Current through Register Vol. 48, No. 12, March 22, 2024
a)
Commencement of Action
When the oil or gas rights within a drilling unit are
separately owned and the owners of those rights have not voluntarily agreed to
integrate or pool those rights to develop the oil or gas, an owner may petition
the Department for an order integrating those rights, pursuant to Section 22.2
of the Act. The petition for an order integrating interests shall contain the
following:
1) The name and address of
the petitioner;
2) The petitioner's
reasons for desiring to integrate the separately owned interests;
3) A legal land description of the drilling
unit sought to be established;
4) A
geologic report of the area where the proposed drilling unit is to be located,
indicating the potential presence of reservoirs;
5) A description of the interest owned by the
petitioner and each person named in the petition;
6) The names of all persons who have not
agreed to integrate their interests owning or having an interest in the oil and
gas rights in the proposed drilling unit as of the date of filing the petition,
as disclosed by the records in the office of the recorder for the county or
counties in which the drilling unit is situated, and their addresses, if known.
If the address of any person is unknown, the petition shall so
indicate;
7) A statement that the
owners have not agreed to integrate their interests;
8) A statement that the petitioner has
exercised due diligence to locate each owner and that a bona fide effort was
made to reach an agreement with each owner as to how the unit would be
developed;
9) A statement that no
action has been commenced by the owners seeking permission to drill pursuant to
the provisions of the Oil and Gas Rights Act [765 ILCS 520 ];
10) Any other information relevant to protect
correlative rights of the parties sought to be affected by the order.
b) Execution and Filing
1) The petition for an order requiring
integration pursuant to Section 22.2 of the Act shall be sent to the Department
at One Natural Resources Way, Springfield IL 62702.
2) Every petition shall be signed by the
petitioner or his or her representative and the petitioner's address shall be
stated on the petition. The signature of the petitioner or the petitioner's
representative constitutes a certificate that he or she has read the petition
and that, to the best of his or her knowledge, information and belief, there is
good ground to support the petition. The petition shall be accompanied by a
non-refundable application fee in the amount of $1,500.
3) If the Department finds the petition
deficient relative to the requirements of subsection (a), subsection (b)(2) or
Section
240.250(b),
the petition shall not be accepted and the Department shall return the petition
to the applicant with a statement as to the deficiencies. The Department shall
return any unaccepted petition within 30 days after its receipt. A returned
petition shall not be considered filed until the deficiencies have been
cured.
c) Notice of
Hearing
1) Upon the receipt of an accepted
petition for integration, the Department will fix the time and place for a
hearing.
2) The Department shall
prepare a notice of hearing that shall issue in the name of the State of
Illinois and shall be signed by the Director. The notice shall specify the
number and style of the proceeding, the time and place of the hearing, the
purpose of the hearing, the name of the petitioner, and a legal description of
the lands embraced within the proposed drilling unit. The notice shall also
state that any interested person may file an entry of appearance in the hearing
by submitting an entry of appearance in writing to the Department and that
person shall be deemed a party of record in the proceeding.
3) The Department shall mail the notice to
the petitioner who shall then serve notice in the following manner:
A) By mailing the notice by U.S. Postal
Service certified mail, return receipt requested, directed to the persons named
in the petition at their last known addresses at least 20 days prior to the
hearing; and
B) By publication of
the notice for service on those persons whose addresses are unknown or whose
names are unknown, once each week for 2 consecutive weeks, with the first
notice appearing at least 20 days prior to the hearing in a newspaper of
general circulation published in each county containing some portion of the
proposed integrated unit.
4) Whenever the Department shall determines
that a notice of hearing should be served upon a person because the granting or
denying of the relief requested in the petition would materially affect that
person's rights or property, the Department shall cause notice to be sent to
the person, as provided in this subsection (c).
d) Pre-Hearing Conferences
1) Upon his or her own motion or the motion
of a party, the Hearing Officer shall direct the parties or their counsel to
meet for a conference in order to:
A) Simplify
the factual and legal issues presented by the hearing request;
B) Receive stipulations, admissions of fact
and the contents and authenticity of documents;
C) Exchange lists of witnesses the parties
intend to have testify and copies of all documents the parties intend to
introduce into evidence at the hearing; and
D) Discuss and resolve such other matters as
may tend to expedite the disposition of the hearing request and to assure a
just conclusion.
