General Quesons

ACTION: Revised DATE: 05/18/2020 9:28 AM

Rule Summary and Fiscal Analysis Part A - General Quesons

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 legislaon? No

3. What statute is this rule being promulgated under? 119.03

4. What statute(s) grant rule wring 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 operaons (i.e. horizontal drilling), standards, and materials; ensure beer planning and review of plugging operaons by the well owner as part of the perming process; revise exisng deﬁnions and language to provide clear standards for the regulated community and regulators; and clarify when, where, and how plugs must be placed during operaons.

The Agency has reorganized and rewrien 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

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restricons as the rules it is replacing. We consider this new rule an update to exisng 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 draed version of OAC 1501:9-11 updates Ohio's rules regarding well plugging by: Revising definions to reflect changes made in rule; Updang 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 wrien plugging plan that includes informaon 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 informaon; Updang language that explains how a well may be plugged and what precauons, standards, and procedures operators may or may not follow; Revising standards for appropriate noficaon of DOGRM inspectors to witness plugging operaons; Revising the rules regarding commencement of plugging operaons of a lost or dry hole; Clarifying rules addressing consideraons of the top-hole, including the requirements to maintain conductor casing or drive pipe in the wellbore and wring plugging plans to address situaons 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 operaons; Idenfying 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 producon in the area; Establishing standards for plugging of horizontal wells; Updang 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 inspecon; Relocang rules pertaining to rat and mouse holes to another chapter of Ohio Administrave 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 exempon 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.

Correcng RSFA queson #4, "What statute(s) grant rule wring authority?"

II. Fiscal Analysis

11. Please esmate 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.

Not applicable.

12. What are the esmated costs of compliance for all persons and/or organizaons directly aﬀected by the rule?

The Agency, upon consultaon with industry experts, prepared plugging cost esmates 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 Uca/Marcellus Horizontal Well ~$85,000

It's esmated 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 addion of the area-of-review allows the company to develop a plan based on site condions 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 esmated 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 protecon? (If yes, you must complete an RSFA Part C). Yes Page 4 Rule Number: 1501:9-11-13

15. If the rule imposes a regulaon fee, explain how the fee directly relates to your agency’s cost in regulang the individual or business.

Not applicable.

III. Common Sense Iniave (CSI) Quesons

16. Was this rule ﬁled with the Common Sense Iniave 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 authorizaon 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 consultaon with the regulated community, deﬁnes the perming process.

B. Does this rule impose a criminal penalty, a civil penalty, or another sancon, or create a cause of acon, for failure to comply with its terms? No

The rule does not impose a penalty, but Ohio Revised Code 1509.04 deﬁnes enforcement acon the Division may take, such as compliance noces, compliance agreements, or administrave orders.

C. Does this rule require speciﬁc expenditures or the report of informaon as a condion of compliance? Yes

Operators are required to submit informaon during and aer 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

IV. Regulatory Restricons (This secon only applies to agencies indicated in R.C. 121.95 (A))

18. Are you adding a new or removing an exisng regulatory restricon as deﬁned in R.C. 121.95? No

A. How many new regulatory restricons do you propose adding?

Not Applicable

B. How many exisng regulatory restricons 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 Quesons Pursuant to Am. Sub. H.B. 106 of the 121st General Assembly, prior to adopng a rule or an amendment to a rule dealing with environmental protecon, or containing a component dealing with environmental protecon, a state agency shall:

(1) Consult with organizaons that represent polical subdivisions, environmental interests, business interests, and other persons aﬀected by the proposed rule or amendment.

(2) Consider documentaon 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 idenfy 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 parcipate 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 raonale for not incorporang its federal counterpart.

(4) Include with the proposed rule or rule amendment and rule summary and ﬁscal analysis required to be ﬁled with the Joint Commiee on Agency Rule Review informaon relevant to the previously listed requirements.

