KRS 349.040: Prohibited drilling activities -- Filing requirements for permit application -

- Appeal -- Waiver -- Filing of maps and plans -- Denial of permit.

(1) It is unlawful for any person to drill, commence, operate, deepen, convert, or

stimulate any coalbed methane well, to conduct any horizontal drilling of a coalbed

methane well or to convert any existing oil or natural gas well to a coalbed methane

well, without first securing from the department a permit pursuant to this chapter.

Before any well, borehole , or facility initially used for a coal mining related

purpose, such as a vent hole, is converted for the purpose of recovering coalbed

methane for sale or use, the operator shall obtain a permit and comply with the

provisions of this chapter prior to the time that the well, borehole, or facility is

converted or used for the purpose of recovering coalbed methane for sale or use. It

is unlawful for any person to drill, deepen, convert, or reopen a coalbed methane

well for the production of oil or natural gas or for the injection of water, gas, or

other fluids into any oil or natural gas producing formation until the person has

obtained a permit from the department for a petroleum or natural gas well pursuant

to KRS 353.570. However, no additional permit fee s hall be required if the original

permit for the coalbed methane well has not expired.

(2) Every permit application filed under this section shall be verified and shall contain

the following:

(a) A statement that the applicant claims to have a valid real pr operty interest in,

or the current legal right to produce coalbed methane from a person claiming a

valid real property interest in, the coalbed methane. The statement shall

identify with specificity the nature of the real property interest and the

document or instrument evidencing that interest or right, including recording

information of any recorded document or instrument;

(b) The names and addresses of the coalbed methane well operator and every

person or entity whom the applicant must notify under any s ection of this

chapter;

(c) The name and address of each coal interest holder of any workable coalbed

which is to be penetrated by a proposed coalbed methane well or within seven

hundred fifty (750) horizontal feet or fifty (50) vertical feet of any portio n of

the proposed coalbed methane well;

(d) The name and addresses of each record oil and gas lessee of, the record oil

and gas lessor of, and the operator of all oil and gas formations from the

surface to one hundred (100) feet below the deepest penetration of the coalbed

methane well on the tract upon which the coalbed methane well is proposed to

be located;

(e) The coalbed methane well name or such other identification as the department

may require;

(f) The approximate depth to which the coalbed methane well is to be drilled,

deepened, or converted, the coal seams including the depth and thickness of

each seam that will be completed for production, and any other coal seams

which will be penetrated by the coalbed methane well;

(g) A description of any mean s to be used to stimulate any of the workable

coalbeds penetrated by the coalbed methane well;

(h) If the proposed coalbed methane well will require casing or tubing, the entire

casing program for the coalbed methane well, including the size of each string

of pipe, the starting point and depth to which each string is to be set, and the

extent to which each string is to be cemented;

(i) If the proposed operation is to convert an existing petroleum or natural gas

well, as defined in KRS 353.010(19), or to con vert a vertical borehole or

facility initially used for a coal mining related purpose, such as a vent hole, to

a coalbed methane well, all information required by this section, all

formations from which production is anticipated, and any plans to plug any

portion of the well;

(j) Except for a vent hole proposed to be converted to a coalbed methane well, if

the proposed coalbed methane well will be completed in some but not all coal

seams for production, a plan and design for the coalbed methane well which

will protect all workable coalbeds which will be penetrated by the coalbed

methane well;

(k) If the proposed operations will include horizontal drilling of a coalbed

methane well, a description of the operations, including both the vertical and

horizontal alignment and extent of the coalbed methane well from the surface

to total depth; and

(l) Other information as the department may require consistent with this chapter.

(3) Each application for a coalbed methane well permit shall be accomp anied by the

following:

(a) A permit application fee of three hundred dollars ($300);

(b) A bond in an amount prescribed in KRS 349.120;

(c) A certificate that the applicant's notice requirements of KRS 349.015 have

been satisfied. Certification may be by affidavit of personal service, or the

return receipt card, or other postal receipt, for certified mailing;

(d) If the proposed coalbed methane well will be located within one-half (1/2) of a

mile, measuring horizontally, of a water supply well being used f or residential

or domestic purposes, the applicant will submit the groundwater protection

plan required under KRS 224.70 -110 and applicable administrative

regulations promulgated pursuant thereto for review by the department, or

demonstrate to the department that a plan is not required; and

(e) Proof that the applicant has public liability insurance coverage in an amount

not less than five hundred thousand dollars ($500,000) in aggregate and three

hundred thousand dollars ($300,000) per occurrence for damag es to persons

and property caused by the applicant's operations or proof that the applicant

has satisfied self -insurance requirements as provided by administrative

regulations which shall be promulgated by the department.

(4) Prior to the department's issu ance of a permit to drill a coalbed methane well, a

copy of the written authorization from the mine licensee shall be filed with the

application under the following circumstances:

(a) If the proposed coalbed methane well is to penetrate a workable coalbed that

is within the permitted area of an existing permit or the proposed permitted

area of a permit pending before the division and if the applicant plans to

stimulate, complete, or horizontally drill the coalbed methane well in a

workable coalbed that is within the permitted area of an existing permit or the

proposed permitted area of a permit pending before the division;

(b) If the proposed coalbed methane well is to be located within a surface area

permitted under an existing permit, or the proposed permi tted area of a permit

pending before the division for which no bond release has been obtained; or

(c) If the proposed coalbed methane well is to be located within a surface area

permitted under an existing permit by the division for which a partial bond

release has been obtained.

If a coalbed methane well permit is issued for a well site located within the

boundaries of any coal mine for which a permit has been issued or is pending

pursuant to KRS Chapter 350, the permit shall include a provision specifica lly

stating that the permitted coalbed methane well location is in an area for which a

coal mine permit has been issued or is pending pursuant to KRS Chapter 350 and is

subject to the mine-through rights set forth in KRS 349.030(1).

