General Quesons
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ACTION: Revised DATE: 05/18/2020 9:28 AM Rule Summary and Fiscal Analysis Part A - General Quesons Rule Number: 1501:9-11-13 Rule Type: Rescission Rule Title/Tagline: Conversion to water well. Agency Name: Department of Natural Resources Division: Division of Mineral Resources Management-Oil and Gas Address: 2045 Morse Road, D-3 Columbus OH 43229 Contact: Brian Becker Phone: (614) 265-6861 Email: [email protected] I. Rule Summary 1. Is this a five year rule review? Yes A. What is the rule’s five year review date? 5/12/2020 2. Is this rule the result of recent legislaon? No 3. What statute is this rule being promulgated under? 119.03 4. What statute(s) grant rule wring authority? 1509.03 5. What statute(s) does the rule implement or amplify? 1509.13, 1509.14, 1509.15 6. What are the reasons for proposing the rule? The Ohio Department of Natural Resources, Division of Oil and Gas Resources Management seeks to ensure that the rules regarding the plugging of wells address current industry operaons (i.e. horizontal drilling), standards, and materials; ensure beer planning and review of plugging operaons by the well owner as part of the perming process; revise exisng definions and language to provide clear standards for the regulated community and regulators; and clarify when, where, and how plugs must be placed during operaons. The Agency has reorganized and rewrien the rule and believes this rule to be in compliance with R.C. 121.95 as the new rules have the same number of regulatory [ stylesheet: rsfaWithBusImpact.xsl 2.07, authoring tool: EZ1, (dv: 9, p: 188246, pa: 330840, ra: 571411, d: 758397)] print date: 05/18/2020 9:30 AM Page 2 Rule Number: 1501:9-11-13 restricons as the rules it is replacing. We consider this new rule an update to exisng rule, but are rescinding and filing new rules as more than 50% of the content has changed. This dra has wide support from the regulated industry, environmental groups and other regulatory bodies. 7. Summarize the rule’s content, and if this is an amended rule, also summarize the rule’s changes. The draed version of OAC 1501:9-11 updates Ohio's rules regarding well plugging by: Revising definions to reflect changes made in rule; Updang language that outlines when a permit to plug or a permit to plug back a well must be obtained; Adding a new requirement that operators develop a detailed wrien plugging plan that includes informaon such as measurements of the casing strings, depth of underground sources of drinking water, depth of each layer of reservoir rocks, depth of mineable coal seams, and proposed depths of plugs, and other relevant informaon; Updang language that explains how a well may be plugged and what precauons, standards, and procedures operators may or may not follow; Revising standards for appropriate noficaon of DOGRM inspectors to witness plugging operaons; Revising the rules regarding commencement of plugging operaons of a lost or dry hole; Clarifying rules addressing consideraons of the top-hole, including the requirements to maintain conductor casing or drive pipe in the wellbore and wring plugging plans to address situaons where drive pipe, conductor casing, or surface casing are not present; Enhancing standards for materials that may be used to plug a well and how those materials must be prepared, tested, and used in plugging operaons; Idenfying the wells that must be plugged with cement, at which intervals cement must be placed in the wellbore, and the amount of cement to be placed in the differing intervals. The rule now requires operators to perform an area-of-review around wells to be plugged to determine where plugs be placed based on geology and historic producon in the area; Establishing standards for plugging of horizontal wells; Updang language authorizing the limited use of prepared clay for plugging cable tool drilled wells; Requiring operators to leave a plugged well uncovered for three business days to allow Division inspectors to conduct a final inspecon; Relocang rules pertaining to rat and mouse holes to another chapter of Ohio Administrave Code; Amending when and how operators must submit a plugging report to the Division; and removing a provision that allowed wells to be converted to a water well. 8. Does the rule incorporate material by reference? No 9. If the rule incorporates material by reference and the agency claims the material is exempt pursuant to R.C. 121.75, please explain the basis for the exempon and how an individual can find the referenced material. Not Applicable Page 3 Rule Number: 1501:9-11-13 10. If revising or re-filing the rule, please indicate the changes made in the revised or re- filed version of the rule. Correcng RSFA queson #4, "What statute(s) grant rule wring authority?" II. Fiscal Analysis 11. Please esmate the increase / decrease in the agency's revenues or expenditures in the current biennium due to this rule. This will have no impact on revenues or expenditures. 