Florida Senate - 2015                             CS for SB 1468
       By the Committee on Appropriations; and Senator Richter
       576-04536-15                                          20151468c1
    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; prohibiting the department from
   15         approving any permit for a high pressure well
   16         stimulation until rulemaking is complete; amending s.
   17         377.241, F.S.; requiring the Division of Resource
   18         Management to give consideration to and be guided by
   19         certain additional criteria when issuing permits;
   20         amending s. 377.242, F.S.; authorizing the department
   21         to issue permits for the performance of high pressure
   22         well stimulation; clarifying provisions relating to
   23         division inspection; prohibiting a county,
   24         municipality, or other political subdivision of the
   25         state from adopting or establishing permitting
   26         programs for certain oil and gas activities; amending
   27         s. 377.2425, F.S.; requiring an applicant or operator
   28         to provide surety that performance of a high pressure
   29         well stimulation will be conducted in a safe and
   30         environmentally compatible manner; creating s.
   31         377.2436, F.S.; directing the department to conduct a
   32         study on high pressure well stimulations; providing
   33         study criteria; requiring the study to be submitted to
   34         the Governor and the Legislature by a specified date;
   35         requiring the study to be posted on the department
   36         website; amending s. 377.37, F.S.; increasing the
   37         maximum amount for civil penalties; creating s.
   38         377.45, F.S.; requiring the department to designate
   39         the national chemical registry as the state’s
   40         registry; requiring service providers, vendors, or
   41         well owners or operators to report certain information
   42         to the registry; providing applicability; providing an
   43         appropriation; providing an effective date.
   45  Be It Enacted by the Legislature of the State of Florida:
   47         Section 1. Subsection (5) of section 377.19, Florida
   48  Statutes, is amended, present subsections (6) through (32) of
   49  that section are redesignated as subsections (7) through (33),
   50  respectively, and a new subsection (6) is added to that section,
   51  to read:
   52         377.19 Definitions.—As used in ss. 377.06, 377.07, and
   53  377.10-377.45 377.10-377.40, the term:
   54         (5) “Gas” means all natural gas, including casinghead gas,
   55  and all other hydrocarbons not defined as oil in subsection (16)
   56  (15).
   57         (6) “High pressure well stimulation” means all stages of a
   58  well intervention performed by injecting more than 100,000
   59  gallons total of fluids into a rock formation at high pressure
   60  that exceeds the fracture gradient of the rock formation in
   61  order to propagate fractures in such formation to increase
   62  production at an oil or gas well by improving flow of
   63  hydrocarbons from the formation into the wellbore.
   64         Section 2. Subsection (2) of section 377.22, Florida
   65  Statutes, is amended to read:
   66         377.22 Rules and orders.—
   67         (2) The department shall issue orders and adopt rules
   68  pursuant to ss. 120.536 and 120.54 to implement and enforce the
   69  provisions of this chapter. Such rules and orders shall ensure
   70  that all precautions are taken to prevent the spillage of oil or
   71  any other pollutant in all phases of the drilling for, and
   72  extracting of, oil, gas, or other petroleum products, including
   73  high pressure well stimulations, or during the injection of gas
   74  into and recovery of gas from a natural gas storage reservoir.
   75  The department shall revise such rules from time to time as
   76  necessary for the proper administration and enforcement of this
   77  chapter. Rules adopted and orders issued in accordance with this
   78  section are for, but not limited to, the following purposes:
   79         (a) To require the drilling, casing, and plugging of wells
   80  to be done in such a manner as to prevent the pollution of the
   81  fresh, salt, or brackish waters or the lands of the state and to
   82  protect the integrity of natural gas storage reservoirs.
   83         (b) To prevent the alteration of the sheet flow of water in
   84  any area.
   85         (c) To require that appropriate safety equipment be
   86  installed to minimize the possibility of an escape of oil or
   87  other petroleum products in the event of accident, human error,
   88  or a natural disaster during drilling, casing, or plugging of
   89  any well and during extraction operations.
   90         (d) To require the drilling, casing, and plugging of wells
   91  to be done in such a manner as to prevent the escape of oil or
   92  other petroleum products from one stratum to another.
