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Committee Substitute House Bill 3110 History

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Key: Green = existing Code. Red = new code to be enacted

WEST virginia legislature

2023 regular session

Committee Substitute

for

House Bill 3110

By Delegates Anderson, Zatezalo, Horst, Hansen, Fehrenbacher, Cooper, Martin, Young, Hardy and Heckert

[Originating in the Committee on Finance,
February 13, 2023]

 

A BILL to amend and reenact §11-13A-5a of the Code of West Virginia, 1931, as amended, and to amend and reenact §22-6-2, §22-6-29, and §22-6A-7 of said code; all relating to funding the Office of Oil and Gas in the Department of Environmental Protection; providing for the apportionment of three fourths of one percent of oil and gas severance taxes to Office of Oil and Gas; establishing two tiers of annual oversight fees for wells producing more than 60,000 cubic feet of gas per day; increasing the expedited permit modification fee by $2500 over the current level; eliminating the one million dollar cap on deposits to the Oil and Gas Operating Permit and Processing Fund from collections of fees for expedited permits and expedited permit modifications; providing that those fees, if not used for other purposes, may be moved to the Oil and Gas Reclamation Fund; and making technical corrections.

Be it enacted by the Legislature of West Virginia:

chapter 11. taxation.

ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.

§11-13A-5a. Dedication of ten percent of oil and gas severance tax for benefit of counties and municipalities and of three fourths of one percent of oil and gas severance tax for the benefit of the Office of Oil and Gas in the Department of Environmental Protection; distribution of major portion of such dedicated tax to oil and gas producing counties; distribution of minor portion of such dedicated tax to all counties and municipalities; reports; rules; special funds in the office of state treasurer; methods and formulae for distribution of such dedicated tax; expenditure of funds by counties and municipalities for public purposes; and requiring special county and municipal budgets and reports thereon.

(a) Effective July 1, 1996, five percent of the tax attributable to the severance of oil and gas imposed by §11-13A-3a of this code is hereby dedicated for the use and benefit of counties and municipalities within this state and shall be distributed to the counties and municipalities as provided in this section. Effective July 1, 1997, and thereafter, ten percent of the tax attributable to the severance of oil and gas imposed by §11-13A-3a of this code is hereby dedicated for the use and benefit of counties and municipalities within this state and shall be distributed to the counties and municipalities as provided in this section. Effective July 1, 2023, and every year thereafter, three fourths of one percent of the tax attributable to the severance of oil and gas imposed §11-13A-3a of this code is hereby dedicated for the use and benefit of regulating the oil and gas industry by the Office of Oil and Gas in the Department of Environmental Protection and shall be deposited in the Oil and Gas Operating Permit and Processing Fund to ensure that the Office of Oil and Gas has sufficient funding to support its regulatory mission of ensuring the safety of the natural environment of this State.

(b) Seventy-five percent of this the dedicated tax for counties and municipalities shall be distributed by the State Treasurer in the manner specified in this section to the various counties of this state in which the oil and gas upon which this additional tax is imposed was located at the time it was removed from the ground. Those counties are referred to in this section as the "oil and gas producing counties". The remaining twenty-five percent of the net proceeds of this additional tax on oil and gas shall be distributed among all the counties and municipalities of this state in the manner specified in this section.

(c) The Tax Commissioner is hereby granted plenary power and authority to promulgate reasonable rules requiring the furnishing by oil and gas producers of such additional information as may be necessary to compute the allocation required under the provisions of subsection (f) of this section. The Tax Commissioner is also hereby granted plenary power and authority to promulgate such other reasonable rules as may be necessary to implement the provisions of this section.

(d) In order to provide a procedure for the distribution of seventy-five percent of the dedicated tax for counties and municipalities on oil and gas to the oil and gas producing counties, the special fund known as the oil and gas county revenue fund established in State Treasurer’s office by chapter two hundred forty-two, acts of the Legislature, 1995 regular session, as amended and reenacted in the subsequent act of the Legislature, is hereby continued. In order to provide a procedure for the distribution of the remaining twenty-five percent of the dedicated tax for counties and municipalities on oil and gas to all counties and municipalities of the state, without regard to oil and gas having been produced in those counties or municipalities, the special fund known as the all counties and municipalities revenue fund established in State Treasurer’s office by chapter two hundred forty-two, acts of the Legislature, 1995 regular session, as amended and reenacted in the subsequent act of the Legislature, is hereby redesignated as the "all counties and municipalities oil and gas revenue fund" and is hereby continued.