0 Not applicable. 12. What are the esmated costs of compliance for all persons and/or organizaons directly affected by the rule? The Agency, upon consultaon with industry experts, prepared plugging cost esmates for four common types of wells: 3,500 feet Clinton (with approved clay) ~$16,000 4,500 feet Clinton ~$21,000 7,200 feet Rose Run ~$33,000 Uca/Marcellus Horizontal Well ~$85,000 It's esmated the revised rule could increase plugging costs from five to ten percent due to the increase in the required footage amount of cement to be placed in the plugged well. However, the addion of the area-of-review allows the company to develop a plan based on site condions of each well, possibly reducing the number of cement plugs that must be placed in a well. The Agency believes the increased footage requirements and the area-of-review strike an acceptable balance. Too few horizontal wells have been plugged to determine if the esmated costs based on this rule would present an adverse impact. 13. Does the rule increase local government costs? (If yes, you must complete an RSFA Part B). No 14. Does the rule regulate environmental protecon? (If yes, you must complete an RSFA Part C). Yes Page 4 Rule Number: 1501:9-11-13 15. If the rule imposes a regulaon fee, explain how the fee directly relates to your agency’s cost in regulang the individual or business. Not applicable. III. Common Sense Iniave (CSI) Quesons 16. Was this rule filed with the Common Sense Iniave Office? Yes 17. Does this rule have an adverse impact on business? Yes A. Does this rule require a license, permit, or any other prior authorizaon to engage in or operate a line of business? Yes An oil and gas operator must secure a permit to plug a well and the proposed rule, developed in consultaon with the regulated community, defines the perming process. B. Does this rule impose a criminal penalty, a civil penalty, or another sancon, or create a cause of acon, for failure to comply with its terms? No The rule does not impose a penalty, but Ohio Revised Code 1509.04 defines enforcement acon the Division may take, such as compliance noces, compliance agreements, or administrave orders. C. Does this rule require specific expenditures or the report of informaon as a condion of compliance? Yes Operators are required to submit informaon during and aer the plugging of a well - processes which are defined in the proposed rule. D. Is it likely that the rule will directly reduce the revenue or increase the expenses of the lines of business of which it will apply or applies? Yes It's esmated the revised rule could increase plugging costs from five to ten percent due to the increase in the required footage amount of cement to be placed in the plugged well. However, the addion of the area-of-review allows the company to develop a plan based on site condions of each well, possibly reducing the number of cement plugs that must be placed in a well. The Agency believes the increased footage requirements and the area-of-review strike an acceptable balance. Page 5 Rule Number: 1501:9-11-13 IV. Regulatory Restricons (This secon only applies to agencies indicated in R.C. 121.95 (A)) 18. Are you adding a new or removing an exisng regulatory restricon as defined in R.C. 121.95? No A. How many new regulatory restricons do you propose adding? Not Applicable B. How many exisng regulatory restricons do you propose removing? Not Applicable ACTION: Revised DATE: 05/18/2020 9:28 AM Page C-1 Rule Number: 1501:9-11-13 Rule Summary and Fiscal Analysis Part C - Environmental Rule Quesons Pursuant to Am. Sub. H.B. 106 of the 121st General Assembly, prior to adopng a rule or an amendment to a rule dealing with environmental protecon, or containing a component dealing with environmental protecon, a state agency shall: (1) Consult with organizaons that represent polical subdivisions, environmental interests, business interests, and other persons affected by the proposed rule or amendment. (2) Consider documentaon relevant to the need for, the environmental benefits or consequences of, other benefits of, and the technological feasibility of the proposed rule or rule amendment. (3) Specifically idenfy whether the proposed rule or rule amendment is being adopted or amended to enable the state to obtain or maintain approval to administer and enforce a federal environmental law or to parcipate in a federal environmental program, whether the proposed rule or rule amendment is more stringent than its federal counterpart, and, if the proposed rule or rule amendment is more stringent, the raonale for not incorporang its federal counterpart.