Agenda 04/14/2015 Item #10A 4/14/2015 10.A.
n
EXECUTIVE SUMMARY
Recommendation to consider whether additional actions are necessary to achieve the
Board's legislative objectives with respect to regulation of the oil and gas industry.
(Commissioner Taylor)
OBJECTIVE: To receive an update on the various House and Senate bills under consideration by the
Legislature and to determine whether any additional lobbying or advocacy initiatives are warranted by the
Board at this time.
CONSIDERATIONS: On October 14, 2014, the Board entered into a stipulated settlement with the
Florida Department of Environmental Protection (FDEP) wherein the FDEP agreed to work
collaboratively with the Board to seek legislative and regulatory changes to further strengthen the
Department's authority to regulate the oil and gas industry in Florida. On October 28, 2014, the Board
adopted its 2015 State Legislative Priorities, identifying Inland Oil Drilling and Fracking as its top
priority for the session. On November 18, 2014, the Board accepted a report by AECOM Technical
Services Incorporated regarding oil exploration and production and approved specific recommendations
for the development of new state regulations to be presented, in coordination with the FDEP, to the
Legislative Delegation. All of the above referenced documents are included as backup materials to this
executive summary.
The two primary bills regarding oil industry regulation currently under consideration by the Legislature
are S.B. 1468 sponsored by Senator Garrett Richter and H.B. 1205 sponsored by Representative Ray
Rodrigues. They are essentially companion bills. Both bills, along with the committee staff analysis and
current status of each,are also included in the agenda backup materials.
While these proposed bills appear to strengthen the State's ability to effectively regulate the industry, I
believe there may be opportunities for further improvements. I would like to engage the Board in a
discussion on this topic to determine if additional direction needs to be provided to the County Manager
regarding our lobbying efforts.
FISCAL IMPACT:None
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, raises no legal
issue,and requires majority vote for action.-JAK
GROWTH MANAGEMENT IMPACT:None
RECOMMENDATION: to consider whether additional actions are necessary to achieve the
Board's legislative objectives with respect to regulation of the oil and gas industry.
Prepared By: Commissioner Penny Taylor
Attachments: Stipulated Agreement
Legislative Priorities
AECOM Report
SB 1468
HB 1205
Staff/Lobbyist Talking Points
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COLLIER COUNTY
Board of County Commissioners
Item Number: 10.10.A.
Item Summary: Recommendation to consider additional actions to achieve the Board"s
legislative objectives with respect to oil and gas regulations legislation item. (Commissioner
Taylor)
Meeting Date: 4/14/2015
Prepared By
Name: BrockMaryJo
Title: Executive Secretary to County Manager, County Managers Office
4/7/2015 12:44:54 PM
Submitted by
Title: Executive Secretary to County Manager, County Managers Office
Name: BrockMaryJo
4/7/2015 12:44:55 PM
Approved By
Name: OchsLeo
Title: County Manager, County Managers Office
Date: 4/8/2015 4:44:00 PM
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4/14/2015 10.A.
EXECUTIVE SUMMARY
Recommendation to approve a stipulated settlement as it relates to OGC File No.: 14-0012, in
The Division Of Water Resource Management: Collier County and Collier County Water-
Sewer District v. Florida Department of Environmental Protection, and Dan A. Hughes
Company,L.P.
OBJECTIVE: That the Board of County Commissioners (Board) approves the attached
Stipulation and withdraws from current litigation against the Florida Department of Environmental
Protection(FDEP)and Dan A. Hughes Company, L.P.
CONSIDERATIONS: At its September 9, 2014 regular meeting, the Board heard a presentation
by FDEP Secretary Herschel Vinyard concerning the history of Florida's oil program, protections
that are in place to ensure the safety of Collier County residents, and additional protections that may
be put in place. Secretary Vinyard also updated the Board on the FDEP's actions against the Dan
A. Hughes Company (Hughes). Based on the presentation, and certain commitments made by
Secretary Vinyard, the Board directed the County Attorney to commence the process of dropping
the County's lawsuit against the FDEP so that the County and the FDEP could form a partnership
not only in the litigation against Hughes, but also in the development of new legislation regarding
oil drilling. The Board's decision to withdraw from the lawsuit, however, was predicated on
Secretary Vinyard confirming the commitments made by him during the presentation in writing.
During the Board's discussion on September 23rd of Item 12B, in which the County Attorney
sought direction as to whether to intervene in FDEP's litigations against Hughes, it was felt that
additional clarifications on Secretary Vinyard's letter to the Board of September 12`h were
necessary.
In the proposed Stipulation, FDEP makes certain commitments to the County in exchange for the
County dropping its Petition. The agreement incorporates the commitments made to the County in
Secretary Vinyard's letter of September 12th, with several clarifications to address concerns that
have been raised. I have also included a copy of the transcript of FDEP's presentation.
FISCAL IMPACT: None.
GROWTH MANAGEMENT IMPACT: None.
LEGAL CONSIDERATIONS: The County Attorney has reviewed this item and approved it as to
form and legality. Majority support of the Board is required for approval. -JAK
RECOMMENDATION: That the Board approves a stipulated settlement as it relates to OGC File
No.: 14-0012, in The Division Of Water Resource Management: Collier County and Collier County
Water-Sewer District v. Florida Department of Environmental Protection, and Dan A. Hughes
Company, L.P.
PREPARED BY: Jeffrey A. Klatzkow, County Attorney
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BEFORE THE STATE OF FLORIDA
DEPARTMENT OF ENVIRONMENTAL PROTECTION
COLLIER COUNTY and COLLIER IN THE DIVISION OF
COUNTY WA'T'ER-SEWER DISTRICT, WATER RESOURCE
MANAGEMENT
Petitioners,
OGC File No.: 14-0012
v.
FLORIDA DEPARTMENT OF ENVIRONMENTAL
PROTECTION, and DAN A. HUGHES COMPANY,
L.P.,
Respondents.
STIPULATION
This Stipulation is hereby entered by and between Collier County and the Collier County
Water-Sewer District, the Petitioners, and the Florida Department of Environmental Protection, a
Respondent, as of this day of October, 2014.
In consideration of Petitioners withdrawing their Petition (June 12, 2014) and Amended
Petition (July 1, 2014), the Florida Department of Environmental Protection (hereinafter referred
to as"FDEP")hereby agrees as follows:
1. The commitments set forth in Secretary Vinyard's letter dated September 12, 2014 to
the Collier County Board of County Commissioners, a copy of which is attached as Exhibit A,
are hereby reaffirmed and incorporated by reference into this Stipulation as if fully set forth
below.
2. One of the commitments in Secretary Vinyard's letter is that "[T]he Department will
seek additional legislative authority to further strengthen our existing oil program regulations.
This will include updating the current statutes to address new technologies and include greater
protections. The Department commits to work collaboratively with the County to address its
concerns as the legislative process moves forward." To clarify, FDEP confirms that this
commitment covers all current oil well technologies, including the activities, technologies and
processes engaged in by the Dan A. Hughes Company at the Collier-Hogan well site, including
but not limited to those commonly referred to by the public as"fracking" or"acid fracking."
1
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4/14/2015 10.A.
3. With respect to Secretary Vinyard's commitment regarding Legislative and
Regulatory Actions, FDEP agrees that it will actively seek out, engage and work with all of the
stakeholders in Collier County with respect to proposed legislative and regulatory changes,
including but not limited to Collier County, the Collier County Water-Sewer District, The
Conservancy, Collier Resources Company, as well as any other affected land owners.
4. Petitioners will file a Notice of Dismissal of their Petition within 5 business days of
the full execution of this stipulation,
IN WITNESS WHEREOF, the undersigned have executed this stipulation as of the date
first set forth above.
COLLIER COUNTY:
ATTEST: BOARD OF COUNTY COMMISSIONERS
DWIGHT E. BROCK, Clerk COLLIER COUNTY, FLORIDA
By: By:
,Deputy Clerk TOM HENNING, CHAIRMAN
STATE OF FLORIDA DEPARTMENT
OF ENVIRONMENTAL PROTECTION
By:
Hershel T. Vinyard Jr.
Secretary
Approved as to form and legality:
Jeffrey A. Klatzkow
County Attorney
2
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EXHIBIT A
'1000,440r FLORIDA DEPARTMENT OF
i ENVIRONMENTAL PROTECTION
FLORIDA ar MARJORY STONEMAN DOUGLAS BUILDING
- 3900 COMMONWEALTH BOULEVARD
TALLAHASSEE.FLORIDA 32399-3000
September 12.2014
Collier County Board of Commissioners
3299 Tamiami Trail East
Suite 303
Naples, Florida 34112
Dear Collier County Commissioners:
It was a pleasure to be with you at this week's Collier County Commission meeting. I am
grateful for the opportunity the Commission afforded me to discuss all the actions that the
Florida Department of Environmental Protection(Department) is taking to protect the
families and incredible natural resources of Collier County. The issues that we discussed
regarding oil production and the protection of the groundwater resources are of the
utmost importance,and I appreciate the clear message that the Commission sent in its
desire to work collaboratively with the Department. I want nothing more than to work in
a transparent and open manner with you—our local partners—for the benefit of the
citizens and the environment.
As I relayed to the Commission,the Department has been hard at work over the summer,
taking action to hold Dan A. Hughes legally accountable,but we will not wait for the
outcome of that litigation to seek out and eliminate any threats to groundwater resources.
That is why the Department has already begun groundwater testing and investigation.
starting with the drilling of six shallow monitoring wells.The Department will also
undertake numerous additional protective measures at our own expense in the coming
months. As requested by the Commission, I would like to formally commit in writing to
the additional action items the Department will be taking to address the County's
concerns.pertaining both to the Collier-Hogan well and legislative and regulatory
proposals.
Actions to Address the Collier-Hogan Well
Later this month,the Department will install a 1,850 foot groundwater monitoring well to
the base of the"underground source of drinking water."The location of the deep well
will be downgradient of the Collier-Hogan well to be certain any contamination is
detected. Water quality testing in this deep well will be completed,and sampling lab
results will be released to the County and the public as soon as results are available.
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4/14/2015 10.A.
Collier County Commissioners
Page 2
September 12. 2014
Additionally,the Department will perform analysis of the flowback material produced at
the Collier-Hogan well, immediately upon obtaining adequate samples of the material.
The Department will use all legal means to obtain samples of the flowback material and
analysis of the materials from any available sources. The Department will also investigate
and address how Dan A. Hughes treated and disposed of the flowback material.
The Department is hiring a team of independent third-party experts—with no ties to the
Dan A. Hughes Company or Collier Resources Company—to assess the activities that
took place at the Collier-Hogan well and determine whether those activities present any
concern to the groundwater resources in Collier County. We will provide the County the
opportunity to consult with the Department on the selection of the third-party experts and
will ensure that the County's experts have the ability to collaborate with our experts in
this endeavor.
As part of the work of the third-party experts, the Department will require an analysis of
the two plugged wells nearby the Collier-Hogan well(Gulf Coast Realty Corporation C I
Well,Permit Number 86 and Gulf Coast Realty Corporation E I Well,Permit Number
103).The analysis will include an assessment of whether the two wells could have been
affected by the Collier-Hogan well, whether they present any concern of contamination to
the underground source of drinking water and whether re-entering those old wells is
recommended.
If,at any time,contamination of groundwater is discovered related to the Collier-Hogan
well. the Department will seek full assessment and remediation of the contamination,as
required by its legal authorities to protect public or private water sources.
Legislative and Regulatory Actions
The Department will seek additional legislative authority to further strengthen our
existing oil program regulations.This will include updating the current statutes to address
new technologies and include greater protections.The Department commits to work
collaboratively with the County to address its concerns as the legislative process moves
forward.
As part of this process,we will seek to increase the maximum penalty amounts available,
to ensure that energy companies like Dan A. Hughes Company will be deterred from
engaging in an unauthorized activity. We will seek greater authority from the Legislature
to consider operators' prior history of violations in other states as part of the
Department's permitting decisions. We will seek additional authority to require the latest
technology to conduct real-time well monitoring on a continuous basis for all active wells
in Florida. We will also seek to increase the current bond requirements for oil well.
operators to make certain that, in the event of a spill, there is more than adequate funding
to perform complete cleanup and remediation activities.
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Collier County Commissioners
Page 3
September 12, 2014
Again,thank you for your support of the Department's efforts to protect our citizens. I
want to reiterate what 1 said at the Commission meeting—the Department will openly
support the County should it chose to join us in the litigation that is currently pending
against Dan A. Hughes; both our enforcement action in Collier County Circuit Court and
the permit revocation action in Tallahassee. I have extended the same offer to the
Conservancy of Southwest Florida,should it choose to participate in those actions.
I have a deep appreciation for the critical role local government plays in protecting the
health, safety and welfare of Florida's residents and the environment. I know by standing
together we will guarantee a safe,clean and abundant drinking water supply for Collier
County's families.
Sincerely,
Herschel T. Vinyard Jr.
Secretary
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4/14/2015 10.A.
EXECUTIVE SUMMARY
Recommendation to review and approve the proposed Collier County 2015 State
Legislative Priorities
OBJECTIVE: To review and approve the proposed list of Collier County 2015 State
Legislative Priorities. These Board-approved priorities will be presented by a member
of the County Commission at the Collier County Legislative Delegation Public
Meeting and Hearing on Thursday,December 4, 2014.
CONSIDERATION: Each year staff prepares a draft list of state legislative
priorities for consideration and subsequent endorsement by the Board of County
Commissioners(BCC).Next year's proposed list includes Issues of Major
Importance to Advocate that either emerged during the current year, or continued
from 2014. These issues need to be addressed during the upcoming 2015 Legislative
Session.
Also on the 2015 list is a new section: Water Quality Funding Requests. Five(5)
water resource projects have been proposed based on community need to be
considered for an appropriation from the Florida Legislature. Issues to Monitor are
those issues from 2014 and past years that still have relevancy.
The proposed Collier County 2015 State Legislative Priorities are listed in
Attachment A for BCC review.
FISCAL IMPACT: This executive summary has no immediate fiscal impact.
GROWTH MANAGEMENT IMPACT: This executive summary has no
immediate growth management impact.
LEGAL CONSIDERATIONS: This item is a policy decision for the Board; no
legal issues are raised.
RECOMMENDATION: That the Board of County Commissioners reviews and
approves the proposed Collier County 2015 State Legislative Priorities.
Prepared by Debbie Wight, Legislative Affairs Coordinator
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Collier County 2015 State Legislative Priorities
Issues of Major Importance to Advocate:
1. Inland Oil Drilling& Fracking—The Board of County Commissioners(BCC)has
requested assistance from the Collier County Legislative Delegation to support legislation
that improves and strengthens State rules and regulations governing oil well drilling
activities.The BCC has entered into a formal agreement with the Florida Department of
Environmental Protection(DEP)to jointly develop and support regulatory reforms in this
industry.
2. Pedestrian and Bike Safety—Collier County will ask the Florida Department of
Transportation(FDOT)District One Secretary Billy Hattaway how Collier County can
assist in his 2015 Pedestrian and Bicycle Focused Initiative in a complementary fashion.
Collier County will also participate in a statewide task force to address these safety issues
and education effectively.
3. University of Florida/Institute of Food and Agricultural Sciences (UF/IFAS)
Collier County will continue efforts to identify and pursue a recurring funding source for
UF/IFAS.
4. Human Trafficking—Work with the Collier County Sheriff's Office to add measures to
the 2012 Florida Human Trafficking Law that improve and strengthen current legislation.
Water Quality Funding,Requests:
Collier County is requesting funding allocations from 2015 Florida Legislature appropriations for
five(5)water resource projects identified as critical needs in the community. The following
prioritized water projects have been identified based on deliberate,measured review:
I) Naples Park Water, Wastewater and Stormwater (Conveyance, Swale and Culvert
Replacement Program)
Project Description: This is a phased project which will replace all three types of
water infrastructure components resulting in water quality improvements reducing
pollutant loading to the impaired waters of Wiggins Pass.
3.10.15
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Cost: The estimated total cost for construction for the first phase of the integrated
program is $6.0 million, ($1.4 million for stormwater and $4.6 million for water
infrastructure components). Future phases will cost approximately $50.8 million for
combined elements.
II) Golden Gate City Outfall System Replacement Program (Golden Gate City
Stormwater Improvement Project)
Project Description: The project will improve collection, treatment and conveyance
of stormwater runoff within the four (4)-square-mile area of Golden Gate City.
Stormwater runoff from this 50-year-old system is conveyed to the Golden Gate
Canal system,which discharges into the impaired waters of Naples Bay.
Cost: The estimated cost for Phase I construction is$0.8-$1.6 million.
III)Livingston Road Aquifer Storage and Recovery(ASR)System
Project Description:This is a shovel-ready program for wet and dry season
optimization of water resources through ASR that will enhance the environment and
provide a sustainable water supply.
Cost: The estimated cost bundled in a single phase is$15 million for Fiscal Year
(FY)2015/16.
Alternatively,three(3)phases would request$5 million each for FY 2015/16,
FY 2016/17,and FY 2017/18.
IV) South Service Area Re-use Optimization
Project Description:This is a permitted project for wet and dry season optimization
of water resources through four(4)new Lower Tamiami wells to supplement
Irrigation Quality(IQ)water supply in the South Service Area to enhance the
environment and provide sustainable water supply.
Cost:The estimated cost for Phase I, including two(2)wells at$2 million each, is a
total of$4 million for FY 2015/16.
Phase 1I will include two(2)wells at$2 million each, $4 million total in FY 2016/17.
V) Lely Area Stormwater Improvement Project (LASIP)/Wingsouth Airpark Channel
Improvements
Project Description: This project will improve stormwater collection, conveyance
and quality while rehydrating environmental preserve areas in the upstream section of
the Rookery Bay watershed. The improvements are a component of the Lely Area
Stormwater Improvement Project (LASIP), a regional stormwater improvement
master plan.