Seventy-five percent of the dedicated tax for counties and municipalities on oil and gas shall be deposited in the oil and gas county revenue fund and twenty-five percent of the this dedicated tax on oil and gas shall be deposited in the all counties and municipalities oil and gas revenue fund, from time to time, as the proceeds are received by the Tax Commissioner. The moneys in the funds shall be distributed to the respective counties and municipalities entitled to the moneys in the manner set forth in subsection (e) of this section.

(e) The moneys in the oil and gas county revenue fund and the moneys in the all counties and municipalities oil and gas revenue fund shall be allocated among and distributed annually to the counties and municipalities entitled to the moneys by the State Treasurer in the manner specified in this section. On or before each distribution date, the State Treasurer shall determine the total amount of moneys in each fund which will be available for distribution to the respective counties and municipalities entitled to the moneys on that distribution date. The amount to which an oil and gas producing county is entitled from the oil and gas county revenue fund shall be determined in accordance with subsection (f) of this section, and the amount to which every county and municipality shall be entitled from the all counties and municipalities oil and gas revenue fund shall be determined in accordance with subsection (g) of this section. After determining, as set forth in subsections (f) and (g) of this section, the amount each county and municipality is entitled to receive from the respective fund or funds, a warrant of the State Auditor for the sum due to the county or municipality shall issue and a check drawn thereon making payment of the sum shall thereafter be distributed to the county or municipality.

(f) The amount to which an oil and gas producing county is entitled from the oil and gas county revenue fund shall be determined by:

(1) In the case of moneys derived from tax on the severance of gas:

(A) Dividing the total amount of moneys in the fund derived from tax on the severance of gas then available for distribution by the total volume of cubic feet of gas extracted in this state during the preceding year; and

(B) Multiplying the quotient thus obtained by the number of cubic feet of gas taken from the ground in the county during the preceding year; and

(2) In the case of moneys derived from tax on the severance of oil:

(A) Dividing the total amount of moneys in the fund derived from tax on the severance of oil then available for distribution by the total number of barrels of oil extracted in this state during the preceding year; and

(B) Multiplying the quotient thus obtained by the number of barrels of oil taken from the ground in the county during the preceding year.

(g) The amount to which each county and municipality is entitled from the all counties and municipalities oil and gas revenue fund shall be determined in accordance with the provisions of this subsection. For purposes of this subsection "population" means the population as determined by the most recent decennial census taken under the authority of the United States:

(1) The treasurer State Treasurer shall first apportion the total amount of moneys available in the all counties and municipalities oil and gas revenue fund by multiplying the total amount in the fund by the percentage which the population of each county bears to the total population of the state. The amount thus apportioned for each county is the county’s "base share".

(2) Each county’s base share shall then be subdivided into two portions. One portion is determined by multiplying the base share by that percentage which the total population of all unincorporated areas within the county bears to the total population of the county, and the other portion is determined by multiplying the base share by that percentage which the total population of all municipalities within the county bears to the total population of the county. The former portion shall be paid to the county and the latter portion shall be the "municipalities’ portion" of the county’s base share. The percentage of the latter portion to which each municipality in the county is entitled shall be determined by multiplying the total of the latter portion by the percentage which the population of each municipality within the county bears to the total population of all municipalities within the county.

(h) Moneys distributed to any county or municipality under the provisions of this section, from either or both special funds, shall be deposited in the county or municipal general fund and may be expended by the county commission or governing body of the municipality for such purposes as the county commission or governing body shall determine to be in the best interest of its respective county or municipality: Provided, That in counties with population in excess of two hundred thousand, at least seventy-five percent of the funds received from the oil and gas county revenue fund shall be apportioned to and expended within the oil and gas producing area or areas of the county, the oil and gas producing areas of each county to be determined generally by the State Tax Commissioner: Provided, however, That the moneys distributed to any county or municipality under the provisions of this section shall not be budgeted for personal services in an amount to exceed one fourth of the total amount of the moneys.

