senate Bill S786

2011-2012 Legislative Session

Establishes a financial security fund for natural gas and oil producers

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to environmental conservation
Jan 05, 2011 referred to environmental conservation

S786 - Bill Details

Current Committee:
Senate Environmental Conservation
Law Section:
Environmental Conservation Law
Laws Affected:
Add ยง23-0315, En Con L
Versions Introduced in 2009-2010 Legislative Session:
S3410

S786 - Bill Texts

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Establishes a natural gas and oil well security fund to enable natural gas and oil producers to meet the financial security requirements in the environmental conservation law for the permitting, operation, maintenance and plugging of natural gas and oil wells.

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BILL NUMBER:S786

TITLE OF BILL:

An act
to amend the environmental conservation law, in relation to establishing
a fund for the natural gas and oil producing industry to make financial
security affordable for natural gas and oil producers who own, operate,
maintain and plug natural gas and oil wells

PURPOSE:

The purpose of this legislation is to create a fund to provide a
secure and dedicated source of money to plug natural gas and oil
wells that have been abandoned.

SUMMARY OF PROVISIONS:

The environmental conservation law is amended by adding a new section
23-0315.

JUSTIFICATION:

This legislation would create a dedicated fund, administered by the
Commissioner of Environmental Conservation, which would be used to
plug and secure natural gas and oil wells that are abandoned and
determined to be an imminent or immediate hazard to the public safety
or environment.

Many New York State natural gas and oil producers have been subjected
to increasing and excessive financial security costs rendering
plugging bonds unaffordable or unavailable. Steps to ensure that the
Department of Environmental Conservation has the tools and funds
necessary to require that natural gas and oil wells be properly
plugged need to be strengthened.

A natural gas and oil producer would be able, in lieu of the financial
security requirements currently required, to participate in the
natural gas and oil well security fund. A producer who is
registered and permitted by the Department would pay ten dollars per
well per year, with an initial one time fee of five hundred dollars.

LEGISLATIVE HISTORY:

2009-2010: S.3410 Referred to Environmental Conservation
2007-2008: S.401/A.2581 Referred to Environmental Conservation
2006: S.6234/A.645 Referred to Environmental Conservation
2003-2004: A.8820/S.5451 Referred to Environmental Conservation

FISCAL IMPLICATIONS:

This legislation would create a fund which would be used to plug
abandoned natural gas and oil wells.

EFFECTIVE DATE:


This act shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   786

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  YOUNG  -- 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
  establishing  a fund for the natural gas and oil producing industry to
  make financial security affordable for natural gas and  oil  producers
  who own, operate, maintain and plug natural gas and oil wells

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The environmental conservation law is amended by  adding  a
new section 23-0315 to read as follows:
S 23-0315. FINANCIAL SECURITY FUND.
  1.  NOTWITHSTANDING  ANY  OTHER  PROVISION OF LAW, THE COMMISSIONER OF
TAXATION AND FINANCE AND COMPTROLLER ARE HEREBY DIRECTED AND  AUTHORIZED
TO  ESTABLISH  A  NATURAL  GAS  AND  OIL WELL SECURITY FUND (HEREINAFTER
REFERRED TO IN THIS SECTION AS THE "FUND") TO  ENABLE  ELIGIBLE  NATURAL
GAS  AND  OIL  PRODUCERS  TO MEET THE FINANCIAL SECURITY REQUIREMENTS OF
THIS CHAPTER FOR THE PERMITTING, OPERATION, MAINTENANCE AND PLUGGING  OF
NATURAL GAS AND OIL WELLS. THE FUND SHALL BE ADMINISTERED BY THE COMMIS-
SIONER IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. IN LIEU OF THE
FINANCIAL  SECURITY REQUIREMENTS ESTABLISHED BY THE COMMISSIONER OR THIS
CHAPTER, A NATURAL GAS OR OIL PRODUCER MAY SATISFY THE FINANCIAL SECURI-
TY REQUIREMENTS FOR NATURAL GAS OR OIL WELL PLUGGING AND ABANDONMENT  BY
PARTICIPATION IN THE NATURAL GAS AND OIL WELL SECURITY FUND.
  2.  (A) A NATURAL GAS PRODUCER WHO IS THE OWNER AND/OR OPERATOR OF ANY
NATURAL GAS WELL DRILLED TO A COMPLETION DEPTH OF NO MORE THAN SIX THOU-
SAND FEET THAT HAS BEEN REGISTERED WITH AND PERMITTED BY THE  DEPARTMENT
SHALL BE ELIGIBLE TO PARTICIPATE IN THE FUND.
  (B)  AN  OIL PRODUCER WHO IS THE OWNER AND/OR OPERATOR OF ANY OIL WELL
DRILLED TO A COMPLETION DEPTH OF NO MORE THAN SIX THOUSAND FEET THAT HAS