Cost: The estimated cost for construction is$2.6 million.
VI) Direct state advocacy efforts on behalf of Collier County to include additional
support for legislative initiatives that increase opportunities for funding for
local water resource projects with direct state support or additional funding
through the FDEP and the SFWMD. (added by BCC March 10,2015)
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Issues to Monitor: The Board of County Commissioners (BCC)on behalf of Collier
County citizens advocates for the overall principles of preserving the Home Rule
authority of local governments; opposing state Preemption; opposing Unfunded
Mandates; and protecting against Trust Fund Diversions.
A. Beach Funding & Maintenance — Support increased funding and streamlined
permitting for beach renourishment and maintenance for coastal counties as beaches
continue to be the State of Florida's economic engine and tourism industry driver,
attracting visitors and creating jobs.
B. Communications Services Tax (CST)—Oppose any legislation that would change
the CST; support present CST collections. Loss of CST represents$5 million impact to
Collier County.
C. Gaming—Continue to monitor the new Seminole Gaming Compact being negotiated by
Governor Rick Scott and the Seminole tribe. Support at least three(3)%government
share of any future gaming proceeds to finance future infrastructure needs. The Seminole
gambling casino in Immokalee has plans to expand vertically.
D. Impact Fees — Continue to support home rule authority over administration of Collier
County's existing impact fee program.
E. Gulf Consortium — Support Collier County's continued participation in the federal
.-� RESTORE Act directives, including the State of Florida's Gulf Consortium. Transocean
is the only determined civil settlement so far; Collier County is eligible for more than
$900,000. The decision of a settlement with British Petroleum (BP) continues in federal
court with Phase III; most recently BP was found to be "grossly negligent" in the
Deepwater Horizon tragedy of April 2010.
F. Transportation —Oppose diverting funds from the State Transportation Trust Fund to
non-transportation projects. A total of$10.1 billion was funded for transportation items
for the current FY 2014-2015. Also, pursue an increased return on dollars for Collier
County,a long-time donor county.
G. Libraries — Continue to support State Aid to Libraries and the Southwest Florida
Library Network (SWFLN). Last session, there was about $34 million in statewide
allocations.
H. Public Record Requests—Request a legislative amendment to add onto current public
records law 119.07(1)a provision that includes Emergency Medical Technicians (EMTs)
and Paramedics as exemptions,like firefighters and law enforcement.
I. Tourism-Protect the current level of funding to VISIT FLORIDA and support increased
funding.
J. Offshore Oil and Gas Drilling-Continue to support permanently prohibiting offshore
oil and gas drilling in Florida territorial waters,which are within nine(9)geographic
miles from the coast of the Gulf of Mexico.
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K. Uber-Aligning with the Florida Association of Counties(FAC),Collier County
supports their new policy statement for the regulation of taxis and limousines, which
reads: FAC supports maintaining the integrity of home rule power,which allows counties
to regulate taxis, limousines, and jitneys for the purpose of public safety and consumer
protection. Conversely, FAC opposes any effort that preempts to the state the regulation
of chauffeured limousines,limousine services and drivers of chauffeured limousines.
L. Entertainment Incentives—Support funding of film,television and entertainment
incentives. (added by BCC Feb.24,2015)
3.10.15
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Ann P. Jennejohn
From: Brock, Mary Jo
Sent: Thursday, April 09, 2015 10:55 AM
To: DLCOMM; Minutes and Records; Klatzkow, Jeff; BrownleeMichael; Flanagan,Jim; Hayes,
Karen; Pettit,Jim; Smith, Camden;WillerSpectorLee
Cc: Ochs, Leo; Brock, Mary Jo; Casalanguida, Nick
Subject: Back-Up to Item 10A
Attachments: Item 11D November 18 2014.pdf
Good morning,
Attached please find additional back-up to Item 10A to Tuesday's agenda that I inadvertently forgot to attach.
Thank you, MJ
Mary-Jo Brock - Executive Assistant to Leo E.Ochs,Jr. - County Manager's Office
maryjobrock@colliergov.net
239.252.8364
Under Florida Law,e-mail addresses are public records.If you do not want your e-mail address released in response to a public records request,do not send
electronic mail to this entity.Instead,contact this office by telephone or in writing.
1
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•
EXECUTIVE SUMMARY
Recommendation to 1) consider and accept the report and presentation by AECOM Technical
Services, Inc. regarding oil exploration/production in Collier County;2)approve recommendations
for the development of new state regulations to be presented, in coordination with Florida
Department of Environmental Protection, to the Legislative Delegation. 3) direct the County
Attorney's office and County Manager or his designee to develop zoning code changes including,
but not limited to, a potential Conditional Use process for oil exploration/production wells that are
within an identified distance to residential areas.
OBJECTIVE: To provide the Board of County Commissioners (Board) with the results of
AECOM Technical Services Inc.'s assessment of oil well drilling in Collier County and have the
Board provide direction to the County Manager or his designee to forward to the County's
legislative delegation the Board's recommendations addressing potential legislative changes to
existing State oil well regulations and to have the County Attorney's office and County Manager
or his designee to develop zoning code changes including, but not limited to, a potential
Conditional Use process for oil exploration/production wells that are within an identified
distance to residential areas.
CONSIDERATIONS: On September 9, 2014, as a result of ongoing issues concerning
environmental impacts arising from oil exploration/production in Collier County and resulting
litigation, the Board approved a work order for AECOM to work with staff to develop a
• technical report (Attachment 1) and presentation (Attachment 2). The report and presentation
include a high level risk assessment of the potential impacts of oil exploration/production in
Collier County, identification of the responsibilities of the various regulatory agencies,
evaluation of existing regulations, and recommendations on how such regulations could be
improved. The review was coordinated internally between representatives from the Growth
Management Division and the Public Utilities Division, and externally with representatives from
Collier Resources and the Conservancy. Mike Bennett,P.G.will provide a summary presentation
addressing the Board's direction. His qualifications are listed in Attachment 3.
On September 9, 2014, the Board approved a motion to direct the Chairman to write a letter to
Collier County's legislative delegation to advocate, in conjunction with the Florida Department
of Environmental Protection (FDEP), the development of new legislation and strengthening
existing regulations on oil well drilling in Florida. At the request of Secretary Vinyard,
(Attachment 7) staff has prepared recommendations for the 2015 legislative delegation. During
the October 14, 2014 meeting, Item 12B, the Board approved entering into a stipulation
agreement (Attachment 4) with the FDEP to jointly develop and support regulatory reforms in
this industry. The stipulation agreement specified that the FDEP will seek additional legislative
authority to further strengthen the State's existing oil program regulations and confirms that this
commitment covers all current oil well technologies, including the activities, technologies and
processes engaged in by the Dan A. Hughes Company at the Collier-Hogan well site, including
but not limited to, those commonly referred to by the public as fracking or acid fracking. The
FDEP further agreed that it will actively seek out, engage and work with all of the stakeholders
in Collier County with respect to proposed legislative and regulatory changes, including but not
•
limited to Collier County, the Collier County Water-Sewer District, The Conservancy, Collier •
Resources Company,as well as any other affected land owners.
On October 28, 2014, Item 11C, the Board approved the list of Collier County 2015 State
Legislative Priorities (Attachment 5). Number one on the list,Inland Oil Drilling and Fracking,
requested assistance from the Collier County Legislative Delegation to support legislation that
improves and strengthens State rules and regulations governing oil well drilling activities. The
Inland Oil Drilling and Fracking item was approved with the understanding that
recommendations from the Board's consultant for the development of the new state rules and
regulations for oil well drilling activities would also be considered by the Board at its next
meeting for approval and subsequently included in the proposed legislation. The
recommendations developed by AECOM and staff(Attachment 6) are provided for the Board's
consideration and address construction standards and operational practices for oil and gas
development/production.
During a presentation at the September 9, 2014 Board meeting, the FDEP discussed
strengthening their authority without encroaching on zoning at the local level. The Growth
Management Plan (GMP) is specific in that any application for an oil well is not reviewed at the
local level from an environmental perspective. Policy 1.1.6 of the Conservation and Coastal
Management Element states, "In those areas of Collier County where oil extraction and related
processing is an allowable use, such use is subject to applicable state and federal oil and gas
permits and Collier County non-environmental site development plan review procedures."
Essentially this review is done by the FDEP and duplicative reviews are not encouraged by the •
GMP. However, both the GMP and the Land Development Code (LDC) specify where oil wells
and oil field development are permitted within the various GMP districts and LDC zoning
districts and the process an application needs to satisfy to gain approval. For certain districts an
application for an oil well is required to go through an administrative process,which requires the
submittal of a Site Development Plan, to gain approval and, in other districts, an oil well is
required to go through the conditional use process, which requires a public hearing to gain
approval.
After a thorough review with interested parties and AECOM, staff has formulated
recommendations that can be grouped into three general categories: Enhanced Construction
Standards, Enhanced Oversight/On-site Inspection Practices, and potentially a more robust
Conditional Use Process. Provided to the Legislative Delegation in Attachment 6 are
recommendations that address Enhanced Construction Standards and Enhanced Oversight/On-
site Inspection Practices that will require State action. Staff is also recommending that the
Board consider a more robust Conditional Use Process at the local level and consider providing
direction to the County Attorney and County Manager or his designee to review local zoning
requirements, especially expanding the conditional use provision for activities within close
proximity to residential areas, and provide the Board recommended changes at a future Board
meeting.
FISCAL IMPACT: There is no fiscal impact associated with this Executive Summary.
•
• LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, raises no
legal issues at this time,and requires majority vote for approval. -JAK
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated
with this Executive Summary.
RECOMMENDATION: That the Board (1) accept the report and presentation by AECOM
regarding oil exploration/production in Collier County; (2)approve the recommendations for the
development of new state regulations to be presented, in coordination with FDEP, to the
Legislative Delegation; and 3) direct the County Attorney's office and County Manager or his
designee to develop zoning code changes including, but not limited to, a potential Conditional
Use process for oil exploration/production wells that are within an identified distance to
residential areas.
Prepared by: Danette Kinaszczuk,Pollution Control Manager,Engineering&Natural Resources
Department
Attachments:
1. AECOM Technical Report
2. AECOM Presentation
3. Michael Bennett,P.G. Qualifications
4. Stipulation Agreement
• 5. Legislative Priorities List
6. Recommendations for New State Legislation for Construction and Oversight Standards
7. Meeting Minutes-October 9,2014
•
Attachment 6
Recommendations for Construction and Oversight Standards for Inland Oil Drilling and
Fracking, Collier County 2015 State Legislative Priorities
Construction Standards
1. Review and amend, as necessary, all well and site construction requirements.
2. Amend Rule 62C-29 to require Class II injection wells have consistent permitting, well
construction, testing, operational, reporting, and plug and abandonment requirements as
those stipulated for Class I Industrial Injection Wells as per Rule 62-528 Underground
Injection Control F.AC.,which are more stringent than those required by Rule 62C-29.
3. Amend Rule 62C-28.004, which requires all tank batteries to be constructed upon
sufficiently impermeable pads, to include secondary containment for all fuel, hazardous
materials/wastes (including exempted), piping, wastes, and produced water storage
tanks to minimize contamination risk to shallow groundwater and surface water bodies.
4. Amend Rule 62C-27.005(1)to increase the surface casing depth to extend a minimum of
100 feet below the deepest underground source of drinking water(USDVV). Currently the
rule stipulates that the surface casing be set below deepest UDSW with no specified
depth.
5. Amend Rule 62C-27.005(3) to increase the cement fill of the annular space to whichever
is greater, either the static fluid level of the reservoir or 1,500 feet above the uppermost
producible hydrocarbon zone being used.
6. Amend Rule 62C-27.005 (4) to increase minimum surface pressure requirements for the
production and tubing and packer to 1.5 times the anticipated static, operational, or
planned work-over/well stimulation pressures. Current regulations stipulate a minimum
surface test pressure for the production casing and tubing and packer of 1,500 psi and
1,000 psi, respectively. These pressures may not be representative of work-over and
production activities for individual oil &gas wells.
7. Establish minimum annular cement thickness for the production casing — similar to
minimum requirements for water wells and Class I injection wells completed in Florida or
specify API standards or practices.
Oversight Standards
8. Add a requirement that the applicant fund an onsite inspector, similar to a construction
engineer inspector, employed by FDEP who must witness all of the construction, drilling,
fracturing, plugging, and abandonment activities including those activities related to
waste disposal. This inspector shall have the authority to stop work.
9. Review all records related to the plug and abandonment of oil wells, especially those in
close proximity to existing public water supply wellfields to determine their adequacy to
protect water quality. Develop a requirement that if information indicates inadequate
protection of the plug and abandonment method used, move forward to reenter and
properly plug and abandon the well to isolate all open-hole sections.
10. Identify and develop appropriate regulations to identify and protect the public from the
hazards associated with future public water supplies in proximity to wells not
plugged/abandoned to current standards.
11.Add a requirement for surficial aquifer monitoring wells around exploration and
production wells to be monitored by FDEP. Applicant shall pay the costs of the wells
and monitoring.
12.Add a requirement for chemical disclosure statement related to all drilling and well
stimulation fluids.
13.Add a requirement that disposal of all solid debris (well cuttings) and heavy drilling fluids
generated during drilling and completion of an oil well be disposed at a secure landfill
that is permitted to accept industrial waste.
14.Add a requirement that the FDEP's Oil and Gas Section notifies and copies Collier
County on all applications, supporting documents, submittal and meeting notices,
correspondences related to future oil and gas exploration, oil and gas production, Class
II injection wells, and any oil and gas related waste disposal located within or for wells
located within Collier County.
15. Develop a requirement to post an increased or additional bond that is sufficient to the
cover the costs of site remediation should site or aquifer contamination occur.
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16.Add a requirement that the FDEP conducts a minimum number of annual inspections in
addition to the witness requirements addressed in number eight.
17.Amend Rule 62C-28.005(1) to reduce the reportable spill volume from 210 gallons (5
barrels) to 25 gallons for spills that occur during any oil and gas exploration, production,
or completion activities including but not limited to drilling, testing, work-overs. Spills of
materials include but are not limited to drilling fluids, produced water, fracking fluids,
hazardous and petroleum products, hazardous and petroleum wastes, or materials and
wastes exempted from the hazardous waste rules. This amendment would be consistent
with existing state regulations for petroleum products not associated with oil and gas
exploration/production activities.
18.Add a requirement that backfiow prevention devices are installed, working, and tested
weekly for all water supplies onsite.
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By Senator Richter
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1 A bill to be entitled
2 An act relating to the regulation of oil and gas
3 resources; amending s. 377 . 19, F. S. ; applying the
4 definitions of certain terms to additional sections of
5 ch. 377, F. S. ; conforming a cross-reference; defining
6 the term "high pressure well stimulation"; amending s.
7 377 .22, F. S. ; revising the rulemaking authority of the
8 Department of Environmental Protection; providing that
9 certain information may be considered proprietary
10 business information; amending s . 377 . 24, F. S. ;
11 requiring that a permit be obtained before the
12 performance of any high pressure well stimulation;
13 specifying that a permit may authorize single or
14 multiple activities; amending s. 377 . 241, F. S. ;
15 requiring the Division of Resource Management to give
16 consideration to and be guided by certain additional
17 criteria when issuing permits; amending s. 377 . 242,
18 F. S. ; authorizing the department to issue permits for
19 the performance of high pressure well stimulation;
20 clarifying provisions relating to division inspection;
21 amending s . 377 .2425, F.S. ; requiring an applicant or
22 operator to provide surety that performance of a high
23 pressure well stimulation will be conducted in a safe
24 and environmentally compatible manner; amending s .
25 377 . 37, F. S. ; increasing the maximum amount for civil
26 penalties; creating s . 377 . 45, F. S. ; requiring the
27 department to designate the national chemical registry
28 as the state' s registry; requiring service providers,
29 vendors, or well owners or operators to report certain
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30 information to the registry; providing applicability;
31 providing an effective date.
32
33 Be It Enacted by the Legislature of the State of Florida:
34
35 Section 1 . Subsection (5) of section 377 . 19, Florida
36 Statutes, is amended, present subsections (6) through (32) of
37 that section are redesignated as subsections (7) through (33) ,
38 respectively, and a new subsection (6) is added to that section,
39 to read:
40 377 . 19 Definitions.-As used in ss. 377 . 06, 377 . 07, and
41 377 . 10-377 . 45 377 . 10 377 . 40, the term:
42 (5) "Gas" means all natural gas, including casinghead gas,
43 and all other hydrocarbons not defined as oil in subsection (16)
44 (15) .
45 (6) "High pressure well stimulation" means a well
46 intervention performed by injecting more than 100, 000 gallons of
47 fluids into a rock formation at high pressure that exceeds the
48 fracture gradient of the rock formation in order to propagate
49 fractures in such formation to increase production at an oil or
50 gas well by improving flow of hydrocarbons from the formation
51 into the wellbore.
52 Section 2 . Subsection (2) of section 377 .22, Florida
53 Statutes, is amended to read:
54 377 . 22 Rules and orders .-
55 (2) The department shall issue orders and adopt rules
56 pursuant to ss. 120 . 536 and 120. 54 to implement and enforce the
57 provisions of this chapter. Such rules and orders shall ensure
58 that all precautions are taken to prevent the spillage of oil or
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59 any other pollutant in all phases of the drilling for, and
60 extracting of, oil, gas, or other petroleum products, including
61 high pressure well stimulations, or during the injection of gas
62 into and recovery of gas from a natural gas storage reservoir.
63 The department shall revise such rules from time to time as
64 necessary for the proper administration and enforcement of this
65 chapter. Rules adopted and orders issued in accordance with this
66 section are for, but not limited to, the following purposes :
67 (a) To require the drilling, casing, and plugging of wells
68 to be done in such a manner as to prevent the pollution of the
69 fresh, salt, or brackish waters or the lands of the state and to
^" 70 protect the integrity of natural gas storage reservoirs.
