S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         3842
                              2015-2016 Regular Sessions
                                   I N  S E N A T E
                                   February 20, 2015
                                      ___________
       Introduced  by Sens. ESPAILLAT, HASSELL-THOMPSON, SQUADRON -- read twice
         and ordered printed, and when printed to be committed to the Committee
         on Environmental Conservation
       AN ACT to amend the environmental conservation law, in relation  to  the
         regulation of the drilling of natural gas resources
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Legislative intent. 1. The legislature finds that the proc-
    2  ess used to stimulate natural gas extraction referred  to  as  hydraulic
    3  fracturing utilizes components that are often toxic, that are non-biode-
    4  gradable,  and  that  are virtually impossible to remove once they enter
    5  the natural environment.  Thus, they pose such a high level of  environ-
    6  mental  risk  that  the  policy  of the state must be to insure they are
    7  excluded from any area that is significant  for  public  drinking  water
    8  resources or any other area that is environmentally sensitive.
    9    2.  Natural gas drilling is potentially highly transformative of rural
   10  landscapes, offering economic benefits to many landowners, but threaten-
   11  ing the property values of other  local  landowners,  traditional  rural
   12  economic  activity,  the  carrying capacity of local infrastructure, the
   13  natural habitat of wildlife, and the public health and quality  of  life
   14  of  residents  in  areas  where  there  is natural gas extraction taking
   15  place. Unless these resources are protected in the permitting and  regu-
   16  latory  processes of the state, the costs of Marcellus shale natural gas
   17  extraction will exceed the benefits  and  natural  gas  extraction  will
   18  become  a fundamentally unfair and divisive process in which the profits
   19  of some are subsidized by the costs to others.
   20    3. The proposed scope of natural gas drilling across the state of  New
   21  York  will  present  unprecedented  challenges  of regulatory oversight.
   22  Funding for such oversight must be sufficient to meet this challenge and
   23  should come from a series of fees paid  by  the  natural  gas  industry.
   24  Similarly, the natural gas industry should pay for all other costs asso-
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD02455-02-5
       S. 3842                             2
    1  ciated  with  natural  gas extraction. Otherwise, natural gas extraction
    2  will be unfairly subsidized, either  by the New York state  taxpayer  or
    3  by the impacts on local human and natural resources.
    4    4.  One  of  the  chief environmental and infrastructure assets of the
    5  state of New York is its drinking water systems, which play a  fundamen-
    6  tal  role  in  the economic productivity and public health of the state.
    7  The legislature finds that no risk to these resources and to the  public
    8  health  of  their  users  is acceptable and that the policy of the state
    9  with respect to the management of shale gas extraction must be one of no
   10  drinking water risk.
   11    5. The purpose of this legislation is to insure that the  exploitation
   12  of shale natural gas resources is conducted in a manner that is consist-
   13  ent  with and supportive of New York state's commitment to sustainabili-
   14  ty, and is consistent with other state economic development, energy  and
   15  environmental policies.
   16    6.  Therefore,  in light of the many commitments the state of New York
   17  has made to more sustainable development and the critical role  greening
   18  the state's economy will play in the future prosperity of the state, the
   19  only  acceptable  natural  gas  extraction practices will be sustainable
   20  ones. This act is intended to ensure that that goal is met.
   21    S 2. Article 23 of the environmental conservation law  is  amended  by
   22  adding a new title 29 to read as follows:
   23                                   TITLE 29
   24                     REGULATION OF NATURAL GAS DRILLING
   25  SECTION 23-2901. NATURAL GAS DRILLING; PROHIBITION  NEAR WATERSHED.
   26          23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
   27          23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
   28          23-2907. PROTECTION OF LOCAL RESOURCES.
   29          23-2909. WATER WITHDRAWALS.
   30          23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
   31          23-2913. OTHER PROVISIONS.