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02705-01-1

S. 786                              2

BEEN REGISTERED WITH AND PERMITTED BY THE DEPARTMENT SHALL  BE  ELIGIBLE
TO PARTICIPATE IN THE FUND.
  (C)  THE  RATE  OF PAYMENT INTO THE FUND SHALL BE TEN DOLLARS PER WELL
PER YEAR.
  (D) THE COMMISSIONER SHALL DEPOSIT ALL MONIES  RECEIVED  FROM  NATURAL
GAS AND OIL PRODUCERS FOR THIS FUND AND ALL FUNDS SO RECEIVED AND DEPOS-
ITED  IN  SUCH  FUND  SHALL  NOT BE DEEMED TO BE STATE FUNDS.  THE COMP-
TROLLER SHALL BE EMPOWERED TO INVEST  SUCH  FUNDS  PURSUANT  TO  SECTION
NINETY-EIGHT-A  OF THE STATE FINANCE LAW CONSISTENT WITH THE PURPOSES OF
THIS SECTION. THE COMMISSIONER IS HEREBY AUTHORIZED TO  DRAW  UPON  SUCH
FUNDS,  IN  HIS  OR HER DISCRETION, TO PURCHASE CREDIT INSURANCE FOR THE
BENEFIT OF THE FUND. THE COMMISSIONER SHALL MAKE AN ANNUAL REPORT OF THE
RECEIPTS TO AND DISBURSEMENTS FROM  THE  FUND,  INCLUDING  THE  COST  OF
ADMINISTRATION OF THE FUND, WHICH REPORT SHALL BE MADE AVAILABLE TO EACH
ELIGIBLE  NATURAL GAS AND OIL PRODUCER AND TO ANY OTHER PERSON HAVING AN
INTEREST IN THE FUND. A COPY OF SUCH REPORT SHALL BE  FORWARDED  TO  THE
DIRECTOR  OF  THE  DIVISION OF THE BUDGET, THE CHAIRPERSON OF THE SENATE
FINANCE COMMITTEE AND THE CHAIRPERSON OF THE  ASSEMBLY  WAYS  AND  MEANS
COMMITTEE.
  (E)  WHEN  THE  FUND  HAS  ACCUMULATED  FIFTY THOUSAND DOLLARS OR SUCH
GREATER OR LESSER AMOUNT WHICH SHALL BE SUFFICIENT TO COVER THE COST  OF
PLUGGING  UP  TO  FIVE  WELLS PER YEAR, CALCULATED UPON THE BASIS OF THE
AVERAGE COST OF PLUGGING WELLS TYPICALLY COVERED BY THE FUND DURING  THE
PRECEDING CALENDAR YEAR, AS THE COMMISSIONER MAY DETERMINE IS SUFFICIENT
TO  PROTECT  THE  PLUGGING  REQUIREMENTS  OF  PRODUCERS, HE OR SHE SHALL
ADMINISTER THE FUND IN THE MANNER PRESCRIBED IN THIS SECTION.
  (F) IF A NATURAL GAS OR OIL PRODUCER PARTICIPATING IN THE FUND  ELECTS
TO  TERMINATE  HIS  OR  HER  PARTICIPATION THEREIN, HE OR SHE SHALL GIVE
NOTICE IN WRITING TO THE COMMISSIONER SIX MONTHS PRIOR TO THE WITHDRAWAL
AND HE OR SHE SHALL FILE A SURETY BOND OR  OTHER  SECURITY  NINETY  DAYS
BEFORE THE WITHDRAWAL DATE. UPON BEING SATISFIED THAT THE NATURAL GAS OR
OIL PRODUCER IS NOT IN DEFAULT IN ANY PLUGGING OR GAS OR OIL WELL PERMIT
REQUIREMENTS, THE COMMISSIONER SHALL AUTHORIZE THE COMPTROLLER TO PAY TO
SUCH PRODUCER HIS OR HER PRO RATA SHARE WITHIN THIRTY DAYS.
  (G) ANY NATURAL GAS OR OIL PRODUCER WHO FIRST ELECTS TO PARTICIPATE IN
THE  FUND  SHALL  MAKE  AN  INITIAL  PAYMENT TO THE FUND OF FIVE HUNDRED
DOLLARS. UPON THE PAYMENT OF THE  INITIAL  DEPOSIT  INTO  THE  FUND,  AS
REQUIRED  HEREIN,  A  PRODUCER  ELECTING  TO PARTICIPATE IN THE FUND MAY
APPLY TO THE COMMISSIONER FOR TERMINATION OR ADJUSTMENT OF  AN  EXISTING
BOND OR EXISTING ALTERNATIVE SECURITY REQUIREMENT FILED WITH THE COMMIS-
SIONER.
  3. THE COMMISSIONER, AFTER NOTICE AND PUBLIC HEARING, IS AUTHORIZED TO
ADOPT,  AMEND,  REPEAL  AND  ENFORCE SUCH RULES AND REGULATIONS THAT THE
COMMISSIONER DEEMS NECESSARY TO CARRY OUT THE PROVISIONS AND  INTENT  OF
THIS FUND.
  S 2. This act shall take effect immediately.

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