(A) Were organizaons that represent polical subdivisions, environmental interests, business interests, and other persons aﬀected by the proposed rule or amendment consulted? Yes

Please list each contact.

Contact list aached.

The Agency communicated through email with the Ohio Oil and Gas Associaon (OOGA), the American Petroleum Instute- Ohio and the Southeastern Ohio Oil and Gas Associaon February 15 2019 to obtain the names of recommended industry parcipants in an affected party workgroup. February 22, the dra rules were distributed to the members of the affected party that included representaves of the above organizaons and individuals from five oil and gas operators. In-person meengs were held on March 4 and April 9. Wrien comments were received from a company representave unable to aend aer each meeng. May 16, a conference call was held with OOGA representaves and members to answer addional quesons.

On May 23, a dra of the rules was posted to the Agency's website, along with an execuve summary outlining the proposed changes, for interested party review. The Agency ulized its e-noﬁcaon system to alert 236 individuals, organizaons, and/or companies who have signed up that the rules were available for interested party review.

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Aer an 18-day review, one set of comments was received and reviewed by the agency and appropriate modiﬁcaons were made. Addionally, comments were suggested by U.S EPA. The Environmental Defense Fund in comments received commented that the proposed rules are the strongest rules of their kind in the country.

(B) Was documentaon that is relevant to the need for, the environmental beneﬁts or consequences of, other beneﬁts of, and the technological feasibility of the proposed rule or amendment considered? Yes

Please list the informaon provided and aach a copy of each piece of documentaon to this form. (A SUMMARY OR INDEX MAY BE ATTACHED IN LIEU OF THE ACTUAL DOCUMENTATION.)

Plugging is a crical component of the life cycle of a well because a properly plugged well protects human health, safety, and the environment. Proper plugging also allows for connued oil and gas development in a responsible manner in areas adjacent to the plugged well. Ohio law requires oil and gas operators to plug wells that have not reported producon aer a specified period of me and that are not placed in a temporary inacve status. Oil and gas operators will plug older wells where producon has declined or to allow for new development of different formaons. Ohio's oil and gas industry has experienced dramac changes in recent years, operaonally and technologically, which necessitates review of current rules and oen requires appropriate modificaons.

The rule contains references to widely-adopted and commonly-recognized scienﬁc standards in the oil and gas industry tested and veed by the American Petroleum Instute. Formulas are also established for pressure tesng and other variables; these formulas have been developed with input from industry experts and through crical peer review. The Agency also tracks inspecons and responses to reported incidents. This tracking data will be used to monitor the eﬀecveness of plugging operaons and ulmately the success of the rule.

(C) Is the proposed rule or rule amendment being adopted or amended to enable the state to obtain or maintain approval to administer and enforce a federal environmental law or to parcipate in a federal environmental program? Yes

Is the proposed rule or rule amendment more stringent than its federal counterpart? Yes

What is the raonale for not incorporang the federal counterpart?

The U.S. EPA delegated primary enforcement authority of certain types of underground injecon control wells (Class II Disposal, Class II Enhanced Recovery and Class III Soluon Mining) to Ohio in 1983 and the Agency has successfully regulated the program since that me. In brief, the U.S. EPA requires that Ohio's laws and rules be equal to or more Page C-3 Rule Number: 1501:9-11-13

stringent than federal code and implement the goals of the Safe Drinking Water Act, by protecng all Underground Sources of Drinking Water. Ohio's laws, rules, and program operaon meet or exceed federal requirements. These rules address the plugging of wells regulated under Ohio's primacy agreement and are required to maintain this authority.