   32  S 23-2901. NATURAL GAS DRILLING; PROHIBITION NEAR WATERSHED.
   33    1.  NATURAL  GAS  DRILLING  SHALL NOT BE PERMITTED WITHIN THE NEW YORK
   34  CITY WATERSHED OR AT ANY POINT WITHIN FIVE MILES OF ITS BOUNDARY.
   35    2. NATURAL GAS DRILLING SHALL NOT BE PERMITTED WITHIN THE WATERSHED OF
   36  THE DELAWARE RIVER, IN ANY RECHARGE AREA OF A SOLE  SOURCE  AQUIFER,  IN
   37  ANY  AREA  WHERE  GROUNDWATER  CONTRIBUTES  A  SIGNIFICANT  BASE FLOW TO
   38  SURFACE WATER SOURCES OF DRINKING WATER, AND IN ANY OTHER AREA WHERE THE
   39  DEPARTMENT SHALL FIND PRESENTS A SIGNIFICANT THREAT OF  HYDRAULIC  FRAC-
   40  TURING COMPOUNDS ENTERING INTO A SIGNIFICANT SOURCE OF DRINKING WATER.
   41    3. NATURAL GAS DRILLING SHALL BE CONDUCTED IN WAYS THAT DO NOT CONTAM-
   42  INATE DRINKING WATER WELLS. IN ANY AREA WHERE NATURAL GAS DRILLING TAKES
   43  PLACE AND CONTAMINATION OF INDIVIDUAL DRINKING WATER WELLS OCCURS, THERE
   44  SHALL  BE A PRESUMPTION THAT THE NATURAL GAS DRILLING IS RESPONSIBLE FOR
   45  SUCH CONTAMINATION UNLESS THE NATURAL GAS DRILLER CAN SHOW, BY CLEAR AND
   46  CONVINCING EVIDENCE, THAT SUCH DRILLER IS NOT THE SOURCE OF THE  CONTAM-
   47  INATION.  UPON  RECEIVING  A REPORT OF AN INCIDENT OF WELL CONTAMINATION
   48  FROM NATURAL GAS DRILLING, THE DEPARTMENT SHALL INVESTIGATE SUCH  REPORT
   49  WITHIN TWENTY-FOUR HOURS AND SHALL HAVE THE AUTHORITY TO ORDER IMMEDIATE
   50  REMEDIAL  ACTION,  INCLUDING  ISSUING  IMMEDIATE CEASE AND DESIST ORDERS
   51  WITH RESPECT TO THE DRILLING ACTIVITY.  IN THE EVENT THAT THE DEPARTMENT
   52  IS UNABLE TO INVESTIGATE SUCH REPORT WITHIN TWENTY-FOUR  HOURS,  IT  MAY
   53  REQUEST  THAT LOCAL OR STATE POLICE AUTHORITIES CONFIRM THE INCIDENT AND
   54  REPORT AND, IF CONFIRMED, SHALL ISSUE A CEASE AND DESIST ORDER  TO  SUCH
   55  DRILLER  UNTIL IT SHALL MAKE SUCH INVESTIGATION AND DETERMINE THE PROPER
   56  COURSE OF INSURING FULL REMEDIATION.
       S. 3842                             3
    1    4.  ANY  SPILLS  OR  PROHIBITED  DISCHARGES  OF  HYDRAULIC  FRACTURING