2)
Pre-hearing conferences may be held by telephone conference if that procedure
is acceptable to all parties.
e) Hearing
1) Conduct of Hearing: Every hearing shall be
conducted by a Hearing Officer designated by the Director. The Hearing Officer
shall take all necessary action to avoid delay, to maintain order and to
develop a clear and complete record, and shall have all powers necessary and
appropriate to conduct a fair hearing and to render a decision on the petition,
including the following:
A) To administer
oaths and affirmations;
B) To
receive relevant evidence;
C) To
regulate the course of the hearing and the conduct of the parties and their
counsel;
D) To consider and rule
upon procedural requests;
E) To
examine witnesses and direct witnesses to testify, limit the number of times
any witness may testify, limit repetitive or cumulative testimony and set
reasonable limits on the amount of time each witness may testify; and
F) To require the production of documents or
subpoena the appearance of witnesses, either on the Hearing Officer's own
motion or for good cause shown on motion of any party of record. The Hearing
Officer may require that relevant documents be produced to any party of record
on his or her own motion or for good cause shown on motion of any party of
record.
2) Every
interested person wishing to participate at the hearing shall enter an
appearance in writing. The Hearing Officer shall determine if the interested
person shall be allowed to enter as a party of record. The Hearing Officer
shall base that determination on the same standards used to determine parties
in the Circuit Court.
3) All
participants in the hearing shall have the right to be represented by
counsel.
4) The Hearing Officer
shall allow all parties to present statements, testimony, evidence and argument
as may be relevant to the proceeding.
5) At least one representative of the
Department shall appear at any hearing held under this Section and shall be
given the opportunity to question parties or otherwise elicit information
necessary to reach a decision on the petition.
6) Preliminary Matters: When applicable, the
following shall be addressed prior to receiving evidence:
A) The petitioner may offer preliminary
exhibits, including documents necessary to present the issues to be heard,
notices, proof of publication and orders previously entered in the
cause.
B) Ruling may be made on any
pending motions.
C) Any other
preliminary matters appropriate for disposition prior to presentation of
evidence may be addressed.
f) Evidence
1) Admissibility: A party shall be entitled
to present his or her case by oral or documentary evidence, to submit rebuttal
evidence, and to conduct cross-examination as may be required for a full and
true disclosure of the facts. Any oral or documentary evidence may be received
but the presiding Hearing Officer shall exclude evidence that is irrelevant,
immaterial or unduly repetitious. The rules of evidence and privilege applied
in civil cases in the courts of the State of Illinois shall be followed;
however, evidence not admissible under those rules of evidence may be admitted,
except when precluded by statute, if it is of a type commonly relied upon by
reasonable, prudent men in the conduct of their affairs. Subject to these
requirements, when a hearing will be expedited and the interests of the parties
will not be prejudiced, a Hearing Officer shall allow evidence to be received
in written form.
2) Official
Notice: Official notice may be taken of any material fact not appearing in
evidence in the record if the circuit courts of this State could take judicial
notice of that fact. In addition, notice may be taken of generally recognized
technical or scientific facts within the Department's specialized
knowledge.
3) Order of Proof: The
petitioner shall open the proof. Other parties of record shall be heard
immediately following the petitioner. The Hearing Officer or Department
representatives may examine any witnesses. In all cases, the Hearing Officer
shall designate the order of proof and may limit the scope of examination or
cross-examination.
4) Briefs: The
Hearing Officer may require or allow parties to submit written briefs to the
Hearing Officer within 10 days after the close of the hearing or within such
other time as the Hearing Officer shall determine as being consistent with the
Department's responsibility for an expeditious decision.
g) Record of Proceedings; Testimony
The Department shall provide at its expense a certified
shorthand reporter to take down the testimony and preserve a record of all
proceedings at the hearing. Any person testifying shall be required to do so
under oath. However, relevant unsworn statements, comments and observations by
any interested person may be heard and considered by the Department and
included in the record.
h)
Postponement or Continuance of Hearing
A hearing may be postponed or continued for due cause by the
Hearing Officer upon his or her own motion or upon the motion of a party to the
hearing. A motion filed by a party to the hearing shall set forth facts
attesting that the request for continuance is not for the purpose of delay.
