HB 577 (BR 2291) - B. Buckingham, L. Clark, R. Adkins, E. Ballard, H. Cornett, K. Hall, J. Richards, B. Smith, B. Yonts
AN ACT relating to coalbed methane development and making an appropriation therefor.
Create a new KRS Chapter 349 relating to coalbed methane development; declare the importance of coalbed methane development in the Commonwealth and find that development of a process to extract coalbed methane does not imply ownership of coalbed methane; establish definitions; establish a 5-member Coalbed Methane Review Board; establish the authority, jurisdiction, responsibilities and duties of the review board; authorize the Department of Natural Resources to receive applications for permits to drill coalbed methane wells and require a coalbed methane operator making an application for a coalbed methane permit to submit a plat; require that the plat become a public record subject to inspection; require notifications to surface and subsurface owners; require descriptions of mineral tract boundaries and of drilling operations; provide a method for interested parties to make objections to the Department of Natural Resources concerning the drilling of a coalbed methane well; prescribe rules for the plugging and abandonment of a coalbed methane well; authorize the Department of Natural Resources to receive and oversee the plugging and abandonment of coalbed methane wells; establish rules and procedures for a mine licensee to obtain authorization to mine through a coalbed methane well; authorize the review board to issue orders and issue mine-through certificates to mine operators to allow mine-through operations; prescribe a method for determining compensation to all parties with an interest in a coalbed methane well; establish a method for appeals of the review board's authorization for mine-through certificates and provide a method for the escrow of funds; prohibit the waste of coalbed methane and provide for certain exceptions from the definition of waste; establish submission, authorization, and bonding requirements for an application to obtain a permit to drill a coalbed methane well; authorize voluntary pooling agreements for operators and owners of coalbed methane; establish requirements and procedures for stimulating a workable coal seam; prohibit stimulation of a coal seam absent a filed agreement to stimulate; authorize the review board to consider and order the stimulating the coalbed; establish the authority, powers, and rules of procedure for review board hearings; authorize the review board to promulgate and enforce administrative regulations; authorize the review board to hear and rule upon appeals of departmental actions on permits, field rules, drilling units, pooling, and unitization; establish spacing requirements for both vertical and horizontal coalbed methane wells; authorize the review board to act upon applications and prescribe pooling for coalbed methane wells when the ownership is in dispute; authorize the department to receive applications to pool; establish requirements for pooling applications; permit persons aggrieved by an action of the review board to bring civil action; establish requirements, procedures, and defenses for civil actions; establish requirements and procedures for the installation and removal of casings in a coalbed methane well; authorize the department to bid for the plugging of coalbed methane wells; establish a coalbed methane well plugging fund to receive funds paid on the sale of equipment removed from a well that is being plugged and bond forfeitures; authorize the expense of funds from the coalbed methane well plugging fund for plugging coalbed methane wells; authorize the department to supervise the drilling, casing, plugging, and filling of coalbed methane wells; authorize the department to adopt rules, promulgate administrative regulations, and conduct hearings; require applicants for a permit to drill a coalbed methane well to submit a bond or a blanket bond; prescribe alternate bonding requirements for applicants; establish rules for succession on a permit to drill a coalbed methane well; establish termination of operations requirements for coalbed methane well operators; provide that applicants for coalbed methane drilling permits comply with KRS 353.5901 and 353.595; set an expiration date for coalbed methane drilling permits and allow for the extension of the permit for one year; establish an affirmative defense for willful trespass arising from coalbed methane drilling operations; authorize the department to bring suit in Circuit Court for violations and to seek restraint of operations; allow persons to protect water resources affected by coalbed methane operations; require the operator of a coalbed methane well to replace water to the person affected; establish penalties for violations; establish the rights of surface owners, where the surface and subsurface rights are severed, and contractual rights of mineral rights owners; provide that ownership of coalbed methane is not affirmed; prohibit rules and requirements affecting coalbed methane permits to apply to non-coalbed methane permits unless converted; require that provisions be liberally construed; and unless expressly provided, exempt coalbed methane wells from the provisions of KRS Chapter 353.