(i) On or before March 28, 1997, and each March 28 thereafter, each county commission or governing body of a municipality receiving any such moneys shall submit to the Tax Commissioner on forms provided by the Tax Commissioner a special budget, detailing how the moneys are to be spent during the subsequent fiscal year. The budget shall be followed in expending the moneys unless a subsequent budget is approved by the State Tax Commissioner. All unexpended balances remaining in the county or municipality general fund at the close of a fiscal year shall remain in the General Fund and may be expended by the county or municipality without restriction.

(j) On or before December 15, 1996, and each December 15 thereafter, the Tax Commissioner shall deliver to the clerk of the Senate and the Clerk of the House of Delegates a consolidated report of the budgets, created by subsection (i) of this section, for all county commissions and municipalities as of July 15, of the current year.

(k) The State Tax Commissioner shall retain for the benefit of the state from the dedicated tax attributable to the severance of oil and gas the amount of $35,000 annually as a fee for the administration of the additional tax by the Tax Commissioner.

chapter 22. environmental resources.

ARTICLE 6. OFFICE OF OIL AND GAS; OIL AND GAS WELLS; ADMINISTRATION; ENFORCEMENT.

§22-6-2. Secretary – powers and duties generally; department records open to public; inspectors.

(a) The secretary shall have as his or her duty the supervision of the execution and enforcement of matters related to oil and gas set out in §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code.

(b) The secretary is authorized to propose rules for legislative approval in accordance with the provisions of §29A-3-1 et seq. of this code necessary to effectuate the above stated purposes.

(c) The secretary shall have full charge of the oil and gas matters set out in §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code. In addition to all other powers and duties conferred upon him or her, the secretary shall have the power and duty to:

(1) Supervise and direct the activities of the Office of Oil and Gas and see that the purposes set forth in §22-6-2(a) and §22-6-2(b) of this code are carried out;

(2) Determine the number of supervising oil and gas inspectors and oil and gas inspectors needed to carry out the purposes of §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code and appoint them as such. All appointees must be qualified civil service employees, but no person is eligible for appointment until he or she has served in a probationary status for a period of six months to the satisfaction of the secretary;

(3) Supervise and direct such oil and gas inspectors and supervising inspectors in the performance of their duties;

(4) Make investigations or inspections necessary to ensure compliance with and to enforce the provisions of §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code;

(5) Prepare report forms to be used by oil and gas inspectors or the supervising inspector in making their findings, orders, and notices upon inspections made in accordance with §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code;

(6) Employ a hearing officer and such clerks, stenographers, and other employees as may be necessary to carry out his or her duties and the purposes of the Office of Oil and Gas and fix their compensation;

(7) Hear and determine applications made by owners, well operators, and coal operators for the annulment or revision of orders made by oil and gas inspectors or the supervising inspector, and to make inspections, in accordance with the provisions of §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., and §22-9-1 et seq. of this code;

(8) Cause a properly indexed permanent and public record to be kept of all inspections made by the secretary or by oil and gas inspectors or the supervising inspector;

(9) Conduct research and studies as the secretary shall deem necessary to aid in protecting the health and safety of persons employed within or at potential or existing oil or gas production fields within this state, to improve drilling and production methods, and to provide for the more efficient protection and preservation of oil and gas-bearing rock strata and property used in connection therewith;

(10) Collect a permit fee of $400 for each permit application filed other than an application for a deep well, horizontal wells regulated pursuant to §22-6A-1 et seq. of this code, or a coalbed methane well; and collect a permit fee of $650 for each permit application filed for a deep well: Provided, That no permit application fee is required when an application is submitted solely for the plugging or replugging of a well, or to modify an existing application for which the operator previously has submitted a permit fee under this section. All application fees required hereunder are in lieu of and not in addition to any fees imposed under §22-11-1 et seq. of this code relating to discharges of stormwater but are in addition to any other fees required by the provisions of §22-6-1 et seq. of this code: Provided, however, That upon a final determination by the United States Environmental Protection Agency regarding the scope of the exemption under section Section 402(l)(2) of the federal Clean Water Act (33 U.S.C. 1342(l)(2)), which determination requires a "national pollutant discharge elimination system" permit for stormwater discharges from the oil and gas operations described therein, any permit fees for stormwater permits required under §22-11-1 et seq. of this code for such operations may not exceed $100;

