Senator David P. Hinkins proposes the following substitute bill:




Chief Sponsor: David P. Hinkins

House Sponsor: Mike K. McKell


8     General Description:
9          This bill deals with the state preemption of local regulation of oil and gas operations.
10     Highlighted Provisions:
11          This bill:
12          ▸     states that the Board of Oil, Gas, and Mining has exclusive authority to regulate oil
13     and gas operations; and
14          ▸     makes technical changes.
15     Money Appropriated in this Bill:
16          None
17     Other Special Clauses:
18          This bill provides a special effective date.
19     Utah Code Sections Affected:
20     AMENDS:
21          40-6-5, as last amended by Laws of Utah 2012, Chapter 342

23     Be it enacted by the Legislature of the state of Utah:
24          Section 1. Section 40-6-5 is amended to read:
25          40-6-5. Jurisdiction of board -- Rules.

26          (1) The board has jurisdiction over all persons and property necessary to enforce this
27     chapter. The board shall enact rules in accordance with the Utah Administrative Rulemaking
28     Act.
29          (2) The board shall adopt rules and make orders as necessary to administer the
30     following provisions:
31          (a) Ownership of all facilities for the production, storage, treatment, transportation,
32     refining, or processing of oil and gas shall be identified.
33          (b) Well logs, directional surveys, and reports on well location, drilling, and production
34     shall be made and filed with the division. Logs of wells marked "confidential" shall be kept
35     confidential for one year after the date on which the log is required to be filed, unless the
36     operator gives written permission to release the log at an earlier date. Production reports shall
37     be:
38          (i) filed monthly;
39          (ii) accurate; and
40          (iii) in a form that reasonably serves the needs of state agencies and private fee owners.
41          (c) Monthly reports from gas processing plants shall be filed with the division.
42          (d) Wells shall be drilled, cased, operated, and plugged in such manner as to prevent:
43          (i) the escape of oil, gas, or water out of the reservoir in which they are found into
44     another formation;
45          (ii) the detrimental intrusion of water into an oil or gas reservoir;
46          (iii) the pollution of fresh water supplies by oil, gas, or salt water;
47          (iv) blowouts;
48          (v) cavings;
49          (vi) seepages;
50          (vii) fires; and
51          (viii) unreasonable:
52          (A) loss of a surface land owner's crops on surface land;
53          (B) loss of value of existing improvements owned by a surface land owner on surface
54     land; and
55          (C) permanent damage to surface land.
56          (e) The drilling of wells shall not commence without an adequate and approved supply

57     of water as required by Title 73, Chapter 3, Appropriation. This provision is not intended to
58     impose any additional legal requirements, but to assure that existing legal requirements
59     concerning the use of water have been met prior to the commencement of drilling.
60          (f) The operator shall furnish a reasonable performance bond or other good and
61     sufficient surety, conditioned for the performance of the duty to:
62          (i) plug each dry or abandoned well;
63          (ii) repair each well causing waste or pollution;
64          (iii) maintain and restore the well site; and
65          (iv) except as provided in Subsection (8), protect a surface land owner against
66     unreasonable:
67          (A) loss of a surface land owner's crops on surface land;
68          (B) loss of value of existing improvements owned by a surface land owner on surface
69     land; and
70          (C) permanent damage to surface land.
71          (g) Production from wells shall be separated into oil and gas and measured by means
72     and upon standards that will be prescribed by the board and will reflect current industry
73     standards.
74          (h) Crude oil obtained from any reserve pit, disposal pond or pit, or similar facility, and
75     any accumulation of nonmerchantable waste crude oil shall be treated and processed, as
76     prescribed by the board.
77          (i) Any person who produces, sells, purchases, acquires, stores, transports, refines, or
78     processes oil or gas or injects fluids for cycling, pressure maintenance, secondary or enhanced
79     recovery, or salt water disposal in this state shall maintain complete and accurate records of the
80     quantities produced, sold, purchased, acquired, stored, transported, refined, processed, or
81     injected for a period of at least six years. The records shall be available for examination by the
82     board or its agents at any reasonable time. Rules enacted to administer this subsection shall be
83     consistent with applicable federal requirements.
84          (j) Any person with an interest in a lease shall be notified when all or part of that
85     interest in the lease is sold or transferred.
86          (3) [The] To the extent not preempted by federal law, and notwithstanding any other
87     provision of state law, the board has the exclusive authority to regulate:

88          (a) all operations for and related to the production of oil or gas including:
89          (i) drilling, testing, equipping, completing, performing hydraulic fracturing or other
90     stimulation techniques, operating, producing, and plugging of wells; and
91          (ii) reclamation of sites;
92          (b) the spacing and location of wells;
93          (c) operations to increase ultimate recovery, such as:
94          (i) cycling of gas;
95          (ii) the maintenance of pressure; and
96          (iii) the introduction of gas, water, or other substances into a reservoir;
97          (d) the disposal of salt water and oil-field wastes;
98          (e) the underground and surface storage of oil, gas, or products; and
99          (f) the flaring of gas from an oil well.
100          (4) For the purposes of administering this chapter, the board may designate:
101          (a) wells as:
102          (i) oil wells; or
103          (ii) gas wells; and
104          (b) pools as:
105          (i) oil pools; or
106          (ii) gas pools.
107          (5) The board has exclusive jurisdiction over:
108          (a) class II injection wells, as defined by the federal Environmental Protection Agency
109     or any successor agency; and
110          (b) pits and ponds in relation to these injection wells.
111          (6) The board has jurisdiction:
112          (a) to hear any questions regarding multiple mineral development conflicts with oil and
113     gas operations if there:
114          (i) is potential injury to other mineral deposits on the same lands; or
115          (ii) are simultaneous or concurrent operations conducted by other mineral owners or
116     lessees affecting the same lands; and
117          (b) to enter its order or rule with respect to those questions.
118          (7) The board has enforcement powers with respect to operators of minerals other than

119     oil and gas as are set forth in Section 40-6-11, for the sole purpose of enforcing multiple
120     mineral development issues.
121          (8) The provisions of Subsection (2)(f)(iv) do not apply if the surface land owner is a
122     party to, or a successor of a party to:
123          (a) a lease of the underlying privately owned oil and gas;
124          (b) a surface use agreement applicable to the surface land owner's surface land; or
125          (c) a contract, waiver, or release addressing an owner's or operator's use of the surface
126     land owner's surface land.
127          Section 2. Effective date.
128          If approved by two-thirds of all the members elected to each house, this bill takes effect
129     upon approval by the governor, or the day following the constitutional time limit of Utah
130     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
131     the date of veto override.