   93         (e) To prevent the intrusion of water into an oil or gas
   94  stratum from a separate stratum, except as provided by rules of
   95  the division relating to the injection of water for proper
   96  reservoir conservation and brine disposal.
   97         (f) To require a reasonable bond, or other form of security
   98  acceptable to the department, conditioned upon properly
   99  drilling, casing, producing, and operating each well, and
  100  properly plugging the performance of the duty to plug properly
  101  each dry and abandoned well, and the full and complete
  102  restoration by the applicant of the area over which geophysical
  103  exploration, drilling, or production is conducted to the similar
  104  contour and general condition in existence prior to such
  105  operation.
  106         (g) To require and carry out a reasonable program of
  107  monitoring and inspecting or inspection of all drilling
  108  operations, high pressure well stimulations, producing wells, or
  109  injecting wells, and well sites, including regular inspections
  110  by division personnel.
  111         (h) To require the making of reports showing the location
  112  of all oil and gas wells; the making and filing of logs; the
  113  taking and filing of directional surveys; the filing of
  114  electrical, sonic, radioactive, and mechanical logs of oil and
  115  gas wells; if taken, the saving of cutting and cores, the cuts
  116  of which shall be given to the Bureau of Geology; and the making
  117  of reports with respect to drilling, and production, and high
  118  pressure well stimulations; and the disclosure of chemicals and
  119  other materials added during high pressure well stimulations to
  120  the chemical disclosure registry, known as FracFocus records.
  121  However, such information, or any part thereof, at the request
  122  of the operator:,
  123         1. Shall be exempt from the provisions of s. 119.07(1) and
  124  held confidential by the division for a period of 1 year after
  125  the completion of a well; or
  126         2. May be considered proprietary business information, as
  127  defined in s. 377.24075(1)(a)-(e).
  128         (i) To prevent wells from being drilled, operated, or
  129  produced in such a manner as to cause injury to neighboring
  130  leases, property, or natural gas storage reservoirs.
  131         (j) To prevent the drowning by water of any stratum, or
  132  part thereof, capable of producing oil or gas in paying
  133  quantities and to prevent the premature and irregular
  134  encroachment of water which reduces, or tends to reduce, the
  135  total ultimate recovery of oil or gas from any pool.
  136         (k) To require the operation of wells with efficient gas
  137  oil ratio, and to fix such ratios.
  138         (l) To prevent “blowouts,” “caving,” and “seepage,” in the
  139  sense that conditions indicated by such terms are generally
  140  understood in the oil and gas business.
  141         (m) To prevent fires.
  142         (n) To identify the ownership of all oil or gas wells,
  143  producing leases, refineries, tanks, plants, structures, and
  144  storage and transportation equipment and facilities.
  145         (o) To regulate the “shooting,” perforating, and chemical
  146  treatment, and high pressure well stimulations of wells.
  147         (p) To regulate secondary recovery methods, including the
  148  introduction of gas, air, water, or other substance into
  149  producing formations.
  150         (q) To regulate gas cycling operations.
  151         (r) To regulate the storage and recovery of gas injected
  152  into natural gas storage facilities.
  153         (s) If necessary for the prevention of waste, as herein
  154  defined, to determine, limit, and prorate the production of oil
  155  or gas, or both, from any pool or field in the state.
  156         (t) To require, either generally or in or from particular
  157  areas, certificates of clearance or tenders in connection with
  158  the transportation or delivery of oil or gas, or any product.
  159         (u) To regulate the spacing of wells and to establish
  160  drilling units.
  161         (v) To prevent, so far as is practicable, reasonably
  162  avoidable drainage from each developed unit which is not
  163  equalized by counterdrainage.
  164         (w) To require that geophysical operations requiring a
  165  permit be conducted in a manner which will minimize the impact
  166  on hydrology and biota of the area, especially environmentally
  167  sensitive lands and coastal areas.
  168         (x) To regulate aboveground crude oil storage tanks in a
  169  manner which will protect the water resources of the state.
  170         (y) To act in a receivership capacity for fractional
  171  mineral interests for which the owners are unknown or unlocated
  172  and to administratively designate the operator as the lessee.
