ENERGY AND ENVIRONMENT CABINET 

Steven L. Beshear 

Governor 

Department for Natural Resources 

Division of Oil and Gas 

Post Office Box 2244 

Frankfort, KY 40602 

Phone: (502) 573-0147 Fax: (502) 573-1099 

http://oilandgas.ky.gov 

February 9, 2015 

Andrew V. McNeill 

KOGA Executive Director 

306 W. Main St, Suite 404 

Frankfort, KY 40601 

RE: Public Notice No. KY-UIC-1-2014 

Dear Mr. McNeill: 

Leonard K. Peters 

Secretary 

The Division of Oil and Gas is in receipt of the comments from the Kentucky Oil & Gas 

Association (KOGA) regarding the Division's application for primary responsibility of the Class 

II Underground Injection Control Program under Section 1425 of the Safe Drinking Water Act. 

Secondly, I appreciate your attendance at the public hearing held on September 23, 2014 and 

KOGA's support of this endeavor. 

The Division understands KOGA's concern of lack of staff in order to meet the needs of the 

Class II UIC program. The Division expects to receive some financial assistance in the form of a 

grant in order to hire additional staff to meet this expectation. This grant would be renewable 

every two years so the Division does not expect to require additional appropriations from the 

Kentucky General Assembly in the future. 

There is a fee schedule already in place that would cover the Class II UIC wells. KRS 353.590 

(2) a & b call for a $300.00 permit fee and a fee not to exceed $50.00 for UIC wells. Also, these 

wells would be subject to the $50.00 administrative fee in accordance with KRS 353.745. The 

Division would require a total of $400.00 to permit a Class II UIC well. 
Thanks again for KOGA's support as the Division move's forward with this endeavor. If you 

have any questions, please give me a call. 

Sincerely 

Kimberly S. C ings, Directo 

KY Division of Oil & Gas 
KDGA 

KENTUCKY OIL & GAS ASSOCIATION 

PUBLIC NOTICE No. KY-UIC-1-2014 

Fax 502.226.3626 

www.Jcyoilga:. org 

September 23, 2014 

Dear Kentucky Division of Oil and Gas, 

The Kentucky Oil and Gas Association ("KOGA") is the industry association for Kentucl-y's oil and gas 

producers. Formed in 1931, KOGA has 240 member companies representing core industry sectors (producers, 

drillers and field services), associated midstream and downstream sectors (pipelines, transmission and storage, 

refmeries and processors and local distribution companies} and professional services (fmance, legal, engineering 

and surveying). 

Kentucky's oil and gas industry is a St.t billion industry in the state's economy. In 2013, the otl and gas industry 

supported over 3,200 jobs in direct and downstream industry sectors. The average annual wage for oil and gas 

jobs is between SSO,OOO to $60,000. Last year, Kentucky's oil and gas industry contributed over S40 million in 

tax revenues to state and local governments. 

In 2013, thirty-four (34) Kentud.-y counties reported natural gas production. Over ninety-five percent of the 

state's natural g:1.s production comes from eastern Kentucky counties. Last year, si.'<ty three (63) Kentucky 

counties reported oil production. Oil production in Kentucky has increased by 21% since 2011. 

Supporting the Division of Oil and Gas's (the "Division") efforts to attain Primary Enforcement Responsibility 

for Class II Injection Wells has long been a priority for KOGA and Kentucky's otl and gas industry.• We were 

pleased to see that the Division has submitted application to assume primacy over the program. It is an 

important step forward. 

An c.'\perienced Cl:l.ss II well operator recently shared that it took 18 months to secure a permit from USEPA 

Region 4.~ KOGA is encouraged d1at the Division has stated it is their goal to issue UIC permits within two 

weeks. The Division has a solid record on timely permit issuance and, even if the two-week turnaround proves 

to be a bit ambitious, KOGA believes state primacy will significantly speed up the process. 