71 (b) To prevent the alteration of the sheet flow of water in
72 any area.
73 (c) To require that appropriate safety equipment be
74 installed to minimize the possibility of an escape of oil or
75 other petroleum products in the event of accident, human error,
76 or a natural disaster during drilling, casing, or plugging of
77 any well and during extraction operations.
78 (d) To require the drilling, casing, and plugging of wells
79 to be done in such a manner as to prevent the escape of oil or
80 other petroleum products from one stratum to another.
81 (e) To prevent the intrusion of water into an oil or gas
82 stratum from a separate stratum, except as provided by rules of
83 the division relating to the injection of water for proper
84 reservoir conservation and brine disposal .
85 (f) To require a reasonable bond, or other form of security
86 acceptable to the department, conditioned upon properly
87 drilling, casing, producing, and operating each well, and
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88 properly plugging thc performancc of thc duty to plug properly
89 each dry and abandoned well, and the full and complete
90 restoration by the applicant of the area over which geophysical
91 exploration, drilling, or production is conducted to the similar
92 contour and general condition in existence prior to such
93 operation.
94 (g) To require and carry out a reasonable program of
95 monitoring and inspecting or inspcction of all drilling
96 operations, high pressure well stimulations, producing wells, er
97 injecting wells, and well sites, including regular inspections
98 by division personnel.
99 (h) To require the making of reports showing the location
100 of all oil and gas wells; the making and filing of logs; the
101 taking and filing of directional surveys; the filing of
102 electrical, sonic, radioactive, and mechanical logs of oil and
103 gas wells; if taken, the saving of cutting and cores, the cuts
104 of which shall be given to the Bureau of Geology; and the making
105 of reports with respect to drilling, and production, and high
106 pressure well stimulations; and the disclosure of chemicals and
107 other materials added during high pressure well stimulations to
108 the chemical disclosure registry, known as FracFocus re .
109 However, such information, or any part thereof, at the request
110 of the operator: ,-
111 1 . Shall be exempt from thc provisions of s . 119 . 07 (1) and
112 held confidential by the division for a period of 1 year after
113 the completion of a well; or
114 2 . May be considered proprietary business information, as
115 defined in s. 377 . 24075 (1) (a) - (e) .
116 (i) To prevent wells from being drilled, operated, or
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117 produced in such a manner as to cause injury to neighboring
118 leases, property, or natural gas storage reservoirs.
119 (j ) To prevent the drowning by water of any stratum, or
120 part thereof, capable of producing oil or gas in paying
121 quantities and to prevent the premature and irregular
122 encroachment of water which reduces, or tends to reduce, the
123 total ultimate recovery of oil or gas from any pool .
124 (k) To require the operation of wells with efficient gas-
125 oil ratio, and to fix such ratios .
126 (1) To prevent "blowouts, " "caving, " and "seepage, " in the
127 sense that conditions indicated by such terms are generally
x ° 28 understood in the oil and gas business.
129 (m) To prevent fires.
130 (n) To identify the ownership of all oil or gas wells,
131 producing leases, refineries, tanks, plants, structures, and
132 storage and transportation equipment and facilities .
133 (o) To regulate the "shooting, " perforating, chemical
134 treatment, and high pressure well stimulations of wells.
135 (p) To regulate secondary recovery methods, including the
136 introduction of gas, air, water, or other substance into
137 producing formations .
138 (q) To regulate gas cycling operations .
139 (r) To regulate the storage and recovery of gas injected
140 into natural gas storage facilities .
141 (s) If necessary for the prevention of waste, as herein
142 defined, to determine, limit, and prorate the production of oil
143 or gas, or both, from any pool or field in the state .
^144 (t) To require, either generally or in or from particular
.45 areas, certificates of clearance or tenders in connection with
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146 the transportation or delivery of oil or gas, or any product.
147 (u) To regulate the spacing of wells and to establish
148 drilling units.
149 (v) To prevent, so far as is practicable, reasonably
150 avoidable drainage from each developed unit which is not
151 equalized by counterdrainage.
152 (w) To require that geophysical operations requiring a
153 permit be conducted in a manner which will minimize the impact
154 on hydrology and biota of the area, especially environmentally
155 sensitive lands and coastal areas .
156 (x) To regulate aboveground crude oil storage tanks in a
157 manner which will protect the water resources of the state.
158 (y) To act in a receivership capacity for fractional
159 mineral interests for which the owners are unknown or unlocated
160 and to administratively designate the operator as the lessee.
161 (z) To evaluate the history of past adjudicated violations
162 of any substantive and material rule or statute pertaining to
163 the regulation of oil and gas of permit applicants and the
164 applicants' affiliated entities .
165 Section 3. Subsections (1) , (2) , and (4 ) of section 377 . 24,
166 Florida Statutes, are amended to read:
167 377 . 24 Notice of intention to drill well; permits;
168 abandoned wells and dry holes .-
169 (1) Before drilling a well in search of oil or gas, before
170 performing a high pressure well stimulation, or before storing
171 gas in or recovering gas from a natural gas storage reservoir,
172 the person who desires to drill for, store, or recover gas, e
173 drill for oil or gas, or perform a high pressure well
174 stimulation shall notify the division upon such form as it may
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175 prescribe and shall pay a reasonable fee set by rule of the
176 department not to exceed the actual cost of processing and
177 inspecting for each well or reservoir. The drilling of any well,
178 the performance of any high pressure well stimulation, and the
179 storing and recovering of gas are prohibited until such notice
180 is given, the fee is paid, and a e permit is granted. A permit
181 may authorize a single activity or multiple activities .
182 (2) An application for the drilling of a well in search of
183 oil or gas, for the performance of a high pressure well
184 stimulation, or for the storing of gas in and recovering of gas
185 from a natural gas storage reservoir,- in this state must include
x'186 the address of the residence of the applicant, or applicants,
187 which must be the address of each person involved in accordance
188 with the records of the Division of Resource Management until
189 such address is changed on the records of the division after
190 written request.
191 (4 ) Application for permission to drill or abandon any well
192 or perform a high pressure well stimulation may be denied by the
193 division for only just and lawful cause.
194 Section 4 . Subsections (5) and (6) are added to section
195 377 . 241, Florida Statutes, to read:
196 377 . 241 Criteria for issuance of permits .-The division, in
197 the exercise of its authority to issue permits as hereinafter
198 provided, shall give consideration to and be guided by the
199 following criteria:
200 (5) For high pressure well stimulations, whether the high
201 pressure well stimulation as proposed is designed to ensure
02 that:
.03 (a) The groundwater through which the well will be or has
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204 been drilled is not contaminated by the high pressure well
205 stimulation; and
206 (b) The high pressure well stimulation is consistent with
207 the public policy of this state as specified in s . 377 . 06 .
208 (6) As a basis for permit denial or imposition of specific
209 permit conditions, including increased bonding and monitoring,
210 the history of adjudicated violations of any substantive and
211 material rule or statute pertaining to the regulation of oil or
212 gas, including violations that occurred outside the state,
213 committed by the applicant or an affiliated entity of the
214 applicant.
215 Section 5. Section 377 . 242, Florida Statutes, is amended to
216 read:
217 377 .242 Permits for drilling or exploring and extracting
218 through well holes or by other means .-The department is vested
219 with the power and authority:
220 (1) (a) To issue permits for the drilling for, exploring
221 for, performing a high pressure well stimulation, or production
222 of, oil, gas, or other petroleum products that which are to be
223 extracted from below the surface of the land, including
224 submerged land, only through the well hole drilled for oil, gas,
225 and other petroleum products .
226 1 . No structure intended for the drilling for, or
227 production of, oil, gas, or other petroleum products may be
228 permitted or constructed on any submerged land within any bay or
229 estuary.
230 2 . No structure intended for the drilling for, or
231 production of, oil, gas, or other petroleum products may be /a„ .
232 permitted or constructed within 1 mile seaward of the coastline
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233 of the state.
234 3. No structure intended for the drilling for, or
235 production of, oil, gas, or other petroleum products may be
236 permitted or constructed within 1 mile of the seaward boundary
237 of any state, local, or federal park or aquatic or wildlife
238 preserve or on the surface of a freshwater lake, river, or
239 stream.
240 4 . No structure intended for the drilling for, or
241 production of, oil, gas, or other petroleum products may be
242 permitted or constructed within 1 mile inland from the shoreline
243 of the Gulf of Mexico, the Atlantic Ocean, or any bay or estuary
^0.44 or within 1 mile of any freshwater lake, river, or stream unless
245 the department is satisfied that the natural resources of such
246 bodies of water and shore areas of the state will be adequately
247 protected in the event of accident or blowout.
248 5. Without exception, after July 1, 1989, no structure
249 intended for the drilling for, or production of, oil, gas, or
250 other petroleum products may be permitted or constructed south
251 of 26°00 '00" north latitude off Florida' s west coast and south
252 of 27°00 ' 00" north latitude off Florida' s east coast, within the
253 boundaries of Florida' s territorial seas as defined in 43 U. S. C.
254 s . 1301 . After July 31, 1990, no structure intended for the
255 drilling for, or production of, oil, gas, or other petroleum
256 products may be permitted or constructed north of 26°00 ' 00"
257 north latitude off Florida' s west coast to the western boundary
258 of the state bordering Alabama as set forth in s. 1, Art. II of
259 the State Constitution, or located north of 27°00 ' 00" north
260 latitude off Florida' s east coast to the northern boundary of
_61 the state bordering Georgia as set forth in s . 1, Art. II of the
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262 State Constitution, within the boundaries of Florida' s
263 territorial seas as defined in 43 U. S .C. s . 1301 .
264 (b) Subparagraphs (a) 1 . and 4 . do not apply to permitting
265 or construction of structures intended for the drilling for, or
266 production of, oil, gas, or other petroleum products pursuant to
267 an oil, gas, or mineral lease of such lands by the state under
268 which lease any valid drilling permits are in effect on the
269 effective date of this act. In the event that such permits
270 contain conditions or stipulations, such conditions and
271 stipulations shall govern and supersede subparagraphs (a) 1. and
272 4 .
273 (c) The prohibitions of subparagraphs (a) l . -4 . in this
274 subsection do not include "infield gathering lines, " provided no
275 other placement is reasonably available and all other required
276 permits have been obtained.
277 (2) To issue permits to explore for and extract minerals
278 which are subject to extraction from the land by means other
279 than through a well hole.
280 (3) To issue permits to establish natural gas storage
281 facilities or construct wells for the injection and recovery of
282 any natural gas for storage in natural gas storage reservoirs .
283
284 Each permit shall contain an agreement by the permitholder that
285 the permitholder will not prevent inspection by division
286 personnel at any time, including during installation and
287 cementing of casing, testing of blowout preventers, pressure
288 testing of casing and casing shoe, and testing of cement plug
289 integrity during plugging and abandoning operations . The
290 provisions of this section prohibiting permits for drilling or
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291 exploring for oil in coastal waters do not apply to any leases
292 entered into before June 7, 1991 .
293 Section 6. Subsection (1) of section 377 .2425, Florida
294 Statutes, is amended to read:
295 377 .2425 Manner of providing security for geophysical
296 exploration, drilling, and production.-
297 (1) Before Prior to granting a permit to conduct
298 geophysical operations; drilling of exploratory, injection, or
299 production wells; producing oil and gas from a wellhead;
300 performing a high pressure well stimulation; or transporting oil
301 and gas through a field-gathering system, the department shall
X302 require the applicant or operator to provide surety that these
303 operations will be conducted in a safe and environmentally
304 compatible manner.
305 (a) The applicant for a drilling, production, high pressure
306 well stimulation, or injection well permit or a geophysical
307 permit may provide the following types of surety to the
308 department for this purpose:
309 1 . A deposit of cash or other securities made payable to
310 the Minerals Trust Fund. Such cash or securities so deposited
311 shall be held at interest by the Chief Financial Officer to
312 satisfy safety and environmental performance provisions of this
313 chapter. The interest shall be credited to the Minerals Trust
314 Fund. Such cash or other securities shall be released by the
315 Chief Financial Officer upon request of the applicant and
316 certification by the department that all safety and
317 environmental performance provisions established by the
318 department for permitted activities have been fulfilled.
,19 2 . A bond of a surety company authorized to do business in
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320 the state in an amount as provided by rule.
321 3. A surety in the form of an irrevocable letter of credit
322 in an amount as provided by rule guaranteed by an acceptable
323 financial institution.
324 (b) An applicant for a drilling, production, or injection
325 well permit, or a permittee who intends to continue
326 participating in long-term production activities of such wells,
327 has the option to provide surety to the department by paying an
328 annual fee to the Minerals Trust Fund. For an applicant or
329 permittee choosing this option the following shall apply:
330 1 . For the first year, or part of a year, of a drilling,
331 production, or injection well permit, or change of operator, the
332 fee is $4, 000 per permitted well .
333 2 . For each subsequent year, or part of a year, the fee is
334 $1, 500 per permitted well .
335 3. The maximum fee that an applicant or permittee may be
336 required to pay into the trust fund is $30, 000 per calendar
337 year, regardless of the number of permits applied for or in
338 effect.
339 4 . The fees set forth in subparagraphs 1 . , 2 . , and 3. shall
340 be reviewed by the department on a biennial basis and adjusted
341 for the cost of inflation. The department shall establish by
342 rule a suitable index for implementing such fee revisions.
343 (c) An applicant for a drilling or operating permit for
344 operations planned in coastal waters that by their nature
345 warrant greater surety shall provide surety only in accordance
346 with paragraph (a) , or similar proof of financial responsibility
347 other than as provided in paragraph (b) . For all such n
348 applications, including applications pending at the effective
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349 date of this act and notwithstanding the provisions of paragraph
350 (b) , the Governor and Cabinet in their capacity as the
351 Administration Commission, at the recommendation of the
352 Department of Environmental Protection, shall set a reasonable
353 amount of surety required under this subsection. The surety
354 amount shall be based on the projected cleanup costs and natural
355 resources damages resulting from a maximum oil spill and adverse
356 hydrographic and atmospheric conditions that would tend to
357 transport the oil into environmentally sensitive areas, as
358 determined by the Department of Environmental Protection.
359 Section 7 . Paragraph (a) of subsection (1 ) of section
^960 377 . 37, Florida Statutes, is amended to read:
361 377 . 37 Penalties.-
362 (1) (a) Any person who violates any provision of this law or
363 any rule, regulation, or order of the division made under this
364 chapter or who violates the terms of any permit to drill for or
365 produce oil, gas, or other petroleum products referred to in s .
366 377 .242 (1) or to store gas in a natural gas storage facility, or
367 any lessee, permitholder, or operator of equipment or facilities
368 used in the exploration for, drilling for, or production of oil,
369 gas, or other petroleum products, or storage of gas in a natural
370 gas storage facility, who refuses inspection by the division as
371 provided in this chapter, is liable to the state for any damage
372 caused to the air, waters, or property, including animal, plant,
373 or aquatic life, of the state and for reasonable costs and
374 expenses of the state in tracing the source of the discharge, in
375 controlling and abating the source and the pollutants, and in
376 restoring the air, waters, and property, including animal,
,77 plant, and aquatic life, of the state. Furthermore, such person,
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378 lessee, permitholder, or operator is subject to the judicial
379 imposition of a civil penalty in an amount of not more than
380 $25, 000 $10, 000 for each offense. However, the court may receive
381 evidence in mitigation. Each day during any portion of which
382 such violation occurs constitutes a separate offense. Nothing
383 herein shall give the department the right to bring an action on
384 behalf of any private person.
385 Section 8 . Section 377 . 45, Florida Statutes, is created to
386 read:
387 377 . 45 High pressure well stimulation chemical disclosure
388 registry.-
389 (1) (a) The department shall designate the national chemical
390 registry, known as FracFocus, developed by the Ground Water
391 Protection Council and the Interstate Oil and Gas Compact
392 Commission, as the state' s registry for chemical disclosure for
393 all wells on which high pressure well stimulations are
394 performed. The department shall provide a link to FracFocus
395 through the department' s website.
396 (b) In addition to providing such information to the
397 department as part of the permitting process, a service
398 provider, vendor, or well owner or operator shall report, by
399 department rule, to the chemical disclosure registry, at a
400 minimum, the following information:
401 1 . The owner' s or operator' s name;
402 2 . The date of completion of the high pressure well
403 stimulation;
404 3. The county in which the well is located;
405 4 . The API number for the well;
406 5 . The well name and number;
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407 6 . The longitude and latitude of the wellhead;
408 7 . The total vertical depth of the well;
409 8 . The total volume of water used in the high pressure well
410 stimulation; and
411 9. Each chemical ingredient that is subject to 29 C. F.R. s .
412 1910 . 1200 (g) (2 ) for each well on which a high pressure well
413 stimulation is performed.
414 (c) If the chemical disclosure registry cannot accept and
415 make publicly available any information specified in this
416 section, the service provider, vendor, or well owner or operator
417 shall submit the information required under paragraph (b) to the
^'18 department.
419 (2) A service provider, vendor, or well owner or operator
420 shall :
421 (a) Report the information required under subsection (1) to
422 the chemical disclosure registry within 60 days after the
423 initiation of the high pressure well stimulation for each well
424 on which such high pressure well stimulation is performed; and
425 (b) Update the chemical disclosure registry and notify the
426 department if any chemical ingredient not previously reported is
427 intentionally included and used for the purpose of performing a
428 high pressure well stimulation.
429 (3) This section does not apply to an ingredient that:
430 (a) Is not intentionally added to the high pressure well
431 stimulation;
432 (b) Occurs incidentally or is otherwise unintentionally
433 present in a high pressure well stimulation; or
434 (c) Is considered proprietary business information, as
35 defined in s . 377 . 24075 (1) (a) - (e) .
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Florida Senate - 2015 4/14/2015 10.A.
23-006330-15 20151468
436 Section 9. This act shall take effect July 1, 2015 .
n
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4/14/2015 10.A.