(11) On or after July 1 of each year, collect from the responsible operator of the first 400 wells subject to §22-6-1 et seq., §22-6A-1 et seq. or §22-21-1 et seq. of this code that has not yet been plugged, and that produces more than an average, calculated by dividing the annual production by 365, of 250,000 cubic feet of gas per day or more as reported to the State Tax Commissioner in the previous reporting year, an annual oversight fee of $350 for each well;

(12) On or after July 1 of each year, collect from the responsible operator of the first 400 wells subject to §22-6-1 et seq., §22-6A-1 et seq. or §22-21-1 et seq. of this code that has not yet been plugged, and that produces an average, calculated by dividing the annual production by 365, of less than or equal to 250,000 cubic feet of gas but more than 60,000 cubic feet of gas per day as reported to the State Tax Commissioner in the previous reporting year, an annual oversight fee of $75 for each well;

(11) (13) Perform all other duties which are expressly imposed upon the secretary by the provisions of this chapter;

(12) (14) Perform all duties as the permit issuing authority for the state in all matters pertaining to the exploration, development, production, storage, and recovery of this state’s oil and gas;

(13) (15) Adopt rules with respect to the issuance, denial, retention, suspension, or revocation of permits, authorizations, and requirements of this chapter, which rules shall assure that the rules, permits, and authorizations issued by the secretary are adequate to satisfy the purposes of §22-6-1 et seq., §22-6A-1 et seq., §22-7-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code particularly with respect to the consolidation of the various state and federal programs which place permitting requirements on the exploration, development, production, storage, and recovery of this state’s oil and gas; and

(14) (16) Perform such acts as may be necessary or appropriate to secure to this state the benefits of federal legislation establishing programs relating to the exploration, development, production, storage, and recovery of this state’s oil and gas, which programs are assumable by the state.

(d) The secretary shall have authority to visit and inspect any well or well site and any other oil or gas facility in this state and may call for the assistance of any oil and gas inspector or inspectors or supervising inspector whenever such assistance is necessary in the inspection of any such well or well site or any other oil or gas facility. Similarly, all oil and gas inspectors and supervising inspectors shall have authority to visit and inspect any well or well site and any other oil or gas facility in this state. Such inspectors shall make all necessary inspections of oil and gas operations required by §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code; administer and enforce all oil and gas laws and rules; and perform other duties and services as may be prescribed by the secretary. The inspectors shall note and describe all violations of §22-6-1 et seq., §22-6A-1 et seq., §22-8-1 et seq., §22-9-1 et seq., §22-10-1 et seq., and §22-21-1 et seq. of this code and promptly report those violations to the secretary in writing, furnishing at the same time a copy of the report to the operator concerned. Any well operator, coal operator operating coal seams beneath the tract of land, or the coal seam owner or lessee, if any, if said owner or lessee is not yet operating said coal seams beneath said tract of land, may request the secretary to have an immediate inspection made. The operator or owner of every well or well site or any other oil or gas facility shall cooperate with the secretary, all oil and gas inspectors and the supervising inspector in making inspections or obtaining information.

(e) Subject to the provisions of §29B-1-1 et seq. of this code, all records of the office shall be open to the public.

§22-6-29. Operating permit and processing fund; special reclamation fund; fees.

(a) There is hereby continued within the Treasury of the State of West Virginia the special fund known as the Oil and Gas Operating Permit and Processing Fund, and the secretary shall deposit with the state Treasurer to the credit of such special fund all fees collected under the provisions of subdivision ten, subsection (c), section two of this article §22-6-2(c)(10), §22-6-2(c)(11), and §22-6-2(c)(12) of this code.

The Oil and Gas Operating Permit and Processing Fund shall be administered by the secretary for the purposes of carrying out the provisions of this chapter. Fees collected under §22-6-2(c)(11) and (12) of this code not used for other purposes may only be transferred to the Oil and Gas Reclamation Fund that is continued in §22-6-29(b) of this code at the discretion of the secretary.

