DEPARTMENT OF ENVIRONMENTAL QUALITY

                   GEOLOGICAL AND LAND MANAGEMENT DIVISION

                           OIL AND GAS OPERATIONS

(By authority conferred on the supervisor of wells and the  director  of  the 
department of environmental quality by section 61506  of  1994  PA  451,  MCL 
324.61506, sections 9 and 251 of 1965 PA 380,  MCL  16.109  AND  16.351,  and 
Executive Reorganization Order No. 1991-22, MCL 299.13).

                            PART 1.  GENERAL PROVISIONS


R 324.101    Application of rules.
  Rule 101. These rules govern  oil  and  gas  operations  in  the  state  of 
Michigan and supersede all rules and regulations issued under  the  authority 
of Act No. 61 of the Public Acts of 1939, as amended, being §319.1 et seq.
of the Michigan Compiled Laws, except for special well spacing and  proration 
orders and determinations that have application  to  specifically  designated 
areas throughout Michigan.

  History:  1996 AACS.


R 324.102    Definitions; A to M.
  Rule 102. As used in these rules:
  (a) "Act" means 1994 PA 451, MCL 324.101 et seq.
  (b) "ANSI" means the American national standards institute.
  (c) "API" means the American petroleum institute.
  (d) "Authorized representative of the  supervisor"  means   a    department 
of environmental quality employee who is charged  with   the   responsibility 
for implementation of the act or these rules.
  (e) "Blowout  prevention   equipment"   means    a    casinghead    control 
device designed to control the flow of fluids from the well bore by   closing 
around the drill pipe or production tubing or completely sealing   the   hole 
in  the absence of drill pipe or production tubing.
  (f) "Brine" means all nonpotable water  resulting,  obtained,  or  produced 
from the exploration, drilling, or production of oil or gas, or both.
  (g) "Central production facility" means production  equipment   which   has 
been consolidated at a central location that provides for the commingling  of
 oil or gas production, or both, from 2 or   more   wells    or    production 
units  of diverse ownership or from 2 or more prorated  wells  or  production 
units.
  (h) "Conformance bond" means a surety bond  that  has  been  executed  by a 
surety company authorized to do business in   the    state    of    Michigan, 
cash, certificates of deposit, letters of credit,   or    other    securities 
that  are filed by a person and  accepted  by  the  supervisor   to    ensure 
compliance  with the  act,  these  rules,  permit  conditions,  instructions,
 orders  of  the supervisor, or an order of the department  of  environmental 
quality.
  (i) "Development well" means a well which has as its objective  an  oil  or 
gas pool known to be, or have been, productive through the discovery well  of 
the oil or gas pool and which is located either within a  2-mile  radius   of 
the discovery well or on the same structure as the discovery well.
  (j) "Directionally drilled well" means a well purposely    deviated    from 
the vertical using controlled angles to reach an objective location.
  (k) "Discovery  well"  means  a   well   that   discovers   a    new    and 
previously untapped oil or gas pool.  A discovery well  may  open  up  a  new 
field or it may locate a previously unknown oil or gas pool in an old field.
  (l) "Drilling completion" means  the  time  when  a  well    has    reached 
its permitted depth or the supervisor has determined drilling has ceased.
  (m) "Drilling operations" means  all  of  the  physical   and    mechanical 
aspects of constructing a well for the exploration or production of  oil   or 
gas,  or both, for injection of fluids associated with the production of  oil 
or  gas, or both, or the storage  of  natural  hydrocarbons   or    liquefied 
petroleum  gas derived from oil or gas, and includes all of the following:
  (i) Moving drilling equipment onto the drill site.
  (ii)Penetration of the ground by the drill bit and  drilling  of  the  well 
bore.
  (iii)Casing and sealing of the well bore.
  (iv)Construction of well sites and access roads.
  (n) "Drilling unit" means the  area  prescribed  by  an   applicable   well 
spacing rule or order for the granting of  a  permit  for  the  drilling  and 
operation  of an oil or gas well, or both.
  (o) "Facility piping" means piping that connects any of the following:
  (i) Compressors.
  (ii)Flares.
  (iii)Loadouts.
  (iv)Separators.
  (v) Storage tanks.
  (vi)Transfer pumps.
  (vii)Treatment equipment.
  (viii)Vents.
  (p) "Fence" means a structure which is designed  to  deter    access    and 
which consists of  not  less  than  2  strands  of  barbed  wire,  1   strand 
being approximately  18  inches  above  the  ground  and  the  other   strand 
being approximately 42 inches above the ground,   secured    to    supporting 
posts  or means an equivalent structure that deters access.
  (q)  "Final  completion"  means  the  time   when    locating,    drilling, 
deepening, converting,  operating,  producing,  reworking,   plugging,    and 
proper  site restoration have been performed on  a   well   in    a    manner 
approved  by  the supervisor,  including  the  filing  of    the    mandatory 
records,  and  when  the conformance bond has been released.
  (r) "Flow line" means piping that connects  a  well   or   wells    to    a 
surface facility.
  (s) "Fresh  water"  means  water  which  is   free   of    contamination in 
concentrations that may cause disease or harmful  physiological  effects  and 
which is safe for human consumption.
  (t) "Gas storage" means the use of a  depleted  oil  or  gas   pool,   salt 
cavern, or other porous strata utilized for the purpose  of   injecting   and 
withdrawing gas from the depleted oil or gas  pool,  salt  cavern,  or  other 
porous strata.
  (u) "Gathering line" means a pipeline that transports  natural  gas  from a 
surface facility to a transmission pipeline.
  (v) "Geologist" means a person  who  is  certified  as  a  geologist  by  a 
credible geological professional association or who, by reason of his or  her 
knowledge of the natural sciences, mathematics, and the principles of geology
 acquired by professional education and practical experience, is qualified to 
engage in the practice of the science of geology.
  (w) "Groundwater" means  water  below  the  land  surface  in   the    zone 
of saturation.
  (x)  "Injection  well"  means  a  well   used   to   dispose    of,    into 
underground  strata,  waste  fluids  produced  incidental  to  oil  and   gas 
operations or a  well used to inject water, gas, air, brine, or other  fluids 
for  the  purpose  of increasing the ultimate recovery of hydrocarbons from a 
reservoir or for  the storage of hydrocarbons.
  (y) "Instruction" means a written  statement  of   general    applicability 
which is  issued  by  the  supervisor,  which  conforms  with  the  act   and 
rules promulgated under the  act,  and  which  clarifies  or   explains   the 
applicability  of  the  act  or  rules  to  commonly   recurring   facts   or 
circumstances.
  (z) "Multiple zone completion" means a  well  constructed   and    operated 
to separately produce oil or gas, or both, from more than 1 reservoir through
 1 well bore.

  History:  1996 AACS; 2001 AACS; 2002 AACS.


R 324.103    Definitions; N to Z.
  Rule 103. As used in these rules:
  (a) "Nuisance odor" means an emission of any gas, vapor, fume,  or    mist, 
or combination thereof, from a well or its  associated  surface   facilities, 
in whatever quantities, that causes, either alone or in reaction  with  other 
air  contaminants,  injurious  effects   to   human   health    or    safety; 
unreasonable  injurious  effects  to   animal   life,    plant    life     of 
significant  value,  or  property;  or  unreasonable  interference  with  the 
comfortable enjoyment of life or property.
  (b) "Oil and gas operations" means permitting activities  required  under R 
324.201, drilling operations, well completion operations,  operation   of oil 
and gas wells, plugging operations, and site restoration.
  (c) "Operation of oil and gas wells" means the process of  producing    oil 
or gas, or both, or the  storage  of  natural  hydrocarbons   or    liquefied 
petroleum gas, including all of the following:
  (i) Production, pumping, and flowing.
  (ii)Processing.
  (iii)Gathering.
  (iv)Compressing.
  (v) Treating.
  (vi)Transporting.
  (vii)Conditioning.
  (viii)Brine removal and disposal.
  (ix)Separating.
  (x) Storing.
  (xi)Injecting.
  (xii)Testing.
  (xiii)Reporting.
  (xiv)Maintenance and use of surface facilities.
  (xv)Secondary recovery.
  (d)  "Organization   report"   means   a   listing   of    all    corporate 
officers, directors, incorporators, partners, or shareholders  who  have  the 
authority to make, or are responsible for making,   operational    decisions, 
including   the  siting,  drilling,  operating,  producing,  reworking,   and 
plugging of wells.
  (e) "Permit" means a permit to drill and operate an  oil  or   gas    well, 
or both, or an injection well, including associated surface  facilities   and 
flow lines.
  (f) "Plugging operations" means the sealing  of   the   fluids    in    the 
strata penetrated by an oil or gas well, or both,  upon  abandonment  of  the 
well or  a portion of the well bore, so that the fluid from one stratum  will 
not  escape into another or to the surface.
  (g) "Ppm" means parts per million by volume.
  (h) "Psi" means pounds per square inch.
  (i) "Psig" means pounds per square inch gauge.
  (j) "Secondary recovery" means the introduction or utilization  of    fluid 
or energy into or within a pool for   the   purpose   of    increasing    the 
ultimate recovery of hydrocarbons from the pool.
  (k) "Shut-in" means an action by a permittee  to  close  down  a  producing 
well, a well capable of producing, or an injection well temporarily  for  any 
of  the following reasons:
  (i) Repair.
  (ii)Cleaning out.
  (iii)Building up reservoir pressure.
  (iv)Planning for secondary recovery.
  (v) Other injection projects.
  (vi)While awaiting connection of a sales line.
  (vii)Lack of a market.
  (l) "Site restoration" means all of the following:
  (i) The filling and leveling of all cellars, pits, and excavations.
  (ii)The removal or elimination of all debris.
  (iii)The elimination of all conditions that may create a fire or  pollution 
hazard.
  (iv)The minimization of erosion.
  (v) The restoration of the  well  site  as  nearly  as    practicable    to 
the original land contour or to a condition approved by the supervisor.
  (m)  "Structure  used  for  public  or  private    occupancy"    means    a 
residential  dwelling  or  place  of  business,  place  of  worship,  school, 
hospital, government building, or other building  where  people  are  usually 
present at least 4 hours per day.
  (n)  "Supervisor"  means  the   director   of     the     department     of 
environmental quality or his  or  her  assistants  as   approved    by    the 
director  of  the department of environmental quality.
  (o) "Surface casing" means the casing string or strings   used    primarily 
for protecting  fresh  water   or   mineralized    water    resources    from 
potential contamination during the drilling and operation of an oil  or   gas 
well,  or both.
  (p) "Surface facility" means a facility used in the injection  of    fluids 
or in the production, processing, or  treatment  of  oil  or  gas,  or  both, 
including any of the following:
  (i) Pumping equipment.
  (ii)Fluid disposal equipment.
  (iii)Facility piping.
  (iv)Load outs.
  (v) Separators.
  (vi)Storage tanks.
  (vii)Treatment equipment.
  (viii)Compressors.
  (q) "Surface  water"  means  a  body  of  water,   and    the    associated 
sediments, which has a top surface that is exposed to  the   atmosphere   and 
which  is  not solely for wastewater  conveyance,  treatment,  or  control.
Surface  water  may be any of the following:
  (i) A Great Lake or its connecting waters.
  (ii)An inland lake or pond.
  (iii)A river or stream, including intermittent streams.
  (iv)An impoundment.
  (v) An open drain.
  (vi)A wetland.
  (r) "Well completion" means the time when a well  has  been   tested    and 
found to be incapable of producing hydrocarbons in   commercial    quantities 
and  has been plugged or has  been  found  capable  of  producing  commercial 
quantities  of hydrocarbons or when the well has been equipped   to   perform 
the  service  for which it was intended.
  (s) "Well completion operations" means work performed  in  an  oil  or  gas 
well, or both, after the well has been drilled  to  its    permitted    depth 
and  the production string of casing has been set,  including    perforating, 
artificial stimulation, and production testing.
  (t) "Well location" means the surface location of a well.
  (u) "Zoned residential" means a geographic area that  was  zoned    by    a 
local unit of government before January 8,  1993,  as  an   area   designated 
principally for permanent or recreational residences.

  History:  1996 AACS; 2002 AACS.


R 324.104   Terms defined in act.
  Rule 104. Unless the context requires a different meaning, the trade  words 
and other words defined in the act have the same meanings when used in  these 
rules.

  History:  1996 AACS.


R 324.199   Rescission.
  Rule 199. (1) R 299.251 to R 299.258 of the Michigan  Administrative  Code, 
appearing on pages 1415 to 1417 of the 1979 Michigan Administrative Code, are 
rescinded.
  (2)   R 299.1101 to R 299.1807, R 299.1809, R 299.1810, and R 299.1901 to R 
299.2101 of the Michigan Administrative Code, appearing on pages 1466 to 1495 
of the 1979 Michigan Administrative Code, and pages 206 to 217  of  the  1987 
Annual Supplement to the Code, are rescinded.
  
   History:  1996 AACS.


                        PART 2.  PERMITS TO DRILL AND OPERATE

R 324.201    Application  for  permit  to  drill  and  operate  requirements; 
issuance   of permit.
  Rule 201. (1) Until a person has complied with the requirements of  subrule 
(2) of this rule, a person shall not begin the drilling  or  operation  of  a 
well for any of the following:
  (a)   Oil or gas, or both.
  (b)   Injection for secondary recovery.
  (c)   Injection for the disposal of brine, oil or gas field waste, or other 
fluids incidental to the drilling, producing, or treating of wells for oil or 
gas, or both, or the storage of natural hydrocarbons or  liquefied  petroleum 
gas derived from oil or gas.
  (d)   Injection or withdrawal for the storage of natural  dry  gas  or  oil 
well gas.
  (e)   Injection or withdrawal for the storage  of  liquid  hydrocarbons  or 
liquefied petroleum gas.
  (2)   A permit applicant shall comply with  all  of  the  following  permit 
application requirements:
  (a)   The exact well location shall be surveyed by a surveyor  licensed  in 
the state of Michigan, a readily visible stake or marker shall be set at  the 
well location, and a flagged route shall be established to the well location.
  (b)   The survey required by subdivision (a) of this subrule shall  include 
a plat that shows all of the following:
  (i)   The correct well location and bottom hole location description.
  (ii)  A flagged route or explanation  of  how  the  well  location  may  be 
reached.
  (iii) Footages from the nearest section, quarter section, and drilling unit 
lines.
  (iv)  Information relative to the approximate distances and directions from 
the stake or marker to special hazards or conditions, including  all  of  the 
following:
  (A)   Surface waters and other environmentally sensitive areas within 1,320 
feet of the proposed well.  Environmentally sensitive areas are identified by 
the department pursuant to applicable state and federal laws and regulations.
  (B)   Floodplains associated with surface waters within 1,320 feet  of  the 
proposed well.
  (C)   Wetlands, as identified by the provisions of sections 30301 to  30323 
of the act, within 1,320 feet of the proposed well.
  (D)   Natural rivers, as identified by the provisions of sections 30501  to 
30515 of the act, within 1,320 feet of the proposed well.
  (E)   Critical dune areas, as designated  by  the  provisions  of  sections 
35301 to 35326 of the act, within 1,320 feet of the proposed well.
  (F)   Threatened or endangered species, as identified by the provisions  of 
sections 36501 to 36507 of the act, within 1,320 feet of the proposed well.
  (G)   All buildings, recorded fresh water wells and reasonably identifiable 
fresh water wells utilized for human consumption,  public  roads,  pipelines, 
and power lines that lie within 600 feet of the proposed well location.
  (H)   All public water supply wells identified as type I and IIa  that  lie 
within 2,000 feet of the proposed well location and type IIb and III that lie 
within 800 feet of the proposed well location, as defined in Act No.
399 of the Public Acts of 1976, as amended, being §325.1001 et  seq.  of  the 
Michigan Compiled Laws.
  (I)   Identification of  the  existing  local  zoning  designation  of  the 
surface location of the well.
  (c)   One signed and sealed copy of the survey, on a form prescribed by the 
supervisor, shall be filed with an application for  a  permit  to  drill  and 
operate.
  (d)   A person applying to drill and operate a well  shall  completely  and 
accurately fill out, sign, and file a written application  for  a  permit  to 
drill on a form prescribed by  the  supervisor.   The  application  shall  be 
submitted to the supervisor at the offices  of  the  Michigan  Department  of 
Environmental Quality, Geological Survey Division, P.O. Box  30256,  Lansing, 
Michigan 48909, and a copy of the first page of the permit application  shall 
be mailed to the clerk of the county and the surface owner of record  of  the 
land on which the well is to be located  within  7  days  of  submitting  the 
permit application by first-class United States mail addressed to the surface 
owner's last known address as evidenced by  the  current  property  tax  roll 
records.
  (e)   When the proposed well  is  located  in  or  adjacent  to  any  areas 
described in subdivision(b)(iv)(A) or (B) of this  subrule,  a  person  shall 
file  for  and  obtain  all  applicable  permits  from  the   department   of 
environmental quality before developing the well site or access to  the  well 
site or before drilling of the well.  The person  shall  also  file  for  and 
obtain any additional permits that may be required before the installation of 
flow lines or production equipment or before operating the well.
  (f)   A person shall file an environmental impact assessment as  instructed 
by the supervisor.
  (g)   A person shall file an organization report if a current  organization 
report is not on file with the supervisor.
  (h)   A person shall file a conformance  bond  or  statement  of  financial 
responsibility pursuant to R 324.210.
  (i)   A person shall pay the fee as specified by statute.  A fee filed with 
an application shall not be applied to a  subsequent  application.   The  fee 
shall be returned if a permit is not issued.
  (j)   All of  the  following  additional  information  is  required  to  be 
submitted with an application for a permit to drill and operate an  injection 
well or to convert a previously drilled well to an injection well:
  (i)   A plat which shows the location  and  total  depth  of  the  proposed 
injection well, shows each abandoned, producing, or  drilling  well  and  dry 
hole within 1,320 feet of the proposed injection  well  location,  and  which 
identifies the surface owner of the land on which the proposed injection well 
is to be located and each operator of a producing leasehold within 1,320 feet 
of the proposed injection well.
  (ii) If a well is proposed to be converted to an injection well, a copy  of 
the completion report, together with the written geologic description log  or 
record filed pursuant to R 324.418(a) and  borehole  and  stratum  evaluation 
logs filed pursuant to R  324.419(1).   The  permittee  shall  also  file  an 
application for change of well status pursuant to R 324.511.
  (iii) Plugging records of all abandoned  wells  and  casing,  sealing,  and 
completion records of all other wells  within  1,320  feet  of  the  proposed 
injection well location.  An applicant shall also submit  a  plan  reflecting 
the steps or modifications believed necessary to  prevent  proposed  injected 
fluids from migrating up, into, or through inadequately plugged,  sealed,  or 
completed wells.
  (iv)  A schematic diagram of the proposed injection well that shows all  of 
the following information:
  (A)   The total depth or plug-back depth of the proposed injection well.
  (B)   The true vertical depth and thickness of the  disposal  or  injection 
interval.
  (C)   The geological name of the disposal interval.
  (D)   The geological name and the top and bottom depths of all fresh  water 
strata to be penetrated.
  (E)   The depths of the top and bottom of the casing or casings and  cement 
to be used in the proposed injection well.
  (F)   The size of the casing and tubing and the depth of the packer.
  (v)   Information confirming that injection of liquids  into  the  proposed 
zone will not exceed the fracture pressure gradient or,  information  showing 
that  injection  into  the  proposed  geological  strata  will  not  initiate 
fractures through the overlying strata.
  (vi)  Proposed operating data, excluding injection wells utilized  for  gas 
storage, including all of the following data:
  (A)   The daily injection rates and pressures.
  (B)   The types of fluids to be injected.
  (C)   A qualitative and quantitative analysis of a representative sample of 
fluids to be injected.  A chemical analysis shall be prepared for  each  type 
of fluid to be injected showing specific conductance as an indication of  the 
dissolved solids and a determination of the concentration  of  the  following 
parameters for chemical  balance  and  indicators  for  comparison  of  water 
quality:
                Cations                                 Anions
                Calcium                                 Chloride
                Sodium                                  Sulfate
                Magnesium                               Bicarbonate
                Potassium However, if the  fluid  to  be  injected  is  fresh 
water, then an analysis is not required.
  (D)   The geological name of the injection strata and the vertical distance 
separating the top of the injection strata from the base of the lowest  fresh 
water strata.
  (E)   A plan for conducting 5-year mechanical  integrity  tests  of  casing 
pursuant to R 324.805.
  (vii)  For a proposed injection well to dispose of oil or gas field  waste, 
or both, into a zone that would likely constitute  a  producing  oil  or  gas 
pool, a list of all offset operators and certification that the person making 
application for an injection well has notified all offset  operators  of  the 
person’s intention by certified mail.  If within 21 days  after  the  mailing 
date a substantive objection is  filed  with  the  supervisor  by  an  offset 
operator, then the  application  shall  not  be  granted  without  a  hearing 
pursuant to part 12 of these rules.  A hearing may also be scheduled  by  the 
supervisor to determine the need or desirability of granting  permission  for 
the proposed injection well.
  (viii)  A proposed plugging and abandonment plan.
  (k)   A person shall receive and post the permit in a conspicuous place  at 
the well location.  The permit shall remain posted at the well location until 
well completion.
  (3)   A person who desires to directionally drill a well  shall  apply  for 
and obtain a permit to drill and operate  as  provided  in  this  rule.   The 
application to drill a directionally drilled well shall include, in  addition 
to the information specified  in  subrule  (2)  of  this  rule,  all  of  the 
following information:
  (a)   The depth at which deviation from vertical is planned.
  (b)   The angle and path of each deviation.
  (c)   The proposed horizontal distance and direction from the well location 
to the bottom hole.
  (d)   The well's measured and true vertical depths.
  (4)   The application for a well shall be processed pursuant to  this  rule 
and the supervisor shall issue or deny a permit to drill and operate pursuant 
to section 61525 of the act.  Upon receipt of an application  for  a  permit, 
the supervisor or authorized representative of the supervisor shall  have  up 
to 60 days to review the application  to  determine  if  the  application  is 
accurate and complete.  If the application is determined to be inaccurate  or 
incomplete,  then  the  supervisor  or  authorized  representative   of   the 
supervisor shall provide the person making  the  application  for  a  permit, 
within the 60-day period, with a notice that the application is inaccurate or 
incomplete and what changes or additional information shall  be  submitted.
Upon receipt of the  requested  information,  the  supervisor  or  authorized 
representative of the supervisor shall have up to an additional  30  days  to 
review the information to  determine  if  the  application  is  accurate  and 
complete.   Upon  completion  of  the  review  process,  the  supervisor   or 
authorized representative of the supervisor shall issue or  deny  the  permit 
application within 10 business days, as provided in section 61525 of the act.
 A determination of administrative completeness shall  not  be  construed  to 
mean that additional information may not be required from the applicant as  a 
result of new circumstances that come to the attention of  the  supervisor.
Pursuant to R 324.205, the supervisor shall not issue a permit to a person or 
an authorized representative of a person if the person is not eligible for  a 
permit.

  History:  1996 AACS.


R 324.202   Directional redrilling.
  Rule 202. (1) A permittee of a well who desires to  directionally   redrill 
an existing well to  a  different  bottom  hole  location  shall   file    an 
application for a new permit.  The application shall set  forth,  in  detail, 
the new bottom hole location and identify the plug-back depth of the existing 
well and shall be filed under  R  324.201(3).   The  directional   redrilling 
shall  not  be commenced until the application  has  been  approved  by   the 
supervisor  or authorized  representative  of  the  supervisor,   except   as 
provided  in  subrule (2) of this rule.  A new permit and an  additional  fee 
shall be required.
  (2) A permittee of a  well  who  desires  to  directionally   redrill    an 
existing permitted drilling well to a different bottom hole location with the 
drilling rig then on location shall obtain approval from the  supervisor   or 
authorized representative of the supervisor.  Approval to redrill  shall   be 
obtained  by contacting the authorized representative of the  supervisor   in 
person  or  by telephone   and   providing   pertinent   details    of    the 
proposed  directional redrilling.  Approval may be granted  immediately    if 
all  of  the  following provisions are complied with:
  (a) The existing drilled hole  is  plugged  back  before    starting    the 
new directional hole under the provisions of these rules.
  (b) The new bottom hole location conforms to applicable spacing.
  (c)  The  well  has  adequate  bonding  or   a   statement   of   financial 
responsibility has been filed under R 324.210.
  (3) If approval to directionally redrill is granted, a  permittee   of    a 
well shall obtain a new permit and pay an additional fee.   The   application 
for  a new permit and additional fee shall be filed within  10  days  at  the 
offices of the  Michigan  Department  of  Environmental  Quality,  Geological
 and  Land Management Division, P.O. Box 30256, Lansing, Michigan 48909.   In 
addition to other enforcement actions, failure to comply  with  this  subrule 
shall be cause for immediate suspension of  any  or  all  components  of  the
 oil  and  gas operations on the well.
  (4) A well log and plugging record shall be filed  on   the    plugged-back 
hole under these rules.

  History:  1996 AACS; 2002 AACS.


R 324.203    Lost holes.
  Rule 203. (1) A permittee of a well shall obtain approval to skid  a    rig 
or move to start a new hole when  a  hole  has  been  lost.   A  new   permit 
or additional fee is not required if the new location for the well is  within 
165 feet of the lost hole and the drilling unit is not changed.
  (2) A permittee of a well may obtain approval  for  skidding  a   rig    or 
moving to a new location for the well because of a lost   hole    from    the 
authorized representative of the supervisor  in  person  or  by  telephone.
Approval may  be granted immediately if all of the following  provisions  are 
complied with:
  (a) The lost hole shall be plugged  before   starting    the    replacement 
hole under the provisions of these rules.
  (b) The new location for the well shall be made at a safe   distance   from 
the lost hole.
  (c) The new bottom hole location shall conform to applicable spacing.
  (d) The new location for the well shall not create surface waste.
  (e) An amended application with  corrected  attachments   and   supplements 
shall be filed within  5  business  days  at  the  offices  of  the  Michigan 
Department  of Environmental  Quality,  Geological  and    Land    Management 
Division,  P.O.  Box 30256, Lansing, Michigan 48909.  In addition  to   other 
enforcement  actions, failure to comply with this subrule shall be cause  for 
suspension of  any  or all components of the oil and gas  operations  on  the 
well.
  (f) A well log and well plugging record shall be  filed   on    all    lost 
holes under the provisions of these rules.

  History:  1996 AACS; 2002 AACS. 


R 324.204    Permits for oil and gas storage by conversion of operation.
  Rule 204.  If a well or underground operation developed for a  non-oil  and 
gas use is converted for the storage of oil or gas  or  any  of  the  natural 
hydrocarbons produced from oil or gas, then the well or underground operation 
shall be classified as an oil or gas storage operation and shall  be  subject 
to the provisions of these rules.

  History:  1996 AACS.


R 324.205    Eligibility for permit.
  Rule 205.  The supervisor shall not issue or transfer a permit, other  than 
as provided by R 324.206(7) and (8), to a person who has been  determined  to 
be in violation of any of the following:
  (a)   The act.
  (b)   These rules.
  (c)   Permit conditions.
  (d)   Instructions.
  (e)   Orders of the supervisor.
  (f)   An order of the department of environmental quality.

  History:  1996 AACS.


