January 23, 2002
HOUSE BILL No. 1227
DIGEST OF HB 1227
(Updated January 16, 2002 12:43 PM - DI 69)
Citations Affected: IC 14-37.
Synopsis: Oil and gas environmental fund. Amends the fee and
bonding requirements for oil and gas well permits. Eliminates the
separate fee for Class II wells. Establishes new minimum and
maximum balances for the oil and gas environmental fund. Allows the
department of natural resources to use a percentage of the fund for
Effective: July 1, 2002.
January 10, 2002, read first time and referred to Committee on Environmental Affairs.
January 22, 2002, amended, reported _ Do Pass.
January 23, 2002
Second Regular Session 112th General Assembly (2002)
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HOUSE BILL No. 1227
A BILL FOR AN ACT to amend the Indiana Code concerning
natural and cultural resources.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 14-37-4-6; (02)HB1227.1.1. -->
SECTION 1. IC 14-37-4-6 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 6. (a) A person must
submit the following with an application for a permit:
(1) A bond under IC 14-37-6.
(2) A permit fee of one hundred dollars ($100) payable to the
(b) Permit fees collected under this section must be deposited in
the oil and gas fund established by IC 6-8-1-27.
SOURCE: IC 14-37-5-1; (02)HB1227.1.2. -->
SECTION 2. IC 14-37-5-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 1. (a) This section does
not apply to a noncommercial gas well drilled on real estate owned
by a resident of Indiana if:
(1) the deputy director has waived the bond described in
(2) the owner submits written proof of financial
(3) the owner submits on a division form an agreement to
maintain and abandon the well in accordance with IC 14-37.
The deputy director may require the agreement described in
subdivision (3) to be recorded.
(b) An oil and gas well owner or operator must pay an annual fee
for each Class II well permitted or authorized under this article. that is
based on the number of wells for oil and gas purposes for which the
person has permits as of November 1 of each year. The total fees
required are as follows:
(1) For one (1) permit, one hundred fifty dollars ($150).
(2) For two (2) through five (5) permits, three hundred dollars
(3) For six (6) through twenty-five (25) permits, seven
hundred fifty dollars ($750).
(4) For twenty-six (26) through one hundred (100) permits,
one thousand five hundred dollars ($1,500).
(5) For more than one hundred (100) permits, one thousand
five hundred dollars ($1,500) plus fifteen dollars ($15) for
each permit over one hundred (100).
(b) (c) The commission shall adopt rules under IC 4-22-2 and
IC 14-37-3 setting the amount of the annual fee required by this
section. subsection (b):
(1) applies to each well for oil and gas purposes in existence on
November 1 of each year; and
(2) must be paid to the department not later than February 1
of the following year.
(d) The department shall deposit the fees collected under this
section into the oil and gas environmental fund established by
SOURCE: IC 14-37-5-2; (02)HB1227.1.3. -->
SECTION 3. IC 14-37-5-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 2. (a) Notwithstanding
section 1(b) of this chapter, if the amount in the oil and gas
environmental fund established by IC 14-37-10-2 is more than one
million five hundred thousand dollars ($1,500,000) on November
1 of a year, the annual fee required by section 1 of this chapter
(1) applies to a Class II well in existence on February 1 of a year;
(2) is due on July 1 of the same year.
must be reduced by seventy-five percent (75%). However, the
department shall charge a fee of at least fifty dollars ($50).
(b) The fee required under subsection (a) remains in effect until
the amount in the oil and gas environmental fund is less than one
million dollars ($1,000,000) on November 1 of a year.
SOURCE: IC 14-37-6-1; (02)HB1227.1.4. -->
SECTION 4. IC 14-37-6-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 1. (a) Except as
otherwise provided in this chapter, this section applies to the following:
(1) An applicant for a permit under this article who has never
been granted a permit for a well for oil and gas purposes
under this article.
(2) A person who
will create, modify, or acquire a well for oil and
gas purposes that has not been plugged and abandoned. has
demonstrated a pattern of violation under this article within
the previous two (2) years.
(3) A person who has failed to pay a civil penalty imposed
under IC 14-37-13.
(4) A person who has failed to pay an annual fee required
under IC 14-37-5.
(b) In addition to the annual fee required under IC 14-37-5, an
and or a person described in subsection (a) shall execute
and file with the department:
(1) a bond of two thousand five hundred dollars
($2,500) for each well;
(2) a bond in any amount if the number of wells does not exceed
the number determined by dividing the principal amount of the
bond by two thousand five hundred dollars
(3) a blanket bond of
thirty forty-five thousand dollars ($30,000)
($45,000) for any number of wells.
SOURCE: IC 14-37-10-3; (02)HB1227.1.5. -->
SECTION 5. IC 14-37-10-3, AS AMENDED BY P.L.236-2001,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 3. The following shall be deposited in the fund:
(1) Permit fees received under IC 14-37-4-6.
(2) (1) Annual fees for Class II oil and gas wells received under
(3) (2) Accrued interest and other investment earnings of the
(4) (3) Civil penalties collected under IC 14-37-13-3.
(5) (4) Gifts, grants, donations, or appropriations from any source.
SOURCE: IC 14-37-10-4; (02)HB1227.1.6. -->
SECTION 6. IC 14-37-10-4 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 4. (a) Except as
provided in subsection (d), money in the fund does not revert to the
state general fund at the end of a state fiscal year.
(b) The total amount of money in the fund may not exceed one
million five hundred thousand
Any amount of money in the fund exceeding one million five hundred
($1,000,000) ($1,500,000) on November 1 of a year
reverts to the oil and gas fund established by IC 6-8-1-27. The fund
must maintain a balance of at least five hundred thousand dollars
($500,000) as a surety fund for operators who are not required to
execute a bond under IC 14-37-6-1. Expenditures that would
reduce the fund below five hundred thousand dollars ($500,000)
must be approved by the budget agency.
(c) The treasurer of state shall invest the money in the fund not
currently needed to meet the obligations of the fund in the same
manner as other public money may be invested. Interest that accrues
from these investments shall be deposited in the fund.
(d) If the fund is abolished, all money in the fund is transferred to
the state general fund.
(e) The expenses of administering the fund shall be paid from
money in the fund. However, the department may not expend more
than five percent (5%) of the money in the fund for administering
the fund each state fiscal year.