    2  COMPOUNDS  SHALL  BE  IMMEDIATELY REPORTED BY THE NATURAL GAS DRILLER TO
    3  THE DEPARTMENT, WHICH  SHALL  ESTABLISH  PROCEDURES  FOR  RECORDING  AND
    4  REVIEWING  SUCH  REPORTS AND FOR ORDERING REMEDIAL ACTION TO CONTAIN THE
    5  SPILL  AND KEEP THE SPILL OR DISCHARGE INCIDENT FROM BEING REPEATED. THE
    6  DEPARTMENT SHALL HAVE THE AUTHORITY  TO  IMPOSE  FINES  FOR  FAILURE  TO
    7  REPORT  SUCH INCIDENTS, TO ORDER IMMEDIATE CLEANUP OF SUCH SPILLS AT THE
    8  EXPENSE OF SUCH DRILLER AND, SHOULD SUCH DRILLER FAIL  TO  DO  SO  IN  A
    9  TIMELY  FASHION,  TO  ENTER  INTO  THE  DRILLING AREA AND DO THE CLEANUP
   10  ITSELF, AT THE EXPENSE OF SUCH DRILLER. IN ANY INSTANCE WHERE SUCH DRIL-
   11  LER SHALL REFUSE TO CARRY OUT A DEPARTMENT CLEANUP  OR  REMEDIAL  ACTION
   12  ORDER IN A TIMELY AND APPROPRIATE MANNER, THE DEPARTMENT SHALL ORDER ALL
   13  DRILLING  ACTIVITY  TO CEASE AND DESIST UNTIL SUCH TIME AS THE SPILL HAS
   14  BEEN CLEANED UP AND SUCH DRILLER HAS REMEDIATED THE CONDITIONS OR  PRAC-
   15  TICES THAT CAUSED THE SPILL.
   16    5.  ANY  DRILLER  OF  NATURAL GAS WHO KNOWINGLY ATTEMPTS TO COVER UP A
   17  SPILL OR PROHIBITED DISCHARGE SHALL BE GUILTY OF A CLASS A  MISDEMEANOR.
   18  ANY DRILLER OF NATURAL GAS WHO KNOWINGLY DISCHARGES HYDRAULIC FRACTURING
   19  COMPOUNDS  INTO  THE  SURFACE  WATERS  OF THE STATE SHALL BE GUILTY OF A
   20  CLASS E FELONY.
   21    6. NOTHING IN THIS TITLE OR ANY OTHER LAW OR REGULATION  SHALL  ALTER,
   22  LIMIT,  IMPAIR  OR  OTHERWISE  AFFECT  THE AUTHORITY OF THE STATE OF NEW
   23  YORK, OR THE AUTHORITY OF THE CITY OF NEW YORK  IN  THE  NEW  YORK  CITY
   24  WATERSHED,  TO  TAKE  WHATEVER  MEASURES  ARE NECESSARY UNDER THE LAW TO
   25  PROTECT THE QUALITY AND SAFETY OF THE SOURCES OF THE DRINKING WATERS  OF
   26  NEW YORK STATE.
   27  S 23-2903. DISCLOSURE OF HYDRAULIC FRACTURING MATERIALS.
   28    1. ALL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS SHALL BE DISCLOSED