R 324.206    Modification of permits; deepening permits; change of ownership.
  Rule 206.  (1)  A permit shall not be transferred to a location outside  of 
the drilling unit.
  (2)   A permittee of a well who has not initiated drilling of a well  shall 
not do either of the following:
  (a)   Change the well location within the drilling unit without  the  prior 
approval of the supervisor or authorized representative of the supervisor.
To receive approval, a permittee shall  return  the  permit  to  the  Lansing 
office of the supervisor together with a revised application  with  corrected 
attachments and supplements.  If the permittee requests a change in the  well 
location, then a new permit and an additional fee are required.
Drilling shall not begin until the new permit  or  revised  permit  has  been 
issued by the supervisor or authorized representative of the  supervisor  and 
posted at the drilling site.
  (b)   Change the method of drilling, casing and sealing programs, or  other 
conditions of the permit without the prior  approval  of  the  supervisor  or 
authorized representative  of  the  supervisor.   To  receive  approval,  the 
permittee shall return the permit to the Lansing  office  of  the  supervisor 
together  with  a  revised  application  with   corrected   attachments   and 
supplements.  If the permittee only requests a modification of  the  existing 
permit conditions, then an additional fee is not  required.   Drilling  shall 
not begin until the revised permit has been approved  by  the  supervisor  or 
authorized representative of the supervisor and posted at the drilling site.
  (3)   A permittee of  a  well  who  begins  the  drilling  of  a  well  and 
encounters drilling problems or other drilling conditions that necessitate  a 
change shall not do either of the following:
  (a)   Change the well location within the  drilling  unit,  other  than  as 
provided by R 324.203, without  the  prior  approval  of  the  supervisor  or 
authorized representative of the supervisor.  To receive approval  to  change 
the well location, the permittee shall  return  the  permit  to  the  Lansing 
office of the supervisor together with a revised application  with  corrected 
attachments and supplements.  Drilling shall not begin at  the  new  location 
until the new  permit  has  been  issued  by  the  supervisor  or  authorized 
representative of the supervisor.  A new permit and  an  additional  fee  are 
required.
  (b)   Change the method of drilling, casing and sealing programs, or  other 
conditions of the permit without the prior  approval  of  the  supervisor  or 
authorized representative of the supervisor.  To receive approval  to  modify 
an existing permit condition only, the permittee shall contact the supervisor 
or authorized representative of the supervisor by letter, telephone, or visit 
and explain the drilling circumstances and request the necessary  changes  to 
the permit.  The supervisor or authorized representative  of  the  supervisor 
may give verbal approval to modify the permit with conditions for  additional 
reporting requirements by the permittee.  If approval to modify  an  existing 
permit is granted, then the revised  permit  and  corrected  attachments  and 
supplements shall be filed, within 10 days, at the offices  of  the  Michigan 
Department of Environmental Quality, Geological  Survey  Division,  P.O.  Box 
30256, Lansing, Michigan 48909.  An additional permit fee is not required.
  (4)   A permittee of a  well  who  desires  to  deepen  a  well  below  the 
permitted stratigraphic  or  producing  horizon  where  well  completion  has 
occurred shall file an application for a deepening permit.   The  application 
shall set forth, in detail, the new proposed total depth  and  the  plan  for 
casing and sealing off the oil, gas, brine,  or  fresh  water  strata  to  be 
found, or expected to be found, in the deepening  operation.   The  deepening 
operation shall not be commenced until the application has been  approved  by 
the supervisor or authorized representative of the supervisor.   A  deepening 
permit and an additional fee are required.
  (5)   A permittee of a well who desires to continue the drilling of a  well 
below  the  permitted  depth,  but  within  the  permitted  stratigraphic  or 
producing horizon where drilling completion or well completion has  occurred, 
shall file an application for change of well status pursuant to R 324.511.
The application shall set forth, in detail, the new proposed total depth  and 
the plan for casing and sealing off the  oil,  gas,  brine,  or  fresh  water 
strata found, or expected to be  found,  when  drilling  is  continued.   The 
approval of the change of well status shall serve to  revise  the  permit  to 
reflect the new permitted depth.  The continuation of drilling shall  not  be 
commenced until the application for change of well status has  been  approved 
by the supervisor or authorized representative of the supervisor.  To  obtain 
approval to continue the drilling below the permitted depth, but  within  the 
permitted stratigraphic or producing horizon with the drilling  rig  then  on 
location,  the  permittee  shall  contact  the   supervisor   or   authorized 
representative of the supervisor by letter, telephone, or visit  and  explain 
the circumstances for the request to continue the drilling.
The supervisor or authorized  representative  may  give  verbal  approval  to 
continue the drilling below the permitted depth,  but  within  the  permitted 
stratigraphic or producing horizon.  If approval to continue the drilling  is 
granted, then the permittee shall file the application  for  change  of  well 
status pursuant to R 324.511, within 10 days of approval, at the  offices  of 
the Michigan Department of Environmental Quality, Geological Survey Division, 
P.O. Box 30256, Lansing, Michigan 48909.  An additional  permit  fee  is  not 
required.
  (6)   If a permittee of a well conveys his or her rights as an owner  of  a 
well to another person, or ceases to be the authorized representative of  the 
owner of a well, before final completion, then a request for the transfer  of 
the permit to the acquiring person shall be submitted by the acquiring person 
to the supervisor at the offices of the Michigan Department of  Environmental 
Quality, Geological Survey Division, P.O. Box 30256, Lansing, Michigan 48909, 
on forms as prescribed by the supervisor.  The transfer of the permit may  be 
approved  upon  receipt  of  a  properly  completed  request,  including  the 
signatures of the permittee of record and the acquiring person, and upon  the 
filing by the acquiring person of the conformance  bond  or  a  statement  of 
financial responsibility as required by R 324.210.
Pending the transfer of the existing permit, the acquiring person  shall  not 
operate the well.   The  acquiring  person  shall  be  required  to  file  an 
organization report pursuant to R 324.201(2)(g).
  (7)   A permit for a well shall not be transferred to a person who has been 
determined to be in violation of any of the following until the permittee has 
corrected the violation or the supervisor has accepted a compliance  schedule 
and a written agreement has been reached to correct the violations:
  (a)   The act.
  (b)   These rules.
  (c)   Permit conditions.
  (d)   Instructions.
  (e)   Orders of the supervisor.
  (f)   An order of the department of environmental quality.
An additional conformance bond covering the period of the compliance schedule 
may  be  required.   The  conformance  bond  shall  be  in  addition  to  the 
conformance bonds filed pursuant to R 324.212(a) or (b).
  (8)   If the permittee of a well is under notice because of  unsatisfactory 
conditions at the well site involved in the transfer, then the permit  for  a 
well shall not be transferred to a person until the permittee  has  completed 
the necessary corrective actions or the acquiring person has entered  into  a 
written agreement to correct all of the unsatisfactory conditions.

  History:  1996 AACS.


R 324.207    Suspension of oil and gas  operations  due   to    failure    to 
transfer permit.
  Rule 207. If a permittee of a well conveys his or her rights as  an   owner 
of a well to another person, or ceases to be the  authorized   representative 
of the owner of a well, and a  request  for  transfer  of  the  permit  under
 R 324.206(6) has  not  been  approved,  then,   in   addition    to    other 
enforcement  actions,  failure  to  comply  shall  be  cause  for   immediate 
suspension of any  or all components of the oil and gas  operations  on   the 
well,  including  the removal or sale of oil, gas, or brine.

  History:  1996 AACS; 2002 AACS. 


R 324.208  Termination of permit.
  Rule 208.  (1)  A permit issued pursuant to R  324.201(4),  or  transferred 
pursuant to R 324.206(6) or rules that were in effect  before  the  effective 
date of these rules, shall terminate 2 years  after  the  date  of  issuance, 
unless the drilling operation has reached a depth of not less than  100  feet 
below the ground surface elevation and the drilling operation  is  diligently 
proceeding or the well is otherwise being used for its permitted purpose.
  (2)   Terminated permits may not be  reactivated  or  transferred  and  the 
permit fee shall not be refunded.

  History:  1996 AACS.


R 324.209  Temporary abandonment status.
  Rule 209.  (1)  A permittee of a well  that  has  not  been  used  for  its 
permitted purpose during 12 consecutive months shall plug  the  well,  unless 
the well is granted  temporary  abandonment  status.   Temporary  abandonment 
status shall be allowed only upon written application to,  and  approval  of, 
the supervisor or authorized representative of the supervisor.
  (2)   The term of the initial temporary abandonment  status  shall  not  be 
more than 12 months, unless the well is shut-in awaiting the connection of  a 
sales line.  For a well that is shut-in awaiting connection of a sales  line, 
the term of the initial temporary abandonment  status  shall  be  up  to  and 
including 60 months.
  (3)   Extensions for temporary abandonment status beyond the  initial  term 
provided in subrule (2) of this rule may be granted  by  the  supervisor  if, 
after application by the permittee,  the  supervisor  determines  that  waste 
shall be prevented.   When  approving  the  extensions,  the  supervisor  may 
require special actions  and  monitoring  by  the  permittee  to  ensure  the 
prevention of waste.

  History:  1996 AACS.


R 324.210     Conformance   bond     or      statement      of      financial 
responsibility requirements.
  Rule 210. (1) A person who files an application for a permit    to    drill 
and operate a well under R 324.201,  or  who  acquires  a  well    under    R 
324.206(6), shall file a conformance bond  with  the  supervisor  on  a  form 
prescribed by the supervisor or shall submit a   statement    of    financial 
responsibility  under subrule (2) of this rule.
  (2) A statement of financial responsibility shall  consist  of    all    of 
the following:
  (a) A written statement which is signed by the  person,  which  lists  data 
that show that the person meets the criteria specified  in  subrule  (3)   of 
this rule, and which  states  that   the   data   are   derived    from    an 
independently audited year-end financial statement.
  (b) A copy  of  an  independent  certified  public   accountant's    report 
on examination of the  person's  financial  statements   for    the    latest 
completed fiscal year.
  (c) A  special  report   from   the    person's    independent    certified 
public accountant stating that the accountant has compared the  data   listed 
in  the statement provided under subdivision (a) of  this  subrule  with  the 
amounts  in the corresponding year-end financial statement and  that  nothing 
came to the  attention  of  the  accountant  which caused the accountant   to 
believe  that  the  financial  records  should  be adjusted.
  (3) When a person submits a statement of financial  responsibility  instead 
of a conformance bond,  a  person  shall  meet  the  criteria    of    either 
subdivision (a) or (b) of this subrule, as follows:
  (a)  A  person  required  to  file   the     statement     of     financial 
responsibility shall have all of the following:
  (i) Two of the following 3 ratios:
  (A) A ratio of total liabilities to net worth of less than 2.0.
  (B) A ratio of the sum of  net  income  plus    depreciation,    depletion, 
and amortization to total liabilities of more than 0.1.
  (C) A ratio of current assets to current liabilities  of  more  than  1.5.
Projected oil and gas reserves may be utilized in determining current  assets 
only to the extent that the value of the reserves exceeds the projected costs 
of development and production.
  (ii)Net working capital and tangible net worth each of which  is  not  less 
than 3 times the amount of the conformance bond provided in R 324.212, if the 
person had elected to file a conformance bond.
  (iii)Total assets in Michigan that are not less than 3 times the amount  of 
the conformance bond provided in R 324.212, if the person had elected to file 
a conformance bond.  Projected oil  and  gas  reserves  may  be  utilized  in 
determining current assets only to the extent that the value of the  reserves 
exceeds the projected costs of development and production.
  (iv)A written statement from a certified  public  accountant  which  states 
that no matter came to the attention of the accountant which  caused  him  or 
her to believe that the financial records should be adjusted.
  (b) A person required to file a  statement  of   financial   responsibility 
shall have all of the following:
  (i) A current rating for his or her most recent bond issuance of  Aaa,  Aa, 
A, or Bbb as issued by Standard and Poor's or Aaa, Aa, A, or Baa  as   issued 
by Moody's.
  (ii)A tangible net worth of not less than $2,000,000.00.
  (iii)Total assets in Michigan that are not less than 3 times the amount  of 
the conformance bond provided in R 324.212, if the person had elected to file 
a conformance bond.  Projected oil  and  gas  reserves  may  be  utilized  in 
determining current assets only to the extent that the value of the  reserves 
exceeds the projected costs of development and production.
  (4) A person shall submit a statement of  financial    responsibility    to 
the supervisor not less than 60 days before the date the financial  assurance
 is scheduled to take effect.
  (5)  After  the  initial   submission   of   a   statement   of   financial 
responsibility, the person shall  send  an  updated  statement  of  financial 
responsibility to the supervisor within 90  days  after  the  close  of  each 
succeeding fiscal year.
  (6) If a person no longer meets the requirements  of   subrule    (3)    of 
this rule, he or she shall  send  notice   to   the   supervisor    of    the 
intent   to  establish  alternate  financial  assurance    by    filing     a 
conformance  bond  as specified in subrule (1)  of  this  rule.   The  notice
 shall  be  sent,  by certified mail, within 90 days after  the  end  of  the 
fiscal year for which the year-end review of the  financial   records   shows 
that  the  person  no  longer meets the  requirements.   The   person   shall 
provide  the  alternate  financial assurance within 120 days after the end of 
the fiscal year.
  (7) The supervisor may, based on a reasonable  belief  that   the    person 
no longer meets the requirements of subrule (3) of this  rule,   require    a 
report at any time from the person   in   addition   to    the    information 
required  by subrule (3) of this rule.  If the supervisor finds, on the basis 
of a  review of the report or other  information,  that   the    person    no 
longer  meets  the requirements  of  subrule  (3)  of  this  rule,  then  the 
supervisor  or  authorized representative of the supervisor shall notify  and 
inform the person.   Within 30 days of the notification, the  person    shall 
provide  alternate  financial assurance  by  filing  a  conformance  bond  as 
specified in subrule  (1)  of  this rule or shall bring  the  well  to  final 
completion.   Failure  to  comply  with  this  subrule  shall  be  cause  for 
immediate suspension of any or all components of the oil and  gas  operations 
on the well.
  (8) The supervisor  may   require   additional   conformance    bonds    to 
ensure compliance with orders of the   supervisor,    excluding    proration, 
compulsory pooling, or spacing orders.  The  conformance  bond  shall  be  in 
addition to the conformance bonds filed under R 324.212(a), (b), or  (c)  and 
shall be required  only  if  the  supervisor  determines  that  the  existing 
conformance bond  is  not adequate to cover the estimated  cost  of  plugging 
the well  and  conducting  site  restoration  or  other  obligations  of  the 
permittee under the order.  A  person is  not  required  to  file  additional 
conformance bonds under  this  subrule  if the person  has  filed  a  blanket 
conformance bond  or  bonds  in  an  aggregate amount of $250,000.00 or more, 
under R 324.212(d).  Subject to the provisions of R 324.213,  the  additional 
conformance bond  shall  be  released  when  the permittee has complied  with 
all provisions of the orders of the supervisor.
  (9) Conformance bonds that were in effect  before  the  effective  date  of 
these rules shall remain in effect under the conditions upon which they  were 
filed and accepted by the supervisor.  However, in place of conformance bonds
 that were in effect before the effective date of these  rules,  a  permittee 
may file conformance bonds or submit a statement of financial  responsibility 
under these rules for wells permitted under the   act  before  the  effective 
date of these rules.

  History:  1996 AACS; 2002 AACS. 


R 324.211    Liability on conformance bond.
  Rule 211. (1) The liability on the  conformance   bond    is    conditioned 
upon  compliance  with  the  act,  these    rules,     permit     conditions, 
instructions,  or orders of the supervisor.  Subject to the provisions  in  R 
324.213,  liability shall cover all oil and gas operations of  the  permittee 
as follows:
  (a) Through transfer of the permit for the subject well under R 324.206(6).
  (b) Through final completion approved by the supervisor of the subject well.
  (c) Otherwise as approved by the supervisor.
  (2) The   supervisor   shall   look   to   the   conformance    bond    for 
immediate compliance with, and fulfillment of, the full conditions  of    the 
act,  these rules, permit conditions,  instructions,  or  orders    of    the 
supervisor.   All expenses incurred  by   the   supervisor    in    achieving 
compliance  with,  and fulfillment of, all conditions  of  the   act,   these 
rules,  permit  conditions, instructions, or orders of the  supervisor  shall 
be paid by the  permittee  or the  surety  or  from  cash  or  securities  on 
deposit.  The claim  shall  be  paid within 30 days of  notification  to  the 
permittee or surety that expenses  have been incurred by the supervisor.   If 
the claim is not paid  within  30  days, the supervisor, acting  for  and  on 
behalf of the state, may bring suit for the payment of the claim.

  History:  1996 AACS; 2002 AACS. 


R 324.212  Conformance bond amounts.
  Rule 212.  A person who drills or operates a well shall file a  conformance 
bond with the supervisor for the following amounts, as applicable:
  (a)   Single well  conformance  bonds  shall  be  filed  in  the  following 
amounts, as applicable:
  (i)   $10,000.00 for wells up  to  and  including  2,000  feet  deep,  true 
vertical depth.
  (ii)  $20,000.00 for wells deeper than 2,000  feet,  but  not  deeper  than 
4,000 feet, true vertical depth.
  (iii) $25,000.00 for wells deeper than 4,000  feet,  but  not  deeper  than 
7,500 feet, true vertical depth.
  (iv)  $30,000.00 for wells deeper than 7,500 feet, true vertical depth.
  (b)   A person may file single well conformance bonds in an amount equal to 
1/2 of the amount specified in subdivision (a) of this rule for  wells  where 
well completion operations have not commenced.  A person may not file  single 
well conformance bonds under this subdivision for more than 5 wells.
A person shall  file  single  well  conformance  bonds  in  the  full  amount 
specified in subdivision (a) of this rule or file a blanket conformance  bond 
as specified in subdivision (c)  of  this  rule  or  submit  a  statement  of 
financial responsibility pursuant to R 324.210  before  the  commencement  of 
well completion operations on any well.
   (c)  Blanket conformance bonds may be filed as an  alternative  to  single 
well conformance bonds.  If a blanket conformance bond is utilized, then  the 
permittee shall provide the supervisor with a list of wells  covered  by  the 
blanket conformance bond.  A maximum of 100 wells may be covered by a blanket 
conformance bond.  If the permittee has more than 100 wells  in  a  category, 
then the additional wells may be covered by single well conformance bonds  or 
additional blanket conformance bonds.  Blanket  conformance  bonds  shall  be 
filed in the following amounts, as applicable:
  (i)   $100,000.00 for wells up to  and  including  2,000  feet  deep,  true 
vertical depth.
  (ii)  $200,000.00 for wells deeper than 2,000 feet,  but  not  deeper  than 
4,000 feet, true vertical depth.
  (iii) $250,000.00 for wells deeper than 4,000 feet, true vertical depth.
  (d)   A person shall not be required to file a blanket conformance bond  or 
bonds in an aggregate amount of more than $250,000.00.   When  the  aggregate 
amount of the conformance bonds is $250,000.00,  the  permittee  may  file  1 
blanket conformance bond of $250,000.00 to cover all of his or her wells.

  History:  1996 AACS.


R 324.213    Cancellation of conformance bonds issued by a surety.
  Rule 213. (1) A surety company may cancel  a  conformance   bond   acquired 
under these rules upon 90 days' notice to the supervisor of   the   effective 
date  of cancellation.  However, the surety company shall  retain   liability 
for  all  violations  of  the  act,   these   rules,    permit    conditions, 
instructions,  or orders of the supervisor that occurred during the time  the 
conformance  bond was in effect.
  (2) Forty days before the effective date of  cancellation,   as    provided 
in subrule (1) of this rule, a permittee shall secure a   conformance    bond 
from another surety company authorized to do business  in  the    state    of 
Michigan, deposit cash or other securities, or bring the  well    to    final 
completion.
Failure to comply  with  this  subrule  shall  be  cause  for  the  immediate 
suspension of any or all components of the oil and gas operations on the well.
  (3) A surety company shall remain liable  until   the    violations    have 
been corrected and  the  corrections  are  accepted  by  the  supervisor  for
 all  violations  of  the  act,   these     rules,     permit     conditions, 
instructions,  or orders of the supervisor that  occurred   at    the    well 
during  the  time  the conformance bond was in effect  before  the  effective 
date of cancellation.

  History:  1996 AACS; 2002 AACS. 


R 324.214  Limitation of additional liability of blanket conformance bonds.
  Rule 214.  A surety company may refuse to accept liability  for  additional 
wells under  a  blanket  conformance  bond  by  giving  10  days’  notice  by 
registered mail to the supervisor.  Subject to the provisions of  R  324.213, 
the blanket conformance bond shall continue in full force and  effect  as  to 
all other wells covered by the blanket conformance  bond  for  which  permits 
were granted or transferred to the permittee before the effective date of the 
notice.

  History:  1996 AACS.


R 324.215  Release  of  conformance  bonds;  release  of  well  from  blanket 
conformance bond.
  Rule 215.  (1)  A conformance bond shall be released or  a  well  shall  be 
released from a blanket conformance bond, subject  to  the  provisions  of  R 
324.213, by the supervisor or authorized representative of the supervisor  if 
a permittee disposes of the well  and  the  permit  for  the  well  has  been 
transferred to a new person pursuant to R 324.206(6) or if the well has  been 
plugged and  proper  site  restoration  has  been  performed  pursuant  to  R 
324.1003, including the filing of the mandatory records.
  (2)   The release of the conformance bond or the release of a well  from  a 
blanket conformance bond does not release a permittee from liability for  any 
violations of the act,  these  rules,  permit  conditions,  instructions,  or 
orders of the supervisor which occurred during the time the conformance  bond 
was in effect  and  which  have  not  been  corrected  and  accepted  by  the 
supervisor.
  (3)   A conformance bond filed to comply with  a  permit  that  has  become 
terminated shall be released if there is final completion.

  History:  1996 AACS.


R 324.216   Notice of release of conformance bond or  release  of  well  from 
blanket conformance bond.
  Rule  216.   (1)   The  supervisor  or  authorized  representative  of  the 
supervisor shall advise  the  surety  company  and  the  permittee  when  the 
conformance bond has been released or a well has been released from a blanket 
conformance bond.
  (2)   The supervisor or authorized representative of the  supervisor  shall 
return cash to the permittee or securities to the institution  that  provided 
the bonding instrument when the conformance bond has been released.

  History:  1996 AACS.


                        PART 3.  SPACING AND LOCATION OF WELLS

R 324.301  Drilling unit; well location; exceptions.
  Rule 301.  (1)  The  following  provisions  specify  requirements  for  the 
location and spacing of wells to be  drilled  for  oil  or  gas,  except  for 
injection wells and wells to be drilled in  gas  storage  reservoirs,  liquid 
petroleum gas storage reservoirs,  unitized  areas,  and  other  specifically 
designated areas or  geological  formations  where  special  spacing  orders, 
rules, or determinations are in effect:
  (a)   The drilling unit for wells to be drilled for oil or gas shall  be  a 
legal subdivision of 40 acres,  more  or  less,  defined  as  a  governmental 
surveyed quarter-quarter section of land.  The drilling unit shall conform to 
1 of the quarter-quarters of a governmental surveyed section  of  land,  with 
allowances being made for the differences in the size and shape  of  sections 
as indicated by official governmental survey plats.
  (b)   The prescribed well location shall be in compliance with all  of  the 
following requirements, as applicable:
  (i)   A permit may be granted for the drilling of an exploratory  well  for 
oil or gas if the bottom hole location is not less than  330  feet  from  the 
drilling unit boundary.
  (ii)  The bottom hole location of development wells shall be located  in  a 
pattern at the same relative position in each drilling unit as  that  of  the 
discovery well if the discovery well is located not less than 330  feet  from 
the unit boundary.  Exceptions for environmental reasons may  be  granted  by 
the supervisor or authorized  representative  of  the  supervisor  without  a 
hearing if the bottom hole location is not more than 495 feet from  the  unit 
boundary.  The uniform spacing of wells specified in this  subdivision  shall 
be followed until a special spacing order is adopted after a hearing pursuant 
to R 324.302 and part 12 of these rules.
  (iii)  If the bottom hole location of the discovery well  is  located  more 
than 495 feet from the unit boundary, then a permit shall not be  issued  for 
the drilling of a development well until a hearing has been held to determine 
the need or desirability of adopting a special spacing order  pursuant  to  R 
324.302.
  (iv)  An off-pattern development well completed in a pool previously spaced 
pursuant to subrule (2)  of  this  rule,  a  special  spacing  order  adopted 
pursuant to R 324.302, or an existing special spacing  order  or  rules  that 
were in effect before the effective date of these  rules  shall  not  produce 
from that pool until a hearing pursuant to part 12 of these  rules  has  been 
held to determine the need or desirability of granting an exception to  these 
rules or orders.
  (v)   The well surface location and associated surface facilities for wells 
drilled and constructed after the effective date  of  these  rules  shall  be 
located not less than 300 feet from existing recorded fresh water  wells  and 
reasonably identifiable fresh water wells utilized for human consumption  and 
existing structures used for public or private occupancy.
  (vi)  The well separators, storage tanks, and treatment equipment installed 
or constructed after the effective date of these rules shall be  located  not 
less than 2,000 feet from type I and IIa public water supply  wells  and  not 
less than 800 feet from type IIb  and  III  public  water  supply  wells,  as 
defined in Act No. 399  of  the  Public  Acts  of  1976,  as  amended,  being 
§325.1001 et seq. of the Michigan Compiled Laws.
  (2)   Exceptions to the location and spacing of wells may be granted in the 
following instances:
  (a)   The supervisor or authorized representative of the supervisor  issues 
a permit for an off-pattern or  nonconforming  drilling  unit  well  after  a 
hearing to determine the need or desirability of  issuing  the  permit.   The 
wells shall be subject to the restricted  or  adjusted  allowables  that  the 
supervisor considers necessary to ensure that the owners  shall  be  afforded 
the opportunity to produce their just and equitable share of the oil and  gas 
from the reservoir and to prevent waste.
  (b)   The supervisor or authorized representative of the supervisor  issues 
a permit for a well where the surface location is closer than 300  feet  from 
all existing recorded fresh water wells  and  reasonably  identifiable  fresh 
water wells utilized for human consumption and existing structures  used  for 
public or private occupancy upon presentation, to the supervisor, of  written 
consent signed by the owner or owners of all existing fresh water  wells  and 
reasonably identifiable fresh water wells utilized for human consumption  and 
existing structures used for public or private occupancy.
  (c) The supervisor determines the well  surface  location  or  location  of 
associated surface  facilities  will  prevent  waste,  protect  environmental 
values, and not compromise public safety after a hearing pursuant to part  12 
of these rules.
  (d)   The supervisor approves an application to pool or communitize  tracts 
or mineral interests pursuant to R 324.303(2).

  History:  1996 AACS.


R 324.302   Adoption of special spacing orders.
  Rule 302.  The development of an oil or gas field after the completion of a 
discovery well may warrant the adoption of a drilling unit and  well  spacing 
pattern other than as specified in  R  324.301.   An  interested  person  may 
request, or the supervisor may schedule, a hearing pursuant  to  part  12  of 
these rules to consider the  need  or  desirability  of  adopting  a  special 
spacing order to apply to a  designated  area,  field,  pool,  or  geological 
strata.  The drilling unit established by the special spacing  order  may  be 
smaller or larger than the basic 40-acre unit pursuant to R 324.301(1)(a).

  History:  1996 AACS.


R 324.303  Voluntary pooling.
  Rule 303.  (1)  The lessees or lessors, or  both,  of  separate  tracts  or 
mineral interests that lie partially or wholly within an established drilling 
unit or larger area may pool or communitize the tracts or interests  to  form 
full drilling units or multiples of full drilling units and  to  develop  the 
units pursuant to the provisions of these rules and the applicable orders  of 
the supervisor.
  (2)   Persons who pool or communitize the tracts or interests may submit an 
application to the supervisor  to  abrogate  spacing  within  the  pooled  or 
communitized area.  The application shall include a  certified  copy  of  the 
pooling or  communitization  agreement  and  the  plans  for  exploration  or 
development.  The supervisor may  approve  the  application  if  all  of  the 
following conditions are satisfied:
  (a)   Waste is prevented.
  (b)   The drilling of unnecessary wells is prevented.
  (c)   A well is not located  closer  than  330  feet  from  the  pooled  or 
communitized area boundary or closer than 660 feet from adjacent wells.
  (d)   The distance between wells prevents interference.
  (3)   The lessees and lessors of separate tracts or mineral interests  that 
lie partially or wholly within an area encompassing 2 or more  full  drilling 
units may voluntarily pool the tracts or interests to form a development unit 
for the purpose of receiving a permit for a well as an exception to R 324.301 
or special spacing orders adopted pursuant to R 324.302, if the  bottom  hole 
location of the well is found by the supervisor to ensure  each  producer  is 
afforded the opportunity to use his or her just and equitable  share  of  the 
reservoir energy and to prevent waste, including the drilling of  unnecessary 
wells.

  History:  1996 AACS.


R 324.304  Compulsory pooling.
  Rule 304. The supervisor may require  the  pooling  of  tracts  or  mineral 
interests within a drilling unit when the owners of  the  tracts  or  mineral 
interests have not agreed, or do not agree, upon the pooling of the interests 
to form full drilling units  pursuant  to  these  rules  and  the  applicable 
spacing orders.  The compulsory pooling  shall  be  done  on  a  basis  which 
ensures that each owner of an interest within a drilling unit is afforded the 
opportunity to receive his or her just and equitable share of the  production 
from the unit.  Compulsory pooling shall be adopted by  the  supervisor  only 
after a hearing pursuant to part 12 of these rules.

  History:  1996 AACS.


                        PART 4.  DRILLING AND WELL CONSTRUCTION

R 324.401  Preventing waste.
  Rule 401.  A person who drills a well or wells as described in R 324.201(1) 
shall use every reasonable precaution to prevent waste.

  History:  1996 AACS.


R 324.402  Drilling notification.
  Rule 402.  Not less than 5 days before preparing the location and not  less 
than 48 hours before moving drilling equipment  on  location,  the  permittee 
shall notify the supervisor or authorized representative  of  the  supervisor 
and the surface owner when well construction is  to  begin.   Notice  may  be 
given verbally or by first-class United States mail.

  History:  1996 AACS.


R 324.403   Construction  of  water  wells  used  for  drilling  or   surface 
facilities.
  Rule 403.  (1) A water well that is drilled and  used  for  drinking  water 
purposes  during  the  drilling  of  the  well  or  retained  after  drilling 
completion or final completion shall be drilled pursuant to rules promulgated 
under part 127 of Act No. 368 of the Public Acts of 1978, as  amended,  being 
§333.12701 et seq. of the Michigan Compiled Laws.
  (2)   A water well that is not to be retained after drilling completion  or 
final completion shall be  completed  and  abandoned  as  instructed  by  the 
supervisor and shall meet all of the following minimum requirements:
  (a)   Be located not less than 50 feet from drilling mud pits, pipe  racks, 
salt and mud mixing sites, and the wellhead.
  (b)   Be drilled with chlorinated fresh water.
  (c)   Be grouted pursuant to  the  well  construction  and  grouting  rules 
contained in the well construction code promulgated under part 127 of Act No.
368 of the Public Acts of 1978, as amended, being §333.12701 et seq.  of  the 
Michigan Compiled Laws.
  (d)   Geologic records shall  be  filed  with  the  supervisor  on  a  form 
prescribed by the supervisor.
  (e)   The wellhead, including annulus, shall be sealed and  a  check  valve 
shall be installed in the surface discharge line to prevent contaminants from 
entering the well.
  (f)   The well shall be abandoned and plugged pursuant to the plugging  and 
abandonment rules contained in the well construction code  promulgated  under 
part 127 of Act No. 368 of  the  Public  Acts  of  1978,  as  amended,  being 
§333.12701 et seq. of the Michigan Compiled Laws.

  History:  1996 AACS.


R 324.404  Use of surface water for drilling prohibited; exception.
  Rule 404.  Surface water shall not be used for drilling fluid,  except  for 
emergency situations to protect the public health and safety.

  History:  1996 AACS.


R 324.405   Drilling fluids generally.
  Rule 405.  The drilling fluid  used  for  drilling  wells  described  in  R 
324.201(1) shall be capable of sealing off  and  protecting  each  oil,  gas, 
brine, or fresh water stratum above the stratigraphic  or  producing  horizon 
and controlling subsurface pressures.   The  water  or  brines  used  in  the 
drilling fluid  shall  be  from  a  source  approved  by  the  supervisor  or 
authorized representative of the supervisor, used pursuant to  approved  safe 
drilling practice, and tested as instructed by the  supervisor,  except  that 
only fresh water shall be used in the drilling of the hole  for  the  surface 
casing.