The secretary shall make an annual report to the Governor and to the Legislature on the use of the fund, and shall make a detailed accounting of all expenditures from the Oil and Gas Operating Permit and Processing Fund.

(b) In addition to any other fees required by the provisions of §22-6-1 et seq. of this code, every applicant for a permit to drill a well shall, before the permit is issued, pay to the secretary a special reclamation fee of $150 for each activity for which a well work application is required to be filed: Provided, That a special reclamation fee shall not be assessed for plugging activities. Such special reclamation fee shall be paid at the time the application for a drilling permit is filed with the secretary and the payment of such reclamation fee shall be a condition precedent to the issuance of said permit.

There is hereby continued within the Treasury of the State of West Virginia the special fund known as the oil and gas reclamation fund Oil and Gas Reclamation Fund, and the secretary shall deposit with the state Treasurer to the credit of such special fund all special reclamation fees collected. The proceeds of any bond forfeited under the provisions of §22-6-1 et seq. of this code shall inure to the benefit of, and shall be deposited in, such oil and gas reclamation fund Oil and Gas Reclamation Fund.

The oil and gas reclamation fund Oil and Gas Reclamation Fund shall be administered by the secretary. The secretary shall cause to be prepared plans for the reclaiming and plugging of abandoned wells which have not been reclaimed or plugged or which have been improperly reclaimed or plugged. The secretary, as funds become available in the oil and gas reclamation fund Oil and Gas Reclamation Fund, shall reclaim and properly plug wells in accordance with said plans and specifications and in accordance with the provisions of §22-6-1 et seq. of this code relating to the reclaiming and plugging of wells and all rules promulgated thereunder. Such funds may also be utilized for the purchase of abandoned wells, where such purchase is necessary, and for the reclamation of such abandoned wells, and for any engineering, administrative, and research costs as may be necessary to properly effectuate the reclaiming and plugging of all wells, abandoned or otherwise.

The secretary may avail the division of any federal funds provided on a matching basis that may be made available for the purpose of reclaiming or plugging any wells.

The secretary shall make an annual report to the Governor and to the Legislature setting forth the number of wells reclaimed or plugged through the use of the Oil and Gas Reclamation Fund provided for herein. Such report shall identify each such reclamation and plugging project, state the number of wells reclaimed or plugged thereby, show the county wherein such wells are located, and shall make a detailed accounting of all expenditures from the Oil and Gas Reclamation Fund.

All wells shall be reclaimed or plugged by contract entered into by the secretary on a competitive bid basis as provided for under the provisions of §5A-3-1 et seq. of this code and the rules promulgated thereunder.

article 6a. natural gas horizontal well control act.

§22-6A-7. Horizontal well permit required; permit fee; application; soil erosion control    plan; well site safety plan; site construction plan; water management plan; permit fee; installation of permit number; suspension and transfer of a permit.

(a) It is unlawful for any person to commence any well work, including site preparation work which involves any disturbance of land, for a horizontal well without first securing from the secretary a well work permit pursuant to this article.

(b) Every permit application filed under this section shall be on a form as may be prescribed by the secretary, shall be verified, and shall contain the following information:

(1) The names and addresses of: (A) The well operator; (B) the agent required to be designated under subsection (k) of this section; and (C) every person whom the applicant shall notify under any section of this article, together with a certification and evidence that a copy of the application and all other required documentation has been delivered to all such persons;

(2) The names and addresses of every coal operator operating coal seams under the tract of land on which the well is or may be located, and the coal seam owner of record and lessee of record required to be given notice by §22-6A-5(a)(6) of this code, if any, if the owner or lessee is not yet operating the coal seams;

(3) The number of the well or other identification the secretary may require;

(4) The well work for which a permit is requested;

(5) The approximate total depth to which the well is to be drilled or deepened, or the actual depth if the well has been drilled; the proposed angle and direction of the well; the actual depth or the approximate depth at which the well to be drilled deviates from vertical, the angle, and direction of the nonvertical well bore until the well reaches its total target depth or its actual final depth; and the length and direction of any actual or proposed horizontal lateral or well bore;

