Oil And Gas Law Alert: South Dakota Considering New Oil And Gas Regulations; Increased State Oversight Likely

by Stinson Leonard Street
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Rather than wait for the South Dakota Legislature to pass new laws, the South Dakota Board of Minerals and Environment has announced plans to hold a public hearing on proposed rules reforming South Dakota's regulation of the state's oil and gas industry.

The hearing, to be held on January 17, 2013, in Pierre, South Dakota, is part of a process that will likely result in the establishment of rules requiring public reporting of data on wells where hydraulic fracturing is used. The rules would set broader and more detailed standards for interim reclamation and final reclamation of oil and gas wells. The proposals come in the wake of work by a special committee of the state Legislature that studied oil and gas issues during 2012. The study committee submitted eight measures to be considered by the legislature during the 2013 session, which begins January 8.

Although not confirmed, industry trends suggest a likelihood that the directive ultimately issued by the Board of Minerals and Environment will be similar to the rule changes that occurred in North Dakota in April 2012, which provided a multitude of amended regulations affecting oil and gas operations there.

Leonard, Street and Deinard Shareholder Jannelle Combs testified before the North Dakota Industrial Commission expressing concerns about the North Dakota rule changes during a hearing in 2011. Significant changes adopted in North Dakota that may be embraced by South Dakota include:

  • Disclosure on FracFocus is required within 60 days of well completion.
  • Reserve pits can be approved for depths greater than 5000 feet if they utilize low- sodium content, water-based mud systems.
  • Amended pressure-testing requirements for casing strings.
  • Additional requirements for automatic shut-down equipment.

In addition to Frac-Fluid reporting considerations, the South Dakota Board of Minerals and Environment has responded to concerns expressed by surface owners in regard to well reclamation rules. The proposed rules specifically mention replacing topsoil, reseeding, revegetation, grading, disposal of drilling waste, backfilling pits, correcting collapsed pits and trenches, controlling weeds and erosion, removing equipment, disposal of demolition debris and generally returning disturbed areas back to original condition or a condition acceptable to the owner. Current reclamation rules in South Dakota only apply to well sites after they are plugged and abandoned. The proposed reclamation rule is designed to address these issues during the time between well completion and abandonment.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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