  History:  1996 AACS.


R 324.406  Blowout prevention equipment.
  Rule 406.  (1)  All wells shall be equipped with the following equipment:
  (a)   A double ram blowout preventer, including pipe and blind rams, and an 
annular-type blowout preventer or other equivalent control system as approved 
by the supervisor or authorized representative of the supervisor.
  (b)   Accessible controls both on the  rig  floor  and  at  a  safe  remote 
location.
  (c)   A kelly valve.
  (d)   A drill pipe safety valve.
  (e)   A flow line of the proper size and working pressure.
  (f)   Blowout prevention equipment that has a rated working pressure  which 
equals or exceeds the maximum anticipated surface pressure of the well.
  (2)   The blowout preventers shall be installed above  ground  level.   The 
entire control equipment shall be in good working condition at all times.
All outlets, fittings, and connections on  the  casing,  blowout  preventers, 
choke manifold, and auxiliary wellhead equipment that  may  be  subjected  to 
wellhead pressure shall be of a material and construction that will withstand 
the anticipated pressure.  The lines from outlets on  or  below  the  blowout 
preventers shall be securely installed, anchored, and protected from damage.
  (3)   Blowout preventers, accumulators, and pumps  shall  be  certified  as 
operable under the product manufacturer's minimum operational specifications.

Certification shall include the proper operation of the closing unit valving, 
the pressure gauges, and the manufacturer's recommended accumulator fluids.
Certification shall be obtained through an  independent  company  that  tests 
blowout preventers, stacks, and casings.   Certification  shall  be  required 
annually and shall be posted on the rig floor.  In addition  to  the  primary 
closing system, including an accumulator system, the blowout preventers shall 
have a secondary system.  A combination of any 2 of the  following  secondary 
closing systems is acceptable:
  (a)   Electric-operated pump.
  (b)   Air-operated pump.
  (c)   Hand-operated pump.
  (d)   Nitrogen-operated pump.
Extensions that have hand wheels are not mandatory.  Blowout  preventer  rams 
shall be of a proper size for the drill pipe being used or production  casing 
being run in the well or shall be variable-type rams that are of  the  proper 
size range.
  (4)    Blowout  prevention  equipment  shall  be  tested  to   a   pressure 
commensurate with the expected formation pressure, but not  less  than  1,000 
psig at surface for not less than 20 minutes, before drilling the plug on the 
surface casing, intermediate casing, and the  production  casing  and  before 
encountering all high-pressure formations and at other intervals as  approved 
or requested by the supervisor.  When requested, an authorized representative 
of the supervisor shall be notified before the commencement  of  a  test.   A 
record of each test, including test  pressures,  times,  failures,  and  each 
mechanical test of the  casings,  blowout  preventers,  surface  connections, 
surface fittings, and auxiliary wellhead equipment shall be  entered  in  the 
logbook, signed by the driller, and kept  available  for  inspection  by  the 
supervisor or authorized representative of the supervisor.
  (5)   A trip tank, or an accurate drilling fluid monitoring system,  and  a 
gas buster and flare system  shall  be  in  place  when  penetrating  the  A2 
carbonate or any known or suspected overpressurized  formations.   Permission 
to change or modify the requirements specified in this subrule may be granted 
by  submitting  a  written  request   to   the   supervisor   or   authorized 
representative of  the  supervisor.   The  requirements  may  be  changed  or 
modified only after submission of a written request and  receipt  of  written 
approval from the supervisor or authorized representative of the supervisor.
  (6)   An exception to all or part of  this  rule  may  be  granted  by  the 
supervisor or authorized representative of the supervisor  when  drilling  in 
shallow low-pressure formations.  The supervisor or authorized representative 
of the supervisor may grant an exception upon receipt of an application for a 
permit that is accompanied by a written request and supportive data.

  History:  1996 AACS.


R 324.407  Drilling mud pits.
  Rule 407.  (1)  The supervisor shall prohibit the use of a drilling mud pit 
if it is determined that the mud pit causes waste.
  (2)   Drill cuttings, muds, and fluids shall be confined by a pit, tank, or 
container which is of proper size and construction and which  is  located  as 
approved by the supervisor or authorized representative of the supervisor.
  (3)   Only tanks shall be utilized while drilling a well that is located in 
an area zoned residential before January 8, 1993.  The supervisor  may  grant 
an exception if the applicant or permittee makes a request for  an  exception 
as part of the written application for a permit.  The supervisor may grant an 
exception if an applicant or permittee  satisfactorily  demonstrates  that  a 
municipal water system is utilized or required to be utilized.
  (4)   Drilling mud pits shall be located and plotted as instructed  by  the 
supervisor.   Before  construction  of  the  mud  pit,  a   permittee   shall 
demonstrate to the supervisor or authorized representative of the  supervisor 
that there is not less than 4 feet of vertical isolation between  the  bottom 
of the pit and the uppermost groundwater level.   The  bottom  of  the  liner 
shall not be installed within the observed groundwater  level  as  determined 
while excavating the pit.  If groundwater is  encountered  during  or  before 
construction of the pit, then the permittee shall select 1 of  the  following 
options and obtain the  approval  for  the  option  from  the  supervisor  or 
authorized representative of the supervisor:
  (a)   The pit shall be designed and constructed so the bottom of the pit is 
not less than 4 feet above the groundwater level.
  (b)   The pit shall be designed and constructed so the bottom of the pit is 
above the groundwater level, but less  than  4  feet  above  the  groundwater 
level, and during encapsulation the pit contents shall be solidified using  a 
method approved by the supervisor.
  (c)   The pit shall be relocated at  the  well  site  as  approved  by  the 
supervisor or authorized representative of the supervisor.
  (d)   Tanks shall be used, and drilling muds disposed of,  at  an  approved 
off-site location.
  (5)    Drilling  mud  pits  shall  be  constructed  as  instructed  by  the 
supervisor and shall be in compliance with  both  of  the  following  minimum 
requirements:
  (a)   Pits shall be constructed with rounded corners and side slopes of not 
less than 20 degrees measured from the vertical.
  (b)   The bottom and sides of the pit shall be free of objects  that  could 
penetrate the liner.
  (6)   Drilling mud pits shall be lined as instructed by the supervisor  and 
shall be in compliance with all of the following minimum requirements:
  (a)   Pits shall be lined with 20-mil virgin polyvinyl chloride  liners  as 
approved by the supervisor or with other liners that meet or exceed  the  20- 
mil virgin polyvinyl chloride liner requirement.
  (b)   Ample liner material shall be installed in a manner to allow for sags 
and material loading to reduce stress on the liner and allow  for  a  minimum 
10-foot flat apron on all sides, including enough liner material to  underlay 
the drilling mud tank, salt washer, and shale shaker.
  (c)   The bottom of the lined pit shall be weighted with  earthen  material 
or water before anchoring the ends of the liner on  the  surface  or  placing 
drilling muds in the pit.
  (d)   Ripping, tearing, puncturing, or other destruction of  a  liner  that 
may cause loss of fluids is prohibited.
  (e)   Liner field seams are prohibited, except for liner field  seams  that 
result from failures in the liner due to abrasion or accidental  perforation, 
which shall be immediately repaired in the field  using  the   manufacturer's 
recommended procedures.
  (7)   Drilling mud pits shall be utilized as instructed by  the  supervisor 
and shall be in compliance with all of the following minimum requirements:
  (a)   Solid salt cuttings shall not be released to  inground  drilling  mud 
pits.  Solid salt cuttings obtained while drilling  below  the  base  of  the 
Detroit River Anhydrite to the top of the  Amherstburg  formation  and  while 
drilling through the formations in the Salina Group shall be collected  in  a 
container at the shale shaker and either  diverted  to  a  device  that  will 
result in the dissolving of the solid salt cuttings and the  proper  disposal 
of the resultant brine pursuant to R 324.703 or  removed  from  the  drilling 
site to a licensed disposal facility.
  (b)   Twenty-four months after the effective date of these rules, only  the 
following may be placed in a lined pit:
  (i)   Water-based drilling muds generated or utilized while drilling  above 
the base of the Detroit River Anhydrite.
  (ii)  Drilling fluids generated or utilized while drilling above  the  base 
of the Detroit River Anhydrite.
  (iii) Cuttings obtained while drilling above the base of the Detroit  River 
Anhydrite.
  (iv)  Cuttings and  the  solid  fraction  of  drilling  muds  generated  or 
utilized while drilling below the base of the Detroit River Anhydrite,  other 
than drill cuttings prohibited by subdivision (a) of  this  subrule,  if  the 
cuttings and the solid fraction of drilling muds do not contain free  liquids 
as determined by the United States  environmental  protection  agency,  paint 
filter liquids test, method 9095, September 1986 edition, which is adopted by 
reference in these rules.  Copies are available for inspection at the Lansing 
office of the geological survey division of the department  of  environmental 
quality.  Copies may be obtained without charge as of the time of adoption of 
these rules from the Michigan Department of Environmental Quality, Geological 
Survey Division, P.O. Box 30256, Lansing, Michigan 48909, or from the  United 
States Environmental Protection Agency, Office of Research  and  Development, 
26 West Martin Luther King Boulevard, Cincinnati, Ohio  45268.   A  permittee 
shall provide the necessary equipment at the site  of  the  drilling  rig  to 
perform the paint filter liquids test.
  (v)   Water-based drilling muds and entrained cuttings,  other  than  drill 
cuttings prohibited by subdivision (a) of this subrule, which  are  generated 
or utilized while drilling below the base of  the  Detroit  River  Anhydrite, 
which contain weighting materials or lost circulation  materials,  and  which 
cannot reasonably be treated to eliminate free liquids as determined  by  the 
paint filter liquids test identified in paragraph (iv) of  this  subdivision, 
if approved by the supervisor or authorized representative of the supervisor.
  (vi)  Native soils.
  (vii) Cementing materials.
  (viii)  Stiffening or solidification materials approved by the supervisor.
  (c)   During the initial 24 months after the effective date of these rules, 
only the following may be placed in a lined pit:
  (i)   Water-based drilling muds.
  (ii)  Drilling fluids.
  (iii) Cuttings that are not prohibited by subdivision (a) of this subrule.
  (iv)  Native soils.
  (v)   Cementing materials.
  (vi)  Stiffening or solidification materials approved by the supervisor.
  (d)   Machine oil, refuse, completion and test fluids, liquid hydrocarbons, 
or other materials may not be placed in a lined pit.
  (e)   A permittee of a well shall, before encapsulation,  test  the  fluids 
and cuttings remaining in the pit to determine the concentrations of benzene, 
ethylbenzene, toluene, and xylene and provide certification to the supervisor 
or authorized representative of the supervisor of the  test  results,  except 
that a permittee is not required to test the fluids and cuttings remaining in 
the pit for benzene, ethylbenzene,  toluene,  and  xylene  if  the  well  was 
drilled with water from a source approved by the supervisor  and  if,  during 
the drilling operation, liquid hydrocarbons were not encountered.
  (8)   If a drilling mud  pit  is  not  closed  immediately  after  reaching 
drilling completion, then a permittee of a well shall fence the perimeter  of 
the drilling mud pit as soon as practical after drilling completion, but  not 
later than 30 days after drilling completion, to prevent public access.
  (9)   A permittee of a well shall close a drilling mud pit as instructed by 
the supervisor and be  in  compliance  with  all  of  the  following  minimum 
requirements:
  (a)   All free liquids above the solids in the pit shall be removed to  the 
maximum extent practical and disposed of in an approved disposal well or used 
in a manner approved by the supervisor.
  (b)   All drilling mud pits shall be stiffened before encapsulation, except 
as provided in subrule (4)(b) of this rule.  Earthen materials shall be mixed 
with the pit contents to stiffen the pit  contents  sufficiently  to  provide 
physical stability and  support  for  the  pit  cover.   An  alternative  pit 
stiffening process approved by the supervisor may be used at the option of  a 
permittee or if required by the supervisor.
  (c)   The drilling mud pit shall be carefully encapsulated  and  buried  as 
soon as practical after drilling completion, but not more than 6 months after 
drilling completion.
  (d)   Apron edges of the liner shall be folded over the pit proper.
  (e)   The drilling mud pit shall be totally covered with a  separate  piece 
of material that meets or exceeds  the  specifications  of  a  20-mil  virgin 
polyvinyl chloride cover as approved by  the  supervisor.   The  cover  shall 
extend beyond the outer edges of the pit to cover  and  entirely  encapsulate 
the pit and shall be sloped to provide surface drainage away from the pit.
  (f)   The drilling mud pit shall be buried not less than 4 feet  below  the 
original ground grade level.

  History:  1996 AACS.


R 324.408  Surface casing.
  Rule 408.  (1)  Surface casing shall be set a minimum of 100 feet below the 
base of the glacial drift into competent bedrock and 100 feet below all fresh 
water strata.
  (2)   Surface casing shall be cemented pursuant to R 324.411 and  shall  be 
circulated to the surface.  If the cement falls back or fails to circulate to 
the surface, then the open annulus space shall be sealed with cement or other 
equivalent materials approved by the supervisor or authorized  representative 
of the supervisor before resuming drilling.

  History:  1996 AACS.


R 324.409  Wells drilled with cable tools.
  Rule 409.  Wells drilled with cable tools shall have the  innermost  string 
of casing  equipped  with  a  high-pressure  master  gate  valve,  flow  line 
assembly, control head with oil saver, bottle with hydraulic  lubricator,  or 
other combination of equipment  approved  by  the  supervisor  or  authorized 
representative of the supervisor.  All of the equipment shall be anchored  to 
the surface casing or another casing string before drilling into or through a 
stratum known to contain or likely to  contain  oil  or  gas.   The  wellhead 
equipment and casing to be installed to keep a well under  control  shall  be 
pressure-tested commensurate to formation pressures, shall be in good working 
order when installed, shall be maintained in good  working  order  throughout 
its use on the well, and shall be capable of being equipped with a bottle  or 
lubricator, or both, when this method of control is necessary.
The annulus shall be sealed with a bradenhead  or  other  approved  equipment 
that has a connection and valve for monitoring.

  History:  1996 AACS.


R 324.410  Casing other than surface casing.
  Rule 410.  (1)  A person who drills a well or causes a well to  be  drilled 
pursuant to R 324.201 or rules that were in effect before the effective  date 
of these rules shall case the well in a manner approved by the supervisor  to 
prevent waste.
  (2)   In addition to the surface casing,  the  supervisor  may  require  or 
order a string of casing to be run to seal off any of the following:
  (a)   A potentially productive oil or gas zone, or both.
  (b)   A lost circulation zone.
  (c)   A utilized natural brine or mineral zone.
  (d)   A storage field.
  (e)   A high-pressure zone.
  (f)   A reservoir undergoing secondary recovery.
  (3)   All casing, except for casing set pursuant to R 324.413, shall be  of 
sufficient weight, grade, and condition to have a designed  minimum  internal 
yield of 1.2 times the greatest expected well bore pressure to be encountered.
  (4)   For the purpose of proper sealing of  wells  and  the  prevention  of 
waste, the minimum hole size for a given casing shall be as  shown  in  table 
410:

                                        Table 410
                                   Minimum Hole Size
                Casing size                                     Minimum  hole 
size
        outside diameter (O.D.)-inches                     outside diameter - 
inches
                Up to 7 O.D.                                    Casing O.D. + 
1 1/2
                More than 7 O.D.                                Casing O.D. + 
2
                More than 10 3/4 O.D.                           Casing O.D. + 
3

An exception to the minimum hole size as shown in table 410 may be granted by 
the supervisor or authorized representative of the supervisor, upon a written 
request by the permittee or applicant, if it is determined that the  proposal 
provides  proper  sealing  of  the  well.   The  supervisor   or   authorized 
representative of the supervisor may require  a  larger  hole  size  for  the 
surface hole than the size shown in table 410 in order to prevent waste.

  History:  1996 AACS.


R 324.411  Cementing.
  Rule 411.  Well casing shall be cemented by the pump and plug method or  by 
a method approved by the supervisor and allowed to set undisturbed at  static 
balance with the casing in tension, with surface pressure released, and  with 
no backflow until the tail-in slurry reaches 500  psi  compressive  strength, 
but for not less than 12 hours; however, if backflow occurs, then the surface 
pressure shall not be released.  The cement mixture shall be of a composition 
and volume approved by the supervisor or  authorized  representative  of  the 
supervisor.  The casing shall be pressure-tested before the cement plugs  are 
drilled or the casing perforated.  The pressure at  the  top  of  the  cement 
shall be equal to the expected operating pressure of the well;  however,  the 
test pressure shall not exceed the API  specification  for  hydrostatic  test 
pressure for new casing, API specification 5CT, specification for casing  and 
tubing, April 1995, fifth edition, which is adopted  by  reference  in  these 
rules.  Copies are available for inspection at  the  Lansing  office  of  the 
geological survey division of  the  department  of  environmental  quality.
Copies may be obtained from the Michigan Department of Environmental Quality, 
Geological Survey Division, P.O. Box 30256, Lansing,  Michigan  48909,  at  a 
cost as of the time of adoption of these rules of $42.00 each, and  from  the 
American Petroleum Institute, 1220 L Street NW, Washington, DC  20050,  at  a 
cost as of the time of adoption of these rules of $42.00 each.

  History:  1996 AACS.


R 324.412  Stripping of casing.
  Rule 412.  (1)  A permittee of a well shall not pull or strip a  string  of 
casing from a well, except under the following circumstances:
  (a)   When provision is made for the removal of casing in  the  casing  and 
sealing program specified in the application  for  permission  to  drill  and 
operate.
  (b)   When casing is pulled and reset in  the  same  stratum  to  obtain  a 
satisfactory casing seat.
  (c)   When a well is being plugged back or is being plugged to the  surface 
under the change of well  status  provided  in  R  324.511  or  the  plugging 
instructions set forth in R 324.902.
  (2)   A permittee of a well shall seal the annular space left open and  the 
stratum exposed by the approved pulling and stripping of casing in  a  manner 
approved by the supervisor or authorized representative of the supervisor.

  History:  1996 AACS.


R 324.413  Drilling to strata beneath gas storage reservoirs.
  Rule 413.  Except when  special  orders  have  been  adopted  for  specific 
reservoirs, areas, or  practices,  all  of  the  following  provisions  about 
drilling to strata beneath gas storage reservoirs shall apply:
  (a)   The applicant shall  send  a  copy  of  the  entire  drilling  permit 
application  and  all  revisions  to  the  gas  storage  operator  when   the 
application and revisions are submitted to the supervisor.  The  gas  storage 
operator shall have 10 business days  to  provide  written  comments  to  the 
supervisor.
  (b)   Drilling operations shall proceed through gas storage zones only when 
the gas storage reservoir pressure exerts a pressure  gradient  of  not  more 
than 0.50 psig per foot of true vertical depth to the top of the gas  storage 
zone.
  (c)   Drilling rigs for wells drilled through gas storage reservoirs  shall 
use rotary tools and shall have blowout prevention equipment  pursuant  to  R 
324.406.  Complete operational checks of the well control appliances shall be 
made every 8 hours,  with  the  well  control  system  initially  checked  by 
pressure testing and checked again  before  drilling  into  the  gas  storage 
reservoir.  The 8-hour checks shall be recorded in the daily driller's log.
  (d)   Surface casing and any other protective casing string required  above 
the gas storage reservoir shall be new casing manufactured in compliance with 
the API specifications for casing and tubing as adopted  by  reference  in  R 
324.411, the properties and  design  of  which  have  been  approved  by  the 
supervisor or authorized representative of the  supervisor.   Surface  casing 
and any other protective casing string shall be  designed  to  withstand  the 
required test pressures as set forth in R 324.410(3).  Surface  casing  shall 
be set pursuant to R 324.408.   Surface  casing  shall  be  cemented  to  the 
surface and not disturbed for a  period  of  18  hours  after  completion  of 
cementing.  Cement shall attain a minimum compressive  strength  of  500  psi 
before disturbing the casing or resuming  drilling.   Surface  casing,  other 
protective casing strings, and blowout preventers shall be tested pursuant to 
R 324.406(4) before drilling out the cement, unless  otherwise  specified  by 
the supervisor or authorized representative of the supervisor.
  (e)   Drilling fluid shall be circulated and conditioned  at  a  point  not 
less than 100 feet above the gas storage reservoir and  shall  be  maintained 
with the following characteristics until the gas storage reservoir  is  cased 
off:
  (i)   Drilling fluid density shall be sufficient to provide  a  hydrostatic 
pressure of not less than 100 psig above the anticipated bottom hole pressure 
of the gas storage reservoir.
  (ii)  When drilling through the storage reservoir, the drilling fluid shall 
have a maximum fluid loss of 15 cubic centimeters or less as specified by the 
API standard procedure for testing drilling fluids, API  RP  13B-1,  entitled 
"Recommended Practice Standard  Procedure  for  Field  Testing  Water-  Based 
Drilling Fluids," June 1, 1990, first edition, which is adopted by  reference 
in these rules.  Copies are available for inspection at the Lansing office of 
the geological survey division of the department of environmental  quality.
Copies may be obtained from the Michigan Department of Environmental Quality, 
Geological Survey Division, P.O. Box 30256, Lansing,  Michigan  48909,  at  a 
cost as of the time of adoption of these rules of $30.00 each, and  from  the 
American Petroleum Institute, 1220 L Street NW, Washington, DC  20050,  at  a 
cost as of the time of adoption of these rules of $30.00 each.
  (f)   Hole size shall be large enough to allow the running  of  a  separate 
intermediate casing, which shall be set through each gas storage reservoir.
The casing shall be new and conform to the API specification and  performance 
properties for casing,  tubing,  and  drill  pipe,  API  BULL  5C2,  entitled 
"Bulletin on Performance Properties of Casing, Tubing and Drill Pipe, May 31, 
1987," twelfth edition, which is adopted by reference in these rules.
Copies are available for inspection at the Lansing office of  the  geological 
survey division of the department of environmental quality.   Copies  may  be 
obtained from the Michigan Department of  Environmental  Quality,  Geological 
Survey Division, P.O. Box 30256, Lansing, Michigan 48909, at a cost as of the 
time of adoption of these  rules  of  $35.00  each,  and  from  the  American 
Petroleum Institute, 1220 L Street NW, Washington, DC 20050, at a cost as  of 
the time of adoption of these rules of $35.00 each.  The gas storage operator 
shall be allowed to review  the  intermediate  casing  design  and  cementing 
program before implementation.  Intermediate casing shall be set in competent 
stratum approximately 100 feet below the base of the gas storage reservoir or 
set as required  by  the  supervisor  or  authorized  representative  of  the 
supervisor.  Intermediate casing  shall  be  designed  for  the  maximum  gas 
storage reservoir operating pressure using a minimum collapse  design  factor 
of 1.125, a minimum burst design factor of 1.25, and a minimum tension design 
safety factor of 1.6.  The minimum hole size for a given size casing shall be 
pursuant to R 324.410(4).  The hole  shall  be  properly  conditioned  before 
running casing by circulating the drilling fluid  at  a  rate  equal  to  the 
drilling circulating rate and by utilizing a circulating time  equivalent  of 
not less than twice the hole displacement.
Casing shall be  equipped  with  a  sufficient  number  of  centralizers  and 
scratchers to ensure good cement distribution and shall include  centralizers 
above and below the gas storage reservoir.  All centralizers shall conform to 
the  API  for  casing   centralizers,   API   specification   10D,   entitled 
"Specification for Bow-Spring Casing Centralizers," January  1,  1995,  fifth 
edition, which is adopted by reference in these rules.  Copies are  available 
for inspection at the Lansing office of the geological survey division of the 
department of  environmental  quality.   Copies  may  be  obtained  from  the 
Michigan Department of Environmental  Quality,  Geological  Survey  Division, 
P.O. Box 30256, Lansing, Michigan 48909, at a cost as of the time of adoption 
of these rules of $27.00 each, and from  the  American  Petroleum  Institute, 
1220 L Street NW, Washington, DC 20050, at a cost as of the time of  adoption 
of these rules of $27.00 each.  Casing shall  include  float  equipment  that 
will prevent  movement  after  the  cementing  operation  is  completed.   If 
conditions allow, casing shall  be  rotated  or  reciprocated  slowly  during 
cementing.  The mill varnish shall be removed from the casing shoe to a point 
100 feet above the storage reservoir.  An acceptable spacer that is at  least 
as dense as the drilling fluid shall precede the cement to  aid  in  removing 
the drilling fluid.  Cement mix water shall be tested  before  the  cementing 
operation to ensure compatibility with  the  cement.   The  casing  shall  be 
cemented using a sufficient cement volume to circulate cement to the surface.
 Multistage cementing operations and external casing packers may be used only 
with the approval of the  supervisor  or  authorized  representative  of  the 
supervisor.  Cemented casing shall not be disturbed for a period of 18 hours.
 Cement shall also attain a minimum compressive strength of 500 psi based  on 
cement tables before disturbing the  casing  or  resuming  drilling.   Absent 
backflow, the internal casing pressure shall be relieved after the  cementing 
operation.  Intermediate casing and the blowout preventers shall be tested to 
a pressure of not less than  1,500  psig  at  the  surface  or  as  otherwise 
specified by the supervisor or authorized representative of  the  supervisor, 
and the pressure shall be held for not less than 20 minutes  before  drilling 
out the cement.
  (g)   When additional intermediate  casing  is  run  inside  the  innermost 
storage zone  casing,  below  the  base  of  the  Detroit  river  group,  the 
intermediate casing string and cementing shall be pursuant to these rules and 
the orders and instructions issued by the supervisor.
  (h)   A centralized cement bond evaluation log or equivalent test  approved 
by the supervisor shall be  performed  on  the  storage  zone  casing  before 
running subsequent casing or plugging the hole, but not sooner than 48  hours 
after cementing the storage  zone  intermediate  casing.   A  description  of 
problems occurring while running or cementing casing shall be recorded in the 
daily driller's log.  If unsatisfactory conditions are  indicated,  including 
unsatisfactory cement bonding, gas to the surface in the cellar area, or  gas 
pressure on the surface or intermediate casing string annulus, and additional 
testing does not provide sufficient proof  the unsatisfactory condition  does 
not  exist,  then  the  permittee  shall  initiate  remedial  action   before 
additional casing is installed.
  (i)    Wellhead  equipment  and  assemblies  shall  conform  to   the   API 
specification for  wellhead  equipment,  and  shall  include  slip  and  seal 
assemblies for all casings, unless an exception is approved by the supervisor 
or authorized representative of the supervisor.  The  API  specification  for 
wellhead equipment is specification 6A, entitled "Specification for  Wellhead 
and Christmas Tree Equipment," February 1, 1996, seventeenth  edition,  which 
is adopted by reference in these rules.  Copies are available for  inspection 
at the Lansing office of the geological survey division of the department  of 
environmental quality.  Copies may be obtained from the  Michigan  Department 
of  Environmental  Quality,  Geological  Survey  Division,  P.O.  Box  30256, 
Lansing, Michigan 48909, at a cost as of the time of adoption of these  rules 
of $55.00 each, and from the American Petroleum Institute, 1220 L Street  NW, 
Washington, DC 20050, at a cost as of the time of adoption of these rules  of 
$55.00 each.  The wellhead shall be assembled to allow the monitoring of  the 
pressure of each annulus at the surface.
  (j)   The permittee shall notify the gas  storage  operator  before  moving 
personnel or equipment, or both, onto the well location to ensure all of  the 
following:
  (i)   That the  proposed  well  location  does  not  endanger  gas  storage 
facilities or storage operations.
  (ii)  That the movement of drilling rigs,  related  trucks,  and  equipment 
does not endanger gas storage facilities or storage operations.
  (iii) That  the  gas  storage  operator  is  allowed  to  witness  drilling 
operations that impact the gas storage reservoir.

  History:  1996 AACS.


R 324.414  Requests for exceptions to R 324.406 through R 324.413.
  Rule 414.  If a permittee of a well demonstrates alternative  methods  that 
are in compliance with the requirements of these rules, then the request  for 
an exception to the provisions  of  R  324.406  through  R  324.413  and  the 
rationale for the alternate methods shall be included in the application  for 
permission to drill or shall be submitted in writing to the supervisor.

  History:  1996 AACS.


R 324.415   Elevations; well depth measurements.
  Rule 415.  (1)  Drilling reference elevations of the kelly bushing  or  rig 
floor and a described point on  the  production  casing  shall  be  measured, 
recorded, and filed pursuant to R 324.418.
  (2)   The depth of the top of  key  geologic  strata  shall  be  accurately 
determined and shall be entered in the drilling log book and become a part of 
the record and log of the  well.   Additional  requirements  for  directional 
drilled wells are contained in R 324.421.

  History:  1996 AACS.


R 324.416  Well records; service company records; confidentiality.
  Rule 416. (1)  A person  who  drills,  deepens,  changes  well  status,  or 
completes a well under R 324.201, R 324.420, R 324.511, or rules that were in 
effect before the effective date of these rules shall keep  and  preserve  at 
the well, during drilling, deepening, changes in well status,  or  completion 
operations, accurate records recording all geologic strata penetrated, casing 
and cement used, and other information as may be required by  the  supervisor 
in connection with the drilling of the well.
  (2) When requested by the supervisor or authorized  representative  of  the 
supervisor, a permittee of a well  shall  file  a  copy  of  service  company 
records, including records of all of the following:
  (a) Mudding, cementing, and squeeze operations.
  (b) Acidizing.
  (c) Perforating.
  (d) Fracturing.
  (e) Shooting.
  (f) Temperature surveys.
  (g) Bond logs.
  (h) Caliper surveys.
  (i) Wireline borehole and strata evaluation logs.
The supervisor may request the records directly from the service company.
  (3) A permittee of a well shall make all records and information  available 
to the supervisor or authorized  representative  of  the  supervisor  at  all 
times.  A permittee shall protect the records from damage or destruction  due 
to a preventable cause.  All well data and samples provided to the supervisor 
or authorized representative of the supervisor as  required  by  these  rules 
shall be held confidential commencing with the receipt of a  written  request 
of the permittee and shall remain confidential for  90  days  after  drilling 
completion.  Information on volumes, concentrations, and times  of  releases, 
spills, or leaks of gas, brine,  crude  oil,  oil  or  gas  field  waste,  or 
products and chemicals used in association  with  oil  and  gas  exploration, 
production, disposal, or development is not subject to confidentiality.