HB 577 - AMENDMENTS
HCS (1) - Retain original provisions of HB 577; add "positive" to description of economic impact; provide that the development of coalbed methane protect and preserve the coal for future safe mining; define "abandoned" as a well or a hole which has never been used or will no longer be used for the production of coalbed methane or the injection or disposal of fluid therein; define "coalbed methane" as gas produced from a reservoir found in a coalbed, a mined-out area or gob; define "field rules" as rules established by orders of the review board relating to the drilling, completion, production of, and specifications for coalbed methane wells in a particular geographic area as defined by an order; delete the word spacing from the definition of "unit operator"; require that a well operator provide the department with a plat prepared by a licensed, professional land surveyor and a licensed, professional engineer; require any executive officer, process agent, or chief engineer of the mine licensee or mine permittee may be considered a mine licensee or mine permittee for the purposes of mailing the plat; permit an objection to stimulation in the workable coalbed or the proposed completion in the workable coalbed; permit objections to be filed in 20 days rather than 15 days; require that authorization have been denied by the mine permittee rather than the mine licensee before an appeal is filed; require a person requesting a hearing to send a copy of the request to the coalbed methane well operator; add permit amendment to the type of permit status that will be subject to mine-through right provisions; provide that a written determination shall be issued by the review board after a hearing; add modification of a permit to the type of permit status that will be subject to mine-through right provisions; delete loss resulting from the mine licensee planned mine-through operations from the type of loss subject to compensation through an agreement; require that the review board base its decision on mine-through operations solely on specified criteria; require actual sales price to be used if the coalbed methane is sold pursuant to an arm's length firm or fixed price gas sales agreement or marketing contract; require verification of the thickness of each coal seam that will be completed for production, a description of the means to stimulate any of the workable coalbeds penetrated by the coalbed methane well; change active permit to existing permit where the operator shall obtain a written authorization from the mine licensee; require notifications to specified parties if the mine licensee is operating in a coal seam not being produced by the operator and has not exercised mine through rights; change 15 days to 20 days of receipt of documents when the well operator may file specific objections; prohibit stimulation if a coal interest holder has objected to the proposed stimulation except after making specific filings with the department; attach the review board to the Department of Mines and Minerals and delete Public Protection and Regulation Cabinet; delete requirement that all final orders issued by the review board be effective 31 days after the order is issued; allow the review board to consider specified criteria in hearings or proceedings that the board deems appropriate; require well locations to correspond with mine operations including the drilling of multiple wells on the same surface location of each drilling unit; provide that the department issue a permit to drill, deepen, convert, or reopen the well provided all provisions of this chapter are complied with; allow the review board to deny the pooling order; delete provision granting department authority to promulgate administrative regulations for the protection of funds delivered to escrow accounts; delete requirement that the department conduct the sale of equipment removed from wells; provide that suit may be brought in the Circuit Court in the county where the defendant resides or in Franklin Circuit Court if there is more than one defendant; add coal to the list of natural resources identified that this chapter whose contractual rights or obligations shall not be superseded, impaired, abridged or affected; and make technical corrections.
HCS (2) - Retain provisions of HCS1; include notification to surface owners and the sending of a plat as requirements to obtain a permit to drill a coalbed methane well; delete unreasonable damage and prohibit the unlawful damage of the water supply and coalbeds; require an operator to submit a groundwater protection plan to the department if the well is within 1/2 mile of a water supply used for residential or domestic purposes and permit deviation from the requirement; allow the designee of the Commissioner of Natural Resources to serve on the review board; require notice of hearings to be sent to surface owners; require restoration of the surface and any improvements to the property in conjunction with plugging and abandonment of a coalbed methane well and allow for a waiver from this requirement in writing; establish requirements for reclamation when there is and is not a complete severance of surface from the subsurface ownership rights; make technical corrections; and renumber subsections accordingly.
SCS - Retain original provisions of HB 577/GA; require the application for a coalbed methane permit include proof of public liability insurance coverage; and allow the department to establish a bond sum greater than $5,000 for an individual well and greater than $100,000 for a blanket bond.
Feb 23-introduced in House
Feb 24-to Tourism Development and Energy (H); posting waived
Feb 25-reported favorably, 1st reading, to Calendar with Committee Substitute
Feb 26-2nd reading, to Rules; recommitted to Tourism Development and Energy (H); posting waived
Feb 27-reported favorably, to Rules with Committee Substitute (2) ; posted for passage in the Regular Orders of the Day for Monday, March 1, 2004
Mar 2-3rd reading, passed 98-0 with Committee Substitute (2)
Mar 3-received in Senate
Mar 8-to Agriculture and Natural Resources (S)
Mar 18-reported favorably, 1st reading, to Calendar with Committee Substitute
Mar 19-2nd reading, to Rules; posted for passage in the Regular Orders of the Day for Monday, March 22, 2004
Mar 22-3rd reading, passed 36-0 with Committee Substitute
Mar 23-received in House; to Rules (H)
Mar 24-posted for passage for concurrence in Senate Committee Substitute for Thursday, March 25, 2004
Mar 25-House concurred in Senate Committee Substitute ; passed 93-0
Mar 26-enrolled, signed by each presiding officer; delivered to Governor
Apr 7-signed by Governor (Acts ch. 65)