The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By:The Professional Staff of the Committee on Environmental Preservation and Conservation
BILL: SB 1468
INTRODUCER: Senator Richter
SUBJECT: Regulation of Oil and Gas Resources
DATE: March 30, 2015 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Gudeman Uchino EP Favorable
2. AGG
3. AP
I. Summary:
SB 1468:
• Provides a definition for"high pressure well stimulation";
• Requires the Department of Environmental Protection(DEP)to adopt rules for the regulation
of high pressure well stimulation;
• Specifies the rules must ensure all well drilling activities are done properly;
• Requires high pressure well stimulation to be monitored, inspected, and included in drilling
reports;
• Requires notice be given to the DEP and a fee be paid prior to high pressure well stimulation
activities;
• Prohibits high pressure well stimulation prior to permit issuance;
• Requires the DEP to consider groundwater contamination and public policy when reviewing
a permit application for high pressure well stimulation;
• Specifies that a permit may be denied or specific permitting conditions applied based on the
compliance history of the permit applicant or affiliated entity;
• Specifies the DEP has clear authority to inspect drilling activities;
• Requires the permit applicant to provides financial assurance to the DEP that high pressure
well stimulation will be conducted in a safe and environmentally compatible manner;
• Increases the civil penalty from $10,000 per day to $25,000 per day for violations of the
provisions found in Part I of ch. 377, F.S.
• Creates a high pressure well stimulation chemical disclosure registry and provides specific
requirements for the registry;
• Requires the chemical ingredients used in high pressure well stimulation to be reported to the
chemical disclosure registry, FracFocus; and
• Exempts information considered proprietary business information as defined in
s. 377.24075(l)(a)-(e), F.S., from the disclosure registry.
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II. Present Situation:
Oil was first successfully extracted from the ground in large quantities in 1859 in Titusville,
Pennsylvania. Prior to this, oil was collected through seeps in small quantities and skimmed from
surface waters using blankets.' Since this time, the oil and gas industry has evolved to become
one of the world's largest industries.2
Traditional Drilling and Hydraulic Fracturing
Traditional oil wells are drilled vertically to reach the oil and gas reservoir. A steel pipe, called a
casing, is inserted into the wellbore and set in place using cement. Once the targeted area is
reached,the well casing is perforated and the oil and gas immediately surrounding the well can
be extracted.3
Hydraulic fracturing is a technique that involves stimulating the well to extract oil and gas. Large
amounts of fluid under pressure are injected into a wellbore to create and extend fractures in the
rock formation. The fractures are held open by a slurry mixture which allows natural gas to flow
from the fractures into the production well.4
The injected fluid is composed of water,proppants, and chemical additives. The composition of
the injected fluid varies between rock formations but the majority of the fluid, 98 to 99.5 percent,
is water. The proppants are made of sand, ceramic pellets, or other small incompressible particles
that hold the fractures open. The chemical additives include bactericides, buffers, stabilizers,
fluid-loss additives, and surfactants that improve the effectiveness of the fracturing process and
prevent damage to the rock formation.5
The injection of the fracturing fluid is sequenced and the blend and proportions of the additives
used vary depending on the characteristics of the rock formation. The acid stage consists of
several thousand gallons of water mixed with hydrochloric acid or muriatic acid that work to
clear cement debris and create an open path for the fracturing fluids. The pad stage consists of
approximately 100,000 gallons of"slick-water,"which is a friction reducing agent that reduces
the pressure needed to pump fluid into the wellbore and facilitate the flow and placement of the
proppant material. The prop sequence stage, which may include several sub-stages, uses several
hundred thousand gallons of water mixed with varying sized particulates that keep the fractures
open. Finally, there is a flushing stage that consists of enough water to adequately flush the
excess proppant from the wellbore.6
'Business Reference Services,History of Oil and Gas,httn://www.loc.gov/rr/businessBERA/issue5/historv.html(last visited
Mar.29,2015).
2 American Petroleum Institute,Industry Economics,http://www.api.org/oil-and-natural-gas-overview/industry-economics
(last visited Mar.29,2015).
'Drilling Waste Management Information System,Fact Sheet-Drilling Practices That Minimize Generation of Drilling
Wastes,http://web.ead.anl.gov/dwm/techdesc/drilline/(last visited Mar.29,2015).
4FracFocus Chemical Disclosure Registry,Hydraulic Fracturing: The Process,http://fracfocus.org/hydraulic-fracturing-how-
it-works/hydraulic-fracturing-process.(last visited Mar.27,2013).
5 Id. n
6 Id.
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Oil and Gas Production in Florida
There are two major oil producing areas in Florida: the Sunniland trend in South Florida and the
western panhandle. The Sunniland trend is approximately 200 to 300 feet thick and the top of the
formation is approximately 11,200 to 11,600 feet below sea level. This area has been in
production since 1943. Oil production in north Florida began with the discovery of the Jay field
in 1970, which is the largest oil field in the state. There are eight oil fields in this region that
extend through Escambia and Santa Rosa Counties. The production area is 14,500 to 16,800 feet
below the land surface and between 5 to 259 feet thick.' Production from both regions peaked at
100,000 barrels per day in 1978 and has since leveled off to approximately 6,000 barrels per
day.8
Oil and Gas Regulation in Florida
The Oil and Gas Program in the DEP is the permitting authority for oil and gas wells under Part I
of ch. 377.01, F.S. Section 377.22, F.S., directs the DEP to establish rules for the oil and gas
program that ensure human health,public safety, and the environment are protected from the
exploration phase to well completion and abandonment phase. The DEP is also responsible for
monitoring and reporting the well drilling and production activities from exploration to well
abandonment.
The DEP adopted Rules 62C-25 through 30, F.A.C., to implement Part I of ch. 377, F.S. The
rules include permitting procedures,bonding requirements, well spacing, well construction,
production, injection, workovers, and well abandonment. The rule also requires each operator to
submit a spill prevention and cleanup plan pursuant to Rule 62C-28.004(2), F.A.C. The plan
must include the potential spill source, the protective measures to prevent a spill, and the location
of emergency equipment in the event of a spill.
The requirements and procedures for well stimulation technology is not provided for in rule or
statute; however, hydraulic fracturing, acidizing, or other chemical treatments of a well are
activities that may be approved in a workover. A workover includes a variety of remedial
operations that are conducted in order to increase well production. Rule 62C-25.002(61), F.A.C.,
defines a"work over" as "an operation involving a deepening, plug back, repair, cement squeeze,
perforation, hydraulic fracturing, acidizing, or other chemical treatment which is performed in a
production, disposal,or injection well in order to restore, sustain, or increase production,
disposal, or injection rates."An operator is required to notify the DEP prior to commencing a
workover procedure, unless it is for an emergency operation in which case the operator must
notify the DEP during the operation or immediately thereafter.9 The operator must submit a
revised Well Record to the DEP within 30 days of the workover.10
Bureau of Land Management,Florida,Reasonable For seeable Development Scenario for Fluid Minerals, 18(Apr.2008),
available at
http://www.blm.gov/style/medialib/blm/es/jackson field office/planning/planninuodf florida.Par.65103.File.dat/Florida R
FDS R1.pdf(last visited Mar.29,2015).
8 EIA,Florida State Energy Profile,Florida Quick Facts, http://www.eia.gov/state/print.cfm?sid=FL(last visited Mar.29,
2015).
9 Fla.Admin.Code R. 62C-29.006(1996).
10 The Well Record is the DEP Oil and Gas Form 8.
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Emergency Planning and Community Right to Know Act
In 1986, Congress enacted the Emergency Planning and Community Right-to-Know Act
(EPCRA), which requires federal, local, and state governments to report hazardous and toxic
chemicals in order to increase the public's knowledge and access to information on chemicals at
individual facilities. The EPCRA includes the Toxic Release Inventory(TRI), which is a
publicly available database that contains information on chemical releases and waste
management reported by certain industries. The U.S. Environmental Protection Agency(EPA)
has not included oil and gas extraction as an industry that must report under the TRI because the
EPA determined the oil and gas extraction industry is not a high priority for reporting. The
decision is based on the fact that most of the information that the TRI requires is already reported
by oil and gas providers to the individual state agencies and reporting for the hundreds and
thousands of oil and gas sites would overwhelm the system."
In May 2012, the Bureau of Land Management(BLM)published a proposed rule that would
require companies that conduct hydraulic fracturing on lands managed by the BLM to disclose
the composition of the fracturing fluid. Congress has also proposed legislation requiring the
disclosure of chemicals under the Fracturing Responsibility and Awareness of Chemicals Act.12
To date, federal legislation has not been implemented to require the disclosure of chemicals used
in hydraulic fracturing; therefore, many states have taken steps to develop their own chemical
disclosure laws. The disclosure requirements that have been established in certain states include
the information about the chemical additives and whether the disclosures are made to state n
agencies or available to the public, the composition of the chemicals, the protections provided in
trade secrets, and when the disclosure of the chemicals is to take place in relation to the
fracturing process.13
FracFocus Chemical Disclosure Registry
FracFocus is a national hydraulic fracturing chemical registry operated by the Ground Water
Protection Council and the Interstate Oil and Gas Compact Commission. The registry provides
public access to reported chemicals used for hydraulic fracturing. FracFocus does not replace
state governmental information systems but is used by ten states as the primary means of state
chemical disclosure. Currently there are 41,118 well sites registered with the database.14
Public Records Law
Article I, s. 24(a) of the Florida Constitution sets the state's public policy regarding access to
government records. The section guarantees every person a right to inspect or copy any public
record of the legislative, executive, and judicial branches of government. The Legislature may
"Id.
12 Id.
13 Congressional Research Service,Hydraulic Fracturing:Chemical Disclosure Requirements,2(June 19,2012),available
at http://www.fas.ora/sap/crs/misc/R42461.pdf(last visited Mar.29,2015).
14 Supra note 2.
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provide for the exemption of records from the requirements of the constitution; however, the
Legislature must specify the public necessity to justify the exemption.
Access to public records is also addressed in the Open Government Sunset Review Act in
s. 119.07(1), F.S., which guarantees every person the right to inspect and copy any state, county
or municipal record. The Open Government Sunset Review Act provides that a public record or
public meeting exemption may only be created or maintained if it serves a public purpose. The
Legislature created a number of specific exemptions from the Open Government Sunset Review
Act, including documents submitted by a private party that constitute trade secrets as defined in
s. 812.081, F.S. and are stamped as confidential at the time of submission to an agency.
Proprietary Business Information
Section 377.24075, F.S., defines"proprietary business information,"as information that:
• Is owned or controlled by the applicant or person affiliated with the applicant;
• Is intended to be private and is treated by the applicant as private;
• Has not been disclosed except as required by law or private agreement;
• Is not publicly available or otherwise readily ascertainable through proper means from
another source in the same configuration as requested by the DEP;
• Includes trade secrets as defined in s. 688.002, F.S.;
• Includes leasing plans, real property acquisition plans, exploration budgets, or marketing
studies; and
• Includes well design, completion plans, geologic and engineering studies, utilization
strategies or operating plans.
III. Effect of Proposed Changes:
Section 1 amends s. 377.19, F.S.,to define"high pressure well stimulation"as"a well
intervention performed by injecting more than 100,000 gallons of fluids into a rock formation at
high pressure that exceeds the fracture gradient of the rock formation in order to propagate
fractures in such formation to increase production at an oil or gas well by improving flow of
hydrocarbons from the formation into the wellbore."
Section 2 amends s. 377.22, F.S., to require the DEP to adopt rules for the regulation of high
pressure well stimulation. The bill requires the permit applicant to provide a reasonable bond or
other form of security acceptable to the DEP, which is conditioned on each well being properly
drilled, cased,produced, operated, and plugged. It also includes high pressure well stimulation as
an activity that is monitored and inspected.
The bill requires high pressure well stimulation to be to be included in drilling reports and the
disclosure of chemicals and other materials used to stimulate the well to be reported to the
chemical disclosure registry FracFocus. The bill exempts information considered proprietary
business information as defined in s. 377.24075(1)(a)-(e), F.S., from the disclosure registry.
The bill requires the DEP to consider the past history of violations on the part of the permit
applicant and the applicant's affiliated entities in all permit reviews.
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Section 3 amends s. 377.24, F.S., to require notice be given to the DEP and a fee be paid prior to
high pressure well stimulation activities. The bill also prohibits high pressure well stimulation
prior to permit issuance.
Section 4 amends s. 377.241, F.S., to add criteria for issuing a permit for high pressure well
stimulation. The DEP must consider whether the high pressure well stimulation is designed to
ensure the groundwater through which the well is drilled is not contaminated and the high
pressure well stimulation is consistent with the public policy stated in s. 377.06, F.S.
The bill specifies that a permit may be denied or require specific conditions of a permit,
including increased bonding and monitoring, if the permit applicant or affiliated entity has a
history of violations related to the regulation of oil and gas, including violations that occurred
outside of Florida
Section 5 amends s. 377.242, F.S., to specify that the DEP has the authority to inspect drilling
activities, including installation and cementing of casing, testing of blowout preventers, pressure
testing of casing and casing shoe, and testing of cement plug integrity during plugging and
abandoning operations.
Section 6 amends s. 377.245, to require the permit applicant to provide surety to the DEP that
high pressure well stimulation will be conducted in a safe and environmentally compatible
manner. The bill specifies the permit applicant must provide such surety consistent with existing
law.
Section 7 amends s. 377.37, F.S., to increase the civil penalty from $10,000 per offense to
$25,000 per offense.
Section 8 creates s. 377.45, F.S., to establish a high pressure well stimulation chemical
disclosure registry. The bill requires the DEP to designate the national chemical registry,
FracFocus, as the state's registry for chemical disclosure for all wells on which high pressure
well stimulation is performed. A link to the FracFocus registry must be provided on the DEP's
website. The service provider, vendor, well owner, or operator must report the following
minimum information:
• The owner's or operator's name;
• The date of completion of the high pressure well stimulation;
• The county in which the well is located;
• The API number for the well;
• The well name and number;
• The latitude and longitude of the wellhead;
• The total vertical depth of the well;
• The total volume of water used in the high pressure well stimulation; and
• Each chemical ingredient that is subject to the Occupational Safety and Health
Administration (OSHA) regulations in 29 C.F.R. s. 1910.1200(g)(2) for each well that high
pressure well stimulation is performed.15
15 See U.S.Department of Labor, OSHA, Standards-29CFR,
https://www.osha.gov/pls/oshaweb/owadisp.show document?p table=standards&p_id=10099 (last visited Mar. 29,2015).
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In the event the chemical disclosure registry cannot accept or provide the information to the
public, the service provider,vendor, well owner or operator must provide the required
information to the DEP.
The service provider, vendor, well owner, or operator is required to report the chemical
disclosure information within 60 days of the initiation of high pressure well stimulation. The
service provider, vendor, well owner, or operator must also update the chemical disclosure
registry and notify the DEP if any chemical ingredient not previously reported is used
intentionally.
The bill exempts ingredients from the chemical disclosure registry if the ingredients are
unintentionally added to the high pressure well stimulation, occur incidentally or are otherwise
unintentionally present in the high pressure well stimulation, or are considered proprietary
business information as defined in s. 377.24075(1)(a)-(e), F.S.
Section 9 provides an effective date of July 1, 2015.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill increases penalties from $10,000 to $25,000 per offense, which will have a
negative fiscal impact on private companies that are found in violation the law.
The bill protects proprietary business information which may provide a financial benefit
to private companies engaged in high pressure well stimulation.
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C. Government Sector Impact:
The DEP is authorized to collect a permit fee for high pressure well stimulation, which
will have an indeterminate positive fiscal impact to the state. The bill increases the
penalty fee from $10,000 per offense to $25,000 per offense, which may increase the
amount of money deposited into the Minerals Protection Trust Fund as the result of
violations.
The DEP reports the cost associated to amend Rules 62C-25 through 30, F.A.C., can be
absorbed within the existing agency budget.
VI. Technical Deficiencies:
None.
VII. Related Issues:
The bill defines a"high pressure well stimulation"as "a well intervention performed by injecting
more than 100,000 gallons of fluids into a rock formation at high pressure that exceeds the
fracture gradient of the rock formation in order to propagate fractures in such formation to
increase production at an oil or gas well by improving flow of hydrocarbons from the formation
wellbore."The definition limits the high pressure well stimulation activities regulated by the bill
to 100,000 gallons. This limit may not capture all well stimulation activities, as the DEP has
received at least one workover notice for well stimulation that was less than 100,000 gallons of
fluids.16 In addition, the amount of pressure applied to a well during stimulation activities varies,
therefore,the use of"high pressure" is not clear as it may not be inclusive of the range of
pressures that are used during well stimulation activities.?
The definition of"proprietary business information"in s. 377.24075(1) (a)-(e), F.S., relates to an
application for a natural gas storage facility permit. The definition may not apply to proprietary
business information with respect to high pressure well stimulation.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 377.19, 377.22,
377.24, 377.241, 377.242, 377.2425, and 377.37.
The bill creates section 377.45 of the Florida Statutes.
16 Dan A.Hughes,Co.,Collier-Hogan#20-3H, Well Proposal,6(Dec.23,2013)(on file with the Senate Committee on
Environmental Preservation and Conservation).
17 ALL Consulting,Expert Evaluation of the D.A.Hughes Collier-Hogan 20-3H, Well Drilling and Workover,27(Dec.2014) �1
(on file with the Senate Committee on Environmental Preservation and Conservation).