  173         (z) To evaluate the history of past adjudicated violations
  174  of any substantive and material rule or statute pertaining to
  175  the regulation of oil and gas of permit applicants and the
  176  applicants’ affiliated entities.
  177         Section 3. Subsections (1), (2), and (4) of section 377.24,
  178  Florida Statutes, are amended, and subsection (5) is added to
  179  that section, to read:
  180         377.24 Notice of intention to drill well; permits;
  181  abandoned wells and dry holes.—
  182         (1) Before drilling a well in search of oil or gas, before
  183  performing a high pressure well stimulation, or before storing
  184  gas in or recovering gas from a natural gas storage reservoir,
  185  the person who desires to drill for, store, or recover gas, or
  186  drill for oil or gas, or perform a high pressure well
  187  stimulation shall notify the division upon such form as it may
  188  prescribe and shall pay a reasonable fee set by rule of the
  189  department not to exceed the actual cost of processing and
  190  inspecting for each well or reservoir. The drilling of any well,
  191  the performance of any high pressure well stimulation, and the
  192  storing and recovering of gas are prohibited until such notice
  193  is given, the fee is paid, and a the permit is granted. A permit
  194  may authorize a single activity or multiple activities.
  195         (2) An application for the drilling of a well in search of
  196  oil or gas, for the performance of a high pressure well
  197  stimulation, or for the storing of gas in and recovering of gas
  198  from a natural gas storage reservoir, in this state must include
  199  the address of the residence of the applicant, or applicants,
  200  which must be the address of each person involved in accordance
  201  with the records of the Division of Resource Management until
  202  such address is changed on the records of the division after
  203  written request.
  204         (4) Application for permission to drill or abandon any well
  205  or perform a high pressure well stimulation may be denied by the
  206  division for only just and lawful cause.
  207         (5) The department may not approve any permit to authorize
  208  a high pressure well stimulation until rulemaking is complete.
  209         Section 4. Subsections (5) and (6) are added to section
  210  377.241, Florida Statutes, to read:
  211         377.241 Criteria for issuance of permits.—The division, in
  212  the exercise of its authority to issue permits as hereinafter
  213  provided, shall give consideration to and be guided by the
  214  following criteria:
  215         (5) For high pressure well stimulations, whether the high
  216  pressure well stimulation as proposed is designed to ensure
  217  that:
  218         (a) The groundwater through which the well will be or has
  219  been drilled is not contaminated by the high pressure well
  220  stimulation; and
  221         (b) The high pressure well stimulation is consistent with
  222  the public policy of this state as specified in s. 377.06.
  223         (6) As a basis for permit denial or imposition of specific
  224  permit conditions, including increased bonding and monitoring,
  225  the history of adjudicated violations of any substantive and
  226  material rule or statute pertaining to the regulation of oil or
  227  gas, including violations that occurred outside the state,
  228  committed by the applicant or an affiliated entity of the
  229  applicant.
  230         Section 5. Section 377.242, Florida Statutes, is amended to
  231  read:
  232         377.242 Permits for drilling or exploring and extracting
  233  through well holes or by other means.—The department is vested
  234  with the power and authority:
  235         (1)(a) To issue permits for the drilling for, exploring
  236  for, performing a high pressure well stimulation, or production
  237  of, oil, gas, or other petroleum products that which are to be
  238  extracted from below the surface of the land, including
  239  submerged land, only through the well hole drilled for oil, gas,
  240  and other petroleum products.
  241         1. No structure intended for the drilling for, or
  242  production of, oil, gas, or other petroleum products may be
  243  permitted or constructed on any submerged land within any bay or
  244  estuary.
  245         2. No structure intended for the drilling for, or
  246  production of, oil, gas, or other petroleum products may be
  247  permitted or constructed within 1 mile seaward of the coastline
  248  of the state.
  249         3. No structure intended for the drilling for, or
  250  production of, oil, gas, or other petroleum products may be
  251  permitted or constructed within 1 mile of the seaward boundary
  252  of any state, local, or federal park or aquatic or wildlife
  253  preserve or on the surface of a freshwater lake, river, or
  254  stream.