(6) Each formation in which the well will be completed if applicable;

(7) A description of any means used to stimulate the well;

(8) If the proposed well work will require casing or tubing to be set, the entire casing program for the well, including the size of each string of pipe, the starting point and depth to which each string is to be set and the extent to which each such string is to be cemented;

(9) If the proposed well work is to convert an existing well, all information required by this section, all formations from which production is anticipated, and any plans to plug any portion of the well;

(10) If the proposed well work is to plug or replug the well, all information necessary to demonstrate compliance with the legislative rules promulgated by the secretary in accordance with §22-6A-13 of this code;

(11) If the proposed well work is to stimulate a horizontal well, all information necessary to demonstrate compliance with the requirements of §22-6A-5(a)(7) of this code;

(12) The erosion and sediment control plan required under subsection (c) of this section for applications for permits to drill;

(13) A well site safety plan to address proper safety measures to be employed for the protection of persons on the site as well as the general public. The plan shall encompass all aspects of the operation, including the actual well work for which the permit was obtained, completion activities and production activities, and shall provide an emergency point of contact for the well operator. The well operator shall provide a copy of the well site safety plan to the local emergency planning committee established pursuant to §15-5A-7 of this code for the emergency planning district in which the well work will occur at least seven days before commencement of well work or site preparation work that involves any disturbance of land;

(14) A certification from the operator that: (A) It has provided the owners of the surface described in §22-6A-10(b)(1), §22-6A-10(b)(2), and §22-6A-10(b)(4) of this code, the information required by §22-6A-16(b) and §22-6A-16(c) of this code; (B) that the requirement was deemed satisfied as a result of giving the surface owner notice of entry to survey pursuant to §22-6A-10(a) of this code; or (C) the notice requirements of §22-6A-16(b) of this code were waived in writing by the surface owner; and

(15) Any other relevant information which the secretary may reasonably require.

(c)(1) An erosion and sediment control plan shall accompany each application for a well work permit under this article. The plan shall contain methods of stabilization and drainage, including a map of the project area indicating the amount of acreage disturbed. The erosion and sediment control plan shall meet the minimum requirements of the West Virginia Erosion and Sediment Control Manual as adopted and from time to time amended by the department. The erosion and sediment control plan shall become part of the terms and conditions of any well work permit that is issued pursuant to this article and the provisions of the plan shall be carried out where applicable in the operation. The erosion and sediment control plan shall set out the proposed method of reclamation which shall comply with the requirements of §22-6A-14 of this code.

(2) For well sites that disturb three acres or more of surface, excluding pipelines, gathering lines and roads, the erosion and sediment control plan submitted in accordance with this section shall be certified by a registered professional engineer.

(d) For well sites that disturb three acres or more of surface, excluding pipelines, gathering lines and roads, the operator shall submit a site construction plan that shall be certified by a registered professional engineer and contains information that the secretary may require by rule.

(e) In addition to the other requirements of this section, if the drilling, fracturing, or stimulating of the horizontal well requires the use of water obtained by withdrawals from waters of this state in amounts that exceed 210,000 gallons during any 30-day period, the application for a well work permit shall include a water management plan, which may be submitted on an individual well basis or on a watershed basis, and which shall include the following information:

(1) The type of water source, such as surface or groundwater, the county of each source to be used by the operation for water withdrawals and the latitude and longitude of each anticipated withdrawal location;

(2) The anticipated volume of each water withdrawal;

(3) The anticipated months when water withdrawals will be made;

(4) The planned management and disposition of wastewater after completion from fracturing, refracturing, stimulation, and production activities;

(5) A listing of the anticipated additives that may be used in water utilized for fracturing or stimulating the well. Upon well completion, a listing of the additives that were actually used in the fracturing or stimulating of the well shall be submitted as part of the completion log or report required by §22-6A-5(a)(14) of this code;

(6) For all surface water withdrawals, a water management plan that includes the information requested in subdivisions (1) through (5) of this subsection and the following:

(A) Identification of the current designated and existing water uses, including any public water intakes within one mile downstream of the withdrawal location;

(B) For surface waters, a demonstration, using methods acceptable to the secretary, that sufficient in-stream flow will be available immediately downstream of the point of withdrawal. A sufficient in-stream flow is maintained when a pass-by flow that is protective of the identified use of the stream is preserved immediately downstream of the point of withdrawal; and

(C) Methods to be used for surface water withdrawal to minimize adverse impact to aquatic life; and

(7) This subsection is intended to be consistent with and does not supersede, revise, repeal, or otherwise modify §22-11-1 et seq., §22-12-1 et seq., or §22-26-1 et seq. of this code and does not revise, repeal, or otherwise modify the common law doctrine of riparian rights in West Virginia law.