   29  TO  THE  DEPARTMENT AT THE TIME OF APPLICATION FOR A WELL PERMIT FOR THE
   30  DRILLING OF NATURAL GAS PURSUANT TO THIS ARTICLE.
   31    (A) EMERGENCY HEALTH SITUATION. WHEN A HEALTH PROFESSIONAL  DETERMINES
   32  THAT A MEDICAL EMERGENCY EXISTS RELATED TO A HYDRAULIC FRACTURING OPERA-
   33  TION  AND  THE INGREDIENTS AND SPECIFIC CHEMICAL IDENTITY OF A HYDRAULIC
   34  FRACTURING FLUID IS NECESSARY FOR EMERGENCY  OR FIRST-AID TREATMENT, THE
   35  HYDRAULIC FRACTURING OPERATOR SHALL IMMEDIATELY  DISCLOSE  THE  SPECIFIC
   36  CHEMICAL  IDENTITY  OF  A  TRADE  SECRET CHEMICAL TO THE TREATING HEALTH
   37  PROFESSIONAL, REGARDLESS OF THE EXISTENCE OF A WRITTEN STATEMENT OF NEED
   38  OR A CONFIDENTIALITY AGREEMENT.
   39    (B) NON-EMERGENCY HEALTH SITUATION.  WHEN  A  HEALTH  PROFESSIONAL  OR
   40  GOVERNMENT  AGENCY DETERMINES THAT THE INGREDIENTS AND SPECIFIC CHEMICAL
   41  IDENTITY OF A HYDRAULIC  FRACTURING  FLUID  ARE  NECESSARY  FOR  MEDICAL
   42  TREATMENT,  AN OPERATOR SHALL DISCLOSE A SPECIFIC CHEMICAL IDENTITY TO A
   43  HEALTH PROFESSIONAL OR GOVERNMENT AGENCY IF A REQUEST HAS BEEN  MADE  IN
   44  WRITING  THAT  DESCRIBES  WITH  REASONABLE  DETAIL ONE OR MORE HEALTH OR
   45  SAFETY NEEDS FOR THE INFORMATION  AND  INCLUDES  A  DESCRIPTION  OF  THE
   46  PROCEDURES  TO  BE USED TO MAINTAIN THE CONFIDENTIALITY OF THE DISCLOSED
   47  INFORMATION. THE HEALTH PROFESSIONAL OR GOVERNMENT AGENCY SHALL AGREE IN
   48  A WRITTEN CONFIDENTIALITY AGREEMENT THAT THE  TRADE  SECRET  INFORMATION
   49  WILL  NOT  BE  USED FOR ANY PURPOSE OTHER THAN THE HEALTH NEEDS ASSERTED
   50  AND SHALL AGREE NOT TO RELEASE THE INFORMATION UNDER  ANY  CIRCUMSTANCES
   51  OTHER THAN TO A HEALTH PROFESSIONAL OR GOVERNMENT AGENCY.
   52    2.  NO NATURAL GAS DRILLER MAY CHANGE THE COMPONENTS OR COMPOSITION OF
   53  HYDRAULIC FRACTURING MATERIALS FROM THOSE SPECIFIED IN ITS PERMIT APPLI-
   54  CATION WITHOUT FIRST FILING FOR AND RECEIVING  A  MODIFICATION  OF  SUCH
   55  PERMIT.
       S. 3842                             4
    1    3.  THE  DEPARTMENT  SHALL ESTABLISH A STANDARD FOR THE COMPOSITION OF
    2  HYDRAULIC FRACTURING COMPOUNDS AND REQUIRE NATURAL GAS DRILLERS  TO  USE
    3  SUCH  STANDARD.  THE DEPARTMENT SHALL HAVE THE POWER TO PROHIBIT THE USE
    4  OF SPECIFIC CHEMICALS IN THE COMPOSITION OF HYDRAULIC FRACTURING MATERI-
    5  ALS.
    6    4. HYDRAULIC FRACTURING LIQUIDS AND LIQUID WASTE FROM DRILLING MAY NOT
    7  BE STORED IN OPEN LAGOONS, BUT MUST BE KEPT IN CORROSION PROOF TANKS.
    8    5. NOTWITHSTANDING ANY OTHER PROVISION OF LAW OR ADMINISTRATIVE DETER-
    9  MINATION,  HYDRAULIC  FRACTURING MATERIAL SHALL BE REGARDED AS HAZARDOUS
   10  WASTE AND TREATED AND DISPOSED OF AS SUCH.
   11    6. THE DEPARTMENT SHALL ISSUE REGULATIONS REQUIRING  THE  TRACKING  OF
   12  ALL CHEMICAL COMPONENTS OF HYDRAULIC FRACTURING MATERIALS AND SHALL HAVE