1 KOGA and the industty have: been central participants in the legislative and regulatory process that resulted in KB!i 

353.570, KRS 353.590, KR.<.; 353.522 and 805 KAR !:! W Undewound [ojcwon Control. 

2 To be fair to Region 4, the: operator shared that the amount of time to secure: the permit was an 

several reoremc:nts of key personnel. 

SEP 2 6 2014 

DIVISIOf·.J Ci: CIL & :_:.t: 1 
Enforcement (p. 15); Class II Well Inventory (p. 20); Exempt Aquifers (p. 20); Public Participation in 

Permit Issuance (p. 21) and Public Comments (p. 22). 

• Generally, KOGA believes the Division has complied and presented a complete and accurate 

collection of forms and documents in the various Appendices and attachments. 

• KOGA believes the Division must provide additional detail and clarity on the following items: 

1. The proposal states "current (Division) staff will manage the Class II UIC program; 

the ... Assistant Director will assume the role as UIC Manager and initially administer and 

process Class II permit applications, inspection duties will be assumed by existing fidd staff." 

(p. 18) KOGA believes that the Division already needs additional staff to handle its current 

responsibilities. The proposal's intent to add new responsibilities to current staff could impact 

current agency operations. 

RECOMMENDATION: The Division should describe what, if any, impacts this 

initial management approach will have on current agency operations. 

2. The proposal states "the (Division) proposes to hire an additional environmental inspector." 

This inspector will be uained to handle UIC inspections. The proposal anticipates the new 

mspector will be hired "within the first ye:u of primacy approval." (p. 18) It is unclear why the 

Division believes it could take up to one-year to make this hire. 

RECOMMENDATION: The Division should commit to hiring the additional 

environmental inspector within six months of primacy approval. 

3. The proposal includes a two-year program budget Within that proposed budget, 75% of the 

necessary resources ($352,959.72) to administer the program comes from a USEPA federal 

grant. There is no discussion of how the program will be sustained beyond the two-year period. 

Is the USEPA grant a recurring funding source? Does d1e Division anticipate the need for 

additional and recurring general fund appropriations from the Kentucky General Assembly? 

RECOMMENDATION: The Division should describe how it intends to secure the 

necessary budgetary resources to support the UIC program over the long-hauJ.l 

4. KRS 353.592 authorizes the Division to promulgate regulations establishing "a schedule of 

fees for the mechanical integrity testing and periodic regisuation of Class II wells to be paid 

3 If the Division anticipates the need to secure future general fund appropriations to support the program, KOGA 

believes the industry is ready to support that effort. It is impormnt to understand the long term fundin~~lann..!laUJQO.tUS~-::=-;;:::::1 

p~s~i~le, so the industry can consider an advocacy strategy to support any future UIC related budget cqg.-mtfh~ \ f E 0 

DIVISion. n c:v · 

SEP 2 6 2014 
• 

program? If so, does it believe it bas that authority under KRS 353.592 to 

establish permitting fees? If not, does the Division believe the statute should 

be amended to grant it the authority to establish permitting fees? 

Does the Division anticipate establishing fees for mechanical integrity testing 

and periodic registration of Class II wells? If so, bow much are those fees 

anticipated to be and bow will they be established? 

KOGA believes an effective UIC Class II well program is essential to the future growth of the industry. 

KOGA's comments and recommendations are intended to strengthen the Division's application, We support 

IOGCC's and GWPC's "States First Initiative" and fundamentally believe that states are best positioned to 

regulate the oil and gas industry. Kentucky's primacy over the Class II Injection program embodies the "States 

First" philosophy. 

KOGA appreciates the oppocrunity to participate in this process. Please let us know if you would like additional 

input, clarification or discussion of the items and issues we have presented in these comments. 

Respectfully, 

Andrew V. McNeill 

KOGA Execuuve Director 

306 W. Main St. Suite 404 

Frankfort KY 40601 

502·226·19 55 

amcneill@kyoilgns.org 

W\V\V.kl•oiJgng.org 

RECEIVED 

SEP 2 6 2014 

DIVISION C F OIL & GAS