(5) If a partial bond release for the surface area on which the proposed coalbed methane

well is located has been obtained from the division and the applicant is denied

written authorization from the mine licensee, the applicant may file an appeal with

the review board requestin g approval to drill the proposed coalbed methane well.

When requesting an appeal, the applicant shall submit a verified statement including

the following:

(a) The applicant has met and conferred with or offered to meet and confer with

the mine licensee concerning the authorization;

(b) The mine licensee has refused to provide written authorization to disturb the

permitted area;

(c) The physical area to be disturbed by the proposed well location and the use of

area, including ingress and egress thereto, qual ifies as a commercial or

industrial postmining land use entitling the mine licensee to a complete bond

release for the area to be disturbed by the coalbed methane well operator in

accordance with KRS Chapter 350; and

(d) The applicant has agreed to pay the reasonable and actual costs of the permit

revision required by the division to affect the incremental bond release for the

proposed area to be disturbed by the coalbed methane well operator, not to

exceed five thousand dollars ($5,000).

(6) Prior to the issuance of a permit to drill a coalbed methane well, the applicant shall

grant assignable subsidence waivers to any mine licensee if requested in an

objection filed pursuant to KRS 349.060 and, if required, to allow present or future

mining with planned subsidence under KRS Chapter 350. However, this subsection

and any subsidence waivers shall in no way waive, affect, or impair the ability of

the applicant or the applicant's successors or assigns to pursue any remedies for

damages to persons, or to improved or tangible property, suffered or incurred as a

result of any subsidence caused by the mine licensee or the mine licensee's

successors or assigns. The mine licensee, its successors or assigns, shall be liable

for any and all damages to persons or to impro ved or tangible property proximately

caused by the mine licensee.

(7) If the mine licensee is mining in a coal seam that is not being produced by the

coalbed methane well operator and has not exercised his or her mine-through rights,

as set forth in KRS 34 9.030(1) or (2), in any coal mine before removing any coal or

other material or driving any entry or passageway within five hundred (500)

horizontal feet of the vertical segment of a coalbed methane well or within fifty (50)

vertical feet of the horizontal segment of a coalbed methane well, the mine licensee

shall forward simultaneously to the well operator and to the department, by certified

mail, return receipt requested, or by registered mail, a copy of the maps and plans

required by law to be filed and kept up to date. Maps or plans shall show the mine

workings and projected mine workings within five hundred (500) horizontal feet of

the coalbed methane well. However, the issuance of any coalbed methane well

permit shall not preclude or prevent coal mining outside two hundred (200) feet, but

not closer than fifty (50) feet, of the vertical segment of a coalbed methane well or

outside of the workable coalbed in which the horizontal segment of a coalbed

methane well is located, unless specified by the depart ment for reasons of mine or

well safety. The mine licensee shall not mine within fifty (50) feet of the vertical

segment of a coalbed methane well without the written authorization of the coalbed

methane well operator. A mine licensee may file a request wi th the department to

mine closer than two hundred (200) feet of the vertical segment of the coalbed

methane well. The mine licensee shall forward simultaneously to the well operator

and the department, by certified mail, return receipt requested, or by registered mail,

a request to mine closer than two hundred (200) feet, but not closer than fifty (50)

feet, of the vertical segment of the coalbed methane well, which shall be

accompanied by the following:

(a) A copy of the maps and plans required by law to b e filed and kept up to date,

showing on the copy of the map or plan its mine plan workings and projected

mine workings beneath the tract of land and within two hundred (200) feet,

but not closer than fifty (50) feet, of the vertical segment of the coalbed

methane well; and

(b) A statement that the applicant has met and conferred with, or offered to meet

and confer with, the well operator concerning the mine licensee's plan to mine

closer than two hundred (200) feet, but not closer than fifty (50) feet, of t he

vertical segment of the coalbed methane well.

The well operator may, within twenty (20) days of receipt of the documents listed in

paragraphs (a) and (b) of this subsection, file specific objections in writing with the

department. When objections are f iled, the department shall provide a copy of the

objections to the mine licensee and fix a time and place for an informal hearing. The

hearing shall be held not more than ten (10) days from the end of the twenty (20)

day period. At the hearing, the mine li censee and the well operator, in person or by

representative, shall consider the objections and seek agreement on the character

and the extent of operations to be conducted within less than two hundred (200)

feet, but not closer than fifty (50) feet, of th e vertical segment of the coalbed

methane well. If no agreement can be reached, the department, after administrative

hearing conducted in accordance with KRS Chapter 13B, shall make a decision

defining what coal, if any, is necessary to be left for the saf e protection, use, and

operation of the well. The department's decision shall be subject to appeal by either

party as provided in this chapter. The department shall keep a complete record of all

hearings. The mine licensee shall, every six (6) months, whil e mining within two

hundred (200) feet, but not closer than fifty (50) feet, of the vertical segment of the

coalbed methane well, file up -to-date maps and plans required by this section, or

file new maps and plans complete to date.

(8) The department may deny the issuance of a permit if it determines that the applicant

has a documented pattern or practice of substantial violations of the provisions of

this chapter and has failed to abate or seek review of the violations. If the

department finds that a subst antial violation has occurred with respect to existing

operations and that the operator has failed to abate or seek review of the violation in

the time prescribed, the department may suspend the permit. After a suspension, the

operator shall forthwith ceas e all work being conducted under the permit until the

department reinstates the permit. The department shall make a written finding of its

determination and may enforce the determination in Circuit Court pursuant to KRS

349.145.