   13  THE POWER TO ENFORCE SUCH REGULATIONS BY APPROPRIATE FINES AND CEASE AND
   14  DESIST ORDERS.
   15  S 23-2905. PROTECTION OF OTHER ENVIRONMENTAL RESOURCES.
   16    1.  DRILLERS  OF  NATURAL  GAS SHALL BE RESPONSIBLE FOR MITIGATING ALL
   17  DAMAGE TO ANY  REGULATED  ENVIRONMENTAL  RESOURCES,  INCLUDING  BUT  NOT
   18  LIMITED  TO  AIR, WETLANDS, STREAM CORRIDORS, AND ENDANGERED AND THREAT-
   19  ENED SPECIES HABITAT.
   20    2. WELL PERMITS FOR THE DRILLING OF NATURAL GAS SHALL NOT  BE  GRANTED
   21  IN  ANY  AREA WHERE SUCH DRILLING SHALL ADVERSELY IMPACT THE RECOVERY OF
   22  THREATENED OR ENDANGERED SPECIES OR WHERE IT SHALL  DESTROY  OR  DEGRADE
   23  OTHER  UNIQUE NATURAL OR SCENIC RESOURCES. WELL PERMITS FOR THE DRILLING
   24  OF NATURAL GAS SHALL NOT BE GRANTED IN ANY AREA THAT  IS  DESIGNATED  AS
   25  FOREVER  WILD  UNDER  THE STATE CONSTITUTION OR LAWS, IN STATE PARKS, IN
   26  AREAS IDENTIFIED FOR STATE ACQUISITION AND/OR PROTECTION UNDER THE STATE
   27  OPEN SPACE PLAN, OR IN STATE FORESTS AND STATE PARKS.
   28    3. APPLICATIONS FOR A WELL PERMIT FOR  THE  DRILLING  OF  NATURAL  GAS
   29  SHALL  INCLUDE  AN  ASSESSMENT  OF  ITS  IMPACT  ON  LOCAL  BIODIVERSITY
   30  RESOURCES AND A SHOWING THAT SUCH DRILLING SHALL BE WITHIN THE LEASEHOLD
   31  AT THE LOWEST IMPACT POINT  ON  WILDLIFE.  TO  MINIMIZE  IMPACT  THROUGH
   32  EITHER GROUND DISTURBANCE OR TRAFFIC, ALL EFFORTS SHALL BE MADE TO CLUS-
   33  TER  WELLS,  CENTRALIZE  OPERATIONS,  AND  USE  TELEMETRY. IF NECESSARY,
   34  SEASONAL RESTRICTIONS SHALL BE IMPOSED TO PROTECT WILDLIFE  BREEDING  OR
   35  MIGRATION.
   36    4.  APPLICATIONS  FOR  A  WELL  PERMIT FOR THE DRILLING OF NATURAL GAS
   37  SHALL LIST ALL EXPECTED EMISSIONS OF AIR POLLUTANTS, INCLUDING, BUT  NOT
   38  LIMITED  TO,  ALL GREENHOUSE GASES SUCH AS METHANE. THE DEPARTMENT SHALL
   39  HAVE THE AUTHORITY TO SPECIFY LIMITS ON ALL  SUCH  AIR  EMISSIONS  AS  A
   40  CONDITION  OF  GRANTING  SUCH  PERMIT,  TO REQUIRE APPROPRIATE EMISSIONS
   41  MONITORING AND CONTROLS BY THE OPERATOR, AND TO DENY  ANY  PERMIT  WHOSE
   42  OPERATION  SHALL  BE INCONSISTENT WITH STATE POLICY AND REGULATIONS WITH
   43  RESPECT TO ADDRESSING GLOBAL WARMING.
   44  S 23-2907. PROTECTION OF LOCAL RESOURCES.
   45    1. THE DEPARTMENT SHALL HAVE THE AUTHORITY TO IMPOSE FEES  TO  COMPEN-
   46  SATE LOCAL GOVERNMENT FOR ANY COSTS OR IMPACTS IMPOSED UPON SUCH GOVERN-
   47  MENTS AS A RESULT OF DRILLING FOR NATURAL GAS.
   48    2.  THE  DEPARTMENT,  IN  ITS PERMITTING DECISIONS, SHALL TAKE CARE TO
   49  INSURE THAT NATURAL GAS WELLS ARE SITUATED IN WAYS THAT  MAXIMIZE  FIELD
   50  PRODUCTIVITY  WHILE  MINIMIZING  IMPACTS  ON  THE  LANDSCAPE.  FOR  THIS
   51  PURPOSE, THE DEPARTMENT MAY, WITHIN SPECIFIC REGIONAL  AREAS,  ESTABLISH
   52  PROCEDURES  TO REQUIRE PERIODIC BATCH PROCESSING OF PERMIT APPLICATIONS,
