98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB3424

 

Introduced 2/14/2014, by Sen. Michael W. Frerichs

 

SYNOPSIS AS INTRODUCED:
 
5 ILCS 615/1  from Ch. 96 1/2, par. 5001
5 ILCS 615/2  from Ch. 96 1/2, par. 5002
5 ILCS 615/3  from Ch. 96 1/2, par. 5003
5 ILCS 615/5  from Ch. 96 1/2, par. 5005
5 ILCS 615/7  from Ch. 96 1/2, par. 5007
5 ILCS 615/8  from Ch. 96 1/2, par. 5008
5 ILCS 615/12  from Ch. 96 1/2, par. 5012
5 ILCS 615/13  from Ch. 96 1/2, par. 5013
5 ILCS 615/14  from Ch. 96 1/2, par. 5014
5 ILCS 615/16  from Ch. 96 1/2, par. 5016
5 ILCS 615/19  from Ch. 96 1/2, par. 5019
5 ILCS 615/20  from Ch. 96 1/2, par. 5020
5 ILCS 615/22  from Ch. 96 1/2, par. 5022
5 ILCS 615/6 rep.
5 ILCS 615/9 rep.
5 ILCS 615/11 rep.
5 ILCS 615/17 rep.
5 ILCS 615/18 rep.
5 ILCS 615/21 rep.

    Amends the Oil and Gas Wells on Public Lands Act. Provides that on and after January 1, 2015, no new permits shall be issued for surface extraction activities on lands owned by the Department of Natural Resources or the federal government. Prohibits the Department of Natural Resources from entering into contracts in writing designating any person as the permittee of the State of Illinois with the exclusive right to prospect and explore public lands of the State of Illinois for the occurrence of petroleum. Repeals provisions governing certain petroleum leases, right of way over public lands and preferential rights to prospecting permits. Effective immediately.


LRB098 19999 OMW 55226 b

 

 

A BILL FOR

 

SB3424LRB098 19999 OMW 55226 b

1    AN ACT concerning government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Oil and Gas Wells on Public Lands Act is
5amended by changing Sections 1, 2, 3, 5, 7, 8, 12, 13, 14, 16,
619, 20, and 22 as follows:
 
7    (5 ILCS 615/1)  (from Ch. 96 1/2, par. 5001)
8    Sec. 1. Whenever used in this Act, unless the context
9otherwise requires, words and terms shall have the meaning
10attributed to them herein:
11    (1) "Commence to drill a well": The institution of work in
12good faith with drilling equipment adequate for the drilling of
13a well to a depth that will reasonably test the oil and gas
14productiveness of the public lands where such well is
15commenced.
16    (2) "Petroleum": Any liquid or gaseous hydrocarbon
17occurring in nature beneath the surface of the earth.
18    (3) "Proven territory": Territory so situated with
19reference to known producing wells as to establish the general
20opinion that, because of its relation to them, petroleum is
21contained in it.
22    (4) "Public lands": Lands and areas belonging to, or
23subsequently acquired by the State or the United States,

 

 

SB3424- 2 -LRB098 19999 OMW 55226 b

1including lands of every kind and nature.
2    (5) "Gross value": The value of petroleum at the well
3produced and saved, without deduction for expense of
4production.
5    (6) "Person": Any citizen of the United States or person
6who has, in good faith, declared his intention of becoming a
7citizen of the United States, or any such association of such
8persons, or any corporation organized and existing under and by
9virtue of the laws of any state or territory of the United
10States and authorized to do business in this State.
11    (7) "Department": The Department of Natural Resources.
12    (8) "United States": Lands and areas belonging to, or
13subsequently acquired by, the federal government within the
14State of Illinois.
15(Source: P.A. 89-445, eff. 2-7-96.)
 