(D) If this is a rule amendment that is being adopted under a state statute that establishes standards with which the amendment is to comply, is the proposed rule amendment more stringent than the rule that it is proposing to amend? No ACTION: Revised DATE: 05/18/2020 9:28 AM

Outreach Contacts

Email First Name Last Name Organization [email protected] Athena Adams Eclipse Compliance [email protected] Allison Carmichael Penn E&R [email protected] Allison Carmichael WallacePancher Group [email protected] adam watchey rettew [email protected] Adell Heneghan PDC Energy [email protected] Aell Heneghan PDC Energy, Inc. [email protected] Amanda Fernley Antero Resources [email protected] Aaron Goddard Antero Resources Corporation Fair Shake Environmental Legal [email protected] Andrew Karas Services [email protected] Kathi Albertson Guernsey County Farm Bureau [email protected] Brady Alford CESO [email protected] Allyn Turner Steptoe & Johnson, PLLC [email protected] Amalie Lipstreu OEFFA [email protected] Amber Ray Acampado CNX Gas,LLC [email protected] [email protected] Amy Miller Tug Hill Operating, LLC andrea.bourque@halliburton.com [email protected] Andrew Adgate ODNR [email protected] [email protected] Angie Harakal [email protected] Ashlie Steele Antero Resources [email protected] Brent Winslow [email protected] Blake Arthur Gulfport Energy Chesapeake Energy [email protected] Beth Kern Corporation [email protected] Bethany McCorkle ODNR [email protected] Brooke Gorbach Tzangas Plakas Mannos [email protected] Brian Hickman Ohio Oil & Gas Association [email protected] Bill Chambers Steptoe & Johnson [email protected] Blake Roush PDCE [email protected] Barry Browne OFBF and NARO [email protected] Ben Olszewski 1977 [email protected] Ben Pfefferle McDonald Hopkins LLC [email protected] Brent Powell Triad Hunter [email protected] [email protected] Brandon McKinley American Energy - Utica, LLC [email protected] Brian Boyer Sherrard, German & Kelly, P.C. [email protected] Bryan Smith Antero Resources Civil & Environmental [email protected] Bo Valli Consultants, Inc. [email protected] alicia carnahan elss [email protected] ATTACH p(188246) pa(330840) d: (757395) ra(571411) print date: 05/18/2020 9:30 AM [email protected] Carrie Buchanan Petro Evaluation Services [email protected] Cathy Bihlman RETTEW [email protected] Cheri Budzynski Shumaker, Loop & Kendrick [email protected] Connie Gallaugher Noble County Engineer [email protected] Chad Ulm [email protected] Chris Collet American Projects Shepard- [email protected] Christine Desai Pin Oak Energy Partners [email protected] Chris Tuttle CONSOL Energy [email protected] Colton Parsons Steptoe & Johnson CABOT OIL & GAS [email protected] Connie Carden CORPORATION [email protected] Craig Owens Central Ohio Oil, Inc. [email protected] Christine Shepard AB Resources [email protected] Cyrus Blue [email protected] DAN ARNETT ERNST BIOMASS Greater Metropolitan Title, [email protected] Daniel Duris Inc. [email protected] Dan Riel Williams Co. [email protected] David Bockelmann ALL Consulting [email protected] Dow Cameron DCO&G [email protected] Duane Clark Petrox, Inc. [email protected] Dawn Coughlin Hess Corporation [email protected] Donald Mader ACEC Ohio [email protected] david mcallister Babst Calland Clements & [email protected] David Northrop Zomnir [email protected] Hocking Hills Energy and well [email protected] Douglas Kitchen service LLC [email protected] David Posey Bluetick, Inc. [email protected] [email protected] Diana Shaheen [email protected] Doug Stuart Hull & Associates, Inc. [email protected] Donald Wood Donald E Wood, Esq. [email protected] Don Zuch Hull & Associates, Inc. [email protected] elizabeth joyner Chevron [email protected] Eric Ondrasik HRL Compliance Solutions, Inc. [email protected] Eric