   53  INCLUDING MANDATORY DATES FOR APPLICATION  SUBMISSION,  AND  MAY  IMPOSE
   54  WELL CLUSTERING, CENTRALIZED OPERATIONS, AND THE USE OF TELEMETRY.
   55    3.  ALL SITING OF NATURAL GAS DRILLING ACTIVITY SHALL CONFORM TO LOCAL
   56  ZONING.
       S. 3842                             5
    1    4. ANY PERMIT HOLDER SHALL BE REQUIRED, AT THE  END  OF  ITS  DRILLING
    2  OPERATIONS,  TO  FULLY  RESTORE  THE  DRILL SITE TO ITS PREVIOUS NATURAL
    3  CONDITION. TO ENFORCE THE PROVISIONS OF  THIS  SUBDIVISION,  BEFORE  ANY
    4  LAND  CLEARING OPERATIONS RELATED TO DRILLING ARE COMMENCED, SUCH PERMIT
    5  HOLDER  SHALL  FILE  WITH THE DEPARTMENT, A NON-REVOCABLE AND BANKRUPTCY
    6  PROOF BOND SUFFICIENT, UNDER REGULATIONS TO BE ISSUED BY THE DEPARTMENT,
    7  TO COVER ALL FORESEEABLE COSTS OF SITE RESTORATION.
    8    5. GAS DRILLING OPERATIONS SHALL BE CONDUCTED IN A MANNER  THAT  SHALL
    9  NOT  BURDEN  ADJACENT LANDOWNERS AND RESIDENTS. NO NOISE AUDIBLE INDOORS
   10  IN RESIDENCES LOCATED ON ADJACENT PROPERTY SHALL  BE  PERMITTED  BETWEEN
   11  THE HOURS OF 8:00 PM AND 8:00 AM ON WEEKDAYS AND 6:00 PM AND 10:00 AM ON
   12  WEEKENDS. SIMILARLY, NIGHT LIGHTING SHALL NOT BE OBTRUSIVE OR DISRUPTIVE
   13  OF LIFE FOR SUCH ADJACENT LANDOWNERS AND RESIDENTS. THE DEPARTMENT SHALL
   14  ENFORCE  THE  PROVISIONS  OF THIS SUBDIVISION BY APPROPRIATE REGULATIONS
   15  INCLUDING A SYSTEM OF FINES, AND SHALL FURTHER HAVE THE POWER  TO  ISSUE
   16  CEASE  AND  DESIST  ORDERS  TO ENFORCE THESE PROTECTIONS AND PROTECT THE
   17  QUIET ENJOYMENT OF LOCAL RESIDENTS.
   18    6. LANDOWNERS FORCED INTO A  PRODUCTION  POOL  SHALL  BE  ENTITLED  TO
   19  RECEIVE THE HIGHEST PAYMENT THAT ANY OTHER POOL MEMBER RECEIVES.
   20    7.  ANY  LANDOWNER  WHO  ENTERS INTO A CONTRACT OR LEASE TO PERMIT THE
   21  DRILLING FOR NATURAL GAS ON SUCH LANDOWNER'S PROPERTY SHALL HAVE A THIR-
   22  TY DAY RIGHT OF RECISSION WITH RESPECT TO  SUCH  CONTRACT.  DURING  SUCH
   23  THIRTY  DAY  PERIOD, SUCH LANDOWNER MAY CANCEL SUCH CONTRACT OR LEASE AT
   24  ANY TIME WITHOUT PENALTY.
   25    8. NO WELL PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED FOR
   26  A PERIOD LONGER THAN TEN YEARS. ANY PERMIT UNDER  WHICH  ACTUAL  NATURAL
   27  GAS  EXTRACTION  IS NOT UNDERTAKEN WITHIN FIVE YEARS SHALL EXPIRE AND BE
   28  DEEMED NULL AND VOID.
   29    9. THE DEPARTMENT, IN CONSULTATION WITH THE  ATTORNEY  GENERAL,  SHALL
   30  ISSUE  GUIDANCE  DOCUMENTS  TO  LANDOWNERS, WITH RESPECT TO THEIR RIGHTS
   31  WITH RESPECT TO NATURAL GAS DRILLING CONTRACTS AND LEASES.  THE  DEPART-
   32  MENT  IS  HEREBY  AUTHORIZED  TO  REQUIRE  STANDARD  PROVISIONS  IN SUCH
   33  CONTRACTS OR LEASES IN ORDER TO PREVENT UNFAIR TREATMENT OF LANDOWNERS.
   34    10. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, NATURAL  GAS  DRILLERS