16    (5 ILCS 615/2)  (from Ch. 96 1/2, par. 5002)
17    Sec. 2. State issuance of extraction permits; prohibited
18activities. Effective January 1, 2015:
19    (a) No permits shall be issued for The Department of
20Natural Resources shall be empowered with respect to public
21lands to grant permits and leases in the name of the State of
22Illinois, with the approval of the Governor in writing, for the
23extraction of oil, gas and other petroleum deposits, except
24that no surface extraction activities shall be performed nor
25production equipment located on lands owned by the Department

 

 

SB3424- 3 -LRB098 19999 OMW 55226 b

1of Natural Resources if the State owns 100% of the underlying
2mineral interests of those lands.
3    (b) No permits shall be issued for surface extraction
4activities on lands owned by the United States government.
5    (c) Extraction activities underlying lands owned by the
6Department of Natural Resources or the United States that
7utilize directional drilling techniques shall be prohibited.
8may be permitted at the discretion of the Department. However,
9the
10    (d) The Department shall not grant permits on leases for
11the extraction of oil, gas, and other petroleum deposits from
12State or federal public lands, including, but not limited to,
13the following classifications of lands if the State or federal
14government owns at least 51% 100% of the underlying mineral
15interests: (1) lands where threatened or endangered species
16occur, as determined pursuant to the federal Endangered Species
17Act or the Illinois Endangered Species Protection Act, (2)
18Illinois Natural Area Inventory sites, (3) nature preserves
19dedicated under the Illinois Natural Areas Preservation Act,
20(4) lands containing a wild and scenic river as designated
21under the Wild and Scenic River Area Act, (5) lands registered
22under the Register of Land and Water Reserves under Part 4010
23of Title 17 of the Illinois Administrative Code, and (6) lands
24on which federal or State laws or regulations prohibit the
25surface extraction or production facility activity, (7) State
26parks, recreation areas, fish and wildlife areas, forests, and

 

 

SB3424- 4 -LRB098 19999 OMW 55226 b

1historic sites, and (8) national forests, national grasslands,
2and national wildlife refuges.
3    (e) The grant of such permits or leases shall be subject to
4the terms and conditions hereinafter set forth in this Act.
5(Source: P.A. 89-445, eff. 2-7-96; 90-490, eff. 8-17-97.)
 
6    (5 ILCS 615/3)  (from Ch. 96 1/2, par. 5003)
7    Sec. 3. The Department shall not is hereby authorized to
8enter into contracts in writing designating any person as the
9permittee of the State of Illinois with the exclusive right to
10prospect and explore not to exceed three sections, or an
11equivalent area, of the public lands of the State of Illinois
12for the occurrence of petroleum therein; such contract to
13contain such conditions as may be prescribed by the rules and
14regulations adopted by the Department in accordance with the
15terms of this Act. Such permit shall be for a period of one (1)
16year or less, in the discretion of the Department, and shall be
17granted free of any monetary consideration whatsoever, except
18as provided in Section 13 of this Act, and except that if more
19than one application for a permit is received with respect to
20the same public lands the Department shall grant such permit to
21the person offering the highest cash bonus therefor, and such
22permittee, pursuant to such contract, shall have the right to
23enter in and upon such lands and prospect and explore the same
24to determine the occurrence of petroleum therein.
25(Source: Laws 1951, p. 1167.)
 

 

 

SB3424- 5 -LRB098 19999 OMW 55226 b

1    (5 ILCS 615/5)  (from Ch. 96 1/2, par. 5005)
2    Sec. 5. For existing permits in effect prior to January1,
32014, no No permittee shall commence any operation upon lands
4covered by his permit until he has compensated the owners of
5private rights therein according to law and has compensated the
6State of Illinois for damage to the surface rights of the State
7in accordance with the rules and regulations adopted by the
8Department.
9(Source: Laws 1951, p. 1167.)
 
10    (5 ILCS 615/7)  (from Ch. 96 1/2, par. 5007)
11    Sec. 7. Every permittee with an existing permit in effect
12prior to January 1, 2015 shall have the option of surrendering
13his permit at any time and shall be relieved of all liability
14thereunder except for physical damage to the premises embraced
15by his permit which have been occasioned by his operations.
16(Source: Laws 1941, vol. 1, p. 943.)
 