  History:  1996 AACS; 2001 AACS.


R 324.417  Samples of drill cuttings and cores.
  Rule 417.  (1)  A person who drills a well pursuant to R 324.201  or  rules 
that were in effect before the effective date of these rules shall  take  and 
preserve, for the duration of the drilling, properly  identified  samples  of 
the drill cuttings taken from the base of the drift to the total depth.
  (2)   A permittee of a well shall take  and  preserve  drift  samples  when 
specifically requested by the supervisor or authorized representative of  the 
supervisor.  The samples shall be available to the supervisor upon request.
  (3)   When requested before the commencement of drilling, a permittee of  a 
well shall deliver 1 complete set of drill cutting samples, washed and dried, 
to the supervisor within 90 days  after  drilling  completion.   Samples  not 
requested may be disposed of in a manner  approved  by  the  supervisor  upon 
drilling completion.
  (4)   When a permittee of a well obtains whole cores or core samples during 
the drilling of a well, the permittee shall provide  the  supervisor  with  a 
minimum of 90 days’ notification of his or her intention  to  dispose  of  or 
destroy the whole cores or core samples.  When requested by  the  supervisor, 
pursuant to the notification, the permittee shall deliver the whole cores  or 
core samples to the supervisor within 90 days of the request.

  History:  1996 AACS.


R 324.418  Filing of well records.
  Rule 418.  A permittee of a well who drills a well shall file  all  of  the 
following records with the supervisor:
  (a)   Within 60 days after drilling completion, a complete written geologic 
description log or record of the well, certified by the permittee,  on  forms 
prescribed by the supervisor, including all of the following information:
  (i)   Elevations pursuant to R 324.415.
  (ii)  Depth to, and thickness of, water-bearing sands and  gravels  in  the 
glacial drift as determined by a geologist, including fill-up and volumes  of 
the water, if available.
  (iii) The measured and true vertical depth to geologic  strata  penetrated, 
and accurate and complete lithologic descriptions, including color, hardness, 
and the character of the rock as determined by a geologist.
  (iv)  A record of all shows of oil or gas, or both, encountered.
  (v)   A record of all lost circulation zones encountered.
  (vi)  A record of all hole sizes, casings, and liners used,  including  the 
size, weight, grade, amount, and depth set for each casing string.
  (vii) The amount of cement used and the calculated elevation of the top  of 
the cement,  unless  the  supervisor  or  authorized  representative  of  the 
supervisor requests the elevation to be measured.
  (viii)  Data on all drill stem tests.  The minimum education and experience 
requirements for a geologist to determine the information  required  in  this 
subrule are graduation from a university or college that  has  an  accredited 
4-year curriculum in a geological science, receipt of a 4-year  degree  in  a 
geological science, and 2 years of practical experience providing  geological 
services, including consultation,  investigation,  evaluation,  planning,  or 
responsible supervision of geological activities requiring the application of 
geologic principles and techniques.
  (b)   Within  60  days  after  well  completion  operations,  data  on  all 
perforating, acidizing, fracturing, shooting, and testing.
  (c)   Within 60 days of plugging the well, all of the following information:
  (i)   Accurate and complete descriptions of cores.
  (ii)  Data on all bridge plugs set, make  and  type  of  plug,  depth  set, 
whether left in place or removed, and details of plug-back  operations  below 
the bridge plug.
  (iii) The amount of casing stripped from the well.

  History:  1996 AACS.


R 324.419  Borehole and strata evaluation logging.
  Rule 419.  (1)  A permittee of a well shall file a copy of all borehole and 
geologic strata evaluation logs or other logs with the supervisor  within  30 
days after conducting the logging run.
  (2)   Upon the request of the supervisor or  authorized  representative  of 
the supervisor, a logging service company shall  provide  a  listing  of  all 
borehole and geologic strata evaluation logs or other logs run.

  History:  1996 AACS.


R 324.420  Continuation of drilling; deepening operations.
  Rule 420.  (1)  A permittee of a well who desires to continue the  drilling 
of a well below the permitted depth, but within the  permitted  stratigraphic 
or producing horizon where drilling completion has occurred,  shall  file  an 
application for change of well status pursuant to R 324.511.
  (2)   A permittee of a  well  who  desires  to  deepen  a  well  below  the 
permitted stratigraphic  or  producing  horizon  where  well  completion  has 
occurred shall file an application for  a  deepening  permit  pursuant  to  R 
324.206(4).
  (3)   A permittee of a well shall save samples of the  drill  cuttings  and 
cores during the continuation of drilling or deepening operations pursuant to 
R 324.417.
  (4)   A permittee of a well shall  file  records  of  the  continuation  of 
drilling or deepening operations with the supervisor pursuant to R 324.418, R 
324.419, and R 324.511.

  History:  1996 AACS.


R 324.421  Survey of directionally drilled well.
  Rule 421.  A permittee of a well shall conduct a directional well survey on 
each directionally drilled well, with actual survey points taken at a maximum 
of 100-foot intervals  from  the  point  of  deviation  to  total  depth  and 
including the end point of the borehole or at an interval as approved by  the 
supervisor or authorized representative of the supervisor.   However,  for  a 
well  that  is  to  be  plugged  and  abandoned  immediately  upon   drilling 
completion, the supervisor shall approve survey points at more than  100-foot 
intervals, but not more than 500-foot intervals.   All  information  obtained 
during and  after  the  survey  shall  be  available  to  the  supervisor  or 
authorized representative of  the  supervisor.   A  permittee  shall  file  a 
certified copy of the  survey  with  the  supervisor  within  30  days  after 
drilling completion.  A well shall not be produced until the survey has  been 
filed with the supervisor.

  History:  1996 AACS.


R 324.422  Sealing of cellars and rat and mouse holes.
  Rule 422.  (1)  A permittee of a well shall seal and set into the earth rat 
and mouse hole casings and cellars in a manner to prevent  the  migration  of 
the drilling fluid and other foreign fluids into the groundwater.
  (2)   Immediately after drilling completion, a permittee of  a  well  shall 
fill rat and mouse holes on all rotary-drilled wells solidly from  bottom  to 
top with cement or other suitable material approved by the supervisor.

  History:  1996 AACS.


                        PART 5.  COMPLETION AND OPERATION

R 324.501    Responsibility for oil and gas operations.
  Rule 501. A permittee  of  a  well  is  responsible  for  the    oil    and 
gas operations of his or her well.

  History:  1996 AACS; 2002 AACS. 


R 324.502  Oil, brine, or associated oil or gas field waste; storage.
  Rule 502.  A permittee of a well shall not store or retain oil,  brine,  or 
associated oil or gas field waste in earthen reservoirs or open receptacles.

  History:  1996 AACS.


R 324.503  Well completion operations.
  Rule 503.  (1)  A permittee  of  a  well  shall  use  proper  well  control 
measures to avoid an uncontrolled flowing of the well.  All fluids, including 
acid, load water, chemicals, and associated hydrocarbons, shall  be  produced 
or swabbed back to approved containers.  A permittee of a well shall not  use 
earthen pits or reservoirs to contain fluids produced from the well.
  (2)   A permittee shall notify the supervisor or authorized  representative 
of the supervisor when a well completion operation starts.

  History:  1996 AACS.


R 324.504    Well sites and surface facilities. 
  Rule 504.	(1)	A person shall use every reasonable  precaution  to  stop  and 
prevent waste.  All wells, surface  facilities,  gathering  lines,  and  flow 
lines shall be constructed and operated so that the  materials  contained  in 
the facilities do not cause waste.  An oil and gas  operation  shall  not  be 
commenced or continued at a location where it is likely that a substance  may 
escape in a quantity sufficient to pollute the air, soil, surface waters,  or 
groundwaters or to cause unnecessary endangerment of public  health,  safety, 
or welfare until the permittee has complied with the  methods  and  means  to 
prevent pollution or eliminate the unnecessary endangerment of public health, 
safety, or welfare as specified by the supervisor. 
  (2)	The surface facilities shall be located not less than 300 feet from  all 
of the following:
  (a)	Existing  recorded  freshwater   wells   and   reasonably   identifiable 
freshwater wells utilized for human consumption. 
  (b)	Existing structures used for public or private occupancy. 
  (c)	Existing areas maintained for public recreation. 
  (d)	The edge of the traveled  portion  of  an  existing  interstate,  United 
States, or state highway.  Pump jacks are exempt from this requirement.
  (3)	Surface facilities may be located closer than  300  feet  from  existing 
recorded  freshwater  wells  and  reasonably  identifiable  freshwater  wells 
utilized for human consumption and existing structures  used  for  public  or 
private occupancy under either of the following conditions:
  (a)	Upon presentation to the supervisor of a written consent signed  by  the 
owner or owners of all existing  recorded  freshwater  wells  and  reasonably 
identifiable freshwater wells utilized for  human  consumption  and  existing 
structures used for public or private occupancy.
  (b)	After a hearing under part 12 of these rules, the supervisor  determines 
that the surface facility location will prevent waste, protect  environmental 
values, and not compromise public safety. 
  (4)	A permittee of a well shall not begin  the  installation  of  a  surface 
facility or flow line  without  approval  of  the  supervisor  or  authorized 
representative of the supervisor.  A permittee shall make a  written  request 
for approval to construct and operate or  to  substantially  reconstruct  and 
operate a surface facility or flow line and shall file the request  with  the 
supervisor.  The request may be filed with the application for  a  permit  to 
drill and operate a well.  The request shall have a detailed description  and 
plan of the proposed facility, which  shall  include  all  of  the  following 
information:
  (a)	An environmental impact assessment if the surface  facility  is  located 
more than 300 feet from the well or wells it serves.
  (b)	The location of the proposed surface facility or flow line.
  (c)	Identification of the well or wells  to  be  connected  to  the  surface 
facility or flow line.
  (d)	Reasonable  and  necessary  measures  to  protect  environmental  values 
associated with existing adjacent land uses,  including  berming,  screening, 
and access road location.
  (e)	Information relative to the approximate distances  and  directions  from 
the surface facility or flow line to special hazards or conditions identified 
in R 324.201(2)(b)(iv). 
  (5)	Upon receipt of a written request for approval to construct and  operate 
or to substantially reconstruct and operate a surface facility or  flow  line 
under subrule (4) of this rule, other than a request to construct and operate 
a surface facility or flow line made as part of an application for permit  to 
drill and operate a well, the supervisor or authorized representative of  the 
supervisor shall have up to 30 days to review the request to determine if the 
request is accurate and  complete.   If  the  request  is  determined  to  be 
inaccurate or incomplete, the supervisor or authorized representative of  the 
supervisor shall provide, within the 30?day period, to the person making  the 
request, a notice that the request  is  inaccurate  or  incomplete  and  what 
changes or additional information shall be submitted.  Upon  receipt  of  the 
requested information, the supervisor or  authorized  representative  of  the 
supervisor shall have up to an additional 15 days to review  the  information 
to determine if the request is accurate and complete.  Upon completion of the 
review process, the supervisor or authorized representative of the supervisor 
shall approve or deny the request within 10 business days.  A  request  shall 
be approved if the supervisor determines that construction and  operation  of 
the proposed surface facility  or  flow  line  will  prevent  waste,  protect 
environmental values, and not compromise public safety.  Upon approval by the 
supervisor or authorized representative of the  supervisor,  a  request  made 
under this rule shall become part of, and subject to, the provisions  of  the 
permit to drill and operate the well or wells served by the surface facility.
  (6)	A person or permittee of a well shall  not  install  a  gathering  line, 
carrying gas with more than 300 ppm  hydrogen  sulfide  or  a  flow  line  or 
facility piping carrying gas from a class I H2S well and that is subject to a 
maximum working pressure of more  than  125  psig  that  does  not  meet  the 
construction requirements in R 324.1130. 
  (7)	Surface facilities constructed  after  November  15,  1989,  shall  have 
secondary containment under R 324.1002.  
  (8)	If discharges to the air, surface waters, or groundwater  of  the  state 
are likely to occur at a surface facility, then a permittee shall  apply  for 
and obtain all necessary state and federal discharge permits before operating 
the surface facility. 

  History:  1996 AACS; 2001 AACS; 2002 AACS.


R 324.505  Pump jacks in residential areas.
  Rule 505.  In areas zoned residential before January 8, 1993, if  pumps  or 
pump jacks are installed after the effective date  of  these  rules,  then  a 
permittee of a well shall comply with the following conditions:
  (a)   Electrically driven pumps shall be utilized or, if judged impractical 
by the supervisor, pumps may be driven  by  other  power  sources  that  have 
hospital-type mufflers or the equivalent.
  (b)   Pump jacks within 600 feet of structures used for public  or  private 
occupancy shall be fenced to prevent public access.

  History:  1996 AACS.


R 324.506  Flare stacks and surface facilities in residential areas.
  Rule 506.  (1)  In areas  zoned  residential  before  January  8,  1993,  a 
permittee of an oil or gas well, or both, which contains 300 ppm or  more  of 
hydrogen sulfide and which reaches drilling completion after March  1,  1987, 
shall not locate surface facilities and  associated  flare  stacks  within  a 
residentially zoned area,  unless  either  of  the  following  provisions  is 
satisfied:
  (a)   The supervisor receives written notice from the local government that 
has zoning jurisdiction that the local government  does  not  object  to  the 
location of the facility within the residentially zoned area.
  (b)   The applicant or permittee is granted a variance from the  supervisor 
pursuant to a hearing before the supervisor.  The petitioner shall notify the 
local governmental body of the hearing and has the burden of demonstrating to 
the supervisor that the planned surface facility and associated flare  stacks 
would have minimum impacts upon existing  or  proposed  structures  used  for 
public or private occupancy.
  (2)   The supervisor  may  grant  an  exception  to  permit  flaring  in  a 
residentially zoned area for testing the production characteristics of a well 
for a period of not more than 15 days, unless a longer period  is  authorized 
by the supervisor.  The permittee shall submit a written application  to  the 
supervisor for the exception detailing the time period of, and the  equipment 
to be used for, the testing.
  (3)   If the oil or gas well, or both, reached drilling completion  between 
March 1, 1987, and January 8, 1993, and the area was not zoned residential at 
the time the well reached drilling completion, the well  is  not  subject  to 
this rule.

  History:  1996 AACS.


R 324.507  Tubing.
  Rule 507.  A permittee of a well shall tube a producible oil and gas well.
A permittee of a well shall test and produce all oil through the tubing.
Injection wells utilized for gas storage are exempt from this rule.

  History:  1996 AACS.


R 324.508  Multiple zone completions.
  Rule 508.  The supervisor or authorized representative  of  the  supervisor 
may allow multiple zone completions upon written application to, and approval 
by, the supervisor.

  History:  1996 AACS.


R 324.509  Commingling of oil and gas.
  Rule 509.  The supervisor or authorized representative  of  the  supervisor 
may allow commingling in the well bore of oil and gas from 2  or  more  pools 
upon written application to, and approval by, the supervisor.

  History:  1996 AACS.


R 324.510  Central production facility.
  Rule 510.  (1)  A permittee of a well shall not begin the  operation  of  a 
central production  facility  without  the  approval  of  the  supervisor  or 
authorized representative of the supervisor.  A permittee  of  a  well  shall 
make a written request for approval to operate a central production  facility 
and shall file the request with the supervisor.  The supervisor or authorized 
representative of the supervisor shall approve or deny the request within  30 
days of receipt.  The request shall have a detailed description and  plan  of 
the proposed facility, which shall include all of the following information:
  (a)   The location of the proposed central production facility.
  (b)   Identification of the wells or production units to  be  connected  to 
the central production facility.
  (c)   Identification of the fluid streams that will be commingled.
  (d)   A schematic of the flow schemes, including the location of all of the 
following:
  (i)   Individual gas, oil, condensate, and water meters.
  (ii)  Facility and sales gas, oil, condensate, and water meters.
  (iii) Fuel use and artificial lift meters.
  (iv)  On-site surface equipment.
  (e)   The method proposed for measurement or allocation of  fluid  volumes, 
if individual and facility meters are not  used.   The  method  proposed  for 
measurement may include allocation of production to each well using  a  molal 
balance scheme.
  (f)   Identification of the type and model of the gas, oil, condensate, and 
water meters that are proposed.
  (g)   Quality assurance procedures,  including  calibration  and  proofing, 
that will be implemented to maintain the accuracy of the meters.
  (h)   The procedure or method proposed for allocation  of  each  commingled 
fluid stream.
  (i)   If production from production units or unitized areas is included  in 
the central production facility, a copy of  the  pooling  or  communitization 
agreement filed  pursuant  to  R  324.303(2)  or  the  unitization  agreement 
developed pursuant to sections 61701 to 61738 of the act.
  (2)   A permittee of a well shall obtain the approval of the supervisor  or 
authorized representative of the supervisor before implementing a  subsequent 
addition, alteration, or change  to  the  central  production  facility  that 
affects flow measurement or reporting methods.
  (3)   A permittee of a well shall submit monthly reports of meter readings, 
metered production,  and  allocated  production  on  forms  approved  by  the 
supervisor.

  History:  1996 AACS.


R 324.511    Change of well status.
  Rule 511. (1) A permittee of a well who desires to change the  status  of a 
well by an oil and gas operation, including temporary abandonment, except  as 
allowed by R  324.704,  and   additional   acid    or    other    stimulation 
treatment, shall file an application for  change  of  well  status  with  the 
supervisor.  The application shall set forth, in detail, the kind of oil  and 
gas operation  to be accomplished and the plan for protecting all oil,   gas, 
brine,  or  fresh water strata the well has penetrated.   A  permittee  shall 
not  begin  the  oil and gas operation until he or she has received  approval 
from  the  supervisor or authorized  representative  of  the  supervisor  and 
provided  notification  to the supervisor or authorized representative of the 
supervisor of the date the oil and gas operation will commence.
  (2) A permittee of a well who changes the status of a  well   shall   file, 
with the supervisor, within 60 days, a  complete  change  of   well    status 
record  on forms prescribed by the supervisor, except that a record shall not
 be  filed when the change  of  well  status  operation  is   for   temporary 
abandonment purposes.
   
  History:  1996 AACS; 2002 AACS.


                        PART 6.  PRODUCTION AND PRORATION

R 324.601  Proration of oil and gas wells and fields.
  Rule 601.  (1)  The supervisor may prorate production from wells or fields, 
or both, to conserve reservoir energy, to maximize oil and gas  recovery,  to 
ensure that the owners shall be afforded the  opportunity  to  produce  their 
just and equitable share of the oil  and  gas  from  the  reservoir,  and  to 
prevent waste by setting allowable production rates.  The prorated allowables 
shall be established by order of the supervisor after a hearing  pursuant  to 
part 12 of these rules.
  (2)   The proration order shall specify the maximum amount of oil  or  gas, 
or both, that may be produced in a 24-hour day.

  History:  1996 AACS.


R 324.602  Tolerance from regularly calculated production.
  Rule 602.  (1)  A  permittee  of  a  well  shall  be  allowed  to  make  up 
underproduction of oil and gas if the underproduction  is  not  more  than  3 
days' allowable  production  from  each  well  for  a  calendar  month.   The 
underproduction of oil and gas from  each  well  shall  be  adjusted  by  the 
permittee during the next calendar month.
  (2)   If in a reservoir under multiple  ownership  an  emergency  condition 
arises which is beyond the control of the permittee of  the  well  and  which 
prevents  the  permittee  from  producing  his  or  her  regularly  scheduled 
allowable production or prevents  the  purchaser  from  running  his  or  her 
regularly scheduled amounts of oil or gas during a  calendar  month  and  the 
underproduction is more than 3 days' allowable production, then the permittee 
may apply in writing  to  the  supervisor  for  permission  to  make  up  the 
underages.  The supervisor or authorized representative of the supervisor may 
grant the request if reservoir waste does not occur.
  (3)   In a well that has produced over its daily oil allowable by more than 
3 days or its daily gas allowable by more than 30 days, the permittee of  the 
well shall cease  producing  the  well  or  further  limit  the  oil  or  gas 
production as approved by the supervisor or authorized representative of  the 
supervisor until the overage is made up.

  History:  1996 AACS.


R 324.603  Transfer of allowables between wells prohibited.
  Rule 603.  A permittee of a well shall not produce oil or gas from  a  well 
above the allowables pursuant to R 324.602 to make  up  for  the  failure  of 
another well or wells to produce a full allowable or allowables.

  History:  1996 AACS.


R 324.604  Well hookups to tanks or separators, or both, for prorated wells.
  Rule 604.  A permittee of a well shall ensure that well  is  hooked  up  or 
connected to separators or stock tanks, or both, so that the well’s oil, gas, 
and brine production entrained in the oil or gas may be segregated  from  all 
other wells and so that individual measurements of daily oil, gas, and  brine 
production of each well may be made.  Exceptions to this rule may be  granted 
if the supervisor or authorized representative of the supervisor approves  an 
alternative measurement and allocation method pursuant to R 324.510.

  History:  1996 AACS.


R 324.605  Capacity tests for prorated wells.
  Rule  605.   (1)   The  supervisor  or  authorized  representative  of  the 
supervisor may  require  capacity  tests,  including  test  requirements  and 
reporting on wells  subject  to  proration.   The  supervisor  may  amend  or 
abrogate  a  previously  adopted  test  requirement,  or  set  up  new   test 
requirements, when necessary to adapt to changing field conditions.
  (2)   A wide open capacity test of a well shall not be  made  if  the  test 
will create waste or result in the coning of gas or water.   All  gauges  and 
tests shall  be  made  by  methods  and  at  times  that  will  result  in  a 
determination of the true productive  capacity  of  the  wells  under  normal 
operating conditions.  Reports submitted  to  the  supervisor  or  authorized 
representative of the supervisor shall be certified by the  permittee  or  an 
authorized representative of the permittee.

  History:  1996 AACS.


R 324.606  Production tests for newly completed or  change  of  status  wells 
subject to proration.
  Rule 606.  A permittee of a well shall conduct  production  tests,  not  to 
exceed the prorated allowable, on a newly completed well.   On  a  previously 
tested well, when a change of well status or the stimulation of the well  may 
have resulted in changes in producing capacity, the tests shall be  commenced 
within 10 days after well completion, change of well  status,  or  production 
stimulation  treatments.   A  permittee  shall  report  the  results  of  all 
production tests to  the  supervisor  or  authorized  representative  of  the 
supervisor within 30 days after completion of the tests and shall certify the 
results on forms prescribed by the supervisor.

  History:  1996 AACS.


R 324.607  Special capacity tests.
  Rule  607.   (1)   The  supervisor  or  authorized  representative  of  the 
supervisor may, at any time, require the permittee of a well, either with  or 
without previous notice, to perform a  special  producing  capacity  test  or 
supply production data for a well or wells.   The  supervisor  or  authorized 
representative of the supervisor may witness, direct,  or  make  measurements 
during the test, subject to proper safety supervision by the permittee.
  (2)   A producer who  wishes  to  gather  data  to  determine  the  maximum 
efficiency rate of a well may conduct tests as approved by the supervisor  or 
authorized representative of the supervisor.

  History:  1996 AACS.


R 324.608  Responsibility for regulating production.
  Rule 608.  A permittee of a  well  shall  be  responsible  for  controlling 
production from wells so that an individual well does not produce more oil or 
gas than allowed.

  History:  1996 AACS.


R 324.609  Reservoir evaluation tests.
  Rule 609.  The supervisor or authorized representative  of  the  supervisor 
may require that subsurface pressures, gas-oil ratios,  and  other  tests  on 
wells be conducted and submitted at least once per  year  so  that  reservoir 
data may be maintained.

  History:  1996 AACS.


R 324.610  Reports of oil and gas produced, purchased, or transported.
  Rule 610.  A person who is producing, purchasing, or  transporting  oil  or 
gas  in  a  field  shall  be  required  by  the  supervisor   or   authorized 
representative of the supervisor to report, within 45 days after the  end  of 
the month of production, the  amount  of  oil  or  gas,  or  both,  produced, 
purchased, or transported during the calendar month of production, unless  an 
extension of time or an exemption from monthly reporting is  granted  by  the 
supervisor.  The reports shall be certified by the person who  is  producing, 
purchasing, or transporting oil or gas in a field on forms prescribed by,  or 
acceptable to, the supervisor or authorized representative of the supervisor.

  History:  1996 AACS.


R 324.611  Petition for change in field allowables.
  Rule 611.  A permittee of a well who  believes  proration  allowables  have 
ceased to prevent waste may petition the supervisor for  a  change  in  field 
allowables.  The petition shall include all of the information  specified  in 
part 12 of these rules.  The supervisor shall schedule a meeting to  consider 
the petition.  The permittee shall furnish  a  copy  of  the  notice  of  the 
meeting to all owners of record, operators, lessees, and lessors of  the  oil 
and gas mineral interests underlying  the  lands  directly  affected  by  the 
proposed action.  If the proposed action is contested by an interested party, 
then a hearing is required pursuant to part 12 of these rules.
After a review and evaluation of the data presented, either  administratively 
or by hearing, the supervisor shall issue an order of determination.

  History:  1996 AACS.


R 324.612  Secondary oil recovery projects; hearings; records.
  Rule 612.  (1) A person desiring to inject water, gas, or other fluid  into 
a producing formation or use other technology for the purpose  of  increasing 
the ultimate recovery of hydrocarbons from a reservoir shall file a  petition 
for hearing pursuant to part 12 of these rules.
  (2)   The operator of a secondary  recovery  project  shall  keep  accurate 
records of all oil, gas, and brine produced, volumes of fluids injected,  and 
injection pressures.  The operator shall file reports of the data  and  other 
data as may  be  required  with  the  supervisor  at  regular  intervals,  as 
specified.

  History:  1996 AACS.


R 324.613  Production from directionally drilled wells.
  Rule 613.  (1)  An allowable production  rate  shall  not  be  assigned  or 
production permitted from a directionally drilled well until a certified well 
survey has been furnished by the permittee of a well to the supervisor.
Directionally drilled wells completed at a point in the  objective  formation 
that is contrary to the established well spacing pattern shall be limited  or 
restricted in the same manner as provided for regularly drilled wells located 
contrary to spacing.
  (2)   The production from directionally drilled wells that can be  produced 
contrary to  the  established  well  spacing  pattern  shall  be  limited  or 
restricted in the same manner pursuant to R 324.301(2) for regularly  drilled 
wells located contrary to the applicable spacing pattern.  A permittee  of  a 
well shall not conduct production testing from a directionally  drilled  well 
until a certified well survey has been furnished to,  and  approved  by,  the 
supervisor or authorized representative  of  the  supervisor  pursuant  to  R 
324.421.  Injection wells utilized for  gas  storage  are  exempt  from  this 
subrule.

  History:  1996 AACS.


                        PART 7.  DISPOSAL OF OIL OR GAS FIELD WASTE, OR BOTH

R 324.701  Prevention of pollution, contamination, or damage.
  Rule 701.  The storage, transportation, or disposal of brine, crude oil, or 
oil or gas field waste that results in, or that the supervisor determines may 
result in, pollution is prohibited.  A permittee of a well shall ensure  that 
wastes are stored, transported, and disposed of in a manner approved  by  the 
supervisor and consistent with all applicable  state  and  federal  laws  and 
regulations.

  History:  1996 AACS.


R 324.702   Pit disposal prohibited; exception.
  Rule 702.  Except as provided in R 324.407(2), a permittee of a well  shall 
not dispose of oil or gas field waste, or both, in earthen pits.

  History:  1996 AACS.


R 324.703   Disposal of oil or gas field fluid wastes, or both.
  Rule 703.  A permittee of a well  shall  inject  oil  or  gas  field  fluid 
wastes, or both, into an approved underground  formation  in  a  manner  that 
prevents waste.  The disposal formation shall be isolated  from  fresh  water 
strata by an impervious confining formation.

  History:  1996 AACS.


R 324.704  Use of annular space for disposal prohibited; temporary exception.

  Rule 704.  A permittee of a well shall not dispose of fluid wastes  in  the 
annular space  between  strings  of  casing.   The  supervisor  may  grant  a 
temporary exception to the prohibition  if  the  supervisor  determines  that 
annular disposal will not damage underground fresh water, oil, gas, or  other 
minerals.

  History:  1996 AACS.