  255         4. No structure intended for the drilling for, or
  256  production of, oil, gas, or other petroleum products may be
  257  permitted or constructed within 1 mile inland from the shoreline
  258  of the Gulf of Mexico, the Atlantic Ocean, or any bay or estuary
  259  or within 1 mile of any freshwater lake, river, or stream unless
  260  the department is satisfied that the natural resources of such
  261  bodies of water and shore areas of the state will be adequately
  262  protected in the event of accident or blowout.
  263         5. Without exception, after July 1, 1989, no structure
  264  intended for the drilling for, or production of, oil, gas, or
  265  other petroleum products may be permitted or constructed south
  266  of 26°00′00″ north latitude off Florida’s west coast and south
  267  of 27°00′00″ north latitude off Florida’s east coast, within the
  268  boundaries of Florida’s territorial seas as defined in 43 U.S.C.
  269  s. 1301. After July 31, 1990, no structure intended for the
  270  drilling for, or production of, oil, gas, or other petroleum
  271  products may be permitted or constructed north of 26°00′00″
  272  north latitude off Florida’s west coast to the western boundary
  273  of the state bordering Alabama as set forth in s. 1, Art. II of
  274  the State Constitution, or located north of 27°00′00″ north
  275  latitude off Florida’s east coast to the northern boundary of
  276  the state bordering Georgia as set forth in s. 1, Art. II of the
  277  State Constitution, within the boundaries of Florida’s
  278  territorial seas as defined in 43 U.S.C. s. 1301.
  279         (b) Subparagraphs (a)1. and 4. do not apply to permitting
  280  or construction of structures intended for the drilling for, or
  281  production of, oil, gas, or other petroleum products pursuant to
  282  an oil, gas, or mineral lease of such lands by the state under
  283  which lease any valid drilling permits are in effect on the
  284  effective date of this act. In the event that such permits
  285  contain conditions or stipulations, such conditions and
  286  stipulations shall govern and supersede subparagraphs (a)1. and
  287  4.
  288         (c) The prohibitions of subparagraphs (a)1.-4. in this
  289  subsection do not include “infield gathering lines,” provided no
  290  other placement is reasonably available and all other required
  291  permits have been obtained.
  292         (2) To issue permits to explore for and extract minerals
  293  which are subject to extraction from the land by means other
  294  than through a well hole.
  295         (3) To issue permits to establish natural gas storage
  296  facilities or construct wells for the injection and recovery of
  297  any natural gas for storage in natural gas storage reservoirs.
  299  Each permit shall contain an agreement by the permitholder that
  300  the permitholder will not prevent inspection by division
  301  personnel at any time, including during installation and
  302  cementing of casing, testing of blowout preventers, pressure
  303  testing of casing and casing shoe, and testing of cement plug
  304  integrity during plugging and abandoning operations. The
  305  provisions of this section prohibiting permits for drilling or
  306  exploring for oil in coastal waters do not apply to any leases
  307  entered into before June 7, 1991. A county, municipality, or
  308  other political subdivision of the state may not adopt or
  309  establish permitting programs to accomplish the purposes of this
  310  section.
  311         Section 6. Subsection (1) of section 377.2425, Florida
  312  Statutes, is amended to read:
  313         377.2425 Manner of providing security for geophysical
  314  exploration, drilling, and production.—
  315         (1) Before Prior to granting a permit to conduct
  316  geophysical operations; drilling of exploratory, injection, or
  317  production wells; producing oil and gas from a wellhead;
  318  performing a high pressure well stimulation; or transporting oil
  319  and gas through a field-gathering system, the department shall
  320  require the applicant or operator to provide surety that these
  321  operations will be conducted in a safe and environmentally
  322  compatible manner.
  323         (a) The applicant for a drilling, production, high pressure
  324  well stimulation, or injection well permit or a geophysical
  325  permit may provide the following types of surety to the
  326  department for this purpose:
  327         1. A deposit of cash or other securities made payable to
  328  the Minerals Trust Fund. Such cash or securities so deposited
  329  shall be held at interest by the Chief Financial Officer to
  330  satisfy safety and environmental performance provisions of this
  331  chapter. The interest shall be credited to the Minerals Trust
  332  Fund. Such cash or other securities shall be released by the
  333  Chief Financial Officer upon request of the applicant and
  334  certification by the department that all safety and
  335  environmental performance provisions established by the
  336  department for permitted activities have been fulfilled.