17    (5 ILCS 615/8)  (from Ch. 96 1/2, par. 5008)
18    Sec. 8. A permittee with an existing permit in effect prior
19to January 1, 2015, at any time during the life of the permit
20or upon the termination thereof, shall be entitled to a lease
21for the extraction of petroleum from not to exceed one section,
22or an equivalent area, of such land to be selected by such
23permittee. Such lease shall be at a royalty of not more than

 

 

SB3424- 6 -LRB098 19999 OMW 55226 b

1twelve and one-half (12 1/2%) per centum of all petroleum
2produced and saved therefrom or the market value of such
3petroleum at the option of the Department, and shall provide
4for an annual rental, payable in advance, of from one ($1.00)
5dollar to ten ($10.00) dollars per acre, as the Department may
6determine, which rentals shall be credited against future
7royalties. Such leases shall be for a primary term of ten (10)
8years and as long thereafter as oil in commercial quality and
9commercial quantity can be produced from the lands embraced in
10the lease. The form and terms of such leases shall be the same
11as the standard commercial petroleum lease generally in use in
12the territory in which the oil, gas or other petroleum deposits
13are located, with the addition thereto of such terms as in this
14Act and the rules and regulations of the Department are
15provided. Whenever the conditions contained in such standard
16commercial lease are in conflict with the provisions of this
17Act, the provisions of this Act shall control.
18(Source: Laws 1951, p. 1167.)
 
19    (5 ILCS 615/12)  (from Ch. 96 1/2, par. 5012)
20    Sec. 12. For existing permits prior to January 1, 2015, the
21The Department is hereby authorized to cancel any permit or
22lease issued as provided herein for nonpayment of royalties or
23nonperformance by the permittee or lessee of any provision or
24requirement of the permit or lease: Provided, that before any
25such cancellation shall be made, the Department shall mail to

 

 

SB3424- 7 -LRB098 19999 OMW 55226 b

1the permittee or lessee by registered mail, addressed to the
2post office address of such permittee or lessee shown by the
3records of the office of the Department, a notice of intention
4to cancel such permit or lease specifying the default for which
5the permit or lease is subject to cancellation, and if, within
6thirty (30) days after the mailing of said notice to the
7permittee or lessee, he shall remedy the default specified in
8such notice, then no cancellation of the permit or lease shall
9be entered by the Department, but otherwise, the said
10cancellation shall be made and all rights of the permittee or
11lessee under the permit or lease shall thereupon automatically
12terminate: Provided, further, that failure to pay fees required
13under permits within the time prescribed therein shall
14automatically and without notice work a forfeiture of such
15permits and of all rights thereunder.
16(Source: Laws 1951, p. 1167.)
 
17    (5 ILCS 615/13)  (from Ch. 96 1/2, par. 5013)
18    Sec. 13. Upon the expiration or forfeiture of any existing
19permit prior to January 1, 2015 no new permit covering the
20lands, or any of them, embraced by such expired or forfeited
21permit shall be issued for a period of thirty (30) days
22following the date of such expiration or forfeiture. If more
23than one application for a permit covering such lands, or any
24of them, shall be made during such thirty-day period, the
25Department shall issue a permit to such lands, or any of them,

 

 

SB3424- 8 -LRB098 19999 OMW 55226 b

1to the person offering the greatest cash bonus for such permit
2at a public auction to be held at the time and place and in the
3manner as the Department shall by regulation prescribe. Such
4auction shall be held at any time after the expiration of such
5thirty-day period and the only notice thereof shall be by
6entering in a book kept at the office of the Department for the
7purpose, which book shall be a public record, the date, place
8and hour of the holding of such auction.
9(Source: Laws 1951, p. 1167.)
 
10    (5 ILCS 615/14)  (from Ch. 96 1/2, par. 5014)
11    Sec. 14. Whenever the Department shall find it is in the
12best interest of the State and of the production of petroleum,
13it is declared to be lawful for the State, the permittees,
14lessees, operator or any person owning or controlling royalty
15or other interest in separate properties of the same producing
16or prospective petroleum field, to enter into agreements with
17themselves or among each other, subject to the approval of the
18Department, for the purpose of cooperative exploration,
19development and operation of all or a part or parts of such
20field, or for the purpose of the exploration, development or
21operation of all or part or parts of such field as a pool or
22unit, and for the purpose of fixing the time, location and
23manner of drilling and for the purpose of drilling and for the
24purpose of regulating the location, sequence and number of
25exploratory wells required in the case of permits under unit

 

 