R 324.705  Disposition of brine.
  Rule 705.  (1)  A permittee  of  a  well  is  responsible  for  the  proper 
disposal of all brines produced in association with oil or gas production, or 
both, or brines accumulated in drilling mud pits or tanks  and  shall  ensure 
that waste, as defined in section 61501(p) of the act,  will  not  occur.   A 
permittee may convey or transfer brines for other purposes if the brines  are 
in compliance with the conditions provided in subrule (3) of  this  rule.   A 
permittee shall be required to maintain records on  the  disposition  of  all 
brines pursuant to subrule (4) of this rule, and a permittee shall  not  have 
continuing liability relative to the transport or application of  the  brines 
after the brines are properly conveyed or transferred.
  (2)   Upon the effective date of these rules, a permittee of a  well  shall 
not use brines produced in association with drilling  for  oil  and  gas,  or 
both, and accumulated in drilling mud pits for ice or dust control purposes.
  (3)   Twelve months after the effective date of these  rules,  a  permittee 
shall dispose of all brines as provided in R 324.703 or shall use the  brines 
in a manner approved by the supervisor; however, some brines may be  conveyed 
or transferred and used for ice and dust control and  road  stabilization  if 
all of the following conditions are satisfied:
  (a)   Brines  shall  not  be  used  for  ice  and  dust  control  and  road 
stabilization if the brines are obtained from wells containing more  than  20 
ppm hydrogen sulfide in the gas stream, unless it can be shown that there  is 
less than a 500-ppm-hydrogen sulfide concentration present in the brine.
  (b)   The  brines  shall  contain  a  20,000-milligrams-per-liter  or  more 
concentration of calcium.
  (c)   The brines  shall  contain  less  than  a  1,000-micrograms-per-liter 
concentration of each of the following aromatic hydrocarbons:
  (i)   Benzene.
  (ii)  Ethylbenzene.
  (iii) Toluene.
  (iv)  Xylene.
  (d)   Only brines that have been approved by the supervisor  or  authorized 
representative of the supervisor may be exempt from the disposal requirements 
of R 324.703.  For a permittee to obtain approval to exempt  brine  from  the 
disposal requirements of R 324.703, all of the following conditions shall  be 
satisfied:
  (i)   The brine shall be tested annually within 90 days  of  January  1  of 
each year by the person seeking authorization to utilize the brine for  other 
purposes.  The brine shall be tested using any of the following procedures:
  (A)   Method 200.7 ICP-AES, entitled "Method for Trace Element Analysis  of 
Water and Wastes, Methods for Chemical Analysis of Water and  Wastes,"  March 
1983 edition.
  (B)   Method 6010A, entitled "Inductively Coupled Plasma, Test Methods  for 
Evaluating Solid Waste, Physical/Chemical Methods," 1984 edition 3.
  (C)   Method 602, entitled "Purgeable  Aromatics,  Guidelines  Establishing 
Test Procedures for the Analysis of Pollutants," 40 C.F.R. part 136, appendix 
A, revised July 1990.
  (D)   Method 8020A, "Aromatic Volatile Organics by Gas Chromatography, Test 
Methods for Evaluating Solid Waste, Physical/Chemical Methods," 1984  edition 
3.
  (E)    Method  8240A,  entitled  "Volatile   Organic   Compounds   by   Gas 
Chromatography/Mass Spectrometry: Packed Column Technique, Test  Methods  for 
Evaluating Solid Waste, Physical/Chemical Methods," 1984 edition 3.
  (F)    Method  8260A,  entitled  "Volatile   Organic   Compounds   by   Gas 
Chromatography/Mass Spectrometry: Capillary Column Technique," 1984 edition 3.
  (G)     Method   325.3,   entitled   "Chloride   (Colorimetric,   Automated 
Ferricyanide), Guidelines Establishing Test Procedures for  the  Analysis  of 
Pollutants,"40 C.F.R. part 136, appendix A, revised July 1990.
  (H)   Method 4500-CLE, entitled "Chloride, Methods for the Determination of 
Organic Compounds in Drinking Water" and supplement I, December 1988 and July 
1990 editions. The testing methods are adopted by reference  in  these  rules 
and copies are  available  for  inspection  at  the  Lansing  office  of  the 
geological survey division of the department of environmental quality.
Copies may be  obtained  without  charge  from  the  Michigan  Department  of 
Environmental Quality, Geological Survey Division, P.O. Box  30256,  Lansing, 
Michigan 48909, or from the United States  Environmental  Protection  Agency, 
Office of Research and Development, 26 West  Martin  Luther  King  Boulevard, 
Cincinnati, Ohio 45268.
  (ii)  The sample of brine used for analysis  shall  be  obtained  from  the 
point of loading of the storage tank where the brine is first separated  from 
the production stream.
  (iii)  A chemical analysis of each brine source showing the  concentrations 
of all of the following shall be submitted to the  supervisor  or  authorized 
representative of the supervisor within 30 days  of  the  completion  of  the 
analysis:
  (A)   Chloride.
  (B)   Hydrogen sulfide.
  (C)   Calcium.
  (D)   Benzene.
  (E)   Ethylbenzene.
  (F)   Toluene.
  (G)   Xylene.
  (iv)  The chemical analysis shall include all of the following information:
  (A)   The well name.
  (B)   Permit number.
  (C)   Permittee.
  (D)   Location of the individual well.
  (E)   If the brine is obtained from a tank battery  or  central  production 
facility, the name, number, permittee, and location of the  tank  battery  or 
central production facility.
  (4)   A permittee of a well shall maintain  records  for  2  years  on  the 
disposition of all brines produced in association with oil or gas production, 
or both.  The records shall indicate dates, volumes, recipient,  transporter, 
destination, and proof of delivery.  If the person authorized to utilize  the 
brine for other purposes receives the brine at an  unattended  loading  site, 
then the person shall provide the permittee with a signed  record  describing 
the date, volume, time, destination, and proof of delivery.  A permittee of a 
well shall make the records available for inspection  by  the  supervisor  or 
authorized representative of the supervisor at all times.  A permittee  of  a 
well shall protect the records from damage or destruction due to  preventable 
cause.
  (5)   A permittee of a well shall ensure that brine which is in  compliance 
with the conditions listed in subrule (3) of this rule is also in  compliance 
with all applicable state and federal laws and regulations.

  History:  1996 AACS.


                                PART 8.  INJECTION WELLS

R 324.801  Use of tubing, packer, and fluid.
  Rule 801.  (1)  A permittee of a well shall ensure that  the  injection  of 
fluid into a well is through adequate tubing and  packer.   During  injection 
operations, the tubing to casing annulus shall be filled with a  noncorrosive 
liquid.  Injection wells utilized for gas storage are exempt from this rule.
  (2)   A permittee of a well shall ensure that surface access to all  casing 
annulii is provided.
  (3)   A permittee of  a  well  shall  ensure  that  an  injection  well  is 
constructed and operated so that the  injection  of  fluids  is  confined  to 
strata approved  by  the  supervisor  or  authorized  representative  of  the 
supervisor.

  History:  1996 AACS.


R 324.802  Temporary authority to inject.
  Rule 802.  The supervisor  may  grant  a  permittee  of  a  well  temporary 
authorization, for a period of not more than 30 days, to inject fluid for the 
limited purpose of running injectivity tests.  Injection wells  utilized  for 
gas storage are exempt from this rule.

  History:  1996 AACS.


R 324.803  Testing before operation of injection wells.
  Rule 803.  (1)  Before injecting fluid into a newly drilled injection well, 
or into a previously existing well  that  has  been  newly  converted  to  an 
injection well, a permittee of a well shall provide for a test of the annulus 
between the innermost casing and the tubing above the packer.  The test shall 
be conducted by a qualified person and the test shall be at a pressure of not 
less than 300 psig.  The difference in pressure between the testing  pressure 
and the tubing pressure shall be not less than 100 psig at the  time  of  the 
test.  A satisfactory test shall have a bleed off of not more than 5% over  a 
period of 30 minutes.
  (2)   Before the test, a permittee of a well shall notify the supervisor or 
authorized representative of the supervisor of the date and time of the test.
 A certified copy of the test procedure and results shall be filed  with  the 
supervisor by the qualified  person  making  the  test.   The  supervisor  or 
authorized representative  of  the  supervisor,  after  evaluating  the  test 
results and determining the mechanical integrity of  the  packer  and  casing 
string immediately outside the tubing, may approve  injection  operations  to 
begin.
  (3)   Injection wells utilized for gas storage are exempt from this rule.

  History:  1996 AACS.


R 324.804  Maximum injection pressure.
  Rule 804.  During disposal operations, a permittee shall  ensure  that  the 
surface injection pressure does not  exceed  a  pressure  determined  by  the 
following equation:

                Pm = (fpg - 0.433 sg)d where
  Pm = surface injection pressure
  fpg = fracture pressure gradient (if unknown, assume 0.800)
  sg = specific gravity of the injection liquid (if unknown, assume 1.2)
  d  = injection depth in feet (true vertical depth).

  History:  1996 AACS.


R 324.805  Operational testing requirements.
  Rule 805.  (1)  A permittee of an injection well, except for  an  injection 
well utilized for gas storage, shall provide for a pressure test  that  meets 
the requirement of subrule (2) of  this  rule,  by  a  qualified  person,  to 
determine the mechanical integrity of the tubing, casing, and packer.
  (2)   The annulus between the innermost casing and  the  tubing  above  the 
packer shall be tested at least once each 5 years at a pressure of  not  less 
than 300 psig.  A satisfactory test shall have a bleed off of not  more  than 
5% over a 30-minute period.  The difference in pressure between  the  testing 
pressure and the tubing pressure shall not be less than 100 psig at the  time 
of the test.  Before the test, the permittee shall notify the  supervisor  or 
authorized representative of the supervisor of the date and time of the test.

The supervisor or authorized representative of  the  supervisor  may  request 
that a certified copy of the test procedure and results  be  filed  with  the 
supervisor by the qualified person making the test.
  (3)   Before injecting fluid  into  a  newly  drilled  well  or  previously 
existing well newly converted to an injection well to  be  utilized  for  gas 
storage, a permittee of an injection well shall provide for  a  test  of  the 
mechanical integrity of the casing, by a qualified person, utilizing either a 
pressure test at a bottom hole pressure of not less than the maximum expected 
operating pressure of the gas storage field or an equivalent test approved by 
the supervisor.

  History:  1996 AACS.


R 324.806  Monitoring and filing records and reports.
  Rule 806.  (1)  A permittee of a brine disposal injection well shall, on  a 
weekly basis,  monitor and record the injection pressure, injection rate, and 
cumulative volume of the fluid injected.  A permittee of a secondary recovery 
injection well shall, on a monthly basis, monitor and  record  the  injection 
pressure, injection rate, and cumulative volume of  the  fluid  injected.   A 
permittee of a secondary recovery injection well may conduct  the  monitoring 
and recording, required by this rule, on a field or project basis by manifold 
monitoring, rather than on an individual well basis, if more than 1 secondary 
recovery injection well operates with a single manifold, and if the permittee 
demonstrates that  manifold  monitoring  is  comparable  to  individual  well 
monitoring.  A permittee of a brine disposal injection well shall report  the 
data monthly to the supervisor,  unless  the  supervisor  requires  a  lesser 
frequency, on forms prescribed by the supervisor.  A permittee of a secondary 
recovery injection well shall report the data annually to the supervisor,  on 
forms prescribed by the supervisor.  Injection wells utilized for gas storage 
are exempt from this rule.
  (2)   A permittee of an injection well  shall  file  an  annual  monitoring 
report, on a form provided by the supervisor, summarizing  the  data  of  the 
monitoring required in subrule (1) of  this  rule.   A  permittee  shall  not 
operate an injection well unless the annual monitoring  report  is  filed  by 
March 1 of each year for the previous calendar year.  If the  report  is  not 
filed by March 1, then a permittee  may  not  continue  injection  until  the 
required report is submitted  and  written  approval  is  received  from  the 
supervisor or authorized representative of the supervisor.
   (3)  All records pertaining to an injection well shall be retained by  the 
permittee for a period of 3 years.

  History:  1996 AACS.


R 324.807  Loss of mechanical integrity.
  Rule 807.  (1)  A permittee of an injection well shall verbally notify  the 
supervisor or authorized representative of the  supervisor  of  any  pressure 
test failure, significant pressure changes, or other evidence of a leak in an 
injection well, within 24 hours of the  test  failure,  pressure  change,  or 
evidence of a leak.  If there is evidence that indicates an injection well is 
not, or may not be, directing the injected fluid into the permitted injection 
strata, a permittee of an injection well shall immediately cease injection.
  (2)   A permittee shall submit written notice of the pressure test  failure 
or other evidence of a leak to the supervisor or authorized representative of 
the supervisor within 5 days of  the  occurrence.  If  injection  has  ceased 
pursuant to subrule (1) of this rule,  then  a  permittee  shall  not  resume 
injection until the permittee has tested or repaired the well, or  both.   If 
the repair requires a change of well status pursuant to  R  324.511,  then  a 
plan shall be submitted to, and approved by,  the  supervisor  or  authorized 
representative of the supervisor.

  History:  1996 AACS.


R 324.808   Cessation of injection wells; request for  temporary  abandonment 
status.
  Rule 808.  If an injection well ceases operating for the purpose for  which 
it was intended  for  1  year,  then  a  permittee  shall  request  temporary 
abandonment status for the well.  If  temporary  abandonment  status  is  not 
granted, then the permittee of the injection well shall plug the well.

  History:  1996 AACS.


                                        PART 9.  PLUGGING

R 324.901  Notification of intention to abandon and plug well.
  Rule 901.  A person shall not begin  the  plugging  of  a  well  until  the 
permittee of a well has notified the supervisor or authorized  representative 
of the supervisor of his or  her  intention  to  abandon  the  well  and  has 
received instructions for the plugging  operation.   The  notification  shall 
provide  all of the information requested by  the  supervisor  or  authorized 
representative of the supervisor required to issue plugging instructions.
The notification may also include any of the following information:
  (a)   The present condition of the well.
  (b)   Casing and sealing information.
  (c)   The sizes and lengths of all casing strings.
  (d)   The depths of the top of all principal formations.
  (e)   The depths where oil, gas, and water were encountered.
  (f)   The method to be used to tag plugs.
  (g)   The proposed method for handling unusual or hazardous conditions.

  (h)   The date of the last production or operation.

  History:  1996 AACS.


R 324.902  Plugging instructions; methods and materials.
  Rule  902.   (1)   The  supervisor  or  authorized  representative  of  the 
supervisor shall issue plugging instructions after  receipt  of  notification 
pursuant to R 324.901.  The plugging instructions shall specify  all  of  the 
following information:
  (a)   The type and amount of plugging material to be used.
  (b)   The depths at which bridges are to be set.
  (c)   The depths and lengths of cement plugs.
  (d)   The amount of casing to be pulled.
  (e)   Other requirements the supervisor determines are  necessary  for  the 
proper plugging of the well.
  (2)   A permittee of a well shall ensure that  all  oil,  gas,  brine,  and 
fresh water is confined to the strata in which the oil, gas, brine, and fresh 
water occur by using cement plugs or other plugs approved by the supervisor.
A permittee of a well shall ensure that the well is plugged under static hole 
conditions at all times, unless  otherwise  approved  by  the  supervisor  or 
authorized representative of the supervisor.
   (3)  A permittee of a well shall ensure that each cement plug, except  for 
the bottom hole plug required by subrule (5) of this rule, the plug to be set 
at the base of the surface casing required by subrule (6) of this  rule,  and 
the surface plug required by subrule (7) of this rule, is a  minimum  of  200 
feet in length or contains 50 sacks  of  cement,  whichever  is  the  greater 
volume of cement, unless otherwise approved by the supervisor  or  authorized 
representative of the supervisor.
  (4)   A permittee of a well shall ensure that each cement plug, except  for 
the bottom hole plug required by subrule (5) of this rule and the plug to  be 
set at the base of the surface casing required by subrule (6) of  this  rule, 
is allowed to set undisturbed for a minimum of 1  hour  and  that  the  fluid 
level in the casing is continuously observed.  If the observed fluid level in 
the casing drops during the hour, then the cement plug  shall  be  tagged  to 
ensure that the plug is still in place before setting the next plug uphole.
If the plug is found not to be in place, then the plug shall be reset.
  (5)   A permittee of a well shall ensure that the bottom hole  cement  plug 
is either:
  (a)   A minimum of 200 feet in length, is allowed to set undisturbed for  a 
minimum of 4 hours, has reached a compressive strength of 100  psi  or  more, 
and is tagged to ensure that it is still in place  before  setting  the  next 
plug uphole; however, if the bottom hole cement plug in a dry hole drilled by 
rotary methods is a minimum of 400 feet in length and the fluid level in  the 
hole is observed to remain static, then the bottom hole plug is not  required 
to be tagged.
  (b)   A mechanical bridge plug or other approved bridge has been set and  a 
minimum of 50 feet of cement has been placed on the bridge before setting the 
next plug uphole.
  (6)   A permittee of a well shall set the plug at the base of  the  surface 
casing using either of the following methods as approved by the supervisor or 
authorized representative of the supervisor:
  (a)   In static hole conditions, a cement plug shall be set at a minimum of 
100 feet below the surface casing and shall extend a minimum of 100 feet into 
the surface casing.  The cement plug shall be allowed to  set  undisturbed  a 
minimum of 4 hours, shall have reached a compressive strength of 100  psi  or 
more, and shall be tagged to ensure that it is still in place before  setting 
the next plug uphole.  If the plug is found not to be in place, then the plug 
shall be reset.
  (b)   A mechanical open hole bridge plug or other approved bridge shall  be 
set a minimum of 100 feet below the surface casing.  A cement plug shall then 
be placed on the mechanical open hole bridge plug or other approved bridge.
The cement plug shall extend a minimum of 100 feet into the  surface  casing, 
unless otherwise approved by the supervisor or authorized  representative  of 
the supervisor.
  (7)   A permittee of a well shall set a cement surface plug a minimum of 30 
feet below the surface and within 5 feet of  the  surface,  unless  otherwise 
approved by the supervisor or authorized representative of the supervisor.
  (8)   If surface casing is not present, a permittee of a well shall  set  a 
mechanical open hole bridge plug or other approved bridge a  minimum  of  100 
feet below the base of the glacial drift or 100 feet below the deepest  fresh 
water stratum, whichever is the greater depth, and shall circulate cement  to 
within 5 feet of the surface.
  (9)   A permittee of a well shall ensure that the surface pipe or conductor 
pipe abandoned with the hole is cut off at a point not less than 4 feet below 
grade, a 1/2-inch steel welded plate or another type of seal approved by  the 
supervisor or authorized representative of the supervisor  is  placed  across 
the top of the  pipe  or  pipes,  and  the  permit  number  of  the  well  is 
permanently affixed to the plate or approved seal at the top of the well.
  (10)  A permittee shall file, within 60  days  after  plugging,  the  final 
plugging forms and certified copies of the  service  company  records,  which 
shall include all of the following information:
  (a)   The type of cement and number of sacks used, including the  additives 
and percentages of the additives for each cement bridge plug.
  (b)   The type and volume of plugging material used if other than cement.
  (c)   The number of bridge plugs set in the hole and the depth  and  length 
of each plug.
  (d)   Other materials left in the hole.
  (e)   Service companies’ records of cementing operations  if  requested  by 
the supervisor or authorized representative of the supervisor.
  (f)   All available graphics, if requested by the supervisor or  authorized 
representative of the supervisor, showing the all of following information:
  (i)   Pumping.
  (ii)  Placement of cement.
  (iii) Weights.
  (iv)  Times.
  (v)   Pump rates.
  (vi)  Other pertinent data dealing with the plugging operations.
  (g)   The amounts and type of mix water used for each sack of cement.
  (h)   The volume and types of spacers and flushes used.
  (i)   The operator’s daily plugging records.
  (11)  At a permittee's option, the well bore may be plugged from bottom  to 
top with a material approved by the supervisor if the hydrostatic pressure of 
the material used is not allowed to exceed the  fracturing  pressure  of  the 
strata.

  History:  1996 AACS.


R 324.903  Commencement of plugging operations.
  Rule 903.  (1)  A permittee of a well shall  commence  plugging  operations 
within 90 days after drilling completion or well completion as  a  dry  hole, 
when the well has not economically produced or has not been utilized for  its 
permitted use for more than 12 consecutive months,  when  a  change  of  well 
status has not been granted, or when the permitted use has been suspended for 
more than 12 consecutive months.  The supervisor may require, or a  permittee 
may submit, proof that is  necessary  to  determine  if  the  well  is  being 
economically produced.
  (2)   After receiving a written request showing just  cause  why  the  well 
should not be plugged, the supervisor or  authorized  representative  of  the 
supervisor may grant temporary abandonment status pursuant to  R  324.209  or 
require completion of the plugging operations.
  (3)   A permittee may petition the supervisor for a hearing to  show  cause 
why the well should not be plugged.

  History:  1996 AACS.


R 324.904  Pulling of surface pipe and conductor pipe.
  Rule 904.  A permittee  of  a  well  shall  ensure  that  surface  pipe  or 
conductor pipe is not pulled at a location, unless  it  is  required  by  the 
supervisor.

  History:  1996 AACS.


       PART 10.  WELL SITES AND SURFACE FACILITIES; PREVENTION OF FIRES,
         POLLUTION, AND DANGER TO, OR DESTRUCTION OF, PROPERTY OR LIFE


R 324.1001  Well sites and  surface  facilities;  flammable  and  combustible 
material.
  Rule 1001.  A permittee of a well shall ensure that  the  area  around  the 
well and surface facilities  is  kept  clear  of  flammable  and  combustible 
material stored within a radius of 75 feet, or as approved by the supervisor, 
using the well or dike wall as the point of measurement.  The supervisor,  if 
conditions warrant, may also require construction of a fire line  around  the 
outer edge of the cleared area.  A permittee of a well shall ensure that  the 
disposal of material resulting from the  clearing  operations  is  consistent 
with all applicable state and federal laws and regulations.

  History:  1996 AACS.


R 324.1002  Secondary containment requirements and construction standards.
  Rule 1002.  (1)  All wellheads and pump jacks installed after the effective 
date of these rules and surface facilities constructed for hydrocarbon,  gas, 
brine injection, or brine handling or surface facilities converted  to  brine 
injection or handling after November 15, 1989, shall  provide  for  secondary 
containment pursuant to the requirements of this rule.
A permittee of a well  shall  maintain  all  existing  dikes  or  fire  walls 
approved before November 15, 1989, in a manner to form a reservoir that has a 
capacity of 1 1/2 times the capacity of the enclosed tank or tank battery and 
shall keep the reservoir free of oil, emulsions, tank bottoms, brine,  water, 
vegetation, debris, or any flammable or combustible material.  The supervisor 
or authorized representative may require surface facilities for  hydrocarbon, 
gas, brine injection, or brine handling constructed before November 15, 1989, 
to be upgraded to meet the requirements of  this  rule  if  the  facility  is 
substantially reconstructed.
  (2)   A permittee of a well shall submit secondary containment plans to the 
supervisor or authorized representative of the supervisor for approval before 
construction of the facility.  The secondary containment plans shall  consist 
of  a  plot  plan  of  the  proposed  facility  and  cross  sections  showing 
construction details of the sidewalls and floor or floors  of  all  secondary 
containment areas, including the proposed overall dimensions of the facility.
 The supervisor or authorized representative of the supervisor shall  approve 
or disapprove the secondary containment plans within 30 days  of  receipt  of 
the plans.
  (3)   A permittee of a well shall comply with all of the following  minimum 
construction standards to meet the secondary containment requirements of this 
rule:
  (a)    A  permittee  shall  be  required  to  prepare   a   hydrogeological 
investigation of the facility area to establish local background  groundwater 
quality.   The  hydrogeological  investigation  shall  include  all  of   the 
following:
  (i)   Water quality sampling pursuant to the parameters  established  in  R 
324.201(2)(j)(vi).
  (ii)  A determination of the direction of groundwater flow and depth to the 
groundwater in the uppermost aquifer.
  (iii)  A  chemical  analysis  showing  the   concentrations   of   benzene, 
ethylbenzene, toluene, and xylene.
  (iv)  A geologic description of  earth  materials,  both  horizontally  and 
vertically, in the immediate vicinity of the proposed facility.
  (b)   Each facility shall be required to have 1 of the following monitoring 
systems to  detect  leakage  from  hydrocarbon  or  brine  storage  secondary 
containment areas:
  (i)   A minimum of 1 groundwater monitoring well downgradient which  is  in 
close proximity to all hydrocarbon or  brine  storage  secondary  containment 
areas.
  (ii)  Tertiary containment  underlying  the  secondary  containment,  which 
shall be constructed and sealed in a manner to capture  any  hydrocarbons  or 
brine that may leak or seep through the secondary containment.   A  layer  of 
permeable material  and  a  monitoring  tube  shall  be  placed  between  the 
secondary and tertiary containment  to  allow  monitoring  to  determine  the 
presence of any leakage or seepage through the secondary containment.
  (c)   A vessel that contains hydrocarbons  or  brine,  or  both,  shall  be 
elevated and placed on impervious pads or constructed so that any leakage can 
be easily detected.  A vessel that is to be used on-site for 30 days or  less 
shall, at a minimum, be placed on leak-resistant material.
  (d)   A hydrocarbon and brine storage vessel,  including  oil  heating  and 
treating equipment, shall be located in a secondary containment area and  the 
containment  volume  shall  be  in  compliance  with  the  following  minimum 
requirements, as applicable:
  (i)   Containment areas that have  only  brine  storage  vessels  shall  be 
constructed to contain 150% of the largest storage vessel.
  (ii)  Containment areas with only  hydrocarbon  storage  vessels  shall  be 
constructed pursuant to R 29.2301 et seq.
  (iii) Containment areas where both hydrocarbon and  brine  storage  vessels 
are located shall be in compliance  with  the  volume  requirements  for  the 
largest storage vessels.
  (iv)  Precipitation shall be taken into consideration in the design of  the 
secondary containment area.
  (e)   The sidewalls and  floor  of  the  secondary  containment  and  spill 
containment areas shall be constructed and sealed in a manner to prevent  the 
seepage of hydrocarbons or  brine,  or  both,  into  the  surrounding  soils, 
surface waters, or groundwater.
  (f)   A  hydrocarbon  and  brine  storage  vessel  shall  not  be  erected, 
enclosed, or maintained closer than 200 feet from any drilling  or  producing 
well.
  (g)   Oil heating or treating equipment shall not be erected, enclosed,  or 
maintained closer than 75 feet from any drilling or  producing  well  or  oil 
storage tank or tank battery.
  (h)   Dikes shall be maintained and the enclosure kept free of all  of  the 
following:
  (i)   Oil.
  (ii)  Emulsions.
  (iii) Tank bottoms.
  (iv)  Brine.
  (v)   Water.
  (vi)  Vegetation.
  (vii) Debris.
  (viii)  Any flammable or combustible material.
  (i)   The hydrocarbon and brine truck loading and unloading  areas  located 
outside of hydrocarbon or brine storage  secondary  containment  areas  shall 
have a spill containment capacity equal to double the  volume  of  the  hoses 
used to connect the truck to the tanks, but not less than  a  capacity  of  5 
barrels.  The spill containment shall be constructed and sealed in  a  manner 
that prevents the seepage  of  hydrocarbons  or  brine,  or  both,  into  the 
surrounding soils, surface waters, or groundwater.
  (j)   Brine disposal well truck unloading areas and commercial brine  truck 
loading and unloading areas located outside of hydrocarbon or  brine  storage 
secondary containment areas shall be constructed and sealed in a manner  that 
prevents the seepage of hydrocarbons or brine, or both, into the  surrounding 
soils, surface  waters,  or  groundwater.   In  addition,  a  ramp  shall  be 
constructed to contain the unloading  vehicle,  its  hoses,  and  connections 
within the ramp area.  The ramp area shall contain a sump and be connected to 
a secondary containment area so that any spillage drains into  the  sump  and 
into the secondary containment area.  The spill  containment  ramp  and  sump 
shall have a combined capacity of not less than 20 barrels.
  (k)   Sumps shall be constructed of materials  impervious  to  hydrocarbons 
and brines and resistant to damage and deterioration during use.  Sumps shall 
be connected to the ramp area and the secondary containment area in a  manner 
that prevents leakage.
  (l)   Surface facilities  for  hydrocarbon  and  brine  handling  shall  be 
constructed to meet all of the following minimum requirements:
  (i)   All transfer and injection pumps shall have leak containment.
  (ii)  All brine and hydrocarbon flow lines to  a  facility  are  considered 
part of that facility and are subject to the following requirements:
  (A)   All flow lines shall be pressure tested pursuant to the provisions of 
paragraph (iii)(A),(B),(C),(E), and (G) of this subdivision.
  (B)   A permittee may elect to not perform the pressure testing of the flow 
lines, except flow lines that transport brine only, if the permittee performs 
visual inspections of the entire flow line corridor every  3  months,  except 
when  impractical  due  to  snow  cover,  and  reports  the  results  of  the 
inspections to the supervisor or authorized representative of the  supervisor 
annually by January 31 of each year for the previous calendar year.
  (iii) All buried facility piping for the  transport  of  liquids  shall  be 
pressure-tested pursuant to the following provisions, as applicable:
  (A)   Piping made of noncorrodible or corrosion-protected material shall be 
pressure-tested every 3 years.
  (B)   All piping other than piping specified in subparagraph  (A)  of  this 
paragraph shall be pressure-tested every 12 months.
  (C)   If buried piping is excavated for  repair  or  relocation,  then  the 
disturbed  portion  shall  be   pressure-tested   immediately   pursuant   to 
subparagraphs (D) and (E) of this paragraph.
  (D)   The pressure test shall be 100% of the normal oil and  gas  separator 
operating pressure.   The  pressure  shall  be  stabilized  at  90%  of  test 
pressure, at a minimum, and shall hold for a period of 15 minutes.
  (E)    A  permittee  shall  provide  certification  to  the  supervisor  or 
authorized representative of the supervisor, within 30  days  of  a  pressure 
test, that a pressure test was conducted and the facility piping  passed  the 
pressure test.  If a facility’s piping does not pass the pressure  test,  the 
supervisor or authorized representative of the supervisor shall  be  notified 
by the permittee within 48 hours  after  the  test.   If  the  pressure  test 
indicated that the  facility’s  piping  leaked,  then  the  piping  shall  be 
repaired and retested before putting the piping back in service.   After  the 
repair of the piping, the permittee shall report the repair to the supervisor 
or authorized representative of the supervisor and provide certification that 
the piping has been retested and is not leaking.
  (F)    Single-phase  gas  lines  are  not  subject  to  the  pressure  test 
requirements if the lines are protected by a liquid phase trap.
  (G)   The supervisor may approve or require other pressure testing or  leak 
detection methods in place of the pressure testing required in this paragraph.
  (iv)  At production or injection  well  facilities,  all  piping  shall  be 
routed above the ground and kept within the secondary containment area  where 
practical.  Piping that cannot be routed above  the  ground  shall  have  its 
location  marked  with  posts  or  with  other  location-identifying  markers 
approved by the supervisor or authorized representative of the supervisor  so 
that the buried piping can be easily located.
  (v)   Brine injection wells shall have a working check valve  on  the  flow 
line at or near the wellhead to avoid backflow.
  (vi)  All hydrocarbon and brine loading  and  unloading  facility  transfer 
lines that are not in use shall be secured to prevent  spillage.   A  shutoff 
valve shall be installed at the  truck  connect  point  and  at  the  storage 
vessels.  At connect points, impermeable drip containment  vessels  shall  be 
used and shall be an adequate size to contain all spillage and  precipitation 
to avoid overflow.
  (m)   Wellheads, flare pits, vents, and flare stacks shall  have  secondary 
containment and spill containment areas constructed in a  manner  to  prevent 
the seepage of hydrocarbons or brine, or both, into  the  surrounding  soils, 
surface waters, or groundwater.  Secondary containment at the wellhead  shall 
be constructed in a manner to capture any leakage of liquid that may occur.
In addition, if the wellhead is provided with a pump jack or is converted  to 
a pump jack equipped with a  gasoline  or  diesel-powered  engine,  then  the 
engine shall also have secondary containment that is  sufficient  to  prevent 
the seepage of any machine oils or fuels into the surrounding soils,  surface 
waters, or groundwater.  Injection wells utilized for gas storage are  exempt 
from this subrule.
  (4)   Upon completion of the construction of the facility, but  before  its 
use, a permittee of a well shall certify, to  the  supervisor  or  authorized 
representative of the supervisor, that the  secondary  containment  area  was 
constructed according to the approved plan.  A permittee shall ensure that an 
approved spill or loss response and remedial action plan is also on file with 
the supervisor or  authorized  representative  of  the  supervisor  before  a 
facility is used.
  (5)   Before any significant modification of the secondary containment area 
occurs, a permittee of a well  shall  notify  the  supervisor  or  authorized 
representative of the supervisor  and  receive  approval  before  making  the 
modification.  The supervisor or authorized representative of the  supervisor 
shall approve or deny the request within 10 days of receipt of the request.
  (6)   A permittee of a well shall perform inspections at the facility at  a 
frequency that is sufficient to ensure that the throughput of fluids  in  the 
system does not exceed the primary and secondary containment capacity between 
inspections.  The permittee shall perform at least 1 inspection per week.
  (7)   The  supervisor  shall  require  the  installation  of  an  automatic 
facility shutdown system if the facility has a throughput  of  liquids  in  a 
24-hour  period  that  exceeds  the  containment  volume  of  the   secondary 
containment area.  The automatic shutdown system shall be designed to prevent 
liquids from overflowing the secondary containment area.  A facility shall be 
exempt from the requirement of an automatic shutdown system if  the  facility 
has staff present 24 hours per day and is equipped with alarm systems on  the 
tank or tanks of the tank battery.
  (8)   The monitoring system required by R 324.1002(3)(b) shall be kept in a 
functional condition so that water samples can be collected and  water  level 
measurements can be taken every 6 months.  The water samples shall be  tested 
for specific conductance as an indicator of dissolved solids,  concentrations 
of chloride, and a chemical analysis pursuant to subrule (3)(a)(iii) of  this 
rule, except the chemical analysis provided by subrule  (3)(a)(iii)  of  this 
rule shall not be required at monitoring systems at surface facilities  where 
liquid hydrocarbons are  not  handled.   If  sampling  indicates  a  possible 
problem,  then  additional  sampling  for  the   water   quality   parameters 
established in R 324.201(2)(j)(vi) may  be  required.   The  results  of  the 
sample  analysis  shall  be  provided  to  the   supervisor   or   authorized 
representative of the supervisor as soon as the results  are  available.   If 
the  samples  taken  by  the  permittee  show  substantial  increases   above 
background water quality, then the permittee shall, at  a  minimum,  increase 
monitoring.  If the samples confirm that hydrocarbons are present  at  levels 
above background, then the permittee shall immediately take  remedial  action 
in the form of containment and removal.
  (9)   A permittee of a well shall provide a right of entry to the  facility 
for monitoring at all times to the supervisor or authorized representative of 
the supervisor.