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IX. Additional Information:
A. Committee Substitute —Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill's introducer or the Florida Senate.
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F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
CS/HB 1205 2015
1 A bill to be entitled
2 An act relating to the regulation of oil and gas
3 resources; amending s . 377 . 19, F.S. ; applying the
4 definitions of certain terms to additional sections of
5 chapter 377, F. S. ; conforming a cross-reference;
6 defining the term "high-pressure well stimulation";
7 amending s . 377 . 22, F.S . ; revising the rulemaking
8 authority of the Department of Environmental
9 Protection; amending s . 377 . 24, F. S . ; requiring that a
10 permit be obtained before the performance of a high-
11 pressure well stimulation; specifying that a permit
12 may authorize single or multiple activities; amending
13 s . 377 . 241, F. S . ; requiring the Division of Resource
14 Management to give consideration to and be guided by
15 certain additional criteria when issuing permits;
16 amending s . 377 . 242, F. S. ; authorizing the department
17 to issue permits for the performance of a high-
18 pressure well stimulation; revising permit
19 requirements that permitholders agree not to prevent
20 division inspections; prohibiting a county,
21 municipality, or other political subdivision of the
22 state from adopting or establishing permitting
23 programs for certain oil and gas activities; amending
24 s . 377 .2425, F. S . ; requiring an applicant or operator
25 to provide surety that performance of a high-pressure
26 well stimulation will be conducted in a safe and
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CS/HB 1205 2015
27 environmentally compatible manner; creating s .
28 377 . 2436, F. S . ; directing the Department of
29 Environmental Protection to conduct a study on high-
30 pressure well stimulation; providing study criteria;
31 requiring the study to be submitted to the Governor
32 and Legislature; requiring rulemaking under certain
33 circumstances; amending s. 377 . 37, F. S. ; increasing
34 the maximum amount of a civil penalty; creating s .
35 377 . 45, F. S. ; requiring the department to designate
36 the national chemical registry as the state' s
37 registry; requiring service providers, vendors, and
38 well owners or operators to report certain information
39 to the department; providing applicability; requiring
40 the department to adopt rules; providing an effective
41 date.
42
43 Be It Enacted by the Legislature of the State of Florida:
44
45 Section 1. Section 377 . 19, Florida Statutes, is amended to
46 read:
47 377 . 19 Definitions.—As used in ss. 377 . 06, 377 . 07, and
48 377 . 10-377 . 45 377 . 10 377 . 40, the term:
49 (1) "Completion date" means the day, month, and year that
50 a new productive well, a previously shut-in well, or a
51 temporarily abandoned well is completed, repaired, or
52 recompleted and the operator begins producing oil or gas in
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CS/HB 1205 2015
53 commercial quantities.
54 (2) "Department" means the Department of Environmental
55 Protection.
56 (3) "Division" means the Division of Resource Management
57 of the Department of Environmental Protection.
58 (4) "Field" means the general area that is underlaid, or
59 appears to be underlaid, by at least one pool . The term includes
60 the underground reservoir, or reservoirs, containing oil or gas,
61 or both. The terms "field" and "pool" mean the same thing if
62 only one underground reservoir is involved; however, the term
63 "field, " unlike the term "pool, " may relate to two or more
64 pools.
65 (5) "Gas" means all natural gas, including casinghead gas,
66 and all other hydrocarbons not defined as oil in subsection (16)
67 (15) .
68 (6) "High-pressure well stimulation" means a well
69 intervention performed by injecting more than 100, 000 gallons of
70 fluid into a rock formation at high pressure that exceeds the
71 fracture gradient of the rock formation in order to propagate
72 fractures in such formation to increase production at an oil or
73 gas well by improving the flow of hydrocarbons from the
74 formation into the welibore.
75 (7)-(-6+ "Horizontal well" means a well completed with the
76 welibore in a horizontal or nearly horizontal orientation within
77 10 degrees of horizontal within the producing formation.
78 (8) (7) "Illegal gas" means gas that has been produced
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79 within the state from any well or wells in excess of the amount
80 allowed by any rule, regulation, or order of the division, as
81 distinguished from gas produced within the State of Florida from
82 a well not producing in excess of the amount so allowed, which
83 is "legal gas. "
84 (9) (8) "Illegal oil" means oil that has been produced
85 within the state from any well or wells in excess of the amount
86 allowed by rule, regulation, or order of the division, as
87 distinguished from oil produced within the state from a well not
88 producing in excess of the amount so allowed, which is "legal
89 oil. "
90 (10) (9) "Illegal product" means a product of oil or gas,
91 any part of which was processed or derived, in whole or in part,
92 from illegal gas or illegal oil or from any product thereof, as
93 distinguished from "legal product, " which is a product processed
94 or derived to no extent from illegal oil or illegal gas .
95 (11) (10) "Lateral storage reservoir boundary" means the
96 projection up to the land surface of the maximum horizontal
97 extent of the gas volume contained in a natural gas storage
98 reservoir.
99 (12) (11) "Native gas" means gas that occurs naturally
100 within this state and does not include gas produced outside the
101 state, transported to this state, and injected into a permitted
102 natural gas storage facility.
103 (13) (12) "Natural gas storage facility" means an
104 underground reservoir from which oil or gas has previously been
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105 produced and which is used or to be used for the underground
106 storage of natural gas, and any surface or subsurface structure,
107 or infrastructure, except wells. The term also includes a right
108 or appurtenance necessary or useful in the operation of the
109 facility for the underground storage of natural gas, including
110 any necessary or reasonable reservoir protective area as
111 designated for the purpose of ensuring the safe operation of the
112 storage of natural gas or protecting the natural gas storage
113 facility from pollution, invasion, escape, or migration of gas,
114 or any subsequent extension thereof. The term does not mean a
115 transmission, distribution, or gathering pipeline or system that
116 is not used primarily as integral piping for a natural gas
117 storage facility.
118 (14) (13) "Natural gas storage reservoir" means a pool or
119 field from which gas or oil has previously been produced and
120 which is suitable for or capable of being made suitable for the
121 injection, storage, and recovery of gas, as identified in a
122 permit application submitted to the department under s .
123 377 . 2407 .
124 (15) (14 ) "New field well" means an oil or gas well
125 completed after July 1, 1997, in a new field as designated by
126 the Department of Environmental Protection.
127 (16) (15) "Oil" means crude petroleum oil and other
128 hydrocarbons, regardless of gravity, which are produced at the
129 well in liquid form by ordinary production methods, and which
130 are not the result of condensation of gas after it leaves the
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131 reservoir.
132 (17) (16) "Oil and gas" has the same meaning as the term
133 "oil or gas. "
134 (18) (17) "Oil and gas administrator" means the State
135 Geologist.
136 (19) (18) "Operator" means the entity who:
137 (a) Has the right to drill and to produce a well; or
138 (b) As part of a natural gas storage facility, injects, or
139 is engaged in the work of preparing to inject, gas into a
140 natural gas storage reservoir; or stores gas in, or removes gas
141 from, a natural gas storage reservoir.
142 (20) (19) "Owner" means the person who has the right to
143 drill into and to produce from any pool and to appropriate the
_44 production for the person or for the person and another, or
145 others .
146 (21 ) (20) "Person" means a natural person, corporation,
147 association, partnership, receiver, trustee, guardian, executor,
148 administrator, fiduciary, or representative of any kind.
149 (22) (21) . "Pool" means an underground reservoir containing
150 or appearing to contain a common accumulation of oil or gas or
151 both. Each zone of a general structure which is completely
152 separated from any other zone on the structure is considered a
153 separate pool as used herein.
154 (23) (22) "Producer" means the owner or operator of a well
155 or wells capable of producing oil or gas, or both.
156 (24) (23) "Product" means a commodity made from oil or gas
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157 and includes refined crude oil, crude tops, topped crude,
158 processed crude petroleum, residue from crude petroleum,
159 cracking stock, uncracked fuel oil, fuel oil, treated crude oil,
160 residuum, gas oil, casinghead gasoline, natural gas gasoline,
161 naphtha, distillate, condensate, gasoline, waste oil, kerosene,
162 benzine, wash oil, blended gasoline, lubricating oil, blends or
163 mixtures of oil with one or more liquid products or byproducts
164 derived from oil or gas, and blends or mixtures of two or more
165 liquid products or byproducts derived from oil or gas, whether
166 hereinabove enumerated or not.
167 (25) (24 ) "Reasonable market demand" means the amount of
168 oil reasonably needed for current consumption, together with a
169 reasonable amount of oil for storage and working stocks.
170 (26) (25) "Reservoir protective area" means the area
171 extending up to and including 2, 000 feet surrounding a natural
172 gas storage reservoir.
173 (27) (26) "Shut-in bottom hole pressure" means the pressure
174 at the bottom of a well when all valves are closed and no oil or
175 gas has been allowed to escape for at least 24 hours .
176 (28) (27 ) "Shut-in well" means an oil or gas well that has
177 been taken out of service for economic reasons or mechanical
178 repairs.
179 (29) (28 ) "State" means the State of Florida.
180 (30) (29) "Temporarily abandoned well" means a permitted
181 well or wellbore that has been abandoned by plugging in a manner
182 that allows reentry and redevelopment in accordance with oil or
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183 gas rules of the Department of Environmental Protection.
184 (31) (30) "Tender" means a permit or certificate of
185 clearance for the transportation or the delivery of oil, gas, or
186 products, approved and issued or registered under the authority
187 of the division.
188 (32) (31) "Waste, " in addition to its ordinary meaning,
189 means "physical waste" as that term is generally understood in
190 the oil and gas industry. The term "waste" includes :
191 (a) The inefficient, excessive, or improper use or
192 dissipation of reservoir energy; and the locating, spacing,
193 drilling, equipping, operating, or producing of any oil or gas
194 well or wells in a manner that results, or tends to result, in
195 reducing the quantity of oil or gas ultimately to be stored or
96 recovered from any pool in this state.
197 (b) The inefficient storing of oil; and the locating,
198 spacing, drilling, equipping, operating, or producing of any oil
199 or gas well or wells in a manner that causes, or tends to cause,
200 unnecessary or excessive surface loss or destruction of oil or
201 gas .
202 (c) The producing of oil or gas in a manner that causes
203 unnecessary water channeling or coning.
204 (d) The operation of any oil well or wells with an
205 inefficient gas-oil ratio.
206 (e) The drowning with water of any stratum or part thereof
207 capable of producing oil or gas .
208 (f) The underground waste, however caused and whether or
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209 not defined.
210 (g) The creation of unnecessary fire hazards.
211 (h) The escape into the open air, from a well producing
212 both oil and gas, of gas in excess of the amount that is
213 necessary in the efficient drilling or operation of the well.
214 (i) The use of gas for the manufacture of carbon black.
215 (j ) Permitting gas produced from a gas well to escape into
216 the air.
217 (k) The abuse of the correlative rights and opportunities
218 of each owner of oil and gas in a common reservoir due to
219 nonuniform, disproportionate, and unratable withdrawals, causing
220 undue drainage between tracts of land.
221 (33) (32) "Well site" means the general area around a well,
222 which area has been disturbed from its natural or existing
223 condition, as well as the drilling or production pad, mud and
224 water circulation pits, and other operation areas necessary to
225 drill for or produce oil or gas, or to inject gas into and
226 recover gas from a natural gas storage facility.
227 Section 2 . Subsection (2) of section 377 . 22, Florida
228 Statutes, is amended to read:
229 377 . 22 Rules and orders .-
230 (2) The department shall issue orders and adopt rules
231 pursuant to ss . 120. 536 and 120 . 54 to implement and enforce ire
232 provisions of this chapter. Such rules and orders shall ensure
233 that all precautions are taken to prevent the spillage of oil or
234 any other pollutant in all phases of the drilling for, and
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235 extracting of, oil, gas, or other petroleum products, including
236 high-pressure well stimulations, or during the injection of gas
237 into and recovery of gas from a natural gas storage reservoir.
238 The department shall revise such rules from time to time as
239 necessary for the proper administration and enforcement of this
240 chapter. Rules adopted and orders issued in accordance with this
241 section are for, but not limited to, the following purposes :
242 (a) To require the drilling, casing, and plugging of wells
243 to be done in such a manner as to prevent the pollution of the
244 fresh, salt, or brackish waters or the lands of the state and to
245 protect the integrity of natural gas storage reservoirs.
246 (b) To prevent the alteration of the sheet flow of water
247 in any area.
48 (c) To require that appropriate safety equipment be
249 installed to minimize the possibility of an escape of oil or
250 other petroleum products in the event of accident, human error,
251 or a natural disaster during drilling, casing, or plugging of
252 any well and during extraction operations .
253 (d) To require the drilling, casing, and plugging of wells
254 to be done in such a manner as to prevent the escape of oil or
255 other petroleum products from one stratum to another.
256 (e) To prevent the intrusion of water into an oil or gas
257 stratum from a separate stratum, except as provided by rules of
258 the division relating to the injection of water for proper
259 reservoir conservation and brine disposal .
260 (f) To require a reasonable bond, or other form of
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261 security acceptable to the department, conditioned upon properly
262 drilling, casing, producing, and operating each well, and
263 properly plugging thc performancc of thc duty to plug properly
264 each dry and abandoned well and the full and complete
265 restoration by the applicant of the area over which geophysical
266 exploration, drilling, or production is conducted to the similar
267 contour and general condition in existence before prior to such
268 operation.
269 (g) To require and carry out a reasonable program of
270 monitoring and inspecting or inspcction of all drilling
271 operations, high-pressure well stimulations, producing wells, or
272 injecting wells, and well sites, including regular inspections
273 by division personnel . Inspections will be required during the
274 testing of blowout preventers, during the pressure testing of
275 the casing and casing shoe, and during the integrity testing of
276 the cement plugs in plugging and abandonment operations.
277 (h) To require the making of reports showing the location
278 of all oil and gas wells; the making and filing of logs; the
279 taking and filing of directional surveys; the filing of
280 electrical, sonic, radioactive, and mechanical logs of oil and
281 gas wells; if taken, the saving of cutting and cores, the cuts
282 of which shall be given to the Bureau of Geology; and the making
283 of reports with respect to drilling and production records .
284 However, such information, or any part thereof, at the request
285 of the operator, shall be exempt from thc provisions of s .
286 119 . 07 (1) and held confidential by the division for a period of
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287 1 year after the completion of a well .
288 (i) To prevent wells from being drilled, operated, or
289 produced in such a manner as to cause injury to neighboring
290 leases, property, or natural gas storage reservoirs.
291 (j ) To prevent the drowning by water of any stratum, or
292 part thereof, capable of producing oil or gas in paying
293 quantities and to prevent the premature and irregular
294 encroachment of water which reduces, or tends to reduce, the
295 total ultimate recovery of oil or gas from any pool .
296 (k) To require the operation of wells with efficient gas-
297 oil ratio, and to fix such ratios.
298 (1) To prevent "blowouts, " "caving, " and "seepage, " in the
299 sense that conditions indicated by such terms are generally
;00 understood in the oil and gas business .
301 (m) To prevent fires.
302 (n) To identify the ownership of all oil or gas wells,
303 producing leases, refineries, tanks, plants, structures, and
304 storage and transportation equipment and facilities .
305 (o) To regulate the "shooting, " perforating, ai=l4 chemical
306 treatment, and high-pressure stimulations of wells .
307 (p) To regulate secondary recovery methods, including the
308 introduction of gas, air, water, or other substance into
309 producing formations .
310 (q) To regulate gas cycling operations.
311 (r) To regulate the storage and recovery of gas injected
312 into natural gas storage facilities .
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313 (s) If necessary for the prevention of waste, as herein
314 defined, to determine, limit, and prorate the production of oil
315 or gas, or both, from any pool or field in the state.
316 (t) To require, either generally or in or from particular
317 areas, certificates of clearance or tenders in connection with
318 the transportation or delivery of oil or gas, or any product .
319 (u) To regulate the spacing of wells and to establish
320 drilling units.
321 (v) To prevent, so far as is practicable, reasonably
322 avoidable drainage from each developed unit which is not
323 equalized by counterdrainage.
324 (w) To require that geophysical operations requiring a
325 permit be conducted in a manner which will minimize the impact
326 on hydrology and biota of the area, especially environmentally
327 sensitive lands and coastal areas.
328 (x) To regulate aboveground crude oil storage tanks in a
329 manner which will protect the water resources of the state.
330 (y) To act in a receivership capacity for fractional
331 mineral interests for which the owners are unknown or unlocated
332 and to administratively designate the operator as the lessee.
333 (z) To evaluate the history of past adjudicated violations
334 committed by permit applicants or the applicants ' affiliated
335 entities of any substantive and material rule or law pertaining
336 to the regulation of oil or gas.
337 Section 3. Subsections (1) , (2) , and (4 ) of section
338 377 . 24 , Florida Statutes, are amended to read:
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339 377 .24 Notice of intention to drill well; permits;
340 abandoned wells and dry holes.-
341 (1) Before drilling a well in search of oil or gas, before
342 performing a high-pressure well stimulation, or before storing
343 gas in or recovering gas from a natural gas storage reservoir,
344 the person who desires to drill for, store, or recover gas, or
345 drill for oil or gas, or perform a high-pressure well
346 stimulation shall notify the division upon such form as it may
347 prescribe and shall pay a reasonable fee set by rule of the
348 department not to exceed the actual cost of processing and
349 inspecting for each well or reservoir. The drilling of any well,
350 the performance of any high-pressure well stimulation, and the
351 storing and recovering of gas are prohibited until such notice
,52 is given, the fee is paid, and a ire permit is granted. A permit
353 may authorize a single activity or multiple activities .
354 (2) An application for the drilling of a well in search of
355 oil or gas, for the performance of a high-pressure well
356 stimulation, or for the storing of gas in and recovering of gas
357 from a natural gas storage reservoir,— in this state must include
358 the address of the residence of the applicant,— or applicants,
359 which must be the address of each person involved in accordance
360 with the records of the Division of Resource Management until
361 such address is changed on the records of the division after
362 written request.
363 (4) Application for permission to drill or abandon any
364 well or perform a high-pressure well stimulation may be denied
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365 by the division for only just and lawful cause.