Heis ODNR [email protected] [email protected] Erik Mikkelson Hicks Partners [email protected] Don Fischbach [email protected] Felicia Mettler Torch CAN DO Environmental Solutions & [email protected] Gretchen Addington Innovations, Inc. [email protected] Mark Gaughan Garcia357LLC [email protected] Greg Russell Vorys [email protected] [email protected] Gretchen Addington HEP Shalewater Solutions, LLC [email protected] [email protected] Imad Hajjar Langan Clearfork Landowners [email protected] Dan Coy Association [email protected] Jackie Potvin [email protected] Taylor Airey Eclipse Resources [email protected] Janet Steele DNR Communications [email protected] Jessica Bible P2 Energy Solutions [email protected] Jake Bullard Gulfport Energy [email protected] Joseph Drozinski Rettew Associates, Inc. [email protected] Jeff Glossa PDC Energy [email protected] Jenifer Hakkarinen PDC Energy [email protected] Jerry Nolder DCO&G [email protected] [email protected] Jessica Harley Chesapeake [email protected] Jack Ferenci Polestar Engineering [email protected] Jaime Johnson Edgemarc Energy [email protected] Jace Marshall Gulfport Energy Corporation Civil & Environmental [email protected] John McGreevy Consultants, Inc. [email protected] Jim Noon Rex Energy [email protected] Jody Jones Krattenmake [email protected] John r PDC Energy [email protected] John Pickelhaupt Dominion [email protected] Jon Hickman Ascent Resources Utica [email protected] Joe Smith PDCE Energy [email protected] Josh Johnson Clearwater Technologies LLC [email protected] John Lawrence Rice Energy [email protected] James Anderson Kleinfelder, Inc [email protected] Jim Samuel [email protected] Jensen Silvis FWAP [email protected] JOHN THOMAS FO ENERGY LLC [email protected] Juston Iburg BHGE [email protected] John Watkins MWCD [email protected] Julie Willems Merit Advisors, LP [email protected] Jamie Wright Chevron [email protected] [email protected] Kimberly Beall [email protected] Kathy Shatto DCO&G [email protected] Kris Andersen ALL Consulting LLC [email protected] Karen Winters Squire Patton Boggs [email protected] kathy milenkovski steptoe & johnson [email protected] Katrina Bedilion Certified Pressure Testing [email protected] Kevin Caraker Heritage Environmental [email protected] Kevin Kosko Shale Mountain Resources [email protected] Kevin Kosko K2 Environmental [email protected] Kathy Trent Waste Management [email protected] Kyle Baldwin Ascent Resources-Utica [email protected] Larry Drane Tetra Tech, Inc. [email protected] Lisa Barnard Antero Resources [email protected] Claire Linkhart American Petroleum Institute [email protected] Laura Karosic HRL Compliance Solutions, Inc. [email protected] L. Kelley Attorney at Law [email protected] lester zitkus Gulfport Energy [email protected] Matt Tanner GAI Consultants [email protected] Marc Willerth MagVAR [email protected] Marilyn Yensick [email protected] Mark Bruce ODNR [email protected] Mark Peavy Peavy Energy Ventures LLC [email protected] Mark Ramser Maram Energy, Inc. [email protected] Matthew Pitts Michael Baker International mcarpenter@centralenvironmentalservic Central Environmental es.com Mark Carpenter Services, LLC [email protected] Melissa Breitenbach XTO Energy [email protected] Megan Finnegan Progressive Consulting, Inc. [email protected] Michael Fox Oil Price Information Service [email protected] Mark Gamin Attorney at Law [email protected] Mike Gialousis Gulfport Energy [email protected] Matt Hammond Ohio Oil & Gas Association [email protected] Melanie Houston Ohio Environmental Council [email protected] [email protected] Michele Oliver Chesapeake [email protected] teresa mills citizen [email protected] Mark Layne GWPC [email protected] Mark Recker Marathon Pipe Line LLC Shumaker, Loop & Kendrick, [email protected] Marcus