  History:  1996 AACS.


R 324.1003  Restoration of well site; filling and leveling of cellars,  pits, 
and excavations; removal of debris.
  Rule 1003.  A permittee of a well shall fill and level the cellar  and  all 
pits and excavations, remove  or  eliminate  debris,  minimize  erosion,  and 
restore the well site as nearly as practicable to the original  land  contour 
or to a condition approved by the supervisor or authorized representative  of 
the supervisor as soon as practical after the completion of plugging  to  the 
surface, but not more than 6 months after the completion of plugging  to  the 
surface.

  History:  1996 AACS.


R 324.1004  Safety measures.
  Rule 1004.  If hazards  to  life  or  property,  or  both,  exist,  then  a 
permittee of a well shall post safety signs in conspicuous places around  the 
well or surface facility.  The supervisor or authorized representative of the 
supervisor may require the installation of fences,  gates,  or  other  safety 
measures.

  History:  1996 AACS.


R 324.1005  Use of pits to collect waste oil  and  tank  bottoms  prohibited; 
conveying, storing, or disposing of waste oil and tank bottoms.
  Rule 1005. A permittee of a well shall not  use  earthen  pits  to  collect 
waste oil and tank bottoms.  A permittee shall not convey, store, or  dispose 
of waste oil and tank bottoms in a manner that causes waste.

  History:  1996 AACS.


R 324.1006  Cleanup and disposal of losses.
  Rule 1006.  A permittee of a well shall clean  up  and  dispose  of,  in  a 
manner consistent with these rules and all applicable state and federal  laws 
and regulations, losses of oil, gas, or brine from  wells,  flow  lines,  and 
associated surface facilities.

  History:  1996 AACS.


R 324.1007   Notice of serious accident; reporting.
  Rule 1007.  (1)  A  person  shall  immediately  notify  the  supervisor  or 
authorized representative of the supervisor of a serious  accident  that  has 
created, or may create, a fire or other hazard that  may  cause  waste.   The 
notification shall be made within 8 hours of the accident, by telephone,  and 
shall give the particulars of the accident.  A detailed written report  shall 
be submitted to the supervisor or authorized representative of the supervisor 
within 15 days of the accident.
  (2)    If  a  person  cannot   contact   the   supervisor   or   authorized 
representative of the supervisor after an accident,  then  the  person  shall 
immediately telephone the pollution emergency alerting system.

  History:  1996 AACS.


R 324.1008    Reporting of losses, spills, and releases.
  Rule  1008.  (1)  A  permittee  of  a  well  shall,  under  this  rule  and 
instructions issued by the supervisor and in compliance with  all  applicable 
state and federal laws  and  regulations,  promptly  report  and  record  all 
reportable losses, spills, and releases of any of the following:
  (a) Brine.
  (b) Crude oil.
  (c) Oil or gas field waste.
  (d) Natural gas.
  (e)  Products  and  chemicals  used  in  association  with  oil   and   gas 
exploration, production, disposal, or development.
  (2) A permittee of a well shall promptly report, within 8 hours of a  loss, 
release, or spill discovery, by telephone or in person, to the supervisor  or 
authorized representative of the supervisor during normal business  hours  or 
to the department of  environmental  quality,  pollution  emergency  alerting 
system between 5 p.m. and 8 a.m. and on weekends and holidays, all losses  or 
releases of gas that result  in,  or  may  result  in,  a  nuisance  odor  or 
unnecessary endangerment of public health or safety, and all losses or spills 
of 42 gallons or more of brine, crude oil, or oil and  gas  field  waste.   A 
permittee shall provide all of the  following  minimum  information,  to  the 
extent known, when reporting the loss, spill, or release:
  (a) The name of person reporting the loss, spill, or release.
  (b) The name of permittee who has sustained the loss, spill, or release.
  (c) The date and time of the loss, spill, or release.
  (d) The date and time that the loss, spill, or release was discovered.
  (e) The date and time cleanup commenced.
  (f) The location of the loss, spill,  or  release,  including  all  of  the 
following information:
  (i) Well name.
  (ii)Quarter-quarter-quarter section.
  (iii)Section number.
  (iv)Township.
  (v) County.
  (g) The material lost, spilled, or released.
  (h) The volume of the loss, spill, or release.
  (i) The volume of the loss, spill, or release recovered.
  (j) The cleanup or recovery measures taken.
  (k) The cause of the loss, spill, or release.
  (l)  Whether  the  loss,  spill,  or  release  contacted  surface   waters, 
groundwater, or other environmentally sensitive resources.
  (m) The approximate air temperature, wind  direction,  wind  velocity,  and 
precipitation conditions at the time of the spill or release.
  (3) A permittee of a well shall submit written notification of the  losses, 
spills, and releases to the supervisor or authorized  representative  of  the 
supervisor by completing all parts of the form  provided  by  the  supervisor 
within 10 days from the time the loss, spill, or release was discovered.
  (4) A permittee of a well shall report all losses or spills of less than 42 
gallons of brine, crude oil, or oil and gas field waste  by  completing  only 
parts 1 and 3 of the form provided by the supervisor if both of the following 
provisions apply:
  (a) The loss or spill does not  contact  surface  waters,  groundwater,  or 
other environmentally sensitive resources.
  (b) The loss or spill is completely contained  and  cleaned  up  within  48 
hours from the time the loss or spill was discovered.
  (5) If a loss or spill of less than 42 gallons of brine, crude oil, or  oil 
and gas field waste  does  contact  surface  waters,  groundwater,  or  other 
environmentally sensitive resources,  or  is  not  completely  contained  and 
cleaned up within 48 hours from the time the loss or  spill  was  discovered, 
then a permittee of a well shall report the loss  or  spill  as  provided  by 
subrule (2) of this rule and submit the written notification as  provided  by 
subrule (3) of this rule.
  (6) If the loss or spill is less than 42 gallons of brine,  crude  oil,  or 
oil and gas field waste, then the loss is not a reportable loss or  spill  if 
the loss or spill occurs while a permittee or an authorized representative of 
the permittee is on-site and the loss or spill is  completely  contained  and 
cleaned up within 1 hour of the occurrence.
  (7) A permittee of  a  well  shall  promptly  report,  within  8  hours  of 
discovery of the loss or spill, by telephone or in person, a loss or spill of 
other chemicals used in association with oil and gas exploration, production, 
disposal, or development, shall provide the information required  in  subrule 
(2)(a) through (l) of this rule, and shall  complete  the  form  required  in 
subrule (3) of this rule.  A permittee shall  report  the  losses  or  spills 
under other applicable state and federal laws and regulations.

  History:  1996 AACS; 2001 AACS.


R 324.1009  Smoking and open flame restrictions.
  Rule 1009.  A permittee of a well shall ensure that smoking and open flames 
shall not occur where oil or gas, or both, constitutes a hazard  of  fire  or 
explosion.

  History:  1996 AACS.


R 324.1010  Gas burning, processing, or disposal.
  Rule 1010.  A permittee of a well shall ensure that all gas produced in the 
operation or testing of wells that is not utilized is burned,  processed,  or 
disposed of in a manner consistent with these rules and all applicable  state 
and federal laws and regulations.  The gas shall not be  burned  closer  than 
100 feet from a well or storage tank or 300 feet  from  structures  used  for 
public or private occupancy or  from  any  other  flammable  and  combustible 
material.

  History:  1996 AACS.


R 324.1011  Purging, removal, and abandonment of lines and vessels.
  Rule 1011.  A permittee of a well shall purge all flow lines  and  vessels, 
including tanks, if the flow lines or vessels are not used  for  1  year  and 
shall provide notification of the purging  operation  to  the  supervisor  or 
authorized representative of the supervisor.  The supervisor may require  the 
line to be removed or abandoned.

  History:  1996 AACS.


R 324.1012    Identification of wells and surface facilities.
  Rule 1012.(1)A permittee of a well shall ensure that a well  is  identified 
by a sign which is posted in a conspicuous place and which is not  more  than 
20 feet from the well.  A sign shall be durably constructed, be kept in  good 
condition, and the lettering shall be not less than 1  1/2  inches  high  and 
legible under normal conditions at a distance of 25 feet.
A sign shall show all of the following information:
  (a) The permit number.
  (b) The name of the permittee.
  (c) The name of the lease and well number.
  (d) The well location by quarter-quarter section, township, and range.
  (e) A telephone  number  by  which  an  authorized  representative  of  the 
permittee may be contacted at any time to respond to an emergency at the well.
  (2) A surface facility shall be identified by a sign which is posted  in  a 
conspicuous place and which is not more than 25 feet from the outside  limits 
of the surface facility or at a location  prescribed  by  the  supervisor  or 
authorized representative of the supervisor.  A sign shall show  all  of  the 
following information:
  (a) The name of the permittee or owner.
  (b) A telephone  number  by  which  an  authorized  representative  of  the 
permittee may be contacted at any time to respond  to  an  emergency  at  the 
facility.
  (c) The location by quarter-quarter section, township, and range.
If more than 1 facility is located at a common site, 1 identification sign is 
sufficient.  A sign shall be kept in good condition and the  lettering  shall 
be not less than 1 1/2 inches high and legible under normal conditions  at  a 
distance of 25 feet.

  History:  1996 AACS; 2001 AACS.


R 324.1013   Nuisance odors.
  Rule 1013.  A person shall not cause a nuisance  odor  in  the  exploration 
for, or in the development, production, handling, or use  of,  oil,  gas,  or 
brine or in the handling of any  product  associated  with  the  exploration, 
development, production, or use of oil, gas, or brine.

  History:  1996 AACS.


R 324.1014    Suspension of OIL AND GAS  operations  due   to    threat    to 
public health and safety.
  Rule  1014.  (1)  The  supervisor  or  authorized  representative  of   the 
supervisor shall have the authority to immediately require corrective action,
 including suspending any or all components of the oil and  gas   operations, 
if  the  oil and gas operations have been determined by the supervisor to  be 
in  violation of the provisions of the act, these rules, permit   conditions, 
instructions, or orders of the supervisor and threatens the public health and 
safety.
 (2) A suspension of oil and gas operations shall be in effect for  not  more 
than 5 days or until the operation is in compliance  and  protection  of  the 
public health and safety is ensured.  To extend the suspension beyond 5 days, 
the supervisor shall issue an emergency order to continue the  suspension  of 
oil and gas operations and may schedule a hearing  under  part  12  of  these 
rules.  The total duration of the suspension of oil and gas operations  shall 
not be more than 21 days, as provided in section 61516 of the act.

  History:  1996 AACS; 2002 AACS. 


R 324.1015  Nuisance noise; "decibel," "decibels on the a-weighted  network," 
"noise-sensitive area," and "nuisance noise" defined.
  Rule 1015.  (1)   A  person  shall  not  cause  a  nuisance  noise  in  the 
production, handling, or use of oil, gas, or brine or in the handling of  any 
product associated with the production or use of oil, gas, or brine.
  (2)   If the supervisor or  authorized  representative  of  the  supervisor 
receives 1 or more complaints of noise heard by  the  complainant  at  noise- 
sensitive areas that is attributed to a surface facility, then the supervisor 
may require the permittee to collect decibel readings to determine the  sound 
levels at the noise-sensitive areas and at a distance of 1,320 feet from  the 
facility.  If the sound level of the facility is more than 45 decibels on the 
a-weighted network at a distance of 1,320 feet from the  facility,  then  the 
supervisor or authorized representative of the supervisor  may  find  that  a 
nuisance noise exists after considering all applicable information, including 
the distance between the surface facility and the noise-sensitive areas,  the 
sound levels at the noise-sensitive areas, and sound attributable to  sources 
other than the surface facility.  The supervisor or authorized representative 
of the supervisor may require appropriate noise control  measures  to  reduce 
the decibel levels.   If  noise  control  measures  are  required,  then  the 
permittee shall submit, to the supervisor or authorized representative of the 
supervisor, for approval, an abatement plan and schedule  for  implementation 
within  30  days  of  a  determination  by  the  supervisor   or   authorized 
representative of the supervisor that noise control measures are necessary.
  (3)   As used in this rule:
  (a)   "Decibel" means a unit of sound level on a logarithmic scale measured 
relative to the threshold of audible sound by the  human  ear  in  compliance 
with the ANSI standard 1.1, entitled "Acoustical Terminology," 1994  edition, 
which is adopted by reference in these rules.  Copies  of  the  standard  are 
available for inspection at the  Lansing  office  of  the  geological  survey 
division of the department of environmental quality.
Copies may be obtained from the Michigan Department of Environmental Quality, 
Geological Survey Division, P.O. Box 30256, Lansing,  Michigan  48909,  at  a 
cost as of the time of adoption of these rules of $100.00 each, and from  the 
American National Standards Institute, 11 West  42nd  Street,  New  York,  NY 
10036, at a cost as of the time of adoption of these rules of $100.00 each.
  (b)   "Decibels on the a-weighted network" means decibels measured  on  the 
a-weighted network of a sound level meter, as specified in the ANSI  standard 
1.4, entitled "Specifications for Sound Level Meters," 1983 edition, which is 
adopted by reference in these rules.  Copies of the  standard  are  available 
for inspection at the Lansing office of the geological survey division of the 
department of environmental quality.
Copies may be obtained from the Michigan Department of Environmental Quality, 
Geological Survey Division, P.O. Box 30256, Lansing,  Michigan  48909,  at  a 
cost as of the time of adoption of these rules of $70.00 each, and  from  the 
American National Standards Institute, 11 West  42nd  Street,  New  York,  NY 
10036, at a cost as of the time of adoption of these rules of $70.00 each.
  (c)    "Noise-sensitive  area"  means  a  residential  dwelling,  place  of 
worship, school, or a hospital and  also  means  an  existing  site  that  is 
maintained for public recreation for which quiet is a  primary  consideration 
in the use of the site.
  (d)   "Nuisance noise" means any  noise  from  a  well  or  its  associated 
surface facilities that causes injurious effects to human health or safety or 
the unreasonable interference with  the  comfortable  enjoyment  of  life  or 
property.

  History:  1996 AACS.


R 324.1016    Construction  standards  for  noise  abatement  at  compressors 
associated with surface facilities.
  Rule 1016.  (1)  This rule shall apply  to  compressors  that  have  motors 
rated for more than 150 horsepower.
  (2)   A permittee of a well who installs a compressor after  the  effective 
date of these rules, or a permittee of a well who substantially  reconstructs 
an enclosure for a compressor after the effective date of these rules,  shall 
comply with all of the following provisions:
  (a)   The compressor, drive motor, and cooler shall be completely enclosed.
  (b)   The walls, doors, and roof of the enclosure shall be completely lined 
with sound-absorbent material.
  (c)   The compressor drive motor shall be  equipped  with  a  hospital-type 
muffler or the equivalent.
  (d)   Air intake and exhaust passages shall be constructed so as to include 
at least 1 right-angle turn between the point of air entrance or exit  to  or 
from the passage and the main volume of the compressor enclosure.
Air intake and  exhaust  passages  shall  be  completely  lined  with  sound- 
absorbent material, unless the passages vent through the roof.
  (e)   The compressor shall be capable of operating with the enclosure doors 
closed at ambient air temperatures of 85 degrees Fahrenheit or lower.
"Doors" as used in this rule shall not include  necessary  openings  for  air 
intake and exhaust passages.
  (3)   The supervisor or authorized representative  of  the  supervisor  may 
grant an exception to the requirements of subrule  (2)  of  this  rule  if  a 
permittee designs and constructs a compressor according to a  plan  submitted 
to, and approved by, the  supervisor  or  authorized  representative  of  the 
supervisor.  The plan shall provide for sound abatement equal to or exceeding 
the sound abatement standard specified in subrule (2)(a) of this rule.
  (4)   A compressor which is installed as a replacement for, and on the same 
site as, a compressor that was installed before the effective date  of  these 
rules and which is an  equivalent  size  as  the  previous  compressoris  not 
subject to subrule (2) of this rule.

  History:  1996 AACS.


             PART 11.  HYDROGEN SULFIDE MANAGEMENT

R 324.1101   Definitions; B to M.
  Rule 1101.  As used in this part:
  (a)   "Briefing area" means a specified geographic area  nearby  where  all 
personnel can safely assemble in an emergency.
  (b)   "Colorimetric or length  of  stain  tubes"  means  glass  tubes  that 
contain a chemical which changes color upon exposure to a specified substance 
and which allow the concentration of  the  specified  substance  to  be  read 
directly.
  (c)   "Emergency preparedness coordinator" means  an  individual  appointed 
pursuant to Act No. 390 of the Public Acts of 1976, being §30.401 et seq.
of the Michigan Compiled Laws, to coordinate emergency planning  or  services 
within the county or municipality.
  (d)   "Existing H2S well" means an H2S well that is drilled  and  completed 
before September 2, 1987.
  (e)   "Existing process equipment" means equipment for  the  production  of 
oil or gas, or both, which was in existence, and through which oil or gas, or 
both, was  being  produced,  before  September  2,  1987.   Existing  process 
equipment does not include gas sweetening plants or stripping plants.
  (f)   "Flare" means a device for the burning of gasses in which  the  flame 
is exposed to the atmosphere and burning takes place at a height of not  less 
than 20 feet above the ground.
  (g)   "H2S well" means a well that contains a hydrogen sulfide  content  in 
the gas of not less than 300 ppm.
  (h)    "Incinerator"  means  a  device  specifically   designed   for   the 
destruction, by burning, of combustible gasses,  in  which  the  products  of 
combustion are emitted to the outer air by passing through a stack or chimney 
that opens to the outer air at a height of not less than 20  feet  above  the 
ground.
  (i)   "Mcf" means 1,000 cubic feet of gas at standard conditions  of  14.65 
psi absolute and at 60 degrees Fahrenheit.

  History:  1996 AACS.


R 324.1102  Definitions; N to W.
  Rule 1102.  As used in this part:
  (a)   "NACE" means the national association of corrosion engineers.
  (b)   "New H2S well" means an H2S well that is drilled or  completed  after 
September 2, 1987.
  (c)   "Radius of exposure" means the distance, in feet, that  results  when 
appropriate values  are  substituted  for  the  variables  in  the  following 
equation:

                RoE = (A x B x C) 0.6258 where
        A = 1.589 for a 100-ppm radius of exposure.
        B = the mole  fraction  concentration  of  hydrogen  sulfide  in  the 
released gas.
        C = the maximum volume of gas determined to be available for  release 
in cubic feet per 24 hours.
The radius of exposure is the distance from a point of  release  at  which  a 
specified concentration of hydrogen sulfide would occur if  gas  of  a  known 
concentration of hydrogen sulfide were released at a known rate.
  (d)   "Safety equipment" means, at a minimum, all of the following items:
  (i)   First aid kits.
  (ii)  Stretchers.
  (iii) Blankets.
  (iv)  Portable dry chemical fire extinguishers.
  (v)   Ropes.
  (vi)  Flare guns and flares.
  (vii) Battery-operated lanterns.
  (viii)  Portable electronic hydrogen sulfide detectors.
  (ix)  Warning signs that have the word "Danger" or  "Caution"  followed  by 
the words "Poison Gas."
  (x)   Two copies of the owner's contingency plan.
  (xi)  Not less than 2 portable, self-contained,  pressure-demand  breathing 
apparatus that have a 30-minute air supply.
  (xii) A supply of compressed breathable air or oxygen that is sufficient to 
recharge each self-contained breathing apparatus at least once.
  (e)   "Well class" means the category into which an H2S well falls  or,  in 
the case of an H2S well to be drilled, the category into which it is expected 
that the well will fall, as follows:
  (i)   "Class I H2S well" means a well that has a 100-ppm radius of exposure 
of more than 300 feet and a hydrogen sulfide content in the gas of  not  less 
than 300 ppm.
  (ii)  "Class II H2S well" means  a  well  that  has  a  100-ppm  radius  of 
exposure of not less than 100 feet and not more than 300 feet and a  hydrogen 
sulfide content in the gas of not less than 300 ppm.
  (iii) "Class III H2S well" means a  well  that  has  a  100-ppm  radius  of 
exposure of less than 100 feet and not less  than  30  feet  and  a  hydrogen 
sulfide content in the gas of not less than 300 ppm.
  (iv)  "Class IV H2S well" means  a  well  that  has  a  100-ppm  radius  of 
exposure of less than 30 feet and a hydrogen sulfide content in  the  gas  of 
not less than 300 ppm.

  History:  1996 AACS.


R 324.1103   Metallic component standards.
  Rule 1103.A permittee of a well shall ensure that  metallic  components  of 
the well, flow line, and associated surface facilities installed  during  the 
course of drilling, completing,  testing,  producing,  repair,  workover,  or 
servicing operations after  September  2,  1987,  where  applicable,  are  in 
compliance with or exceed  the  standards  for  use  in  a  hydrogen  sulfide 
environment set  forth  in  the  NACE  standard  MR0175-2000,  2000  edition, 
entitled "Sulfide Stress Cracking Resistant Metallic Material for  Oil  Field 
Equipment," which is adopted by reference in  these  rules.   Copies  may  be 
inspected at the Lansing office or field offices  of  the  geological  survey 
division of the department of environmental quality.  Copies may be  obtained 
from the Michigan Department  of  Environmental  Quality,  Geological  Survey 
Division, P.O. Box 30256, Lansing, Michigan 48909, at a cost as of  the  time 
of adoption of these rules of $50.00 each, and from the National  Association 
of Corrosion Engineers, P.O. Box 218340, Houston, Texas 77218, at a  cost  as 
of the time of adoption of these rules of $50.00 each.

  History:  1996 AACS; 2001 AACS.


R 324.1104  Permittee compliance with this part and state  and  federal  laws 
and regulations.
  Rule 1104. A permittee of a well shall comply with all of the provisions of 
this part.  Compliance with this  part  does  not  exempt  a  permittee  from 
complying  with  all  applicable  state  and  federal  laws  and  regulations 
governing air pollution and emissions.

  History:  1996 AACS.


R 324.1105   Classification of H2S wells;  applicability  of  rules  to  well 
classes.
  Rule 1105.(1) An H2S well is considered a class I H2S well and  is  subject 
to the requirements of R 324.1103, R 324.1104, R 324.1106 to R 324.1115(1) to 
(5) and (7), and R 324.1116 to R 324.1130, unless a permittee can supply data 
showing that the well is a class II H2S, class III H2S, or class IV H2S well.
  (2) An H2S well that is considered to be a class II H2S well is subject  to 
the requirements of R 324.1103, R 324.1104, R 324.1106 to  R  324.1115(1)  to 
(5) and (7), R 324.1116 to R 324.1129, and R 324.1130(1), (3) and (4).
  (3) An H2S well that is considered to be a class III H2S well is subject to 
the requirements of R 324.1103, R 324.1104,  R  324.1106  to  R  324.1109,  R 
324.1111, R 324.1112, R 324.1114, R 324.1115(1) to (5) and (7), R 324.1116 to 
R 324.1129, and R 324.1130(1) and (4).
  (4) An H2S well that is considered to be a class IV H2S well is subject  to 
the requirements of R 324.1103, R 324.1104,  R  324.1106  to  R  324.1109,  R 
324.1111, R 324.1112(2), R 324.1114, R 324.1115(6) and (7), R 324.1118  to  R 
324.1124, R 324.1126 to R 324.1129, and R 324.1130(1) and (4).
  (5) If a well is being drilled through, but not completed in,  a  reservoir 
known to contain hydrogen sulfide-bearing gas, then  the  well  shall  be  in 
compliance with the requirements of the H2S well class to which it  would  be 
assigned if it were completed in the reservoir.   Compliance  shall  continue 
until all hydrogen sulfide-bearing zones have been cased off.
  (6) The supervisor may require  a  permittee  to  provide  the  information 
necessary to determine whether these rules apply to a well.

  History:  1996 AACS; 2001 AACS.


R 324.1106  Location of H2S wells and associated surface facilities.
  Rule 1106.  (1)  New H2S wells shall be located not less than 300 feet from 
existing  water  wells,  existing  structures  used  for  public  or  private 
occupancy, existing areas maintained for public recreation, or  the  edge  of 
the traveled portion of an  existing  interstate,  United  States,  or  state 
highway.
  (2)   Surface facilities associated with new H2S wells shall be located not 
less than 600 feet from existing water wells, existing  structures  used  for 
public or private occupancy, existing areas maintained for public recreation, 
or the edge of the traveled portion of an existing interstate, United States, 
or state  highway.   The  supervisor  or  authorized  representative  of  the 
supervisor may grant an exception to the setback distance to  not  less  than 
450 feet for a class II H2S well and not less than 300 feet for a  class  III 
H2S well and a class IV H2S well either upon presentation, to the  supervisor 
or authorized representative of the supervisor, of a consent  form,  provided 
by the supervisor, signed by the owner or owners of all existing water wells, 
existing structures used for public or private occupancy, or  existing  areas 
maintained for public recreation located less than 600 feet from the proposed 
process equipment site or upon receipt of a petition from the permittee for a 
hearing pursuant to part 12 of these rules.
  (3)   If existing process equipment is located  less  than  600  feet  from 
existing  water  wells,  existing  structures  used  for  public  or  private 
occupancy, existing areas maintained  for  public  recreation,  or  a  state, 
United States, or interstate  highway,  then  the  supervisor  or  authorized 
representative of the supervisor may require relocation of the facility if it 
is substantially reconstructed after September 2, 1987.
  (4)   The supervisor shall not require relocation of an  existing  facility 
because of its proximity to an existing water well, to a structure  used  for 
public or private occupancy, to an area maintained for public recreation,  or 
to a state, United States, or interstate highway constructed  or  established 
after the installation of the facility or after  September 2, 1987.

  History:  1996 AACS.