   35  SHALL  BE  RESPONSIBLE  FOR  THE COSTS OF ALL ENVIRONMENTAL DAMAGE WHICH
   36  OCCURRED IN THE PROCESS OF DRILLING FOR AND EXTRACTING NATURAL GAS.  THE
   37  DEPARTMENT  MAY  REQUIRE THE PROVISION OF APPROPRIATE FINANCIAL SECURITY
   38  TO ENSURE LANDOWNERS ARE PROTECTED FROM ANY CONTINGENT LIABILITY. SHOULD
   39  DRILLING ACTIVITY LEAD TO DESIGNATION AS A BROWNFIELD SITE,  AS  DEFINED
   40  IN SUBDIVISION TWO OF SECTION 27-1405 OF THIS CHAPTER, SUCH DRILLER, NOT
   41  THE LANDOWNER, SHALL BE CONSIDERED TO BE PARTY IN THE CHAIN OF RESPONSI-
   42  BILITY.
   43  S 23-2909. WATER WITHDRAWALS.
   44    ALL  SURFACE  OR  GROUNDWATER  WITHDRAWALS  OF MORE THAN FIVE THOUSAND
   45  GALLONS A DAY FOR NATURAL  GAS  DRILLING  PURPOSES,  OR  MORE  THAN  ONE
   46  PERCENT  OF  IN STREAM FLOW, SHALL REQUIRE A PERMIT FROM THE DEPARTMENT.
   47  THE DEPARTMENT  SHALL  ISSUE  REGULATIONS  GOVERNING  SUCH  WITHDRAWALS,
   48  INCLUDING  PROVISIONS  TO  ASSURE  THAT WATER WITHDRAWALS ARE LIMITED TO
   49  LEVELS THAT DO NOT HARM STREAM ECOLOGY OR FISHERY RESOURCES.
   50  S 23-2911. ENFORCEMENT AND FINANCIAL SECURITY.
   51    1. NO PERMIT FOR THE DRILLING OF NATURAL GAS SHALL BE GRANTED IF  SUCH
   52  APPLICANT HAS FAILED TO MEET HIS ENVIRONMENTAL AND FINANCIAL OBLIGATIONS
   53  UNDER  A  PREVIOUS  PERMIT  OR  IF  SUCH  APPLICANT HAS UNPAID FINANCIAL
   54  LIABILITIES TO EITHER THE STATE, A LOCAL GOVERNMENT OR A  PRIVATE  LAND-
   55  OWNER.
       S. 3842                             6
    1    2.  IN DETERMINING WHETHER OR NOT A PERMIT FOR THE DRILLING OF NATURAL
    2  GAS SHALL BE GRANTED, THE DEPARTMENT SHALL  CONSIDER  THE  PRIOR  RECORD
    3  UNDER  PREVIOUS  PERMITS  OF  THE APPLICANT. APPLICANTS WHO HAVE SHOWN A
    4  PATTERN OF VIOLATION OF PERMIT CONDITIONS OR A LACK OF A PROPER STANDARD
    5  OF CARE IN DRILLING OPERATIONS SHALL NOT BE GRANTED A PERMIT.
    6    3.  A  PERMIT FOR THE DRILLING OF NATURAL GAS SHALL INCLUDE APPLICABLE
    7  LEASE DOCUMENTS BETWEEN THE DRILLING COMPANY AND THE LANDOWNER OR  LAND-
    8  OWNERS FOR THE DRILLING SITE FOR WHICH THE APPLICATION IS MADE.
    9    4.  A  PERMIT  APPLICATION  SHALL INCLUDE A COMPREHENSIVE HYDROLOGICAL
   10  ASSESSMENT OF THE SUBSURFACE STRATA  INCLUDING  THE  POTENTIAL  FOR  ANY
   11  FISSURING  THAT  WOULD  DRAW  HYDRAULIC FRACTURING FLUID, NATURAL GAS OR
   12  OTHER POLLUTANTS INTO WATER BEARING AQUIFER STRATA.
   13    5. THE DEPARTMENT SHALL PROVIDE FOR  UNANNOUNCED  INSPECTIONS  OF  ALL
   14  NATURAL  GAS  DRILLING  SITES  AND  FOR THE PROVISION OF SOIL TESTING TO
