   76  or a natural disaster during drilling, casing, or plugging of
   77  any well and during extraction operations.
   78         (d) To require the drilling, casing, and plugging of wells
   79  to be done in such a manner as to prevent the escape of oil or
   80  other petroleum products from one stratum to another.
   81         (e) To prevent the intrusion of water into an oil or gas
   82  stratum from a separate stratum, except as provided by rules of
   83  the division relating to the injection of water for proper
   84  reservoir conservation and brine disposal.
   85         (f) To require a reasonable bond, or other form of security
   86  acceptable to the department, conditioned upon properly
   87  drilling, casing, producing, and operating each well, and
   88  properly plugging the performance of the duty to plug properly
   89  each dry and abandoned well, and the full and complete
   90  restoration by the applicant of the area over which geophysical
   91  exploration, drilling, or production is conducted to the similar
   92  contour and general condition in existence prior to such
   93  operation.
   94         (g) To require and carry out a reasonable program of
   95  monitoring and inspecting or inspection of all drilling
   96  operations, high pressure well stimulations, producing wells, or
   97  injecting wells, and well sites, including regular inspections
   98  by division personnel.
   99         (h) To require the making of reports showing the location
  100  of all oil and gas wells; the making and filing of logs; the
  101  taking and filing of directional surveys; the filing of
  102  electrical, sonic, radioactive, and mechanical logs of oil and
  103  gas wells; if taken, the saving of cutting and cores, the cuts
  104  of which shall be given to the Bureau of Geology; and the making
  105  of reports with respect to drilling, and production, and high
  106  pressure well stimulations; and the disclosure of chemicals and
  107  other materials added during high pressure well stimulations to
  108  the chemical disclosure registry, known as FracFocus records.
  109  However, such information, or any part thereof, at the request
  110  of the operator:,
  111         1. Shall be exempt from the provisions of s. 119.07(1) and
  112  held confidential by the division for a period of 1 year after
  113  the completion of a well; or
  114         2. May be considered proprietary business information, as
  115  defined in s. 377.24075(1)(a)-(e).
  116         (i) To prevent wells from being drilled, operated, or
  117  produced in such a manner as to cause injury to neighboring
  118  leases, property, or natural gas storage reservoirs.
  119         (j) To prevent the drowning by water of any stratum, or
  120  part thereof, capable of producing oil or gas in paying
  121  quantities and to prevent the premature and irregular
  122  encroachment of water which reduces, or tends to reduce, the
  123  total ultimate recovery of oil or gas from any pool.
  124         (k) To require the operation of wells with efficient gas
  125  oil ratio, and to fix such ratios.
  126         (l) To prevent “blowouts,” “caving,” and “seepage,” in the
  127  sense that conditions indicated by such terms are generally
  128  understood in the oil and gas business.
  129         (m) To prevent fires.
  130         (n) To identify the ownership of all oil or gas wells,
  131  producing leases, refineries, tanks, plants, structures, and
  132  storage and transportation equipment and facilities.
  133         (o) To regulate the “shooting,” perforating, and chemical
  134  treatment, and high pressure well stimulations of wells.
  135         (p) To regulate secondary recovery methods, including the
  136  introduction of gas, air, water, or other substance into
  137  producing formations.
  138         (q) To regulate gas cycling operations.
  139         (r) To regulate the storage and recovery of gas injected
  140  into natural gas storage facilities.
  141         (s) If necessary for the prevention of waste, as herein
  142  defined, to determine, limit, and prorate the production of oil
  143  or gas, or both, from any pool or field in the state.
  144         (t) To require, either generally or in or from particular
  145  areas, certificates of clearance or tenders in connection with
  146  the transportation or delivery of oil or gas, or any product.
  147         (u) To regulate the spacing of wells and to establish
  148  drilling units.
  149         (v) To prevent, so far as is practicable, reasonably
  150  avoidable drainage from each developed unit which is not
  151  equalized by counterdrainage.
  152         (w) To require that geophysical operations requiring a
  153  permit be conducted in a manner which will minimize the impact
  154  on hydrology and biota of the area, especially environmentally
  155  sensitive lands and coastal areas.
  156         (x) To regulate aboveground crude oil storage tanks in a
  157  manner which will protect the water resources of the state.
  158         (y) To act in a receivership capacity for fractional
  159  mineral interests for which the owners are unknown or unlocated
  160  and to administratively designate the operator as the lessee.
  161         (z) To evaluate the history of past adjudicated violations
  162  of any substantive and material rule or statute pertaining to
  163  the regulation of oil and gas of permit applicants and the
  164  applicants’ affiliated entities.