R 324.1107    Training.
  Rule 1107.(1) A permittee of a well is responsible for  ensuring  that  all 
agents, employees, or other representatives of the permittee who are involved 
in drilling, completing, testing, producing, repair, workover,  or  servicing 
operations on an H2S well have received training from  persons  qualified  in 
hydrogen sulfide safety.  The training shall include  all  of  the  following 
matters:
  (a) The physical properties and physiological effects of hydrogen sulfide.
  (b) The effects of hydrogen sulfide on metals and elastomers.
  (c) Emergency escape procedures.
  (d) The location and proper use of safety equipment.
  (e) The locations of primary and secondary briefing areas.
  (f) The location and  operation  of  the  hydrogen  sulfide  detection  and 
warning system.
  (g)  The   corrective   actions,   shut-in     procedures,     H2S     well 
ignition  procedures,  and  procedures  for   notifying    off-site    public 
authorities  listed in the contingency plan to be followed in an emergency.
  (h) The contents of the permittee's contingency plan.
  (2) Not less than 2 persons per crew shall be trained  in  emergency  first 
aid  procedures,   including     red     cross-approved     techniques     of 
cardiopulmonary resuscitation.
  (3) When a  drilling  contractor  or  other  independent   contractor    is 
involved in drilling, completing, testing, producing, repair,  workover,   or 
servicing operations on an H2S well,  a  permittee  of  a  well   may    rely 
on  written certification obtained from the contractor that the  agents   and 
employees  of the contractor involved in the  operations  have  received  the 
training required by this rule.   A  permittee  shall  retain   the   written 
certification.   Failure to ensure that employees receive  adequate  training 
and  are  current  in  the training is sufficient cause for the suspension of 
any or all  components  of the oil and gas operations  on  the    well.     A 
suspension  shall  continue  as provided in R 324.1014(2).

  History:  1996 AACS; 2002 AACS. 


R 324.1108  Securing of nonproducing H2S wells.
  Rule 1108.  A permittee of a nonproducing H2S well shall  ensure  that  the 
well is secured to prevent a person  other  than  authorized  personnel  from 
opening the well.

  History:  1996 AACS.


R 324.1109  Warning signs; specifications.
  Rule 1109.  A permittee of a well shall  ensure  that  warning  signs  have 
letters that are not less than 1 1/2 inches in height and  that  are  legible 
under normal conditions at a distance of 25 feet.

  History:  1996 AACS.


R 324.1110   Contingency plans for drilling and production.
  Rule 1110.(1) A contingency plan for drilling  shall  be  prepared  by  the 
applicant to provide an organized plan of action for alerting and  protecting 
personnel at an H2S well site and  the  public.   The  contingency  plan  for 
drilling shall consist of 2 parts.
  (2) Part 1 of the plan shall contain the general procedures that  shall  be 
followed in the event of an  emergency  involving  the  possible  release  of 
hydrogen sulfide into the atmosphere and shall include both of the  following 
sections:
  (a) A section that lists, by title, personnel to  be  contacted  and  their 
duties and responsibilities.  The list shall also  include  a  delegation  of 
duties and responsibilities and shall specify who is responsible for ordering 
ignition of the H2S well if necessary.  The list shall be kept current by the 
applicant or permittee.
  (b) A section that contains all of the following information:
  (i) The emergency  circumstances  that  cause  the  plan  to  be  put  into 
operation.
  (ii)The initial procedures to be followed if the plan is activated.
  (iii)The actions to be taken to ensure that all personnel known  to  be  on 
the location are accounted for  and  that  nonessential  personnel  shall  be 
safely removed.
  (iv)The actions to be taken to restrict access of nonessential personnel to 
the location.
  (v) The procedure for notifying the general public, public authorities,  as 
listed in the contingency plan, and  safety  agencies  in  the  event  of  an 
emergency.
  (vi)If evacuation of the public is necessary, the procedure for  conducting 
the evacuation.
  (vii)The procedures for igniting the H2S well.
  (3) Part 2 of the plan shall be site-specific and shall contain all of  the 
following information:
  (a) An accurate map that shows the locations  of  all  existing  structures 
used for public or private occupancy, areas maintained for public recreation, 
roads, and railroads within a 1,300-foot radius of the drilling well  in  the 
case of a class I H2S well or within a 500-foot radius of the  drilling  well 
in the case of a class II H2S well.
  (b) A list of names,  telephone  numbers,  and  addresses  of  all  of  the 
following:
  (i) Seasonal and permanent residents.
  (ii)Private businesses.
  (iii)Schools.
  (iv)Places of worship.
  (v) Hospitals.
  (vi)Governmental offices.
  (vii)Parties responsible for the areas maintained  for  public  camping  or 
gathering identified on the map.
  (c) A list of emergency telephone numbers, including the numbers of  all of 
the following:
  (i) Representatives of the permittee.
  (ii)Representatives of the drilling contractor.
  (iii)The emergency preparedness coordinator.
  (iv)Local ambulance services.
  (v) Local hospitals.
  (vi)Local fire departments.
  (vii)The department of environmental quality.
  (viii)The pollution emergency alerting system.
  (4) An applicant shall submit part 1 of the contingency plan  for  drilling 
an H2S well at the request of the supervisor or authorized representative  of 
the supervisor.  The applicant shall submit part 2 of  the  contingency  plan 
for drilling an H2S well with the application for a drilling permit.
The applicant shall submit a copy of part 2 of the contingency  plan  to  the 
local emergency preparedness coordinator  at  the  time  the  application  is 
submitted to the supervisor.  The supervisor or authorized representative  of 
the supervisor may require that contingency plans for producing H2S wells  be 
updated periodically.
  (5)  An  applicant  may  request,  from  the   supervisor   or   authorized 
representative of the supervisor, an exception to the requirement to  prepare 
the map and accompanying list of residences required in subrule (3)  of  this 
rule.
  (6) A permittee shall prepare a contingency plan  for  production  for  any 
well, surface facility, or flow line subject to  this  rule.   A  contingency 
plan shall contain all of the following information:
  (a) Permittee name, well name, location, and permit number of the  well  or 
facility.
  (b) An accurate map or site plan showing  the  location  of  all  equipment 
carrying or containing fluids with hydrogen sulfide.
  (c)  Names  and  contact  information  for  local  representatives  of  the 
permittee  who  have  knowledge  of  the  equipment  and  authority  to  take 
corrective actions at the well or facility in an emergency situation.
  (d) Available information on hydrogen sulfide concentrations at the site.
  (7) Every 3 years or as required  by  the  supervisor,  a  permittee  shall 
review  contingency  plans  and  certify  to  the  supervisor  or  authorized 
representative  of  the  supervisor  and  the  local  emergency  preparedness 
coordinator that the contingency plans are  accurate.   The  permittee  shall 
update the contingency plan under any of the following conditions and  submit 
a copy of the updated  contingency  plan  to  the  supervisor  or  authorized 
representative  of  the  supervisor  and  the  local  emergency  preparedness 
coordinator:
  (a) A change of the notification process or local  representatives  of  the 
permittee.
  (b) A substantial change in the site conditions or equipment noted  on  the 
plan.
  (c) A change of the permittee.
  (8) A permittee shall provide a contingency  plan  for  production  to  the 
supervisor or authorized representative  of  the  supervisor  and  the  local 
emergency preparedness coordinator for all  wells,  surface  facilities,  and 
flow lines subject to this rule 6 months after the effective  date  of  these 
amendatory rules for  all  existing  production  facilities  and  before  the 
commencement of production for all production facilities completed after  the 
effective date of these amendatory rules.

  History:  1996 AACS; 2001 AACS.


R 324.1111  Compliance with rules; time.
  Rule 1111.    A permittee of a well shall  comply  with  R  324.1112  to  R 
324.1116 not later than the time at which drilling reaches  a  depth  of  500 
feet above the projected  top  of  the  geological  stratum  suspected  by  a 
permittee or the supervisor or authorized representative of the supervisor to 
contain hydrogen sulfide.  Compliance shall continue until all formations  or 
strata suspected to contain hydrogen  sulfide  are  cased  off,  plugged,  or 
drilled and proven not to be a potential problem.

  History:  1996 AACS.


R 324.1112  Briefing areas.
  Rule 1112.  (1)   A  permittee  of  a  well  shall  establish  primary  and 
secondary briefing areas at the drilling site.  A permittee shall ensure that 
safety equipment is located at the primary briefing area.
  (2)   The supervisor or authorized representative  of  the  supervisor  may 
require safety equipment, in addition to that listed  in  R  324.1102(d),  if 
necessary for the safety of the public or the workers.

  History:  1996 AACS.


R 324.1113    Emergency preparedness coordinator; contact by permittee.
  Rule 1113. A permittee of a well shall contact  the  appropriate  emergency 
preparedness coordinator not less than 24 hours before  the  commencement  of 
drilling the H2S well.

  History:  1996 AACS; 2001 AACS.


R 324.1114  Wind direction indicators.
  Rule 1114.  A permittee of a well shall install wind  direction  indicators 
at the drilling site. the wind direction indicators shall be visible from all 
normal work stations within the drilling site.

  History:  1996 AACS.


R 324.1115  Equipment; electric or mechanical fan; hydrogen sulfide detection 
and warning system; emergency escape self-contained breathing apparatus;  rig 
floor ventilation.
  Rule 1115.  (1)  A permittee of a well shall  install  a  hydrogen  sulfide 
detection and warning system that activates  audible  and  visual  alarms  if 
hydrogen sulfide is detected.  Visual alarms shall be activated if a hydrogen 
sulfide concentration of  10  ppm  is  detected.   Audible  alarms  shall  be 
activated if a hydrogen sulfide concentration of 20 ppm is detected.
  (2)   A permittee of a  well  shall  locate  hydrogen  sulfide  sensors  as 
follows:
  (a)   For rotary rigs, at all of the following locations:
  (i)   The shale shaker or at the point of first release  of  gas  from  the 
returning stream of drilling fluid.
  (ii)  On the rig floor.
  (iii) In the substructure.
  (iv)  At the mud hopper.
  (b)   For cable tool rigs, at the point of first release of  gas  from  the 
well bore and on the rig floor.
  (3)   After the sensors are mounted, a permittee of a well shall  calibrate 
the system according to the manufacturer's instructions.  The permittee shall 
test the detection and warning system before  drilling  into  the  geological 
stratum suspected to contain hydrogen sulfide.  The  permittee  shall  record 
the  calibrations  and  tests  in  the  driller's  log.   The  supervisor  or 
authorized representative of the  supervisor  may  witness  the  testing  and 
calibration.
  (4)   A permittee of a well shall ensure that  an  emergency  escape  self- 
contained breathing apparatus is readily available to  every  member  of  the 
drilling crew at that member's work station and to other  personnel  required 
to be on the rig floor during the drilling operation.
  (5)    A  permittee  of  a  well  shall  ensure  that  the  rig  floor  and 
substructure is adequately ventilated to prevent the accumulation of gas.
Forced-air ventilation shall be used when natural ventilation is inadequate.
An electric or mechanical fan shall  be  available  on  the  drill  site  for 
ventilation.
  (6)    A  permittee  of  a  well  shall  ensure  that  the  rig  floor  and 
substructure of a class IV H2S well is adequately ventilated to  prevent  the 
accumulation of gas and shall utilize either a hydrogen sulfide detector that 
has an  audible  alarm  or  an  electric  or  mechanical  fan  that  operates 
constantly during the operation if natural ventilation is inadequate to  keep 
the wellhead area free from gas.
  (7)   A permittee of a well shall ensure that well safety equipment is  the 
same equipment that is required under R 324.1102(d) for class I H2S and class 
II H2S wells and R 324.1102(d)(viii), (ix), and (xi) for class III H2S wells.
 Safety equipment shall be located at the primary briefing areas for class  I 
H2S and class II H2S wells and at the well site for class III H2S  and  class 
IV H2S wells, if safety equipment is required for class IV H2S wells,  unless 
otherwise stated in this rule.  The supervisor or  authorized  representative 
of the supervisor may require the use of safety equipment, in addition to the 
equipment listed in R 324.1102(d), if necessary for the safety of the  public 
or the workers.

  History:  1996 AACS.


R 324.1116  Mud gas separator; burning of gas generated by mud gas separator; 
incinerator   or   flare   installation;   hydrogen   sulfide   concentration 
determination.
  Rule 1116.  (1)  All of the following provisions apply to  rotary  drilling 
operations:
  (a)   If  a  gas  kick  occurs,  all  returning  drilling  fluid  shall  be 
circulated through a mud gas separator.
  (b)   All gas separated from the drilling fluid by the  mud  gas  separator 
shall be routed to a properly engineered incinerator or  flare  that  has  an 
elevated discharge to the atmosphere and shall be burned.
  (c)   When gas is being routed to the incinerator or flare from the mud gas 
separator, the hydrogen sulfide content of the gas shall be determined  by  a 
permittee or the permittee's representative.  The determination shall be made 
using colorimetric or length of stain tubes or other  equipment  designed  to 
measure  hydrogen  sulfide  concentrations  and  shall  utilize  a  procedure 
approved by the supervisor or authorized representative of the  supervisor.
The results of the determination shall be entered into the driller's log.
  (2)   Both of the following provisions apply to cable tool drilling:
  (a)   All gas separated from other fluids shall be  routed  to  a  properly 
engineered flare or  incinerator  that  has  an  elevated  discharge  to  the 
atmosphere and shall be burned.
  (b)   When gas is being routed to the incinerator or  flare,  the  hydrogen 
sulfide content of the  gas  shall  be  determined  by  a  permittee  or  the 
permittee's  representative.   The  determination   shall   be   made   using 
colorimetric or length of stain tubes or other equipment designed to  measure 
hydrogen sulfide concentrations and shall utilize a procedure approved by the 
supervisor or authorized representative of the supervisor.
The results of the determination shall be entered into the driller's log.

  History:  1996 AACS.


R 324.1117  Initial testing.
  Rule 1117.  (1)  When initial testing of  an  H2S  well  is  performed,  in 
addition to applicable air pollution  control  commission  general  rules,  a 
permittee of a well shall comply with all of the following  requirements  not 
later than the start of testing if permanent surface facilities have not been 
installed:
  (a)   One or more wind direction indicators shall be installed and shall be 
visible from all normal work stations within the test site of class I H2S and 
class II H2S wells.
  (b)   An incinerator or flare shall be installed for the purpose of burning 
all gas and stock tank vapor produced during the test.   The  incinerator  or 
flare shall be equipped with a continuous pilot light or a pilot light outage 
detector that has an automatic reignition system.  The incinerator  or  flare 
shall be located not less than 75 feet from the wellhead and test  tanks  and 
shall be positioned  so  that  the  prevailing  winds  carry  the  combustion 
products away from the site.
  (c)    A  flashback  prevention  system  shall  be  installed  between  the 
incinerator or flare and the test tanks.
  (d)   All of the following equipment shall be located at the test site:
  (i)   Not less than 2 self-contained, pressure-demand  breathing  apparatus 
that have a 30-minute air supply for class I H2S and class II H2S wells.
  (ii)  A first aid kit for class I H2S and class II H2S wells.
  (iii)  A portable electronic hydrogen sulfide detector for class I H2S  and 
class II H2S wells.
  (iv)  An emergency  escape  self-contained  breathing  apparatus  for  each 
member of the test crew for class I H2S and class II H2S wells.
  (v)   The supervisor or authorized representative  of  the  supervisor  may 
require the use of safety equipment in addition to the equipment listed in  R 
324.1102(e) if necessary for the safety of the public or the workers.
  (e)   Warning signs that have the word "Danger" or  "Caution"  followed  by 
the words "Poison Gas" shall be posted at the entrances to all access roads.
  (f)   The supervisor or authorized representative of the  supervisor  shall 
be notified of the expected start-up date of the initial test.
  (2)   During the test period, a permittee of a  well  shall  determine  the 
hydrogen sulfide content of the gas produced.  Hydrogen sulfide content shall 
be determined on-site using colorimetric or length of stain  tubes  or  other 
equipment designed to measure hydrogen  sulfide  concentrations  utilizing  a 
procedure approved by the supervisor  or  authorized  representative  of  the 
supervisor.
  (3)   All gas measurements made during the initial flow test shall be  made 
using a meter that allows all gas metered to be burned.
  (4)   Operations or procedures that require the  use  of  a  self-contained 
breathing apparatus shall be performed only if not less than 2 people who are 
authorized by the permittee of the well are on-site.
  (5)   The supervisor or authorized representative  of  the  supervisor  may 
grant exceptions to this rule when compliance with  the  provisions  of  this 
rule is not necessary to provide for the protection or safety of  the  public 
or workers or when the H2S well or  associated  surface  facilities  are  not 
likely to constitute sources of nuisance odors.

  History:  1996 AACS.


R 324.1118  Gas analyses.
  Rule 1118.   (1)   The  supervisor  or  authorized  representative  of  the 
supervisor may require periodic gas analyses to  determine  hydrogen  sulfide 
concentration.
  (2)   A permittee of a well shall make a second gas analysis 1  year  after 
the date of the initial analysis required  in  R  324.1117(2).   Further  gas 
analyses shall  be  required  only  at  the  request  of  the  supervisor  or 
authorized representative of the supervisor.
  (3)   A permittee of a well  shall  notify  the  supervisor  or  authorized 
representative of the supervisor before the sampling and analysis required in 
subrules (1) and (2) of this rule.
  (4)   A permittee of a well shall report, in writing, the results of a  gas 
analysis required by the  supervisor  or  authorized  representative  of  the 
supervisor to the supervisor within 1 month of the date of the analysis.
The report shall state the methods of sampling and analysis used.

  History:  1996 AACS.


R 324.1119  Wellheads; painting requirements; warning signs.
  Rule 1119.  (1)  A permittee of a well  shall  ensure  that  the  valve  or 
valves necessary to shut off all fluid flow nearest the wellhead are  painted 
yellow.
  (2)   A permittee of a well shall ensure that the power supply kill  switch 
of an H2S well that is produced by artificial  lift  is  painted  yellow.   A 
permittee of a well shall  ensure  that  the  power  supply  kill  switch  is 
conspicuously marked and readily accessible.
  (3)   A permittee of a well shall ensure that a warning sign that  has  the 
word "Danger" or "Caution" followed by the words "Poison Gas" is  prominently 
displayed at the wellhead.

  History:  1996 AACS.


R 324.1120  Flow lines; markers; protection.
  Rule 1120.  (1)  A permittee of a well shall ensure that the routes of flow 
lines that are located before the  point  of  sale  and  that  are  used  for 
transporting fluids containing hydrogen sulfide are marked.  Markers shall be 
mounted not less than 4 feet above  ground  level,  shall  consist  of  signs 
denoting the presence of a buried line carrying hydrogen sulfide,  and  shall 
contain the name of the flow line owner and the flow line  owner's  emergency 
telephone number.  Markers shall be properly maintained and shall  be  spaced 
so that the route of the flow line can be easily  traced.   Routes  shall  be 
kept sufficiently cleared to allow adjacent markers to be  visible  with  the 
naked eye.
  (2)   A permittee of a well shall ensure that flow lines constructed  above 
ground level are protected from accidental damage  by  vehicular  traffic  or 
other similar causes.

  History:  1996 AACS.


R 324.1121    Heated vessels; installation  of  certain  equipment  required; 
exhaust gas stack height.
  Rule 1121. A permittee of a well shall ensure that  heated  vessels  fueled 
with natural gas that contains hydrogen sulfide are equipped with a system to 
prevent the emission of the fuel gas to the atmosphere  in  the  event  of  a 
pilot failure or flameout and shall be in compliance with the  emissions  and 
operations requirements provided in R 336.1403.  The exhaust gas stack height 
shall be not less than 20 feet.

  History:  1996 AACS.


R 324.1122    Vessels  used  for     storing     hydrogen     sulfide-bearing 
liquid hydrocarbons or hydrogen sulfide-bearing brine; equipment requirements.
  Rule 1122.(1) A permittee of a well shall ensure that  a  vessel  which  is 
located at an H2S well site or in a central production  facility  serving  an 
H2S well and which is used for the storage of hydrogen sulfide-bearing liquid 
hydrocarbons or hydrogen sulfide-bearing brine is equipped  with  a  sealing, 
pressure-vacuum-type hatch, except that a pressure-vacuum-type hatch  is  not 
required on a storage vessel if the venting of vapor  to  the  atmosphere  is 
permitted under subrule (4) of this rule.  A hatch shall be kept closed  when 
a tank is not being gauged.
  (2) If a storage vessel described in subrule (1) of  this  rule  releases a 
total 24-hour volume of 5 mcf or more of vapors, then  a  permittee   of    a 
well shall ensure that the vessel is equipped  with   a   vent    line    for 
conveying released gasses and vapors  to  an  incinerator,  flare,  or  vapor
 recovery system.  A flashback prevention system shall be  installed  on  the 
line between a vessel and the incinerator or  flare.   If  a  vapor  recovery 
system is used to control tank vapor emissions, then a flare  or  incinerator 
shall be  available  for  standby  or  emergency  use.   Installing  a  vapor 
recovery  system  does  not exempt a  flare  or  incinerator  from  being  in 
compliance with the  requirements of R 324.1123.
  (3) If a storage vessel described in subrule (1) of  this  rule  releases a 
total daily volume of 5 mcf or more of vapors, then  a   permittee    of    a 
well shall install a fence around the vessel equipped with a gate.   A  fence 
shall be located not less than 20 feet from   the   base   of    a    storage 
vessel.   A permittee shall ensure that warning signs with the word  "Danger" 
or "Caution" followed by the words "Poison Gas" are installed on all sides of 
the fence.
If the supervisor or authorized representative of the supervisor finds that a 
threat to the public safety exists due to emissions of sulfur-bearing gas  or 
vapor, then fencing other than that specified in R 324.102(p) may be required.
  (4) If a storage vessel described in subrule (1) of  this  rule  releases a 
total daily volume of 5 mcf or less of vapor, then it may be  vented   to the 
atmosphere if the vent is located not less than 10 feet above  the  tank  top 
and if the opening of the vent is within the diked area or not less  than
 20 feet above the ground if the opening of the vent  is  outside  the  diked 
area.
The supervisor may prohibit venting of vapor to the atmosphere if a  verified 
chronic nuisance odor results from the sulfur-bearing compounds being vented.
  (5) If the hydrogen sulfide concentration at the tank  thief    hatch    is 
more than 500 ppm by volume, then a permittee of a well shall ensure that   a 
tank has a latched gate at the foot of the catwalk stairs.  A permittee of  a 
well  shall  ensure  that  a   sign   reading    "Self-contained    Breathing 
Apparatus  is Recommended Beyond This Point if Hatches are to be  Opened"  is 
posted  on  the gate.
  (6) The supervisor may require the use of a tank  gauging    system    that 
does not require the opening of the tank hatches if  a    verified    chronic 
nuisance odor results from tank gauging.
  (7) A person or a permittee of a well shall not install  a  tank  which  is 
used for the storage of hydrogen sulfide-bearing liquid hydrocarbons or brine 
from an H2S well if the separator or treater immediately upstream of the tank
 has an operating pressure of more than  250  psig  unless   an   independent 
registered engineer certifies that the facility is designed and   constructed 
such  that any release of liquids or gas to the  tank  shall  not   cause   a 
release  of hydrogen sulfide to the atmosphere.

  History:  1996 AACS; 2001 AACS; 2002 AACS.


R 324.1123     Incinerators   and    flares;     equipment     and     design 
requirements; additional requirements.
  Rule 1123.(1) A permittee of a well shall ensure  that  an  incinerator  or 
flare installed under R 324.1117, R 324.1122, or R 324.1124 is  designed  and 
equipped to prevent the release of unburned gas to the  atmosphere.   If  the 
daily volume of gas handled by the incinerator or flare contains 28 pounds or 
more of hydrogen sulfide, then a permittee shall ensure that the  incinerator 
or flare is equipped with a mechanism that operates upon failure of the pilot 
light to shut off the flow of fluid from the wellhead.
  (2) A permittee of a  well  shall  ensure  that  an  incinerator  or  flare 
required by R 324.1122 is fenced.  A fence shall be located not less than  20 
feet from the base of the incinerator or flare.  A permittee  of    a    well 
shall  ensure that warning signs that have the  word  "Danger"  or  "Caution" 
followed  by  the words "Poison Gas" are posted on all sides of the  fence.
If  the  supervisor or authorized representative of the supervisor finds that
 a  threat  to  the public safety  still  exists  due  to  emissions  of  the 
incinerator or flare, then fencing other than that specified in R  324.102(p) 
may be required.
  (3) If the supervisor or authorized  representative  of   the    supervisor 
finds that a threat to the public health  or  safety  exists  due   to    the 
emission   of  sulfur-bearing  gasses  or  vapors,  then  a  flare  stack  or 
incinerator stack that is more  than  20  feet  high,  as  specified   in   R 
324.1101(f)  and  (h),  may  be required.

  History:  1996 AACS; 2002 AACS.
 

R 324.1124  Emergency relief valves.
  Rule 1124.  A permittee of a well shall ensure  that  an  emergency  relief 
valve on process equipment is equipped with a line for conveying the released 
gasses or vapors to an incinerator or flare.  The  supervisor  or  authorized 
representative of the supervisor may grant an exception if  the  total  daily 
volume of gas produced is less than 5 mcf.

  History:  1996 AACS.


R 324.1125   Shut-in systems.
  Rule 1125.(1)A permittee of a well shall ensure  that  an  H2S  well  which 
produces unattended and which has a stabilized producing tubing  pressure  of 
not less than 100 psig is equipped  with  a  high-pressure  and  low-pressure 
shut-in system.
  (2) A permittee of a well shall ensure that a  class  I  H2S  well  drilled 
after the effective date of these amendatory rules  for  which  the  100  ppm 
radius of exposure includes an existing structure used for public or  private 
occupancy, existing area maintained for public recreation, or the edge of the 
traveled portion of an existing interstate, united states, or state  highway, 
shall be equipped with the following:
  (a) Hydrogen sulfide sensors located on four sides of  the  wellhead  at  a 
distance of not more than 20 feet.  The sensors  shall  be  set  to  activate 
safety shutdown equipment as specified in subdivisions (b) and  (c)  of  this 
subrule when a hydrogen sulfide concentration  of  30  ppm  is  detected.   A 
permittee of a well shall  calibrate  the  sensor  system  according  to  the 
manufacturer's instructions.
  (b) For flowing class I H2S wells:
  (i) Dual manual master valves.
  (ii)A fail-closed  wing  safety  valve  automatically  actuated  by  a  low 
pressure pilot sensor downstream of the valve and  by  the  hydrogen  sulfide 
sensors at the wellhead.
  (iii)Remote telemetry that alerts  the  well  operator  when  the  hydrogen 
sulfide sensors detect a hydrogen sulfide concentration of 30 ppm.
  (iv)An emergency access valve into the tubing spool.
  (c) For pumped class I H2S wells:
  (i) An emergency access valve into the tubing spool.
  (ii)A fail-closed blowout preventer automatically actuated in the event the 
polish rod breaks.
  (iii)A fail-closed polish rod ram blowout preventer automatically  actuated 
by the hydrogen sulfide sensors at the wellhead.
  (iv)Equipment that automatically shuts off the pump drive unit in the event 
of a stuffing box failure.
  (v) A safety shut down of the pump drive unit,  which  cannot  be  isolated 
from the tubing pressure without unlocking a valve, automatically actuated by 
the high pressure low pressure sensor and the hydrogen sulfide sensors at the 
wellhead.

  History:  1996 AACS; 2001 AACS.


R 324.1126  Vehicle loading racks; vapor return lines  required;  vapor  vent 
lines permitted.
  Rule 1126.  (1)  Truck vapor return lines are required on the loading racks 
of the surface facilities and shall be utilized when  oil  or  condensate  is 
loaded into the truck, except as provided in this rule.
  (2)   Truck vapor vent lines are permitted if the point of emission is  not 
less than 75 feet from the loading rack and not less than 600  feet  from  an 
existing water well and an existing structure  used  for  public  or  private 
occupancy.  The allowance for truck vapor vent  lines  may  be  rescinded  in 
specific  cases  if  the  supervisor  or  authorized  representative  of  the 
supervisor determines that nuisance odors are caused by the use of  the  vent 
lines.

  History:  1996 AACS.


R 324.1127  Compliance with rules before production of new H2S well.
  Rule 1127.  (1)  A permittee of a well shall comply with this  rule  and  R 
324.1119 to R 324.1126 before production of a new H2S well.
  (2)   The supervisor may grant exceptions to R 324.1119 to  R  324.1123,  R 
324.1125, R 324.1126, and this rule when  the  rules  are  not  necessary  to 
provide for the protection or safety of the public or workers or when the H2S 
well or associated surface facilities are not likely to constitute sources of 
nuisance odors.

  History:  1996 AACS.


R 324.1128  Servicing; requirements.
  Rule 1128.  Before commencing an operation that requires removing the  seal 
between the tubing and production casing, a permittee of a  well  shall  meet 
all of the following requirements:
  (a)   Blowout prevention equipment sized  to  accommodate  the  tubing  and 
rework drill pipe shall be installed and tested for class  I  H2S,  class  II 
H2S, and class III H2S wells.
  (b)   Primary and secondary briefing areas shall be established for class I 
H2S and class II H2S wells.
  (c)   The same safety equipment that is required  under  R  324.1102(d)  is 
required  for  class  I  H2S  and  class   II   H2S   wells   and   under   R 
324.1102(d)(viii), (ix), and (xi) is required for class III H2S wells.
Safety equipment shall be located at the primary briefing areas for  class  I 
H2S and class II H2S wells and at the well site for class III H2S  and  class 
IV H2S wells  if  required  for  class  IV  H2S  wells.   The  supervisor  or 
authorized representative of the supervisor may require  the  use  of  safety 
equipment, in addition to the equipment  listed  in  R  324.1102(d),  if  the 
equipment is necessary for the safety of the public or the workers.
  (d)   An electric or mechanical fan shall be located at the well  site  for 
class I H2S, class II H2S, and  class  III  H2S  wells.   The  fan  shall  be 
operated constantly during the operation to keep the wellhead area free  from 
gas if natural ventilation is inadequate.
  (e)   A hydrogen sulfide detection and warning system  shall  be  installed 
and have the detector located downwind from the well or in the  direction  in 
which the fan is blowing.  The detection and warning  system  shall  activate 
visual alarms if a hydrogen sulfide concentration of 10 ppm is detected.
Audible alarms shall be activated if a hydrogen sulfide concentration  of  20 
ppm is detected; however, the use of a hydrogen sulfide detection and warning 
system is optional for a class IV H2S well.
  (f)   Signs that have the word "Danger" or "Caution" followed by the  words 
"Poison Gas" shall be installed at the entrances of all access roads.
  (g)   The supervisor or authorized representative of the  supervisor  shall 
be notified before the start of servicing operations for class I  H2S,  class 
II H2S, and class III H2S wells.
  (h)   A revised and updated contingency plan shall be at the well site  and 
shall be reviewed with all workers for class I H2S and class II H2S wells.