(f) An application may propose and a permit may approve two or more activities defined as well work; however, a separate permit shall be obtained for each horizontal well drilled.

(g) The application for a permit under this section shall be accompanied by the applicable bond as required by §22-6A-15 of this code, the applicable plat required by §22-6A-5(a)(6) of this code, and a permit fee of $10,000 for the initial horizontal well drilled at a location and a permit fee of $5,000 for each additional horizontal well drilled on a single well pad at the same location.

(h)(1) An applicant may enter into an expedited permit application process with the secretary for a well permit and pay an additional expedited permit fee of $20,000 for the initial horizontal well drilled at a location and an additional expedited permit fee of $10,000 for each additional horizontal well drilled on a single well pad at the same location: Provided, That deep well permitting is excluded from this expedited permit process due to the independent board review and approval requirement which is outside the secretary’s control.

(2) Upon entering into an expedited permit process and meeting all the criteria set forth in this article, the secretary shall issue or deny a permit within 45 days of the submission of a permit application under this article, unless the secretary seeks additional information or modification from the applicant, which would toll the 45 day period until the secretary receives the required responsive information from the applicant.

(3) Each day the agency exceeds: (A) The 45-day deadline for approval or denial of an expedited initial horizontal well drilled, the secretary shall refund $1,333.33 per day up to and including day 60 after the submission of a permit application until the expedited fee is reduced to the normal permit fee amount; or (B) the 45-day deadline for approval or denial of an expedited permit for any additional horizontal well drilled on a single well pad at the same location, the secretary shall be required to refund $666.66 per day up to and including day 60 after the submission of a permit application, until the expedited fee is reduced to the normal permit fee amount.

(4)(A) After all refunds are paid by the secretary, one half of the additional expedited permit fee shall be deposited in the Oil and Gas Operating Permit and Processing Fund and shall be used by the agency to cover costs to review, process, and approve or deny the applicable horizontal well permit applications and modifications pending before the agency, but not to exceed $1 million annually in combination with proceeds received through §22-6A-7(i)(4)(A) of this code and any residuary fee proceeds to be distributed as set forth in §22-6A-7(h)(4)(B) of this code.

(B) After all refunds are paid by the secretary, one half of the additional expedited permit fee, plus any residuary as set forth in §22-6A-7(h)(4)(A) of this code, shall be deposited in the Oil and Gas Reclamation Fund and used specifically for the reclamation and plugging of orphaned oil or gas wells.

(i)(1) An applicant may enter into an expedited permit modification application process with the secretary for a well permit and pay an additional expedited permit modification fee of $5,000 for the modification of the permit for any horizontal well drilled at a location: Provided, That deep well permit modifications are excluded from this expedited permit modification process if the modification is subject to independent board review and approval.

(2) Upon entering into an expedited permit modification process and meeting all the criteria set forth in this article, the secretary shall issue or deny a permit modification within 20 days of the submission of a permit modification application under this article, unless the secretary seeks additional information or further modification from the applicant, which would toll the 20 day period until the secretary receives the required responsive information from the applicant.

(3) Each day the agency exceeds the 20-day deadline for approval or denial of an expedited horizontal well permit modification, the secretary shall refund $500 per day up to and including day 30 after the submission of an expedited permit modification application, until the expedited permit modification fee of $5,000 is reduced to zero.

(4)(A) After all refunds are paid by the secretary, one half of the expedited permit modification fee shall be deposited in the Oil and Gas Operating Permit and Processing Fund and shall be used by the agency to cover costs to review, process, and approve or deny the applicable horizontal well permit applications and modifications pending before the agency, but not to exceed $1 million annually in combination with proceeds received through §22-6A-7(h)(4)(A) of this code and any residuary fee proceeds to be distributed as set forth in §22-6A-7(i)(4)(B) of this code.