366 Section 4 . Subsections (5) and (6) are added to section
367 377 . 241, Florida Statutes, to read:
368 377 .241 Criteria for issuance of permits .—The division, in
369 the exercise of its authority to issue permits as hereinafter
370 provided, shall give consideration to and be guided by the
371 following criteria:
372 (5) For high-pressure well stimulations, whether the high-
373 pressure well stimulation as proposed is designed to ensure
374 that:
375 (a) The groundwater through which the well will be or has
376 been drilled is not contaminated by the high-pressure well
377 stimulation; and
378 (b) The high-pressure well stimulation is consistent with
379 the public policy of this state as specified in s . 377 . 06.
380 ( 6) As a basis for permit denial or imposition of specific
381 permit conditions, including increased bonding up to five times
382 the applicable limits and increased monitoring, the history of
383 past adjudicated violations committed by the applicant or an
384 affiliated entity of the applicant of any substantive and
385 material rule or law pertaining to the regulation of oil or gas,
386 including violations that occurred outside the state.
387 Section 5. Section 377 . 242, Florida Statutes, is amended
388 to read:
389 377 .242 Permits for drilling or exploring and extracting
390 through well holes or by other means.—The department is vested
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391 with the power and authority:
392 (1) (a) To issue permits for the drilling for, exploring
393 for, performance of a high-pressure well stimulation, or
394 production of, oil, gas, or other petroleum products that which
395 are to be extracted from below the surface of the land,
396 including submerged land, only through the well hole drilled for
397 oil, gas, and other petroleum products.
398 1 . No structure intended for the drilling for, or
399 production of, oil, gas, or other petroleum products may be
400 permitted or constructed on any submerged land within any bay or
401 estuary.
402 2 . No structure intended for the drilling for, or
403 production of, oil, gas, or other petroleum products may be
04 permitted or constructed within 1 mile seaward of the coastline
405 of the state.
406 3 . No structure intended for the drilling for, or
407 production of, oil, gas, or other petroleum products may be
408 permitted or constructed within 1 mile of the seaward boundary
409 of any state, local, or federal park or aquatic or wildlife
410 preserve or on the surface of a freshwater lake, river, or
411 stream.
412 4 . No structure intended for the drilling for, or
413 production of, oil, gas, or other petroleum products may be
414 permitted or constructed within 1 mile inland from the shoreline
415 of the Gulf of Mexico, the Atlantic Ocean, or any bay or estuary
416 or within 1 mile of any freshwater lake, river, or stream unless
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417 the department is satisfied that the natural resources of such
418 bodies of water and shore areas of the state will be adequately
419 protected in the event of accident or blowout.
420 5 . Without exception, after July 1, 1989, no structure
421 intended for the drilling for, or production of, oil, gas, or
422 other petroleum products may be permitted or constructed south
423 of 26°00 '00" north latitude off Florida ' s west coast and south
424 of 27°00 ' 00" north latitude off Florida' s east coast, within the
425 boundaries of Florida' s territorial seas as defined in 43 U.S .C.
426 s . 1301 . After July 31, 1990, no structure intended for the
427 drilling for, or production of, oil, gas, or other petroleum
428 products may be permitted or constructed north of 26°00 ' 00"
429 north latitude off Florida ' s west coast to the western boundary
430 of the state bordering Alabama as set forth in s. 1, Art. II of
431 the State Constitution, or located north of 27°00 '00" north
432 latitude off Florida ' s east coast to the northern boundary of
433 the state bordering Georgia as set forth in s . 1, Art. II of the
434 State Constitution, within the boundaries of Florida ' s
435 territorial seas as defined in 43 U. S .C. s . 1301 .
436 (b) Subparagraphs (a) 1 . and 4 . do not apply to permitting
437 or construction of structures intended for the drilling for, or
438 production of, oil, gas, or other petroleum products pursuant to
439 an oil, gas, or mineral lease of such lands by the state under
440 which lease any valid drilling permits are in effect on the
441 effective date of this act. In the event that such permits
442 contain conditions or stipulations, such conditions and
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443 stipulations shall govern and supersede subparagraphs (a) 1 . and
444 4 .
445 (c) The prohibitions of subparagraphs (a) 1 . -4 . in this
446 cubscction do not include "infield gathering lines, " provided no
447 other placement is reasonably available and all other required
448 permits have been obtained.
449 (2) To issue permits to explore for and extract minerals
450 which are subject to extraction from the land by means other
451 than through a well hole.
452 (3) To issue permits to establish natural gas storage
453 facilities or construct wells for the injection and recovery of
454 any natural gas for storage in natural gas storage reservoirs .
455
56 Each permit shall contain an agreement by the permitholder that
457 the permitholder will not prevent inspection by division
458 personnel at any time, including during installation and
459 cementing of casing, testing of blowout preventers, pressure
460 testing of the casing and casing shoe, and integrity testing of
461 the cement plugs in plugging and abandonment operations. The
462 provisions of this section prohibiting permits for drilling or
463 exploring for oil in coastal waters do not apply to any leases
464 entered into before June 7, 1991 .
465 (4 ) To avoid unnecessary duplication, a county,
466 municipality, or other political subdivision of the state may
467 not adopt or establish programs to accomplish the purposes of
468 this section.
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469 Section 6. Subsection (1) of section 377 . 2425, Florida
470 Statutes, is amended to read:
471 377 .2425 Manner of providing security for geophysical
472 exploration, drilling, and production.-
473 (1) Before Prior to granting a permit for conducting e
474 oyez geophysical operations; drilling of exploratory,
475 injection, or production wells; producing oil and gas from a
476 wellhead; performing a high-pressure well stimulation; or
477 transporting oil and gas through a field-gathering system, the
478 department shall require the applicant or operator to provide
479 surety that these operations will be conducted in a safe and
480 environmentally compatible manner.
481 (a) The applicant for a drilling, production, high-
•
482 pressure well stimulation, or injection well permit or a
483 geophysical permit may provide the following types of surety to
484 the department for this purpose:
485 1 . A deposit of cash or other securities made payable to
486 the Minerals Trust Fund. Such cash or securities so deposited
487 shall be held at interest by the Chief Financial Officer to
488 satisfy safety and environmental performance provisions of this
489 chapter. The interest shall be credited to the Minerals Trust
490 Fund. Such cash or other securities shall be released by the
491 Chief Financial Officer upon request of the applicant and
492 certification by the department that all safety and
493 environmental performance provisions established by the
494 department for permitted activities have been fulfilled.
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495 2 . A bond of a surety company authorized to do business in
496 the state in an amount as provided by rule.
497 3 . A surety in the form of an irrevocable letter of credit
498 in an amount as provided by rule guaranteed by an acceptable
499 financial institution.
500 (b) An applicant for a drilling, production, high-pressure
501 well stimulation, or injection well permit, or a permittee who
502 intends to continue participating in long-term production
503 activities of such wells, has the option to provide surety to
504 the department by paying an annual fee to the Minerals Trust
505 Fund. For an applicant or permittee choosing this option the
506 following shall apply:
507 1 . For the first year, or part of a year, of a drilling,
08 production, or injection well permit, or change of operator, the
509 fee is $4, 000 per permitted well .
510 2 . For each subsequent year, or part of a year, the fee is
511 $1, 500 per permitted well .
512 3 . The maximum fee that an applicant or permittee may be
513 required to pay into the trust fund is $30, 000 per calendar
514 year, regardless of the number of permits applied for or in
515 effect .
516 4 . The fees set forth in subparagraphs 1 . , 2 . , and 3.
517 shall be reviewed by the department on a biennial basis and
518 adjusted for the cost of inflation. The department shall
519 establish by rule a suitable index for implementing such fee
520 revisions .
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521 (c) An applicant for a drilling or operating permit for
522 operations planned in coastal waters that by their nature
523 warrant greater surety shall provide surety only in accordance
524 with paragraph (a) , or similar proof of financial responsibility
525 other than as provided in paragraph (b) . For all such
526 applications, including applications pending at the effective
527 date of this act and notwithstanding the provisions of paragraph
528 (b) , the Governor and Cabinet in their capacity as the
529 Administration Commission, at the recommendation of the
530 department of Environmcntal Protcction, shall set a reasonable
531 amount of surety required under this subsection. The surety
532 amount shall be based on the projected cleanup costs and natural
533 resources damages resulting from a maximum oil spill and adverse
534 hydrographic and atmospheric conditions that would tend to
535 transport the oil into environmentally sensitive areas, as
536 determined by the department of Environmcntal Protcction.
537 Section 7 . Section 377 . 2436, Florida Statutes, is created
538 to read:
539 377 .2436 Study on high-pressure well stimulation.-
540 (1) The department shall conduct a study on high-pressure
541 well stimulation. The study shall :
542 (a) Evaluate the underlying geologic features present in
543 the counties where oil wells have been permitted and analyze the
544 potential impact that high-pressure well stimulation and
545 wellbore construction may have on the underlying geologic
546 features .
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547 (b) Evaluate the potential hazards and risks that high-
548 pressure well stimulation poses to surface water or groundwater
549 resources. The study shall assess the potential impacts of high-
550 pressure well stimulation on drinking water resources and
551 identify the main factors affecting the severity and frequency
552 of impacts and shall analyze the potential for the use or reuse
553 of recycled water in well stimulation fluids while meeting
554 appropriate water quality standards .
555 (c) Review and evaluate the potential for groundwater
556 contamination from conducting high-pressure well stimulation
557 under wells that have been previously abandoned and plugged and
558 identify a setback radius from previously plugged and abandoned
559 wells that could be impacted by high-pressure well stimulation.
)60 (d) Review and evaluate the ultimate disposition of well
561 stimulation after use in well stimulation processes .
562 (2) The department shall continue normal oil and gas
563 business operations during the performance of the study. There
564 shall not be a moratorium on the evaluation and issuance of
565 permits for conventional drilling, exploration, conventional
566 completions, or conventional workovers during the performance of
567 the study.
568 (3) The study is subject to independent scientific peer
569 review.
570 (4 ) The findings of the study shall be submitted to the
571 Governor, the President of the Senate, and the Speaker of the
572 House of Representatives by March 1, 2016, and shall be
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573 prominently posted on the department website.
574 (5) The department shall adopt rules to implement the
575 findings of the study if such rules are warranted by the study
576 and the department determines that additional legislation is not
577 needed. If the department determines legislation is needed to
578 protect groundwater or surface water resources, the department
579 shall provide recommendations for such legislation to the
580 Legislature.
581 Section 8 . Paragraph (a) of subsection (1) of section
582 377 . 37, Florida Statutes, is amended to read:
583 377 . 37 Penalties .-
584 (1) (a) A AFry person who violates any provision of this law
585 or any rule, regulation, or order of the division made under
586 this chapter or who violates the terms of any permit to drill
587 for or produce oil, gas, or other petroleum products referred to
588 in s. 377 . 242 (1) or to store gas in a natural gas storage
589 facility, or any lessee, permitholder, or operator of equipment
590 or facilities used in the exploration for, drilling for, or
591 production of oil, gas, or other petroleum products, or storage
592 of gas in a natural gas storage facility, who refuses inspection
593 by the division as provided in this chapter, is liable to the
594 state for any damage caused to the air, waters, or property,
595 including animal, plant, or aquatic life, of the state and for
596 reasonable costs and expenses of the state in tracing the source
597 of the discharge, in controlling and abating the source and the
598 pollutants, and in restoring the air, waters, and property,
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599 including animal, plant, and aquatic life, of the state.
600 Furthermore, such person, lessee, permitholder, or operator is
601 subject to the judicial imposition of a civil penalty in an
602 amount of not more than $25, 000 $0,000 for each offense.
603 However, the court may receive evidence in mitigation. Each day
604 during any portion of which such violation occurs constitutes a
605 separate offense. Nothing herein shall give the department the
606 right to bring an action on behalf of any private person.
607 Section 9. Section 377 . 45, Florida Statutes, is created to
608 read:
609 377 . 45 High-pressure well stimulation chemical disclosure
610 registry.-
611 (1) (a) The department shall designate the national
;12 chemical registry, known as FracFocus, developed by the Ground
613 Water Protection Council and the Interstate Oil and Gas Compact
614 Commission, as the state ' s registry for chemical disclosure for
615 all wells on which high-pressure well stimulations are
616 performed. The department shall provide a link to FracFocus
617 through the department ' s website.
618 (b) In accordance with department rule, a service
619 provider, vendor, or well owner or operator shall report to the
620 department, at a minimum, the following information:
621 1 . The name of the service provider, vendor, or owner or
622 operator;
623 2 . The date of completion of the high-pressure well
624 stimulation;
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625 3 . The county in which the well is located;
626 4 . The API number for the well;
627 5 . The well name and number;
628 6 . The longitude and latitude of the wellhead;
629 7 . The total vertical depth of the well;
630 8 . The total volume of water used in the high-pressure
631 well stimulation; and
632 9 . Each chemical ingredient that is subject to 29 C. F.R.
633 s. 1910. 1200 (g) (2) and the ingredient concentration in the high
634 pressure well stimulation fluid by mass for each well on which a
635 high-pressure well stimulation is performed.
636 (c) If the chemical disclosure registry cannot accept and
637 make publicly available any information specified in this
638 section, the department shall post the information on the
639 department ' s website.
640 (2) A service provider, vendor, or well owner or operator
641 shall:
642 (a) Report the information required under subsection (1)
643 to the department within 60 days after the initiation of the
644 high-pressure well stimulation for each well on which such high-
645 pressure well stimulation is performed; and
646 (b) Notify the department if any chemical ingredient not
647 previously reported is intentionally included and used for the
648 purpose of performing a high-pressure well stimulation.
649 (3) This section does not apply to an ingredient that :
650 (a) Is not intentionally added to the high-pressure well
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651 stimulation; or
652 (b) Occurs incidentally or is otherwise unintentionally
653 present in a high-pressure well stimulation.
654 (4) The department shall adopt rules to administer this
655 section.
656 Section 10 . This act shall take effect July 1, 2015.
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4/14/2015 10.A.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. CS/HB 1205 (2015)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill : Agriculture & Natural
2 Resources Appropriations Subcommittee
3 Representative Rodrigues, R. offered the following:
4
5 Amendment (with title amendment) .•
6 Between lines 580 and 581, insert :
7 (6) For the 2015-2016 fiscal year, the sum of $1, 000, 000
8 in nonrecurring funds is appropriated from the General Revenue
9 Fund to the Department of Environmental Protection for the
10 purpose of performing the study pursuant to s . 377 . 2436, Florida
11 Statutes, as created by this act .
12
13
14 T I T L E A M E N D M E N T
15 Remove line 33 and insert:
16 circumstances; providing an appropriation; amending s . 377 . 37,
17 F. S. ; increasing
573837 - h1205-1ine580 Rodriguesl .docx
Published On: 4/6/2015 6: 05 : 05 PM
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS 4/14/2015 10.A.
BILL#: CS/HB 1205 Regulation of Oil and Gas Resources
SPONSOR(S): Agriculture & Natural Resources Subcommittee; Rodrigues and Pigman
..TIED BILLS: HB 1207, CS/CS/HB 1209 IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1)Agriculture& Natural Resources Subcommittee 10 Y, 2 N, As Moore Blalock
CS
2)Agriculture& Natural Resources Appropriations Helpling Massengale
Subcommittee
3)State Affairs Committee
SUMMARY ANALYSIS
The Department of Environmental Protection's (DEP) Mining and Minerals Regulation Program in the Division of Water
Resource Management(Division) oversees permitting for oil and gas drilling, production, and exploration within Florida
through its Oil and Gas Program (Program). The Program's primary responsibilities include conservation of oil and gas
resources, correlative rights protection, maintenance of health and human safety, and environmental protection.
The bill makes the following revisions related to the Program:
• Empowers DEP to issue a single permit that authorizes multiple Program activities;
• Requires the Division, when determining whether to issue a permit, to consider the history of past adjudicated
violations committed by the applicant or an affiliated entity of any rule or law pertaining to the regulation of oil or
gas, including violations that occurred outside the state;
• Allows information about past violations to be used as a basis for permit denial or imposition of permit conditions,
including increased monitoring or increasing the required surety amount to up to five times the standard amount;
• Requires DEP to conduct inspections during specified Program activities;
• Defines"high-pressure well stimulation"as a well intervention performed by injecting more than 100,000 gallons
of fluid into a rock formation at high pressure that exceeds the fracture gradient of the rock formation in order to
propagate fractures in such formation to increase production at an oil or gas well by improving the flow of
hydrocarbons from the formation into the wellbore;
• Requires a well operator to obtain a permit, pay a fee, and provide a surety to DEP prior to performing a high-
pressure well stimulation;
• Requires DEP to conduct a study on the potential effects of performing high-pressure well stimulations;
• Requires certain individuals to report information relating to high-pressure well stimulations to DEP, including
each chemical ingredient used in the well stimulation fluid, within 60 days of initiating the well stimulation;
• Requires DEP to designate the national chemical registry, known as FracFocus, as the state's registry for
chemical disclosure for all wells on which high-pressure well stimulations are performed;
• Prohibits a county, municipality, or other political subdivision of the state from adopting or establishing programs
to issue permits for any activity related to oil and gas drilling, exploration, or production;
• Increases the maximum civil penalty for violation of any provision of the laws governing energy resources,
including any rule, regulation, or order of the Division, or an oil or gas permit from $10,000 to$25,000 per offense;
and
• Authorizes DEP to adopt rules to implement these changes.
The bill may have a significant negative fiscal impact on the state, an indeterminate negative fiscal impact on the private
sector, and no fiscal impact on local government. (See Fiscal Analysis &Economic Impact Statement.)
The bill may be a county or municipality mandate requiring a two-thirds vote of the membership of the House. (See
Constitutional Issues section.)
FULL ANALYSIS
This document does not reflect the intent or official position of the bill sponsor or House of Representatives.
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I. SUBSTANTIVE ANALYSIS 4/14/2015 10.A.