SB3424- 9 -LRB098 19999 OMW 55226 b

1operations and leases, and operating of wells for the
2exploration of petroleum on State and private lands and for the
3apportionment and division of the petroleum between the State
4and the several owners of land embraced within the field so
5placed in such pool, taking into consideration the relative
6character and geological showing in respect of said several
7tracts of land so far as the same is reasonably ascertainable,
8the apparent probability of producing petroleum from the whole
9or any part thereof and any and all other apparent factors that
10may tend to aid in arriving at a fair, just and equitable
11participation by the State and the several owners in the
12apportionment and distribution of all the petroleum that shall
13be recovered and saved therefrom. The purpose of this section
14is to prohibit encourage the development and exploration of
15petroleum upon State and federal lands by and through the unit
16plan of development. When it is in the best interests of the
17State, the Department shall compel the adoption of unit plans
18of operation in so far as State lands are included in any
19productive pool or pools if the permittees or lessees of such
20lands shall fail to agree upon a plan of unit operation
21acceptable to the Department, the Department is empowered to
22fix the terms of such unit plan or plans and any permittees or
23lessees affected who fail to abide by such plan shall suffer
24forfeiture of their permits or leases upon notice as herein
25provided.
26(Source: Laws 1951, p. 1167.)
 

 

 

SB3424- 10 -LRB098 19999 OMW 55226 b

1    (5 ILCS 615/16)  (from Ch. 96 1/2, par. 5016)
2    Sec. 16. The Department is hereby required to prescribe and
3publish, for the information of the public, all reasonable
4rules and regulations necessary for carrying out the provisions
5of this Act, and it may amend or rescind any rule or regulation
6promulgated by it under the authority contained herein:
7Provided, that no rule or regulation or amendment of the same
8or any order rescinding any rule or regulation shall become
9effective until after fifteen (15) days from the promulgation
10of the same by publication in a newspaper of general
11circulation published at the State capital and shall take
12effect and be in force at times specified therein. All rules
13and regulations of the Department and all amendments or
14revocations of existing rules and regulations shall be recorded
15in an appropriate book or books, shall be adequately indexed
16and shall be kept in the office of the Department and shall be
17and constitute a public record. Such rules and regulations of
18the Department shall be printed in pamphlet form and furnished
19to the public free of cost on the Department's website.
20(Source: Laws 1951, p. 1167.)
 
21    (5 ILCS 615/19)  (from Ch. 96 1/2, par. 5019)
22    Sec. 19. For After the issuance of any petroleum lease in
23effect before January 1, 2015, the lessee shall proceed to
24develop the petroleum in the lands covered thereby through the

 

 

SB3424- 11 -LRB098 19999 OMW 55226 b

1drilling of such wells as will efficiently extract the
2petroleum therefrom and such development shall take into
3account the productiveness of the producing horizon, the depth
4at which it occurs, the average cost of wells, the market
5requirements obtaining at any given time, and the maintenance
6of proper oil and gas ratios. The Department shall determine,
7either by rule or regulation, or by inclusion in the terms of
8any lease, the rapidity and extent of development of the oil,
9gas or other petroleum field embraced by such lease.
10(Source: Laws 1951, p. 1167.)
 
11    (5 ILCS 615/20)  (from Ch. 96 1/2, par. 5020)
12    Sec. 20. All existing leases prior to January 1, 2015 shall
13provide that the lessee shall drill an offset well to any well
14on adjoining land which is within three hundred fifty (350)
15feet of any outer boundary of the land covered by the lease,
16and which well on adjoining lands is producing petroleum in
17paying quantities and draining the lands covered by the lease,
18such offset to be begun within ninety (90) days from the
19completion of the adjoining well and drilled with due diligence
20to completion.
21(Source: Laws 1941, vol. 1, p. 943.)
 
22    (5 ILCS 615/22)  (from Ch. 96 1/2, par. 5022)
23    Sec. 22. Nothing contained in this Act shall be construed
24as requiring the Department to offer any tract or tracts of

 

 

SB3424- 12 -LRB098 19999 OMW 55226 b

1land for prospecting or lease, but the Department shall have
2power to withhold any tract or tracts from prospecting or
3leasing for petroleum purposes, if in its judgment the best
4interest of the State will be served by so doing.
5(Source: Laws 1951, p. 1167.)
 
6    (5 ILCS 615/6 rep.)
7    (5 ILCS 615/9 rep.)
8    (5 ILCS 615/11 rep.)
9    (5 ILCS 615/17 rep.)
10    (5 ILCS 615/18 rep.)
11    (5 ILCS 615/21 rep.)
12    Section 10. The Oil and Gas Wells on Public Lands Act is
13amended by repealing Sections 6, 9, 11, 17, 18, and 21.
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.