(B) After all refunds are paid by the secretary, one half of the expedited permit modification fee, plus any residuary as set forth in §22-6A-7(i)(4)(A) of this code, shall be deposited in the Oil and Gas Reclamation Fund and used specifically for the reclamation and plugging of orphaned oil or gas wells.

(j) Any balance in the Oil and Gas Reclamation Fund, earmarked specifically for the reclamation and plugging of orphaned oil or gas wells pursuant to §22-6A-7(h)(4)(B) and §22-6A-7(i)(4)(B) of this code, which remains at the end of any state fiscal year does not revert to the General Revenue Fund but shall remain in the special revenue account as indicated and may be used only as provided in §22-6-29(b) of this code. The revenues deposited in the Oil and Gas Reclamation Fund, earmarked specifically for the reclamation and plugging of orphaned oil or gas wells pursuant to §22-6A-7(h)(4)(B) and §22-6A-7(i)(4)(B) of this code may not be designated as nonaligned state special revenue funds under §11B-2-32 of this code.

(k) The well operator named in the application shall designate the name and address of an agent for the operator who is the attorney-in-fact for the operator and who is a resident of the State of West Virginia upon whom notices, orders, or other communications issued pursuant to this article or §22-11-1 et seq. of this code may be served, and upon whom process may be served. Every well operator required to designate an agent under this section shall, within five days after the termination of the designation, notify the secretary of the termination and designate a new agent.

(l) The well owner or operator shall install the permit number as issued by the secretary and a contact telephone number for the operator in a legible and permanent manner to the well upon completion of any permitted work. The dimensions, specifications, and manner of installation shall be in accordance with the rules of the secretary.

(m) The secretary may waive the requirements of this section and §22-6A-8, §22-6A-10, §22-6A-11, and §22-6A-24 of this code in any emergency situation if the secretary considers the action necessary. In that case the secretary may issue an emergency permit which is effective for not more than 30 days, unless reissued by the secretary.

(n) The secretary shall deny the issuance of a permit if the secretary determines that the applicant has committed a substantial violation of a previously issued permit for a horizontal well, including the applicable erosion and sediment control plan associated with the previously issued permit, or a substantial violation of one or more of the rules promulgated under this article, and in each instance has failed to abate or seek review of the violation within the time prescribed by the secretary pursuant to the provisions of §22-6A-5(a)(1) and §22-6A-5(a)(2) of this code and the rules promulgated hereunder, which time may not be unreasonable.

(o) If the secretary finds that a substantial violation has occurred and that the operator has failed to abate or seek review of the violation in the time prescribed, the secretary may suspend the permit on which the violation exists, after which suspension the operator shall forthwith cease all well work being conducted under the permit. However, the secretary may reinstate the permit without further notice, at which time the well work may be continued. The secretary shall make written findings of the suspension and may enforce the same in the circuit courts of this state. The operator may appeal a suspension pursuant to the provisions of §22-6A-5(a)(23) of this code. The secretary shall make a written finding of any such determination.

(p) Any well work permit issued in accordance with this section may be transferred with the prior written approval of the secretary upon his or her finding that the proposed transferee meets all requirements for holding a well work permit, notwithstanding any other provision of this article or rule adopted pursuant to this article. Application for the transfer of any well work permit shall be upon forms prescribed by the secretary and submitted with a permit transfer fee of $500. Within 90 days of the receipt of approval by the secretary, the transferee shall give notice of the transfer to those persons entitled to notice in §22-6A-10(b) of this code by personal service or by registered mail or by any method of delivery that requires a receipt or signature confirmation, and shall further update the emergency point of contact provided pursuant to §22-6A-7(b)(13).

 

NOTE: The purpose of this bill is to ensure that the WVDEP Office of Oil and Gas has sufficient money to inspect the oil and gas wells of the State of West Virginia in an efficacious and diligent manner that protects the people and environment of the State from degradation related to violations of the West Virginia oil and gas production laws.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

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