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Oil and Gas Production in Florida
There are two major areas in Florida that produce oil and gas: the Sunniland Trend in South Florida
and the Jay Field in the western panhandle.' The Sunniland Trend began producing in 1943 and is
located in Lee, Hendry, Collier, and Dade counties.2 The Jay Field, located in Escambia and Santa
Rosa counties, began producing in 1970.3 Oil production from the two regions peaked at 48 million
barrels (MBbls) in 1978, but has steadily declined over the years, producing only 2.2 MBbls in 2014.4
Natural gas production has decreased as well, from 52 billion cubic feet (BCF) in 1978 to approximately
21 BCF in 2014.5 There are currently 161 active oil and gas wells in Florida.6
The Oil and Gas Program
The Department of Environmental Protection's (DEP) Mining and Minerals Regulation Program in the
Division of Water Resource Management (Division) oversees permitting for oil and gas drilling,
production, and exploration within Florida through its Oil and Gas Program (Program).'The Program's
primary responsibilities include conserving and controlling the state's oil and gas resources and
products; protecting the correlative rights of landowners, owners and producers of oil and gas
resources and products, and others interested in these resources and products; safeguarding the
health, property, and public welfare of the state's residents; and protecting the environment.8 These
concerns are addressed through a system of permits and field inspections to ensure compliance.
DEP is required to adopt rules and issue orders to implement and enforce the Program.9 The rules and
orders must ensure that all precautions are taken to prevent the spillage of oil or any other pollutant in
all phases of the drilling for, and extracting of, oil, gas, or other petroleum products, or during the
injection of gas into and recovery of gas from a natural gas storage reservoir.10 The statutes enumerate
various purposes for which DEP must adopt rules.11
Permitting
DEP is vested with the power and authority to issue permits:
• For the drilling for, exploring for, or production of oil, gas, or other petroleum products that are to
be extracted from below the surface of the land, including submerged land, only through the well
hole drilled for oil, gas, and other petroleum products.12
• To explore for and extract minerals that are subject to extraction from the land by means other
than through a well hole.13
' Jacqueline M. Lloyd, Florida Geological Survey Information Circular No. 107, June 1991,available at
http://ufdcweb1.uflib.ufl.edu/UF00001168/00001/3x.
2 Id.
3 Id.
4 DEP Presentation on Oil and Gas Regulation,Agriculture and Natural Resources Subcommittee, February 18, 2014, available at
http://myfloridahouse.gov/Sections/Committees/committeesdetail.aspx?Committeeld=2852.
Id.;DEP, Oil and Gas Annual Production Reports, http://www.dep.state.fl.us/water/mines/oil_gas/production.htm(last accessed March
13,2015).
6 DEP Presentation on Oil and Gas Regulation,Agriculture and Natural Resources Subcommittee, February 18,2014, available at
http://myfloridahouse.gov/Sections/Committees/committeesdetail.aspx?Committeeld=2852.
The Oil and Gas Program is governed by part 1 of chapter 377, F.S., and chapters 62C-25 through 62C-30, F.A.C.
8 Section 377.06, F.S.
9 Section 377.22(2), F.S.
10 Id.
11 Id.
12 Section 377.242(1), F.S.
13 Section 377.242(2), F.S.
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• To establish natural gas storage facilities or construct wells for the injection ant 4/14/2015 1,O.A.
natural gas for storage in natural gas storage reservoirs.14
Before any geophysical operation in search of oil, gas, or minerals may be conducted, the person
desiring to conduct the operation must apply for a permit from DEP and pay a processing fee.15
Geophysical operations consist of using various methods to locate geologic structures in the ground
that could contain oil or gas.16 These methods include gravity surveys, magnetic surveys, and seismic
surveys.17 Seismic surveys are the industry's primary tool for locating areas containing oil or gas, and
they consist of using explosives or heavy vibrations to create sound pulses in the ground that reflect off
geologic structures and are then captured by specialized microphones.18 The collected data is then
used to establish drilling targets.
After a drilling target is established, a person who would like to drill a well in search of oil or gas or drill
a well to inject gas into and recover gas from a natural gas storage reservoir must notify the Division,
pay a fee,19 and obtain a separate permit authorizing the drilling before the drilling commences.20 These
drilling permits are valid for one year and may be renewed for an additional year provided no
substantive changes are requested.21 After a well is drilled, a separate operating permit must be
obtained and fee paid22 before a person may use the well for its intended purpose, such as producing
oil, disposing of saltwater, or injecting fluids for pressure maintenance.23 An operating permit is valid for
the life of the well, but both the well and permit must be re-certified every five years.24 A separate
permit is also required before a person may store gas in or recover gas from a natural gas storage
reservoir.25
When evaluating a permit application, the Division must consider:
• The nature, character, and location of the lands involved; and whether the lands are rural, such
as farms, groves, or ranches, or urban property vacant or presently developed for residential or
business purposes or are in such a location or of such a nature as to make such improvements
and developments a probability in the near future.
• The nature, type, and extent of ownership of the applicant, including such matters as the length
of time the applicant has owned the rights claimed without having performed any of the
exploratory operations so granted or authorized.
• The proven or indicated likelihood of the presence of oil, gas, or related minerals in such
quantities as to warrant the exploration and extraction of such products on a commercially
profitable basis.
• For activities and operations concerning a natural gas storage facility, whether the nature,
structure, and proposed use of the natural gas storage reservoir is suitable for the storage and
recovery of gas without adverse effect to public health or safety or the environment.26
DEP must weigh these criteria and balance environmental interests against the applicant's right to
explore for oil. 7
Payment of Surety
14 Section 377.242(3), F.S.
15 Section 377.2408(1), F.S.
16 DEP, Oil& Gas: Geophysical Prospecting,available at
http://www.dep.state.fl.us/water/mines/oil_gas/docs/OiIGasGeophysicalProspecti ngFactSheet.pdf.
17 Id.
18 Id.
19 The fee to apply for a drilling permit is currently$2,000. Chapter 62C-26.003(8), F.A.C.
20 Sections 377.24 and 377.2407, F.S.
21 Rule 62C-26.007(4), F.A.C.
22 The fee to apply for an operating permit is currently$2,000. Chapter 62C-26.008(3), F.A.C.
23 Chapter 62C-26.008, F.A.C.
4 Id.
25 Section 377.24(1), F.S.
26 Section 377.241, F.S.
27 Coastal Petroleum Co. v. Florida Wildlife Federation, Inc.,766 So.2d 226, 228(Fla. 1st DCA 1999).
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Before DEP may grant a permit, the permit applicant is required to provide surety that 4/14/2015 10.A.,
drilling, or production activity requested in the application will be conducted in a safe and
environmentally compatible manner.28 An applicant for a drilling, production, or injection well permit or a
geophysical permit may provide the following types of surety to meet this requirement:
• A deposit of cash or other securities made payable to the Minerals Trust Fund;
• A bond of a surety company authorized to do business in the state; or
• A surety in the form of an irrevocable letter of credit guaranteed by an acceptable financial
institution.29
For geophysical operations, the required surety is $25,000 per field crew or$100,000 per operation.30
For wells, the amount of the required surety varies based on the depth of the well drilled and whether
the well becomes an operating well.31 Currently, the initial surety required for a well that is drilled
between zero and 9,000 feet deep is $50,000, and the surety required for a well that is drilled 9,001 feet
deep or more is $100,000.32 If a drilled well becomes an operating well, the required surety for the well
is twice the initial surety amount.33 When all drilling, exploration, and production activities have ceased,
the operator will be reimbursed up to the surety amount.
Alternatively, an applicant for a drilling, production, or injection well permit, or a permittee who intends
to continue participating in long-term production activities, has the option to meet the surety
requirement by paying an annual fee to the Minerals Trust Fund based on the following amounts:
• For the first year, or part of a year, the fee is $4,000 per permitted well.
• For each subsequent year, or part of a year, the fee is $1,500 per permitted wel1.34
The maximum fee that an applicant or permittee may be required to pay into the Minerals Trust Fund is
$30,000 per calendar year, regardless of the number of permits applied for or in effect.35
Inspections
DEP is responsible for monitoring and inspecting all drilling operations, producing wells, or injecting
wells.36 All permitted activities are inspected by Division staff working out of two field offices. Each
permit issued by DEP must contain an agreement that the permit holder will not prevent inspection by
Division personnel at any time.37
Penalties
A person who violates any statute, rule, regulation, order, or permit of the Program is liable to the state
for any damage caused to the air, waters, or property, including animal, plant, or aquatic life, of the
state and for reasonable costs and expenses of the state in tracing the source of the discharge, in
controlling and abating the source and the pollutants, and in restoring the air, waters, and property of
the state.38 Further, such person is subject to the judicial imposition of a civil penalty not to exceed
$10,000 per offense.39 Each day during any portion of which a violation occurs constitutes a separate
offense.40 These penalties also apply to a person who refuses inspection by the Division.41
28 Section 377.2425(1), F.S.
29 Id.
30 Chapter 62C-26.007(5), F.A.C.
31 Chapter 62C-26.002, F.A.C.
32 Id.
33 Id.
34 Section 377.2425(1)(b), F.S.
35 Id.
36 Section 377.22(2)(g), F.S.
37 Section 377.242, F.S.
38 Section 377.37(1)(a), F.S.
39 Id.
40 Id.
41 Id.
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4/14/2015 10.A.
Well Stimulation
Underground oil and gas often forms in certain rock formations resistant to conventional methods of
drilling. Some of these rock formations are less permeable than traditional reservoirs of oil and gas. A
traditional reservoir of oil and/or gas will be permeable enough to naturally allow the migration of oil
and/or gas out of the reservoir rock. However, the decreased permeability of some reservoir rock
formations traps oil and gas within the reservoir. The most common types of rock formations trapping
oil and gas in this fashion are shale, sandstone, and methane coalbeds.42
Well stimulation refers to any action taken by a well operator to increase the inherent productivity of an
oil or gas well.43 Common examples of well stimulation treatments are hydraulic fracturing and acid
fracturing. Both hydraulic fracturing and acid fracturing involve the pressurized injection of fluids and
chemicals to create fractures within a rock formation. The fractures then allow for more oil and gas to
escape the rock formation and migrate up the well.
Hydraulic Fracturing
Hydraulic fracturing consists of using fluid and material to create or restore fractures in a rock formation
to stimulate production. A hydraulic fracturing well is first drilled vertically. Then the well is drilled
horizontally directly into the reservoir rock. The fracturing fluid and materials are pressurized and
released through small perforations in the well casing. The pressurized mixture causes the rock layer to
fracture. The fissures are held open by the proppants to allow natural gas and oil to flow into and out of
the well. Fractured rock formations may be refractured to allow for continued flow of any remaining oil
and gas. This process allows for future productivity of older wells.aa
The composition of a fracturing fluid varies with the nature of the formation, but typically contains large
amounts of water, a proppant to keep the fractures open (typically sand), and chemical additives. Each
hydraulic fracturing well can require between one and seven million gallons of water. The chemical
additives include a friction reducer, biocides (to kill bacteria), a scale inhibitor, surfactants, and
breakers.45 Scale inhibitors prevent the buildup of scale46 on the drilling equipment. The breakers and
friction reducer help to transport the proppants into the fracture, as well as remove them. The
surfactants help control water's reaction with other fluids (in this case, oil and/or gas). A typical fracture
treatment will use between three and 12 additive chemicals depending on the characteristics of the
water and the shale formation being fractured; most often, either 10 or 11 are used. These chemicals
are selected from a list of over 250 chemicals.47 The chemicals typically make up between 0.5 percent
and 1 percent of the hydraulic fracturing fluid, by weight.
Acid Fracturing
Acid fracturing, also known as acidizing, is most often used in limestone formations and other
carbonate formations because the permeability of limestone varies and is too complex for conventional
hydraulic fracturing. Carbonate formations can be dissolved by acid. Acid fracturing is similar to
hydraulic fracturing with some differences. A fluid is still injected at fracturing pressures, but it also
includes a diluted acid, either hydrocholoric acid or formic acid, to "etch" channels into the rock
formation. The channels created through the rock formation can either let oil and gas escape as is, or
can also be propped open with sand, as with hydraulic fracturing. "The effective fracture length is a
42 See generally Hannah Wiseman& Francis Gradijan, Regulation of Shale Gas Development, including Hydraulic Fracturing(Univ.of
Tulsa Legal Studies, Research Paper No.2011-11), available at http://papers.ssrn.com/so13/papers.cfm?abstract_id=1953547.
43 Keith B. Hall, Recent Developments in Hydraulic Fracturing Regulation and Litigation,29 J.LAND USE&Etym.L.29, 22(2013).
44 See generally Hannah Wiseman&Francis Gradijan, Regulation of Shale Gas Development, Including Hydraulic Fracturing(Univ.of
Tulsa Legal Studies, Research Paper No.2011-11),available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1953547.
'6"Scale" are inorganic soluble salts that form when incompatible types of water are mixed. Scale buildup can cause costly damage to
equipment parts.
47 For a list of the chemicals most often used,see What Chemicals Are Used, FRAC Focus, https://fracfocus.org/chemical-use/what-
chemicals-are-used(last visited March 11,2015).
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function of the type of acid used, the acid reaction rate, and the fluid loss from the frac 4/14/2015 10.A.
formation."48
Well Stimulation in Florida
DEP's rules currently require an operator to notify DEP before beginning any workover operation on an
oil or gas well.49 A workover is defined as "an operation involving a deepening, plug back, repair,
cement squeeze, perforation, hydraulic fracturing, acidizing, or other chemical treatment which is
performed in a production, disposal, or injection well in order to restore, sustain, or increase production,
disposal, or injection rates."50 Thus, an operator performing a well stimulation need not apply for a
separate permit authorizing the well stimulation, but must only provide notification to DEP before
beginning the operation.
Both hydraulic fracturing and acid fracturing have been utilized in Florida. According to DEP, the last
hydraulic fracturing on record was conducted in the Jay Field in 2003.51 Acid fracturing was used for the
first time in Florida in Collier County in 2013, but the operation was halted by a cease and desist order
from DEP based on concerns about groundwater contamination.52
Disclosure of Well Stimulation Chemicals
Currently, there is no federal law or regulation that requires the disclosure of the chemicals added to
the fluid used in well stimulations. In May 2012, the Bureau of Land Management (BLM), part of the
U.S. Department of the Interior, published a proposed rule that would require disclosures about
chemicals used in hydraulic fracturing on federal and Indian lands.53 BLM received a high volume of
comments and published an updated proposed rule in May 2013,54 but has yet to publish a final rule.55
Of the states that produce oil, natural gas, or both, at least 15 require some disclosure of information
about the chemicals added to the hydraulic fracturing fluid used to stimulate a particular well. These
provisions vary widely, but generally indicate: (1)which parties must disclose information about
chemical additives and whether these disclosures must be made to the public or a state agency; (2)
what information about chemicals added to a hydraulic fracturing fluid must be disclosed, including how
specifically parties must describe the chemical makeup of the hydraulic fracturing fluid and the additives
that are combined with it; (3) what protections, if any, will be given to trade secrets; and (4) at what time
disclosure must be made in relation to when fracturing takes place.56
Effect of Proposed Changes
Permits for Oil and Gas Exploring, Drilling, and Extracting
The bill requires the Division, when determining whether to issue a permit for activities related to oil and
gas, to consider the history of past adjudicated violations committed by the applicant or an affiliated
entity of any substantive and material rule or law pertaining to the regulation of oil or gas, including
violations that occurred outside the state. This information may be used as a basis for permit denial or
48 THE SOCIETY OF PETROLEUM ENGINEERS, Continuous Improvements in Acid Fracturing at Lake Maracaibo, J. PETROLEUM TECH.54
(2006),available at http://www.slb.com/—/media/Files/stimulation/industry_articles/200607_cont_imp.pdf.
s Chapter 62C-29.006, F.A.C.
50 Chapter 62C-25.002, F.A.C.
51 DEP, Frequent Questions about the Oil and Gas Permitting Process,available at
http://www.dep.statell.us/water/mines/oil_gas/docs/faq_og.pdf.
52 DEP, Collier Oil Drilling, http://www.dep.state.fl.us/secretary/oil/collier_oil.htm (last accessed March 13,2015).
53 BLM, U.S. Department of the Interior, Interior Releases Draft Rule Requiring Public Disclosure of Chemicals Used in Hydraulic
Fracturing on Public and Indian Lands(May 4,2012),available at
http://www.b l m.gov/wo/st/en/i nfo/news room/2012/may/N R_05_04_2012.htm I.
sa BLM, U.S. Department of the Interior, Interior Releases Updated Draft Rule for Hydraulic Fracturing on Public and Indian Lands for
Public Comment(May 16,2013),available at http://www.blm.gov/wo/st/en/info/newsroom/2013/may/nr_05_16_2013.html.
55 Jennifer Dlouhy, Interior Secretary:Feds won't overrule tougher state fracturing regulations, MIDLAND REPORTER-TELEGRAM(March 3,
2015),available at http://www.mrt.com/business/oil/article6e6b6c10-c10c-11 e4-9e76-6f89418469c0.html._
56 Brandon J. Murrill and Adam Vann, Hydraulic Fracturing: Chemical Disclosure Requirements, Congressional Research Service(June
19,2012), available at http://fas.org/sgp/crs/misc/R42461.pdf.
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imposition of specific permit conditions, including increased monitoring or increasing II 4/14/2015 10.A.
required surety to up to five times the standard amount. The bill authorizes DEP to adopt rules to
implement this requirement.
The bill also empowers DEP, when issuing a permit for activities related to oil and gas drilling and
extracting, to authorize multiple activities in a single permit.
Inspections
The bill specifies that DEP must conduct inspections during the testing of blowout preventers, during
the pressure testing of the casing and casing shoe, and during the integrity testing of the cement plugs
in plugging and abandonment operations. The bill requires each permit to contain an agreement that
the permit holder will not prevent inspections during these activities.
High-Pressure Well Stimulation Permits
The bill defines "high-pressure well stimulation" as a well intervention performed by injecting more than
100,000 gallons of fluid into a rock formation at high pressure that exceeds the fracture gradient of the
rock formation in order to propagate fractures in such formation to increase production at an oil or gas
well by improving the flow of hydrocarbons from the formation into the wellbore.