  337         2. A bond of a surety company authorized to do business in
  338  the state in an amount as provided by rule.
  339         3. A surety in the form of an irrevocable letter of credit
  340  in an amount as provided by rule guaranteed by an acceptable
  341  financial institution.
  342         (b) An applicant for a drilling, production, or injection
  343  well permit, or a permittee who intends to continue
  344  participating in long-term production activities of such wells,
  345  has the option to provide surety to the department by paying an
  346  annual fee to the Minerals Trust Fund. For an applicant or
  347  permittee choosing this option the following shall apply:
  348         1. For the first year, or part of a year, of a drilling,
  349  production, or injection well permit, or change of operator, the
  350  fee is $4,000 per permitted well.
  351         2. For each subsequent year, or part of a year, the fee is
  352  $1,500 per permitted well.
  353         3. The maximum fee that an applicant or permittee may be
  354  required to pay into the trust fund is $30,000 per calendar
  355  year, regardless of the number of permits applied for or in
  356  effect.
  357         4. The fees set forth in subparagraphs 1., 2., and 3. shall
  358  be reviewed by the department on a biennial basis and adjusted
  359  for the cost of inflation. The department shall establish by
  360  rule a suitable index for implementing such fee revisions.
  361         (c) An applicant for a drilling or operating permit for
  362  operations planned in coastal waters that by their nature
  363  warrant greater surety shall provide surety only in accordance
  364  with paragraph (a), or similar proof of financial responsibility
  365  other than as provided in paragraph (b). For all such
  366  applications, including applications pending at the effective
  367  date of this act and notwithstanding the provisions of paragraph
  368  (b), the Governor and Cabinet in their capacity as the
  369  Administration Commission, at the recommendation of the
  370  Department of Environmental Protection, shall set a reasonable
  371  amount of surety required under this subsection. The surety
  372  amount shall be based on the projected cleanup costs and natural
  373  resources damages resulting from a maximum oil spill and adverse
  374  hydrographic and atmospheric conditions that would tend to
  375  transport the oil into environmentally sensitive areas, as
  376  determined by the Department of Environmental Protection.
  377         Section 7. Section 377.2436, Florida Statutes, is created
  378  to read:
  379         377.2436 Study on high pressure well stimulations.—
  380         (1)The department shall conduct a study on high pressure
  381  well stimulations. The study shall:
  382         (a) Evaluate the underlying geologic features present in
  383  the counties where oil wells have been permitted and analyze the
  384  potential impact that high pressure well stimulation and
  385  wellbore construction may have on the underlying geologic
  386  features.
  387         (b) Evaluate the potential hazards and risks that high
  388  pressure well stimulation poses to surface water and groundwater
  389  resources. The study shall assess the potential impacts of high
  390  pressure well stimulation on drinking water resources and
  391  identify the main factors affecting the severity and frequency
  392  of impacts and shall analyze the potential for the use or reuse
  393  of recycled water in high pressure well stimulation fluids while
  394  meeting appropriate water quality standards.
  395         (c) Review and evaluate the potential for groundwater
  396  contamination from conducting high pressure well stimulation
  397  under or near wells that have been previously abandoned and
  398  plugged and identify a setback radius from previously plugged
  399  and abandoned wells that could be impacted by high pressure well
  400  stimulation.
  401         (d) Review and evaluate the ultimate disposition of high
  402  pressure well stimulation after use in high pressure well
  403  stimulation processes.
  404         (2) The department shall continue conventional oil and gas
  405  business operations during the performance of the study. There
  406  shall not be a moratorium on the evaluation and issuance of
  407  permits for conventional drilling, exploration, conventional
  408  completions, or conventional workovers during the performance of
  409  the study.
  410         (3) The study is subject to independent scientific peer
  411  review.
  412         (4) The findings of the study shall be submitted to the
  413  Governor, the President of the Senate, and the Speaker of the
  414  House of Representatives by June 30, 2016, and shall be
  415  prominently posted on the department website.