   15  DETERMINE THE PRESENCE OF UNREPORTED SPILLS.
   16    6. THE DEPARTMENT  SHALL  REQUIRE  THAT  ALL  CASING  CONSTRUCTION  BE
   17  CARRIED  OUT  IN  THE PRESENCE OF INDEPENDENT QUALITY CONTROL ENGINEERS.
   18  THE DEPARTMENT SHALL HAVE THE AUTHORITY TO SPECIFY STANDARDS FOR  CASING
   19  CONSTRUCTION,  INCLUDING  COMPOSITION  OF  CONCRETE  AND OTHER TECHNICAL
   20  PARAMETERS FOR DEEP WELL CONSTRUCTION TO INSURE MAXIMUM CASING INTEGRITY
   21  AND PREVENT LEAKAGE OF HYDRAULIC FRACTURING COMPOUNDS, NATURAL  GAS  AND
   22  OTHER  SUBSURFACE  MATERIALS  INTO  WATER BEARING STRATA. THE DEPARTMENT
   23  SHALL, OVER THE LIFE OF THE WELL,  CARRY  OUT  PERIODIC  INSPECTIONS  TO
   24  ENSURE THAT CASING INTEGRITY IS MAINTAINED.
   25  S 23-2913. OTHER PROVISIONS.
   26    1.  THE STATE COMPTROLLER SHALL ANNUALLY AUDIT ALL ROYALTY PAYMENTS TO
   27  THE STATE AND LOCAL GOVERNMENTS, INCLUDING THE GAS PRODUCTION AND  SALES
   28  FIGURES ON WHICH THEY ARE BASED, AND SHALL HAVE THE AUTHORITY TO REQUIRE
   29  APPROPRIATE  FISCAL  REPORTING  AND  RECORD  KEEPING BY BOTH NATURAL GAS
   30  PRODUCERS AND OTHER DEPARTMENTS OF STATE GOVERNMENT CHARGED  WITH  THEIR
   31  SUPERVISION.
   32    2.  THE  STATE  COMPTROLLER  SHALL  HAVE THE AUTHORITY TO PERIODICALLY
   33  AUDIT PAYMENTS MADE UNDER DRILLING CONTRACTS AND LEASES TO PRIVATE LAND-
   34  OWNERS, INCLUDING THE GAS PRODUCTION AND SALES FIGURES ON WHICH THEY ARE
   35  BASED, TO DETERMINE THAT THEY ARE IN COMPLIANCE WITH THE  PROVISIONS  OF
   36  THE CONTRACT OR LEASE AND ALL APPLICABLE LAWS.
   37    3.  THE  DEPARTMENT  SHALL  ESTABLISH  AN IMPARTIAL TECHNICAL ADVISORY
   38  COMMITTEE, WHOSE RESEARCH AND WORK SHALL BE SUPPORTED BY PERMIT FEES, TO
   39  REVIEW AND ISSUE GUIDANCE DOCUMENTS  ON  GAS  DRILLING  BEST  PRACTICES.
   40  SUCH  COMMITTEE  SHALL  INCLUDE  AT  LEAST  ONE  REPRESENTATIVE FROM THE
   41  FOLLOWING INTEREST  GROUPS:  THE  ENVIRONMENTAL  COMMUNITY;  THE  PUBLIC
   42  HEALTH COMMUNITY; AND THE GAS DRILLING INDUSTRY, ALONG WITH PERSONS FROM
   43  THE  DEPARTMENT OR OTHERS THE DEPARTMENT DEEMS APPROPRIATE.  THE DEPART-
   44  MENT MAY REQUIRE COMPLIANCE WITH SUCH PRACTICES AS A CONDITION OF PERMIT
   45  APPROVAL.
   46    S 3. This act shall take effect on the one hundred twentieth day after
   47  it shall have become a law, provided, however, that effective immediate-
   48  ly, the addition, amendment and/or repeal  of  any  rule  or  regulation
   49  necessary  for  the  implementation of this act on its effective date is
   50  authorized to be made and completed on or before such date.