  165         Section 3. Subsections (1), (2), and (4) of section 377.24,
  166  Florida Statutes, are amended to read:
  167         377.24 Notice of intention to drill well; permits;
  168  abandoned wells and dry holes.—
  169         (1) Before drilling a well in search of oil or gas, before
  170  performing a high pressure well stimulation, or before storing
  171  gas in or recovering gas from a natural gas storage reservoir,
  172  the person who desires to drill for, store, or recover gas, or
  173  drill for oil or gas, or perform a high pressure well
  174  stimulation shall notify the division upon such form as it may
  175  prescribe and shall pay a reasonable fee set by rule of the
  176  department not to exceed the actual cost of processing and
  177  inspecting for each well or reservoir. The drilling of any well,
  178  the performance of any high pressure well stimulation, and the
  179  storing and recovering of gas are prohibited until such notice
  180  is given, the fee is paid, and a the permit is granted. A permit
  181  may authorize a single activity or multiple activities.
  182         (2) An application for the drilling of a well in search of
  183  oil or gas, for the performance of a high pressure well
  184  stimulation, or for the storing of gas in and recovering of gas
  185  from a natural gas storage reservoir, in this state must include
  186  the address of the residence of the applicant, or applicants,
  187  which must be the address of each person involved in accordance
  188  with the records of the Division of Resource Management until
  189  such address is changed on the records of the division after
  190  written request.
  191         (4) Application for permission to drill or abandon any well
  192  or perform a high pressure well stimulation may be denied by the
  193  division for only just and lawful cause.
  194         Section 4. Subsections (5) and (6) are added to section
  195  377.241, Florida Statutes, to read:
  196         377.241 Criteria for issuance of permits.—The division, in
  197  the exercise of its authority to issue permits as hereinafter
  198  provided, shall give consideration to and be guided by the
  199  following criteria:
  200         (5) For high pressure well stimulations, whether the high
  201  pressure well stimulation as proposed is designed to ensure
  202  that:
  203         (a) The groundwater through which the well will be or has
  204  been drilled is not contaminated by the high pressure well
  205  stimulation; and
  206         (b) The high pressure well stimulation is consistent with
  207  the public policy of this state as specified in s. 377.06.
  208         (6) As a basis for permit denial or imposition of specific
  209  permit conditions, including increased bonding and monitoring,
  210  the history of adjudicated violations of any substantive and
  211  material rule or statute pertaining to the regulation of oil or
  212  gas, including violations that occurred outside the state,
  213  committed by the applicant or an affiliated entity of the
  214  applicant.
  215         Section 5. Section 377.242, Florida Statutes, is amended to
  216  read:
  217         377.242 Permits for drilling or exploring and extracting
  218  through well holes or by other means.—The department is vested
  219  with the power and authority:
  220         (1)(a) To issue permits for the drilling for, exploring
  221  for, performing a high pressure well stimulation, or production
  222  of, oil, gas, or other petroleum products that which are to be
  223  extracted from below the surface of the land, including
  224  submerged land, only through the well hole drilled for oil, gas,
  225  and other petroleum products.
  226         1. No structure intended for the drilling for, or
  227  production of, oil, gas, or other petroleum products may be
  228  permitted or constructed on any submerged land within any bay or
  229  estuary.
  230         2. No structure intended for the drilling for, or
  231  production of, oil, gas, or other petroleum products may be
  232  permitted or constructed within 1 mile seaward of the coastline
  233  of the state.
  234         3. No structure intended for the drilling for, or
  235  production of, oil, gas, or other petroleum products may be
  236  permitted or constructed within 1 mile of the seaward boundary
  237  of any state, local, or federal park or aquatic or wildlife
  238  preserve or on the surface of a freshwater lake, river, or
  239  stream.
  240         4. No structure intended for the drilling for, or
  241  production of, oil, gas, or other petroleum products may be
  242  permitted or constructed within 1 mile inland from the shoreline
  243  of the Gulf of Mexico, the Atlantic Ocean, or any bay or estuary
  244  or within 1 mile of any freshwater lake, river, or stream unless
  245  the department is satisfied that the natural resources of such
  246  bodies of water and shore areas of the state will be adequately
  247  protected in the event of accident or blowout.
  248         5. Without exception, after July 1, 1989, no structure
  249  intended for the drilling for, or production of, oil, gas, or
  250  other petroleum products may be permitted or constructed south
  251  of 26°00′00″ north latitude off Florida’s west coast and south
  252  of 27°00′00″ north latitude off Florida’s east coast, within the
  253  boundaries of Florida’s territorial seas as defined in 43 U.S.C.