The bill imposes on high-pressure well stimulations the same permitting requirements that apply to
drilling an oil or gas well. Thus, a person who would like to perform a high-pressure well stimulation
must first apply for and obtain a permit from DEP that authorizes the activity and must also pay a fee
not to exceed the actual cost of processing and inspecting for each well. While the permitting criteria in
current law that apply to all oil and gas permits will now apply to high-pressure well stimulation permits,
the bill also creates additional criteria that apply only to permits for high-pressure well stimulation.
Specifically, the bill directs the Division, when issuing a permit, to consider whether the high-pressure
well stimulation is designed to ensure that:
• The groundwater through which the well will be or has been drilled is not contaminated by the
high-pressure well stimulation; and
• The high-pressure well stimulation is consistent with the public policy of the state.
The bill also applies to high-pressure well stimulation permits the requirement that an applicant or
operator provide surety to DEP that the activity will be conducted in a safe and environmentally
compatible manner before DEP may grant a permit. An applicant may provide the following types of
surety to meet this requirement:
• A deposit of cash or other securities made payable to the Minerals Trust Fund;
• A bond of a surety company authorized to do business in the state in an amount provided by
rule; or
• A surety in the form of an irrevocable letter of credit in an amount provided by rule that is
guaranteed by an acceptable financial institution.
Alternatively, an applicant has the option to provide surety to DEP by paying an annual fee to the
Minerals Trust Fund as follows:
• For the first year, or part of a year, the fee is $4,000 per permitted well.
• For each subsequent year, or part of a year, the fee is $1,500 per permitted well.
• The maximum fee that an applicant may be required to pay into the Minerals Trust Fund is
$30,000 per calendar year, regardless of the number of permits applied for or in effect.
The bill specifically authorizes DEP to issue permits for performance of a high-pressure well
stimulation. The bill also requires DEP to issue orders and adopt rules to implement the permitting
requirements for high-pressure well stimulations and to ensure that all precautions are taken to prevent
the spillage of oil or any other pollutant during these operations.
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Study on High-Pressure Well Stimulation
The bill requires DEP to conduct a study on high-pressure well stimulation that:
• Evaluates the underlying geologic features present in the counties where oil wells have been
permitted and analyzes the potential impact that high-pressure well stimulation and wellbore
construction may have on the underlying geologic features;
• Evaluates the potential hazards and risks that high-pressure well stimulation poses to surface
water or groundwater resources, including an assessment of the potential impacts on drinking
water resources, identification of the main factors affecting the severity and frequency of
impacts, and an analysis of the potential for the use or reuse of recycled water in well
stimulation fluids while meeting appropriate water quality standards;
• Reviews and evaluates the potential for groundwater contamination from conducting high-
pressure well stimulation under wells that have been previously abandoned and plugged and
identifies a setback radius from previously plugged and abandoned wells that could be impacted
by high-pressure well stimulation; and
• Reviews and evaluates the ultimate disposition of well stimulation after use in well stimulation
processes.
The bill specifies that DEP must continue normal oil and gas business operations during the
performance of the study and prohibits a moratorium on the evaluation and issuance of permits for
conventional drilling, exploration, conventional completions, or conventional workovers during the
study.
The bill requires the findings of the study to be posted on DEP's website and submitted to the
Governor, the President of the Senate, and the Speaker of the House of Representatives by March 1,
2016.
The bill also requires DEP to adopt rules to implement the findings of the study if it is warranted and
DEP determines that additional legislation is not needed. If additional legislation is needed, DEP must
provide recommendations for such legislation to the Legislature. See CONSTITUTIONAL ISSUES:
Other.
High-Pressure Well Stimulation Chemical Disclosure Registry
The bill requires DEP to designate the national chemical registry, known as FracFocus, as the state's
registry for chemical disclosure for all wells on which high-pressure well stimulations are performed.
DEP must provide a link to FracFocus on its website. The bill requires a service provider, vendor, or
well owner or operator to report to DEP, at a minimum, the following information:
• The name of the service provider, vendor, or well owner or operator;
• The date of completion of the high-pressure well stimulation;
• The county in which the well is located;
• The API number for the well;
• The well name and number;
• The longitude and latitude of the wellhead;
• The total vertical depth of the well;
• The total volume of water used in the high-pressure well stimulation; and
• Each chemical ingredient that is subject to 29 C.F.R. s. 1910.1200(g)(2)57 and the ingredient
concentration in the high-pressure well stimulation fluid by mass for each well on which a high-
pressure well stimulation is performed.
57 29 C.F.R. s. 1910.1200(g)(2)specifies the information that must be included in reports that chemical manufacturers and importers
are required to prepare for the purpose of alerting employers and employees to chemical hazards in the workplace.
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If FracFocus cannot accept and make publicly available any of the required informatio 4/14/2015 10.A.
DEP to post the information on its website.
The bill requires a service provider, vendor, or well owner or operator to report the required information
to DEP within 60 days after the initiation of the high-pressure well stimulation for each well on which it is
performed. The service provider, vendor, or well owner or operator is also required to notify DEP if any
chemical ingredient not previously reported is intentionally included and used for the purpose of
performing a high-pressure well stimulation.
The bill specifies that the chemical disclosure requirements do not apply to an ingredient that is not
intentionally added to the high-pressure well stimulation or that occurs incidentally or is otherwise
unintentionally present in a high-pressure well stimulation.
The bill authorizes DEP to adopt rules to implement the chemical disclosure requirements.
Preemption
The bill prohibits a county, municipality, or other political subdivision of the state from adopting or
establishing programs to issue permits for any activity related to oil and gas drilling, exploration, or
production for which DEP has permitting authority.
Penalties
The bill increases the maximum civil penalty that may be imposed on a person who violates any
provision of chapter 377, F.S., or any rule, regulation, or order of the Division made under the chapter
or who violates the terms of an oil or gas permit from $10,000 to $25,000 per offense. Each day during
any portion of which a violation occurs constitutes a separate offense.
B. SECTION DIRECTORY:
Section 1. amends s. 377.19, F.S., relating to Oil and Gas Program definitions.
Section 2. amends s. 377.22, F.S., relating to DEP rules and orders.
Section 3. amends s. 377.44, F.S., relating to oil and gas well drilling permits.
Section 4. amends s. 377.241, F.S., relating to criteria for issuance of permits.
Section 5. amends s. 377.242, F.S., relating to permits for oil and gas drilling, exploration, and
extraction.
Section 6. amends s. 377.2425, F.S., relating to providing surety for oil and gas operations.
Section 7. creates s. 377.2436, F.S., relating to a study on high-pressure well stimulation.
Section 8. amends s. 377.37, F.S., relating to penalties for oil and gas law violations.
Section 9. creates s. 377.45, F.S., relating to disclosure of high-pressure well stimulation chemicals.
Section 10. provides an effective date of July 1, 2015.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
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The bill may have an indeterminate positive fiscal impact on the state because it rE 4/14/2015 10.A.
gas well operators to pay a permit fee, which will be determined by DEP, before performing a high-
pressure well stimulation.
The bill may also have an indeterminate positive fiscal impact on the state because it raises the
maximum fine that may be imposed for violation of any oil and gas law, rule, regulation, or order
from $10,000 to $25,000 per offense.
2. Expenditures:
The bill may have a significant negative fiscal impact on the state because it requires DEP to
conduct a study on the potential effects of performing high-pressure well stimulations. According to
DEP, this study will cost approximately $1 million.58
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
See CONSTITUTIONAL ISSUES: Applicability of Municipality/County Mandates Provision.
2. Expenditures:
See CONSTITUTIONAL ISSUES: Applicability of Municipality/County Mandates Provision.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have an indeterminate negative fiscal impact on the private sector because it requires oil
and gas well operators to pay a permit fee, which will be determined by DEP, before performing a high-
pressure well stimulation.
The bill may also have an indeterminate negative fiscal impact on the private sector because it raises
the maximum fine that may be imposed for violation of any oil and gas law, rule, regulation, or order
from $10,000 to $25,000 per offense.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
The county/municipality mandates provision of Art. VII, section 18(b) of the Florida Constitution may
apply because this bill may reduce the authority of counties and municipalities to raise total
aggregate revenues as such authority existed on February 1, 1989, by prohibiting them from
adopting or establishing programs to issue permits for any activity related to oil and gas drilling,
exploration, or production for which DEP has permitting authority. According to DEP, no counties or
municipalities currently operate such permitting programs.59 Therefore, an exemption to the
mandates provision may apply because the fiscal impact of the reduced authority is likely
insignificant.
An exception to the mandates provision may also apply because the bill applies to all persons
similarly situated. However, the Legislature would have to make a formal determination that the bill
fulfills an important state interest.
If the exemption and exception do not apply and the bill does qualify as a mandate, final passage
must be approved by two-thirds of the membership of each house of the Legislature.
58 According to an email from DEP staff received on March 18, 2015.
59 According to a phone conversation with DEP staff on March 13, 2015.
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2. Other:
Separation of Powers
The separation of powers doctrine prevents the Legislature from delegating its constitutional duties.66
Legislative power involves the exercise of policy-related discretion over the content of law.61 Thus,
the Legislature must promulgate standards sufficient to guide administrative agencies in the
performance of their duties.62 The Florida Supreme Court has stated, "administration of legislative
programs must be pursuant to some minimal standards and guidelines ascertainable by reference to
the enactment establishing the program."63 In addition, the Court has held that the Legislature may
delegate confined rule-making authority to agencies, but the Legislature may not give agencies
authority to determine what the law should be.64
The bill may implicate the separation of powers doctrine because it requires DEP to adopt rules to
implement the findings of the study on the effects of high-pressure well stimulations, if the
department determines that additional legislation is not needed.
B. RULE-MAKING AUTHORITY:
The bill requires DEP to adopt rules to implement the permitting requirements for high-pressure well
stimulations and to ensure that all precautions are taken to prevent the spillage of oil or any other
pollutant during these operations. The bill also authorizes DEP to adopt rules to evaluate previous
violations of permit applicants, conduct specific inspection activities, require reports for high-pressure
well stimulations, and require chemical disclosure to FracFocus for high-pressure well stimulations.
In addition, the bill requires DEP to adopt rules to implement the findings of the study on the effects of
high-pressure well stimulations. See CONSTITUTIONAL ISSUES: Other.
C. DRAFTING ISSUES OR OTHER COMMENTS:
On line 56 of the bill, the definition of"Division" means the Division of Resource Management. There is
no such Division in DEP.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
On March 17, 2015, the Agriculture & Natural Resources Subcommittee adopted four amendments and
reported the bill favorably as a committee substitute. The amendments:
• Remove provisions that revise the distribution of proceeds in the Oil and Gas Tax Trust Fund;
• Remove language that created a public records exemption not intended by the bill;
• Remove the requirement for DEP to notify a county when a permit is issued that authorizes
activities in that county; and
• Add a service provider and vendor as individuals who must report information related to high-
pressure well stimulations to DEP.
This analysis is drafted to the committee substitute as passed by the Agriculture & Natural Resources
Subcommittee.
60 Florida State Bd. Of Architecture v. Wasserman, 377 So.2d 653(Fla. 1979).
6 State ex rel. Taylor v. City of Tallahassee, 177 So. 719(Ha. 1937).
2 Florida Dept. of State, Div. of Elections v. Martin,916 So.2d 763(Fla. 2005);Avatar Dev. Corp. v. State, 723 So.2d 199(Fla. 1998).
63 Askew v. Cross Key Waterways,372 So.2d 913(Fla. 1978).
64 Sarasota Cnty. v. Barg, 302 So.2d 737(Fla. 1974); Florida Welding&Erection Serv., Inc. v.American Mut. Ins. Co. of Boston,285
So.2d 386(Ha. 1973); Mahon v. County of Sarasota, 177 So.2d 665(Fla. 1965).
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Talking Points for Senator Richter
1. Good points of Senate Bills 1468&1582
a. Includes authority for Florida Administrative Code rulemaking for high pressure well stimulation activities.
b. Appears to allow for the incorporation of some of Collier County's 18 recommendations(attached) during
Florida Administrative Code rulemaking process.
c. Puts the responsibility on the applicant to maintain a trade secret, thus making it easier for the public to
potentially obtain a list of materials used in the fracking process.
d. Speaks to increased fines, bonding, and monitoring
2. Summary of County concerns related to existing SB/HB language and recommendations
a. High Pressure Well Stimulation should be better defined. Currently the definition includes a threshold
volume of 100,000 gallons. FDEP intentionally added the volume threshold; however, including the
volume of water in the definition could inadvertently cause a loophole or allow future techniques to be
omitted from regulation if the actual volume of water used is less than 100,000 gallons. The volume of
water is not the critical function of"fracking"; the pressure that exceeds the fracture gradient in the rock
formation in order to create and propagate fractures in the formation to increase oil/gas production is the
critical function. It is recommended that the definition focuses on the pressure that exceeds the
fracture gradient in the rock formation in order to create and propagate fractures in the formation to
increase oil/gas production and includes hydraulic and acid fracturing. This could include clarifying
defining characteristics of both activities.
b. Waste Disposal. Other than injection wells,there is no mention of regulation of waste disposal, including
wastes from high pressure well stimulation. Although FDEP indicated that the waste disposal issue is
covered under existing solid and hazardous waste statutes and rules, Collier staff pointed out that oil
drilling fluids are exempt from hazardous waste rules per Federal regulations. It is recommended that
language regulating waste disposal be added to HBs/SBs,including a reporting requirement.
c. Identification of chemicals and materials. FDEP indicated that the new language puts the burden on the
applicant to prove that their information is considered a trade secret, whereas existing language places
the burden on the public. Collier staff views this as an improvement to the existing process and recognizes
that information regarding geologic formations, volume of oil/gas in place, percentages of formulations
could remain proprietary; however, the exemption should not apply to products, pressures, or waste
disposal. It is recommended that specific products, pressures, and methods of waste disposal be
reported.
d. Permitting Notification. HB 1205 (line 547) indicates counties/municipalities would only be notified after
a permit has been issued. This language is not in SB 1468 or 1582. Collier County has signed up for FDEP's
Permit Application Subscription Service (PASS) related to oil/gas permit applications. FDEP will research
and find out if there are notifications for any changes such as permit modifications and provide a
response to the County Manager. (No response has been received as of 3/24/15.) It is recommended
that language be added to ensure notification will be at the application stage.
e. Local Planning and Zoning Authority. HB 1205 currently precludes the County from adopting its own
programs to "accomplish the purposes of this section." This language is not in SB 1468 or 1582. It is
important that the County retains control and oversight of comprehensive planning, zoning, site design
standards, and public notice requirements with regards to the above-ground activities of oil and gas
exploration. It is recommended that the language affirm the County's right to regulate these types of
zoning activities.
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Talking Points for Representative Rodrigues
1. Good points of House Bills 1205,1207,and 1209
a. Includes authority for Florida Administrative Code rulemaking for high pressure well stimulation activities.
b. Appears to allow for the incorporation of some of Collier County's 18 recommendations(attached) during
Florida Administrative Code rulemaking process.
c. Puts the responsibility on the applicant to maintain a trade secret, thus making it easier for the public to
potentially obtain a list of materials used in the fracking process.
d. Allows for increased bonding requirements.
e. Requires that the FDEP notify the County in which the activities will occur for issuing permits and activities
authorized by the permit.
f. Requires(HB 1205)a peer reviewed study on high pressure well stimulation.
2. Summary of County concerns related to existing SB/HB language and recommendations
a. High Pressure Well Stimulation should be better defined. Currently the definition includes a threshold
volume of 100,000 gallons. FDEP intentionally added the volume threshold; however, including the
volume of water in the definition could inadvertently cause a loophole or allow future techniques to be
omitted from regulation if the actual volume of water used is less than 100,000 gallons. The volume of
water is not the critical function of"fracking"; the pressure that exceeds the fracture gradient in the rock
formation in order to create and propagate fractures in the formation to increase oil/gas production is the
critical function. It is recommended that the definition focuses on the pressure that exceeds the
fracture gradient in the rock formation in order to create and propagate fractures in the formation to
increase oil/gas production and includes hydraulic and acid fracturing. This could include clarifying
defining characteristics of both activities.
�., b. Waste Disposal. Other than injection wells,there is no mention of regulation of waste disposal, including
wastes from high pressure well stimulation. Although FDEP indicated that the waste disposal issue is
covered under existing solid and hazardous waste statutes and rules, Collier staff pointed out that oil
drilling fluids are exempt from hazardous waste rules per Federal regulations. It is recommended that
language regulating waste disposal be added to HBs/SBs,including a reporting requirement.
c. Identification of chemicals and materials. FDEP indicated that the new language puts the burden on the
applicant to prove that their information is considered a trade secret, whereas existing language places
the burden on the public.Collier staff views this as an improvement to the existing process and recognizes
that information regarding geologic formations, volume of oil/gas in place, percentages of formulations
could remain proprietary; however, the exemption should not apply to products, pressures, or waste
disposal. It is recommended that specific products, pressures, and methods of waste disposal be
reported.
d. Permitting Notification. HB 1205 (line 547) indicates counties/municipalities would only be notified after
a permit has been issued. Collier County has signed up for FDEP's Permit Application Subscription Service
(PASS) related to oil/gas permit applications. FDEP will research and find out if there are notifications for
any changes such as permit modifications and provide a response to the County Manager. (No response
has been received as of 3/24/15.) It is recommended that language be added to ensure notification will
be at the application stage.
e. Local Planning and Zoning Authority. HB 1205 currently precludes the County from adopting its own
programs to"accomplish the purposes of this section." It is important that the County retains control and
oversight of comprehensive planning, zoning, site design standards, and public notice requirements with
regards to the above-ground activities of oil and gas exploration. It is recommended that the language
affirm the County's right to regulate these types of zoning activities.
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