  History:  1996 AACS.


R 324.1129   Burning, processing, or disposing of hydrogen sulfide gas.
  Rule 1129. (1) A permittee shall not release gas produced from an H2S  well 
to the environment, except as follows:
  (a) By burning as fuel in a heated vessel in compliance with R 324.1121.
  (b) By burning in a flare or incinerator that complies with R 324.1010.
  (c) By injection into an approved underground formation under R 324.612  or 
R 324.703.
  (d) By venting from tanks under R 324.1122(4) or R 324.1124.
  (e) By disposal by other means as may be approved by the supervisor under a 
specific request by the permittee,  if  the  permittee  demonstrates  to  the 
supervisor that the manner of disposal prevents  waste  and  does  not  cause 
unnecessary endangerment of public health, safety, and welfare.
  (2) If a well or its associated surface facilities produce hydrogen sulfide 
and the supervisor or authorized representative of the supervisor receives  1 
or more complaints of odor regarding the facility, then  the  supervisor  may 
require the permittee of a well to perform numerical  modeling  to  determine 
the concentration of hydrogen sulfide in the ambient air.  Numerical modeling 
shall utilize the distance  from  the  potential  point  of  an  uncontrolled 
release of gas at the well  or  its  associated  surface  facilities  to  the 
closest existing structure used for public  or  private  occupancy,  existing 
area maintained for public recreation, or the edge of the traveled portion of 
an existing interstate, United States, or state highway.  A  permittee  shall 
have the opportunity to provide,  in  addition  to  the  numerical  modeling, 
actual measurements of the concentration of hydrogen sulfide in  the  ambient 
air taken at the closest  existing  structure  used  for  public  or  private 
occupancy, existing area maintained for public recreation, or the edge of the 
traveled portion of an existing interstate, United States, or state highway.
The supervisor or authorized representative of the supervisor may determine a 
nuisance odor exists based on all applicable information.  The supervisor  or 
authorized representative of the supervisor may require appropriate  emission 
control measures consistent with the provisions of this rule and  R  324.1101 
to R 324.1128.  If emission control measures are required, then the permittee 
shall submit, within 30 days of being  determined  to  be  necessary  by  the 
supervisor, for the approval of the supervisor or  authorized  representative 
of the supervisor, a timetable for the installation of any equipment required.

  History:  1996 AACS; 2001 AACS.


R 324.1130   Requirements  for  certain  gathering  lines,  flow  lines,  and 
facility piping.
  Rule 1130. (1) A gathering line, installed  after  the  effective  date  of 
these amendatory rules carrying gas with more than 300 ppm  hydrogen  sulfide 
shall be  subject  to  the  provisions  for  design,  construction,  testing, 
maintenance, and operation as specified in administrative  rules  promulgated 
under Act No. 165 of the Public Acts of 1969, as amended, being  §483.151  et 
seq. of the Michigan Compiled Laws.
  (2) A flow line or facility piping, carrying gas from a class  I  H2S  well 
and which is subject to a maximum working pressure  in  excess  of  125  psig 
shall be  subject  to  the  provisions  for  design,  construction,  testing, 
maintenance, and operation as specified in administrative  rules  promulgated 
under Act No. 165 of the Public Acts of 1969, as amended, being  §483.151  et 
seq. of the Michigan Compiled Laws.
  (3) A person or a permittee shall not install  a  flow  line  or  gathering 
line, carrying gas from a class I H2S or class II  H2S  well,  or  modify  an 
existing flow line or gathering line to serve additional class I H2S or class 
II H2S wells, unless all of the following provisions are met:
  (a) The person or permittee shall calculate the 100 ppm radius of exposure, 
using either the equation set forth in R 324.1102(c)  or  another  dispersion 
model accepted by the supervisor.  The calculation shall be  based  upon  the 
reasonably expected concentration of hydrogen sulfide to  be  transported  in 
the flow line or gathering line, the maximum actual operating  pressure,  and 
the volume of gas that could be released from  the  flow  line  or  gathering 
line, accounting for any automatic shut-in systems and blocking  valves  that 
will be utilized.
  (b) If an existing structure used  for  public  or  private  occupancy,  an 
existing area maintained for public recreation or the edge  of  the  traveled 
portion of an existing interstate, united  states,  or  state  highway  falls 
within the 100 ppm radius of exposure, the person or permittee shall  prepare 
a construction and operation plan that incorporates  reasonable  measures  to 
reduce the potential for public exposure to hydrogen sulfide from  a  release 
that might  occur.   The  construction  and  operation  plan  shall  consider 
appropriate  construction   standards,   routing   alternatives,   monitoring 
equipment,  automatic  controls  for  source  shut-in,  or  other   available 
engineering methods.  The person or permittee shall submit  the  construction 
and operation plan  to,  and  receive  the  approval  of  the  supervisor  or 
authorized representative of the supervisor.  The  supervisor  or  authorized 
representative of the supervisor shall have 30 days to approve the plan or to 
require modifications or additional information.
  (c) Repair and maintenance of an existing flow line or gathering  line  are 
exempt from the provisions of this subrule.
  (4) Gathering lines, flow lines, or facility piping are not subject to this 
rule if they  are  subject  to  the  issuance  of  a  certificate  of  public 
convenience and necessity by the Michigan public service commission under the 
provisions of Act 9 of the Public Acts of 1929, as amended, being §483.101 et 
seq. of the Michigan Compiled Laws  or  are  subject  to  regulation  by  the 
Michigan public service commission under the provisions of Act No. 165 of the 
Public Acts of 1969, as amended, being  §483.151  et  seq.  of  the  Michigan 
Compiled Laws.

  History: 2001 AACS.


                                PART 12.  HEARINGS


R 324.1201  Hearing; purpose; scheduling; request or petition generally.
  Rule 1201.  Hearings may be held to receive evidence pertaining to the need 
or desirability of an action or an order by the supervisor.  A hearing may be 
scheduled at the initiative of the supervisor or by the supervisor  upon  the 
receipt of a petition, which is properly filed as specified  in  R  324.1202, 
from an owner, producer, lessee, lessor, or other person  interested  in  the 
matter proposed for hearing.

  History:  1996 AACS.


R 324.1202  Petition for hearing; contents.
  Rule 1202.  (1)  A proper written petition for a hearing,  except  for  the 
material filed pursuant to subdivisions (e) and (f) of this subrule, shall be 
filed on 8 1/2 by 11-inch paper  and  shall  contain  at  least  all  of  the 
following information:
  (a)   The name and address of petitioner.
  (b)   A specific  statement  of  the  matters  asserted  or  relief  sought 
indicating the rule, order, or section of the act applicable to the petition.
  (c)   Property descriptions, locations, sections, townships,  and  counties 
relating to the matter to be heard.
  (d)   The names and  last  known  addresses  of  the  last  record  owners, 
lessees, lessors, or other parties of record in the register of deeds  office 
who own interests in the lands that are the subject of the petition.
  (e)   A map of the area to be affected and of the contiguous property.
Lease ownership and well locations within  1,320  feet  of  the  area  to  be 
affected shall be identified.
  (f)   Other maps, plats, and exhibits that may be useful in considering the 
matter to be heard.
  (g)   The name and address of the newspaper circulated  in  the  county  or 
counties where the affected lands are located.
  (h)   A copy of a permit  application  and  attachments  pertinent  to  the 
matters asserted in the petition.
  (i)   The name, address, and telephone  number  of  the  representative  or 
representatives of the petitioner to whom inquiries can be made.
  (2)   All of the following additional information shall be filed  with  the 
petition when a spacing or proration order is to be considered:
  (a)   The size, shape, and orientation of the proposed drilling unit.
  (b)   The well spacing pattern to be proposed.
  (c)   The surface geographic area to be included in the spacing order,  and 
the geologic formation or formations to be spaced or prorated.
  (d)   Well production, testing history, and other applicable reservoir  and 
geological data.
  (e)   Proposed daily well allowables, if applicable.
  (3)   A petition to establish secondary recovery operations pursuant  to  R 
324.612 shall also include all of the following information:
  (a)    Applicable  seismic  lines,  profiles,  and  interpretation  showing 
seismic outlines or  boundaries  of  reservoir  structure  and  the  geologic 
structure and area to be impacted by the operations.
  (b)   Appropriate geologic information, such as structural  cross  sections 
and productive areas, thickness isopach, and other essential maps.
  (c)   Applicable reservoir engineering data, such as the following:
  (i)   Pressure versus time.
  (ii)  Pressure versus oil production.
  (iii) Reservoir rock and fluid properties.
  (iv)  Primary production.
  (v)   An estimated forecast of oil recoveries.
  (vi)  Estimated economics of secondary recovery project.
  (d)   A plan  that  shows  the  locations  of  existing  production  wells, 
proposed production wells, and proposed injection wells and a facilities plan 
that includes schematics that show the locations  of  existing  and  proposed 
flow lines and wells and associated surface facilities.
  (e)   If groundwater is  to  be  injected,  a  hydrogeologic  investigation 
report of the source aquifer.
  (4)   The supervisor may return a petition that is not in conformance  with 
these rules and may include a list of the deficiencies of the petition.
  (5)   All of the following additional information shall be filed  with  the 
petition when compulsory pooling is to be considered:
  (a)   The ownership of oil and gas interests within the drilling unit and a 
specific description of the nature and extent of the interests sought  to  be 
pooled.
  (b)   Sworn statements that indicate, in detail, what action the petitioner 
has taken to obtain a voluntary unit.
  (c)   Whether or not the petitioner desires to drill or operate  the  unit, 
or both, and, if not, the name of the party nominated  as  operator  and  the 
recommendation of the petitioner as to the arrangements  that  are  just  and 
equitable to all owners within the drilling unit.
  (d)   The estimated costs of drilling, completing, and equipping the  well, 
on a form provided by the supervisor, and  additional  compensation  proposed 
for the risk associated with the drilling and equipping of the well.

  History:  1996 AACS.


R 324.1203  Hearings subject to the administrative procedures act of 1969.
  Rule 1203.  A hearing  scheduled  by  the  supervisor  shall  be  conducted 
pursuant to Act No. 306 of the Public Acts of 1969, as amended, being §24.201 
et seq. of the Michigan  Compiled  Laws,  unless  a  different  procedure  is 
authorized by the act or these rules.  All hearings shall be conducted  in  a 
fair and impartial manner.

  History:  1996 AACS.


R 324.1204  Notice of hearing; service; answer.
  Rule 1204.  (1)  The supervisor shall prepare and  furnish  the  notice  of 
hearing to the petitioner, together with  instructions  for  publication  and 
service of the notice.  Upon receipt, the petitioner shall  serve  copies  of 
the notice of hearing on the last known addresses of the last record  owners, 
lessees, lessors, or other parties of record in the register of deeds  office 
or assessor's records, if appropriate, who own interests in  the  lands  that 
are the subject matter of the proposed action, unless otherwise  provided  in 
these rules.
  (2)   If directed by the supervisor, the petitioner shall also serve copies 
of the notice of hearing at the last  known  addresses  of  the  last  record 
owners, lessees, lessors, or other parties of record in the register of deeds 
office who own interests in all or part of the  quarter-quarter  sections  of 
land directly and diagonally adjacent to the lands  or  areas  that  are  the 
subject matter of the proposed action.
  (3)   The notice of hearing shall be published by the petitioner in an  oil 
and gas industry publication circulated in Michigan and  in  a  newspaper  of 
general circulation in the county or counties involved with the matter to  be 
heard.  Publication shall occur not less than 21 days before the date of  the 
hearing.  Affidavits  of  proof  of  publication  shall  be  filed  with  the 
supervisor before the date of the hearing.
  (4)   The notices of hearing shall be mailed not less than 21  days  before 
the date of the hearing.  Affidavits of proof of mailing by first-class  mail 
or personal service shall be filed with the supervisor before the date of the 
hearing.  An affidavit of proof of mailing shall state that  the  notice  was 
deposited in the United States mail not less than 21 days before the  hearing 
date, first-class postage prepaid, addressed to each person so served at  his 
or her record address as set forth in the petition pursuant to R  324.1202.
Each person so served and his or her address of record shall be  specifically 
identified in the affidavit.  The supervisor may require service by certified 
mail, return receipt requested.
  (5)   If a hearing is initiated by the supervisor, or if  the  scope  of  a 
hearing requested by a petitioner  is  enlarged  at  the  initiative  of  the 
supervisor, then the supervisor shall publish the notice of hearing  and  may 
give additional notification of the hearing by United States mail or personal 
service.
  (6)   An interested person shall not be permitted to participate as a party 
in a hearing conducted pursuant to a petition  unless  the  person  files  an 
answer in a timely manner with the supervisor and serves the  answer  to  the 
petition upon the petitioner.  The answer shall be in writing and  shall  set 
forth the interested person's positions with regard  to  the  representations 
made or relief sought in the petition.  An interested person  is  responsible 
for requesting a copy of the petition from the petitioner at the address  set 
forth in the notice of hearing.   The  petitioner  shall  mail  or  otherwise 
deliver a copy of the petition  and  attachments  to  the  interested  person 
within 3 days after receipt of a written request.  Failure of the  petitioner 
to mail or otherwise deliver a copy of the petition to an  interested  person 
in a timely manner relieves the interested person of the obligation  to  file 
an answer and the interested person shall not be  precluded  from  presenting 
evidence or cross-examining witnesses.  An  interested  person  may  mail  or 
otherwise deliver his or her answer to the supervisor and mail  or  otherwise 
deliver a copy to the petitioner not less than 5 days before the date set for 
the hearing.  Failure to  file  and  serve  an  answer  in  a  timely  manner 
precludes an interested person from presenting evidence  at  the  hearing  or 
cross-examining witnesses.  However, an interested person who does  not  file 
an answer in a timely manner may  make  a  nonevidentiary  statement  at  the 
hearing.
  (7)   The notice of hearing shall contain the following statement:
You can obtain a copy of the written petition by requesting  one  in  writing 
from the petitioner at___________________________________________. Take  note 
that if you wish to participate as a  party  in  the  hearing  by  presenting 
evidence  or  cross-examining  witnesses,  you  shall  prepare  and  mail  or 
otherwise deliver to the petitioner and supervisor,  not  less  than  5  days 
before the hearing date, an answer to the petition in the manner set forth in 
R 324.1204(6).  Proof of mailing or delivering the answer shall be filed with 
the supervisor on or before the date of hearing.  The answer shall state with 
specificity the interested person's position with regard to  the  petition.
Failure to prepare and serve an answer in a timely manner shall preclude  you 
from presenting evidence or cross-examining witnesses at the hearing.  If  an 
answer to the petition is not filed, the supervisor may elect to consider the 
petition and enter an order without oral hearing.
  (8)   Upon a showing that service of notice cannot reasonably  be  made  as 
provided by this rule, the supervisor may authorize service of the notice  of 
hearing to be made in  another  manner  reasonably  calculated  to  give  the 
interested parties actual notice of the proceeding and an opportunity  to  be 
heard.  A request for this authorization shall be made by verified motion.
The motion shall  set  forth  sufficient  facts  to  establish  that  service 
pursuant to subrules (1) through (7) of this rule cannot reasonably  be  made 
and shall suggest an alternative method of service.

  History:  1996 AACS.


R 324.1205  Types of hearings.
  Rule 1205.  (1)  Upon receipt of a petition, the supervisor, after  finding 
the petition to be complete, reasonable,  and  appropriate,  shall  determine 
whether the petition shall be heard.  The supervisor shall give each  hearing 
1 of the following designations:
  (a)   A supervisor’s evidentiary hearing to consider  the  adoption  of  an 
order having field-wide or statewide application or ramifications.
  (b)   A supervisor's evidentiary  hearing  to  consider  matters  of  local 
concern in the administration of these rules or the orders of the  supervisor 
or to consider other matters as may be referred to the supervisor.
  (c)   A supervisor’s uncontested evidentiary hearing to consider matters of 
local concern in the administration of these  rules  or  the  orders  of  the 
supervisor or to consider a petition to which an  answer  was  not  filed  as 
provided in R 324.1204(6).
  (2)   If a timely answer is not filed to a petition or if oral  hearing  is 
waived by all interested persons present at a hearing,  then  the  supervisor 
may direct that a petition be processed under subrule (1)(c) of this rule.
In these cases, proceedings pursuant to subrule (1)(c) of this  rule  may  be 
used if it appears that all issues of material fact may be resolved by  means 
of written materials and that  the  proceeding  can  be  efficiently  handled 
without oral hearing.  Where  there  is  no  oral  hearing,  all  substantive 
evidence shall be  presented  by  verified  statement.   The  supervisor  may 
require supplemental verified statements.
  (3)    Prehearing  conferences  may  be  held  at  the  discretion  of  the 
supervisor.  A party may request  a  prehearing  conference  in  his  or  her 
petition or in a responsive pleading.   A  hearing  may  be  converted  to  a 
prehearing conference to ensure an orderly and expeditious hearing.
  (4)   The parties to a proceeding may, by stipulation in writing or entered 
on the record, agree upon facts, law, or procedure involved in the  matter.
Stipulations of fact shall be considered as evidence in the proceeding.
  (5)   The supervisor may, at any time  during  a  proceeding,  designate  a 
hearings officer to conduct an evidentiary  hearing  as  provided  for  under 
either subrule (1)(a) or subrule (1)(b) of this rule.
  (6)   The parties to a matter within the jurisdiction of the supervisor may 
agree to dispose of all or a part of a matter at  issue  by  stipulation  and 
consent order.  The supervisor may enter the stipulation as a consent  order, 
place the stipulation on public notice  as  is  appropriate,  or  reject  the 
stipulation.

  History:  1996 AACS.


R 324.1206  Final decision or order.
  Rule 1206.  (1)  The supervisor shall issue a final decision or order as  a 
result of a hearing held under R 324.1205 or as a  result  of  the  procedure 
pursuant to R 324.1205(1)(c) after giving due consideration  to  all  of  the 
following:
  (a)   The record.
  (b)   The supervisor's experience, technical  competence,  and  specialized 
knowledge.
  (c)   The proposal for decision, if one is issued, and  exceptions  to  the 
proposal for decision, replies  to  exceptions,  and,  if  permitted  by  the 
supervisor, oral arguments and briefs.
  (d)   The advice or recommendations of the representative of the supervisor 
when required or appropriate.
  (e)   The stipulations or  agreements  that  the  contesting  parties  have 
placed on the record at a hearing or submitted in writing to  the  supervisor 
or the hearings officer.
  (f)   The act and rules.
  (2)   The final written decision  or  order  of  the  supervisor  shall  be 
furnished to the petitioner.  The petitioner shall serve  copies,  by  first- 
class mail, to all persons who were mailed a notice of the hearing, who filed 
an appearance at the hearing, or who otherwise requested a copy of the  final 
written decision.
  (3)   When a hearing is scheduled at the initiative of the supervisor,  the 
supervisor shall serve copies of the final  written  decision  or  order,  by 
first-class mail, to all persons who filed an answer, who filed an appearance 
at the hearing, or who otherwise requested a copy.
  (4)   After the hearing on a petition  for  an  order  to  pool  and  after 
thorough  consideration  of  the  evidence  and  testimony   submitted,   the 
supervisor shall either rule that pooling is not necessary to  prevent  waste 
or shall enter an order pooling the separately  owned  tracts  and  interests 
within the drilling unit.  The pooling order shall authorize 1 of the  owners 
within the affected unit to drill and operate the well  within  the  affected 
unit and provide that the well shall be commenced within 90 days if  drilling 
of the well has not already commenced,  unless  otherwise  specified  in  the 
pooling order.  The pooling order is null and void  as  to  all  parties  and 
interests with respect to any well that has  not  commenced  within  90  days 
after the date of the order.   The  order  shall  set  forth  the  terms  and 
conditions under which each of the owners may share in the  working  interest 
ownership of the well drilled or to be drilled on the pooled unit and for the 
sharing of any production  from  the  well.   The  order  shall  provide  for 
conditions under which each mineral or working interest  owner  who  has  not 
voluntarily agreed to pool all of the owner's mineral or working interest  in 
the pooled unit may share in the working interest share of production  or  be 
compensated for the owner's working interest within the pooled unit according 
to either of the following provisions:
  (a)   Pay to the party authorized to drill, or who has  drilled,  the  well 
that owner's proportionate share of the actual cost of drilling,  completing, 
equipping, and operating the well in the pooled unit that the owner elects to 
participate in, or give bond for the payment of the share of the  costs  that 
have been, or are  subsequently,  actually  incurred,  whether  the  well  is 
drilled as a producer or a dry hole.
  (b)   As to each well that the owner does not elect to  participate  in  as 
provided in subdivision (a) of this subrule, if the  well  has  been,  or  is 
subsequently, completed as a producer, authorize the operator of the well  to 
take out of the nonparticipatory interest's share of production from the well 
the party's share  of  the  cost  of  drilling,  completing,  equipping,  and 
operating the well, plus an additional  percentage  of  the  costs  that  the 
supervisor considers appropriate compensation for the risks  associated  with 
drilling a dry hole and the mechanical and engineering risks associated  with 
the completion and equipping of each well.
  (5)   Each nonparticipating owner who has not elected to participate in the 
drilling of any well by agreeing to pay the owner's working interest share of 
the costs shall make an election, within 10 days of receipt by the  owner  of 
the supervisor's certified mail copy of the order, as to which alternative in 
subrule (4)(a) or (b) of this rule the owner will select.
If the nonparticipating party does  not  notify  the  supervisor  in  writing 
within 10 days of the owner's election as to any well proposed for the pooled 
unit, then the owner shall be considered to have elected the  alternative  in 
subrule (4)(b) of this rule.   For  the  type  of  compulsory  pooling  order 
specified in this rule, the owner of an unleased mineral  interest  shall  be 
treated as a working interest owner to the extent of  100%  of  the  interest 
owned in the pooled unit.  The unleased mineral interest shall be  considered 
to be subject to  a  1/8  royalty  interest,  which  shall  be  free  of  any 
withholding for payment of any costs of drilling, completing,  equipping,  or 
operating  the  well  to  be  drilled.   All   operations,   including,   the 
commencement, drilling, completing, equipping, or operation of a well, upon a 
portion of a drilling unit for  which  pooling  has  been  ordered  shall  be 
considered for all purposes to be the  conducting  of  operations  upon  each 
separately owned tract in the drilling unit.  The portion of  the  production 
allocated to a separately owned tract or separately owned  interest  included 
in a drilling unit shall, when produced, be considered for  all  purposes  to 
have been actually produced from the separately owned tract or  tracts  by  a 
well drilled in the drilling unit.

  History:  1996 AACS.


R 324.1207  Subpoenas; discovery.
  Rule 1207.  (1)  At any time in a proceeding, the supervisor  may  order  a 
party or witness to attend and testify orally at the hearing.  Subpoenas  for 
attendance at a hearing shall be issued by the supervisor upon application by 
a party.  A subpoena may also command the person to whom it  is  directed  to 
produce the books, papers, documents, or tangible things  designated  in  the 
subpoena, which shall be specified in detail.
  (2)   A subpoena shall state the purpose or the title of the proceeding and 
shall command each person to whom it is directed to attend  and  comply  with 
the subpoena at a time and place specified in the subpoena.  The  supervisor, 
upon a motion made at or before  the  time  specified  in  the  subpoena  for 
compliance with the subpoena, may do either or both of the following:
  (a)   Quash or  modify  a  subpoena  or  subpoena  duces  tecum  if  it  is 
unreasonable or oppressive or if it requires the production of evidence  that 
is not relevant or material to a matter in issue.
  (b)   Condition the subpoena, in the case of a subpoena duces  tecum,  upon 
the advancement, by the person in whose behalf the subpoena is issued, of the 
reasonable cost of  producing  the  books,  papers,  documents,  or  tangible 
things, unless otherwise provided by law.
  (3)    The  supervisor  may  issue  an  order   to   take   a   deposition, 
interrogatory, or other discovery either upon a motion by the  supervisor  or 
for good  cause  shown  by  a  party  to  a  proceeding.   If  a  deposition, 
interrogatory, or other discovery is permitted, it shall be  taken  according 
to the rules for conducting discovery in circuit court civil cases under  the 
Michigan rules of court.

  History:  1996 AACS.


R 324.1208  Continuance of hearing.
  Rule 1208.  A hearing, as provided in these rules, may be continued at  the 
discretion of the supervisor or the  presiding  officer  until  all  required 
testimony is submitted and all pertinent data and information are received.
Further notice of the continuance of the hearing is not required, other  than 
the announcement at the hearing of the date, time, and place of the continued 
hearing or service of written notice on those persons who filed an appearance 
at the first hearing.

  History:  1996 AACS.


R 324.1209  Failure to give notice of hearing.
  Rule 1209.  Failure to give notice of the time of a  hearing  to  a  person 
entitled to the notice shall not  constitute  a  bar  to  conducting  of  the 
hearing if the petitioner can demonstrate  substantial  compliance  with  the 
notice requirements.

  History:  1996 AACS.


R 324.1210  Administrative complaint; notice of hearing.
  Rule 1210.  (1)  The staff of the supervisor  may  file  an  administrative 
complaint with the supervisor.  An administrative complaint shall  set  forth 
the nature of the violations complained of and shall  specifically  cite  the 
provisions of the act,  these  rules,  permit  conditions,  instructions,  or 
orders of the supervisor allegedly violated.  The supervisor shall  select  a 
date for the hearing and prepare a notice  of  hearing.   Upon  request,  the 
person alleged to be in violation shall provide, to the supervisor, a list of 
the last known names and addresses of all persons of record with the register 
of deeds who own oil and gas  interests  within  the  unit.   The  notice  of 
hearing and administrative complaint  shall  be  served  by  certified  mail, 
return receipt requested, on the person  alleged  to  be  in  violation,  the 
operator, the surety, and other interested persons as  the  supervisor  shall 
consider necessary or appropriate.  The notice shall be served not less  than 
21 days before the hearing date.  The hearing shall be a hearing  before  the 
supervisor.
  (2)   A hearing held pursuant to an administrative  complaint  shall  be  a 
hearing before the supervisor pursuant to R 324.1205.

  History:  1996 AACS.


R 324.1211  Emergency orders and hearings.
  Rule 1211.  (1)  When an emergency order is issued by the  supervisor,  the 
person subject to the order shall be served with the order, either personally 
or by certified, return receipt mail.
  (2)   An emergency hearing may be scheduled by the supervisor  to  consider 
matters of urgency or as a result of the issuance of an emergency order.
Notice  of  hearing  shall  be  served  by  certified  mail,  return  receipt 
requested, not less than 10 days before the hearing date, on other interested 
persons as the supervisor shall consider necessary and appropriate.

  History:  1996 AACS.


R 324.1212  Appeals to  the  director  of  the  department  of  environmental 
quality.
  Rule 1212.  (1)  An owner or producer may file an appeal to the director of 
the department of environmental quality pursuant to section 61503 of the act.
 The appeal shall be in writing and filed with the director of the department 
of environmental quality. The appeal shall set forth the basis for the filing 
of an appeal.
  (2)   An appeal from an order of the supervisor  that  is  issued  after  a 
hearing shall be an appeal on the record.  The appealing  party  shall  order 
and  file  a  transcript  of  the  proceeding  before  the  supervisor.   The 
supervisor shall prepare and file the record of the proceeding.
  (3)   Upon receipt of an appeal  from  an  order  of  the  supervisor,  the 
director of the department of environmental quality shall set a schedule  for 
the filing of briefs on  appeal.   Oral  argument,  if  requested,  shall  be 
scheduled after the  filing  of  briefs.   A  prehearing  conference  may  be 
scheduled for the purpose of establishing a schedule for the appeal.
  (4)   The producer or owner appealing an order, action, or inaction of  the 
supervisor shall file a petition of appeal to the director of the  department 
of environmental quality.  The petition and notice requirements are the  same 
requirements for petitions for a hearing before the supervisor pursuant to  R 
324.1201 through R 324.1204.
  (5)   An appeal to the director of the department of environmental  quality 
shall be filed within 28 days of the order, action, inaction, or procedure as 
provided in section 61503(2) of the act.

  History:  1996 AACS.


                        PART 13.  ENFORCEMENT

R 324.1301    Authority of supervisor.
  Rule 1301.The supervisor, under section 61506 of the act, may do any of the 
following:
  (a)  Enforce   all   rules,   issue     orders,     determinations,     and 
instructions necessary to enforce the rules   and   regulations,    and    do 
whatever  may  be necessary with respect to  the  subject  matter  stated  in 
these rules  to  carry out the purposes of these rules and the  act,  whether
 or   not   the   orders,  determinations,  or  instructions  are  indicated, 
specified,  or  enumerated  in the act or rules.
  (b) Order the suspension of any  or  all  components  of  the    oil    and 
gas operations when a violation exists.  The suspension time  shall  continue 
until a correction is made and a violation no  longer  exists  under  section 
61516  of the act.  The supervisor may also prohibit the    purchaser    from 
taking  oil, gas, or brine from the lease during the required suspension time.
  (c) Order a well plugged for a continuing violation   of   the    act    or 
these rules.

  History:  1996 AACS; 2002 AACS.