  254  s. 1301. After July 31, 1990, no structure intended for the
  255  drilling for, or production of, oil, gas, or other petroleum
  256  products may be permitted or constructed north of 26°00′00″
  257  north latitude off Florida’s west coast to the western boundary
  258  of the state bordering Alabama as set forth in s. 1, Art. II of
  259  the State Constitution, or located north of 27°00′00″ north
  260  latitude off Florida’s east coast to the northern boundary of
  261  the state bordering Georgia as set forth in s. 1, Art. II of the
  262  State Constitution, within the boundaries of Florida’s
  263  territorial seas as defined in 43 U.S.C. s. 1301.
  264         (b) Subparagraphs (a)1. and 4. do not apply to permitting
  265  or construction of structures intended for the drilling for, or
  266  production of, oil, gas, or other petroleum products pursuant to
  267  an oil, gas, or mineral lease of such lands by the state under
  268  which lease any valid drilling permits are in effect on the
  269  effective date of this act. In the event that such permits
  270  contain conditions or stipulations, such conditions and
  271  stipulations shall govern and supersede subparagraphs (a)1. and
  272  4.
  273         (c) The prohibitions of subparagraphs (a)1.-4. in this
  274  subsection do not include “infield gathering lines,” provided no
  275  other placement is reasonably available and all other required
  276  permits have been obtained.
  277         (2) To issue permits to explore for and extract minerals
  278  which are subject to extraction from the land by means other
  279  than through a well hole.
  280         (3) To issue permits to establish natural gas storage
  281  facilities or construct wells for the injection and recovery of
  282  any natural gas for storage in natural gas storage reservoirs.
  284  Each permit shall contain an agreement by the permitholder that
  285  the permitholder will not prevent inspection by division
  286  personnel at any time, including during installation and
  287  cementing of casing, testing of blowout preventers, pressure
  288  testing of casing and casing shoe, and testing of cement plug
  289  integrity during plugging and abandoning operations. The
  290  provisions of this section prohibiting permits for drilling or
  291  exploring for oil in coastal waters do not apply to any leases
  292  entered into before June 7, 1991.
  293         Section 6. Subsection (1) of section 377.2425, Florida
  294  Statutes, is amended to read:
  295         377.2425 Manner of providing security for geophysical
  296  exploration, drilling, and production.—
  297         (1) Before Prior to granting a permit to conduct
  298  geophysical operations; drilling of exploratory, injection, or
  299  production wells; producing oil and gas from a wellhead;
  300  performing a high pressure well stimulation; or transporting oil
  301  and gas through a field-gathering system, the department shall
  302  require the applicant or operator to provide surety that these
  303  operations will be conducted in a safe and environmentally
  304  compatible manner.
  305         (a) The applicant for a drilling, production, high pressure
  306  well stimulation, or injection well permit or a geophysical
  307  permit may provide the following types of surety to the
  308  department for this purpose:
  309         1. A deposit of cash or other securities made payable to
  310  the Minerals Trust Fund. Such cash or securities so deposited
  311  shall be held at interest by the Chief Financial Officer to
  312  satisfy safety and environmental performance provisions of this
  313  chapter. The interest shall be credited to the Minerals Trust
  314  Fund. Such cash or other securities shall be released by the
  315  Chief Financial Officer upon request of the applicant and
  316  certification by the department that all safety and
  317  environmental performance provisions established by the
  318  department for permitted activities have been fulfilled.
  319         2. A bond of a surety company authorized to do business in
  320  the state in an amount as provided by rule.
  321         3. A surety in the form of an irrevocable letter of credit
  322  in an amount as provided by rule guaranteed by an acceptable
  323  financial institution.
  324         (b) An applicant for a drilling, production, or injection
  325  well permit, or a permittee who intends to continue
  326  participating in long-term production activities of such wells,
  327  has the option to provide surety to the department by paying an
  328  annual fee to the Minerals Trust Fund. For an applicant or
  329  permittee choosing this option the following shall apply:
  330         1. For the first year, or part of a year, of a drilling,
  331  production, or injection well permit, or change of operator, the
  332  fee is $4,000 per permitted well.
  333         2. For each subsequent year, or part of a year, the fee is
  334  $1,500 per permitted well.
  335         3. The maximum fee that an applicant or permittee may be
  336  required to pay into the trust fund is $30,000 per calendar
  337  year, regardless of the number of permits applied for or in
  338  effect.
  339         4. The fees set forth in subparagraphs 1., 2., and 3. shall
  340  be reviewed by the department on a biennial basis and adjusted
  341  for the cost of inflation. The department shall establish by
  342  rule a suitable index for implementing such fee revisions.