Miller LLP [email protected] Steve Mobley Buckeye Brine, LLC [email protected] matthew pitts Rettew [email protected] Ron Hale Concerned Citizen [email protected] Marc Strini HRL Compliance Solutions, Inc. [email protected] Michael Fox Oil Price Information Service [email protected] Maureen Turman NiSource Hammontree & Associates, [email protected] Michael Vale Ltd. [email protected] [email protected] Mac Taylor Vorys [email protected] Michelle Yalung Equinor [email protected] [email protected] Nathan Anderson PDC Energy Inc. [email protected] Nathan Fela RETTEW Associates, Inc. [email protected] Nicole Holloway Equinor Schmelzenba [email protected] Chasity ch Noble County EMA&HS [email protected] Nichole Saunders Environmental Defense Fund [email protected] Nathan Vaughan Kimble Company [email protected] Rocky King [email protected] Rocky King Hardrock Consulting [email protected] Patrick Jorgensen Steptoe & Johnson [email protected] patrick hunkler citizen [email protected] Peggy Freund [email protected] Penny Seipel OOGA [email protected] Patrick Gallagher CTL Engineering [email protected] Phillip Keevert Monroe Co EMA [email protected] Phillip Porter PDC Energy [email protected] RANDALL FERGUSON PDC Energy, Inc [email protected] Raymond Hoon CNX Gas [email protected] Robert Barr Big Sky Energy Inc [email protected] Rebecca Clutter NARO Appalachia [email protected] Ryan Elliott [email protected] Richard Ellman Spirit Servcies, Inc. [email protected] Ryan Hall Shalewater Solutions [email protected] Richard Hannan Larson Design Group [email protected] Russ Huffmyer McKim & Creed [email protected] NARO [email protected] Richard Jones USDA Forestg Service [email protected] Robert Pichardo Williams [email protected] robert pollitt steptoe & johnson PLLC Ohio Oil and Gas Energy [email protected] Rhonda Reda Education Program [email protected] Richard Sahli R. Sahli Law Office [email protected] Roger Varner Ecology and Environment, Inc. [email protected] Roger Varner Keystone Consultants, LLC [email protected] Roger Varner Larson Design Group North Carolina Division of Energy, Mineral & Land [email protected] Ryan Channell Resources [email protected] Ryan Dean American Energy Partners [email protected] Royce Young HRL Compliance [email protected] Scott Winters VEGA Americas [email protected] sarah ghezzi division of safety & hygiene Fisher- [email protected] Suzane Edwards McMahon DeGulis [email protected] Seth Shafer CESO, Inc. [email protected] Steven Hamit The Thrasher Group, Inc. [email protected] [email protected] Stephen Kilper AWMS Water Solutions, LLC [email protected] Stephanie McMurray Hilcorp Energy Company [email protected] Sam Miracle Triad Hunter,LLC [email protected] Melissa Lannom SSS Oil and Gas, Inc [email protected] Stephan Ault Chesapeake Energy Corp. [email protected] Stephanie Airey [email protected] Steven Buffone CONSOL Energy Inc. [email protected] Steve Tugend Kegler Brown [email protected] Susan Baldwin Hall Drilling LLC [email protected] Thaddeus Driscoll Frost Brown Todd [email protected] Tom Tugend James Knobloch Petroleum [email protected] Timothy Knobloch Consultants Center for Health, [email protected] Teresa Mills Environment and Justice [email protected] Tom Yarnick XTO Energy [email protected] Tony Long PDC Energy [email protected] Tony Vizurraga PDC Energy [email protected] Teresa Teevan Antero Resources Corporation [email protected] Tina Tucker [email protected] Herman Van Eck DTE Energy [email protected] Vanessa Pesec [email protected] Amanda Veazey Seneca Resources [email protected] Vicki Goodenow Statoil Division of Oil & Gas Resources [email protected] Wendy Booth Management [email protected] Jody Jones [email protected] Hongtao Yi The Ohio state university [email protected] Zachary Frymier Ohio Chamber