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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Action Alert #2: Oil & Gas Interests Served At Public's Expense  Posted: February 17, 2003

House Bill 458: Oil and Gas Companies Move Against Counties

House Bill 458, drafted by oil and gas interests, seeks to make numerous changes in the state laws regulating oil and gas.

Most significant is the language in Section 1 that would sweep away the power of local governments to regulate in any manner the exploration, production, development, gathering and transmission of oil and gas, except for zoning power.

This language pre-empting almost all local government authority is unnecessary since existing law at KRS 67.083 assures that local government actions will not be inconsistent with state law.

This language pre-empting almost all local government authority is dangerous, since the state lacks a comprehensive regulatory program protecting the public health and welfare from the adverse public health, public safety and environmental impacts of the oil and gas industry.

This language pre-empting almost all local government authority is offensive, since it deprives counties of the police powers recognized by the General Assembly as properly belonging to local communities, unless the state has adopted a single standard of conduct in which case existing law resolves any conflicts.

The bill advances the interests of the oil and gas industry to be free of responsibility for accounting for damage to local roads and landowners in the drilling of wells, exploration for oil and gas, and in laying pipelines. Drafted by the oil and gas industry, the bill deserves to be defeated.

Please contact members of the House Natural Resources and Environment Committee and ask them to oppose House Bill 458. The bill is expected to be heard tomorrow, Tuesday February 18 at NOON so messages need to be sent today or early morning Tuesday. MESSAGE: "Do not take away the rights of local governments to protect their citizens from harm caused by the oil and gas industry when the need arises. Please oppose House Bill 458." HOW TO CONTACT LEGISLATORS: Legislative Message Line: 800-372-7181 Legislators Fax Line 502-564-6543 MEMBERS OF THE HOUSE NATURAL RESOURCES AND ENVIRONMENT COMMITTEE (in parenthesis are the counties they represent) Jim Gooch Jr. (Hopkins, Daviess, Webster, McLean) Rocky Adkins (Rowan, Lawrence, Boyd, Elliott) Tim Couch (Harlan, Leslie, Clay) Rick Rand (Carroll, Trimble, Oldham, Henry) Scott Brinkman (Jefferson) Brandon Smith (Perry, Harlan) Hubert Collins (Johnson, Martin, Floyd, Pike) Howard Cornett (Letcher, Harlan, Pike) Keith Hall (Pike) Don Pasley (Clark) Marie Rader (Jackson, Laurel, Owsley) Jim Stewart (Laurel, Knox) Robin Webb (Carter, Lewis) Brent Yonts (Hopkins, Christian, Muhlenberg)



Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone (502) 875-2845 fax

e-mail fitzKRC@aol.com

February 17, 2003

To: Rep. Hubert Collins

Members, House Natural Resources Committee

From: Tom FitzGerald

Re: Opposition to House Bill 458

I am writing to express KRC's opposition to House Bill 458, which was drafted by oil and gas interests and seeks to make numerous changes in the state laws regulating oil and gas.

Most significant and troublesome of the changes is the language in Section 1 that would sweep away the power of local governments to regulate in any manner the exploration, production, development, gathering and transmission of oil and gas, except for zoning power.

This language pre-empting almost all local government authority is unnecessary since existing law at KRS 67.083 assures that local government actions will not be inconsistent with state law. It is dangerous, since the state lacks a comprehensive regulatory program protecting the public health and welfare from the adverse public health, public safety and environmental impacts of the oil and gas industry. And it is offensive, since it deprives counties of the police powers recognized by the General Assembly as properly belonging to local communities, unless the state has adopted a single standard of conduct in which case existing law resolves any conflicts.

KRS 67.083, the county "home rule" statute, reflects the proper interaction of concurrent authority and pre-emption. The reason for this language is to advance the interest of the oil and gas industry to be free of accountability to local governments for damage to local roads and landowners in the drilling of wells, exploration for oil and gas, and in laying pipelines.

Other aspects of the bill are of concern as well:

Section 2(2)(e) defines "waste" to include the venting of gas, unlike existing law which defines waste as surface loss. If a mining company vents coalbed methane to protect miners, are they in violation of the law prohibiting waste?

Section 4 again revisits the issue of extending permit terms and provides that a doubling of the term of a permit does not give rise to a right to object to the well location. In order to assure that surface owners expectations are protected, the language should be rewritten to clarify that it applies only to extensions to permits issued after the law's effective date, and only where the well location is not changed from the initial permit approval. Any change in material terms of the permit should not be allowed by extension.

Section 5(5) inserts new language providing that "individuals acquiring a single well for domestic use may post a combination bond of cash and property to cover future plugging costs.

KRC is concerned that owner/operator responsibility for proper closure of wells may be circumvented by selling off the wells "for domestic use" and releasing the owner/operators bond, replacing it with a cash and property bond that is inadequate to effect closure and difficult to collect upon. Also, when the well is sold or transferred to the landowner, will that landowner have the knowledge and responsibility to manage spill prevention and control and closure?

Section 7 limits the requirement of consent for waivers to allow drilling wells closer than the prescribed distances, to adjacent premises that are directly affected rather than the existing language requiring consent of all owners of oil and gas interests in any premises that will be offset.

Depending on how large adjacent holdings are, a nearby landowner could be affected yet lose the ability to withhold consent. because the property is non-adjacent. All affected landowners whose interests will be offset must be required to give consent whether adjacent or not.

Thank you for the opportunity to convey KRC's concerns.



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