  343         (c) An applicant for a drilling or operating permit for
  344  operations planned in coastal waters that by their nature
  345  warrant greater surety shall provide surety only in accordance
  346  with paragraph (a), or similar proof of financial responsibility
  347  other than as provided in paragraph (b). For all such
  348  applications, including applications pending at the effective
  349  date of this act and notwithstanding the provisions of paragraph
  350  (b), the Governor and Cabinet in their capacity as the
  351  Administration Commission, at the recommendation of the
  352  Department of Environmental Protection, shall set a reasonable
  353  amount of surety required under this subsection. The surety
  354  amount shall be based on the projected cleanup costs and natural
  355  resources damages resulting from a maximum oil spill and adverse
  356  hydrographic and atmospheric conditions that would tend to
  357  transport the oil into environmentally sensitive areas, as
  358  determined by the Department of Environmental Protection.
  359         Section 7. Paragraph (a) of subsection (1) of section
  360  377.37, Florida Statutes, is amended to read:
  361         377.37 Penalties.—
  362         (1)(a) Any person who violates any provision of this law or
  363  any rule, regulation, or order of the division made under this
  364  chapter or who violates the terms of any permit to drill for or
  365  produce oil, gas, or other petroleum products referred to in s.
  366  377.242(1) or to store gas in a natural gas storage facility, or
  367  any lessee, permitholder, or operator of equipment or facilities
  368  used in the exploration for, drilling for, or production of oil,
  369  gas, or other petroleum products, or storage of gas in a natural
  370  gas storage facility, who refuses inspection by the division as
  371  provided in this chapter, is liable to the state for any damage
  372  caused to the air, waters, or property, including animal, plant,
  373  or aquatic life, of the state and for reasonable costs and
  374  expenses of the state in tracing the source of the discharge, in
  375  controlling and abating the source and the pollutants, and in
  376  restoring the air, waters, and property, including animal,
  377  plant, and aquatic life, of the state. Furthermore, such person,
  378  lessee, permitholder, or operator is subject to the judicial
  379  imposition of a civil penalty in an amount of not more than
  380  $25,000 $10,000 for each offense. However, the court may receive
  381  evidence in mitigation. Each day during any portion of which
  382  such violation occurs constitutes a separate offense. Nothing
  383  herein shall give the department the right to bring an action on
  384  behalf of any private person.
  385         Section 8. Section 377.45, Florida Statutes, is created to
  386  read:
  387         377.45 High pressure well stimulation chemical disclosure
  388  registry.—
  389         (1)(a) The department shall designate the national chemical
  390  registry, known as FracFocus, developed by the Ground Water
  391  Protection Council and the Interstate Oil and Gas Compact
  392  Commission, as the state’s registry for chemical disclosure for
  393  all wells on which high pressure well stimulations are
  394  performed. The department shall provide a link to FracFocus
  395  through the department’s website.
  396         (b) In addition to providing such information to the
  397  department as part of the permitting process, a service
  398  provider, vendor, or well owner or operator shall report, by
  399  department rule, to the chemical disclosure registry, at a
  400  minimum, the following information:
  401         1. The owner’s or operator’s name;
  402         2. The date of completion of the high pressure well
  403  stimulation;
  404         3. The county in which the well is located;
  405         4. The API number for the well;
  406         5. The well name and number;
  407         6. The longitude and latitude of the wellhead;
  408         7. The total vertical depth of the well;
  409         8. The total volume of water used in the high pressure well
  410  stimulation; and
  411         9. Each chemical ingredient that is subject to 29 C.F.R. s.
  412  1910.1200(g)(2) for each well on which a high pressure well
  413  stimulation is performed.
  414         (c) If the chemical disclosure registry cannot accept and
  415  make publicly available any information specified in this
  416  section, the service provider, vendor, or well owner or operator
  417  shall submit the information required under paragraph (b) to the
  418  department.
  419         (2) A service provider, vendor, or well owner or operator
  420  shall:
  421         (a) Report the information required under subsection (1) to
  422  the chemical disclosure registry within 60 days after the
  423  initiation of the high pressure well stimulation for each well
  424  on which such high pressure well stimulation is performed; and
  425         (b) Update the chemical disclosure registry and notify the
  426  department if any chemical ingredient not previously reported is
  427  intentionally included and used for the purpose of performing a
  428  high pressure well stimulation.
  429         (3) This section does not apply to an ingredient that:
  430         (a) Is not intentionally added to the high pressure well
  431  stimulation;
  432         (b) Occurs incidentally or is otherwise unintentionally
  433  present in a high pressure well stimulation; or
  434         (c) Is considered proprietary business information, as
  435  defined in s. 377.24075(1)(a)-(e).
  436         Section 9. This act shall take effect July 1, 2015.