  416         Section 8. Paragraph (a) of subsection (1) of section
  417  377.37, Florida Statutes, is amended to read:
  418         377.37 Penalties.—
  419         (1)(a) Any person who violates any provision of this law or
  420  any rule, regulation, or order of the division made under this
  421  chapter or who violates the terms of any permit to drill for or
  422  produce oil, gas, or other petroleum products referred to in s.
  423  377.242(1) or to store gas in a natural gas storage facility, or
  424  any lessee, permitholder, or operator of equipment or facilities
  425  used in the exploration for, drilling for, or production of oil,
  426  gas, or other petroleum products, or storage of gas in a natural
  427  gas storage facility, who refuses inspection by the division as
  428  provided in this chapter, is liable to the state for any damage
  429  caused to the air, waters, or property, including animal, plant,
  430  or aquatic life, of the state and for reasonable costs and
  431  expenses of the state in tracing the source of the discharge, in
  432  controlling and abating the source and the pollutants, and in
  433  restoring the air, waters, and property, including animal,
  434  plant, and aquatic life, of the state. Furthermore, such person,
  435  lessee, permitholder, or operator is subject to the judicial
  436  imposition of a civil penalty in an amount of not more than
  437  $25,000 $10,000 for each offense. However, the court may receive
  438  evidence in mitigation. Each day during any portion of which
  439  such violation occurs constitutes a separate offense. Nothing
  440  herein shall give the department the right to bring an action on
  441  behalf of any private person.
  442         Section 9. Section 377.45, Florida Statutes, is created to
  443  read:
  444         377.45 High pressure well stimulation chemical disclosure
  445  registry.—
  446         (1)(a) The department shall designate the national chemical
  447  disclosure registry, known as FracFocus, developed by the
  448  Groundwater Protection Council and the Interstate Oil and Gas
  449  Compact Commission, as the state’s registry for chemical
  450  disclosure for all wells on which high pressure well
  451  stimulations are performed. The department shall provide a link
  452  to FracFocus through the department’s website.
  453         (b) In addition to providing such information to the
  454  department as part of the permitting process, a service
  455  provider, vendor, or well owner or operator shall report, by
  456  department rule, to the chemical disclosure registry, at a
  457  minimum, the following information:
  458         1. The owner’s or operator’s name;
  459         2. The date of completion of the high pressure well
  460  stimulation;
  461         3. The county in which the well is located;
  462         4. The API number for the well;
  463         5. The well name and number;
  464         6. The longitude and latitude of the wellhead;
  465         7. The total vertical depth of the well;
  466         8. The total volume of water used in the high pressure well
  467  stimulation; and
  468         9. Each chemical ingredient that is subject to 29 C.F.R. s.
  469  1910.1200(g)(2) for each well on which a high pressure well
  470  stimulation is performed.
  471         (c) If the chemical disclosure registry cannot accept and
  472  make publicly available any information specified in this
  473  section, the service provider, vendor, or well owner or operator
  474  shall submit the information required under paragraph (b) to the
  475  department.
  476         (2) A service provider, vendor, or well owner or operator
  477  shall:
  478         (a) Report the information required under subsection (1) to
  479  the chemical disclosure registry within 60 days after the
  480  initiation of the high pressure well stimulation for each well
  481  on which such high pressure well stimulation is performed; and
  482         (b) Update the chemical disclosure registry and notify the
  483  department if any chemical ingredient not previously reported is
  484  intentionally included and used for the purpose of performing a
  485  high pressure well stimulation.
  486         (3) This section does not apply to an ingredient that:
  487         (a) Is not intentionally added to the high pressure well
  488  stimulation;
  489         (b) Occurs incidentally or is otherwise unintentionally
  490  present in a high pressure well stimulation; or
  491         (c) Is considered proprietary business information, as
  492  defined in s. 377.24075(1)(a)-(e).
  493         Section 10. For the 2015-2016 fiscal year, the sum of $1
  494  million in nonrecurring funds from the General Revenue Fund is
  495  appropriated to the Department of Environmental Protection to
  496  conduct a study on high pressure well stimulations pursuant to
  497  s. 377.2436, Florida Statutes.
  498         Section 11. This act shall take effect July 1, 2015.