Except in the case of any emergency, motions requesting postponement or
continuance shall be made in writing and shall be received by all parties to
the hearing at least 3 business days prior to the scheduled hearing date. All
parties involved in a hearing shall avoid undue delay caused by repetitive
postponements or continuances so that the subject matter of the hearing may be
resolved expeditiously.
i)
Default
If a party, after proper service of notice, fails to appear
at the pre-hearing conference or at a hearing, and if no continuance is
granted, the Department may then proceed to make its decision in the absence of
that party. If the failure to appear at a pre-hearing conference or hearing is
due to an emergency situation beyond the parties' control, and the Department
is notified of the situation on or before the scheduled pre-hearing conference
or hearing, the pre-hearing conference or hearing will be continued or
postponed pursuant to Section
240.132(h).
Emergency situations include sudden unavailability of counsel, sudden illness
of a party or his or her representative, or similar situations beyond the
parties' control.
j) Order
1) Upon the conclusion of any hearing held
under this Section, the Hearing Officer, after consultation with the Department
representatives, shall prepare an order disposing of the petition, which shall
be presented to the Director for entry.
2) In making the determination of integrating
separately owned interests, and determining to whom the permit should be
issued, the Department may consider:
A) The
reasons requiring the integration of separate interests;
B) The respective interests of the parties in
the drilling unit sought to be established, and the pool or pools in the field
where the proposed drilling unit is located;
C) Any parties' prior or present compliance
with the Act and the Department's rules; and
D) Any other information relevant to protect
the correlative rights of the parties sought to be affected by the integration
order.
3) Each order
integrating separately owned interests shall authorize the drilling, testing,
completing, equipping, and operation of a well on the drilling unit; provide
who may drill and operate the well; prescribe the time and manner in which all
the owners in the drilling unit may elect to participate therein; and make
provision for the payment by all those who elect to participate therein of the
reasonable actual cost thereof, plus a reasonable charge for supervision and
interest. Should an owner not elect to voluntarily participate in the risk and
costs of the drilling, testing, completing and operation of a well as
determined by the Department, the integration order shall provide either that:
A) The nonparticipating owner shall surrender
a leasehold interest to the participating owners on a basis and for such terms
and consideration the Department finds fair and reasonable; or
B) The nonparticipating owner shall share in
a proportionate part of the production of oil and gas from the drilling unit
determined by the Department, and pay a proportionate part of operation cost
after the participating owners have recovered from the production of oil or gas
from a well all actual costs in the drilling, testing, completing and operation
of the well plus a penalty to be determined by the Department of not less than
100% nor more than 300% of such actual costs.
4) For the purpose of this Section, the owner
or owners of oil and gas rights in and under an unleased tract of land shall be
regarded as a lessee to the extent of a 7/8 interest in and to said rights and
a lessor to the extent of the remaining 1/8 interest therein.
5) In the event of any dispute relative to
costs and expenses of drilling, testing, equipping, completing and operating a
well, the Department shall determine the proper costs after due notice to
interested parties and a hearing thereon. The operator of such unit, in
addition to any other right provided by the integration order of the
Department, shall have a lien on the mineral leasehold estate or rights owned
by the other owners therein and upon their shares of the production from such
unit to the extent that costs incurred in the development and operation upon
said unit are a charge against such interest by order of the Department or by
operation of law. Such liens shall be separable as to each separate owner
within such unit, and shall remain liens until the owner or owners drilling or
operating the well have been paid the amount due under the terms of the
integration order. (Section 22.2 of the Act)
6) As an alternative to denying the petition
for integration, the Department may issue an interim order outlining the
substantive deficiencies that must be cured by the petitioner in order to avoid
dismissal. If the petitioner supplies the information requested by the
Department, a new hearing shall be scheduled in order to examine the documents.
If the petitioner fails to comply with the interim order, the petition shall be
denied. The Department shall send notice of the hearing to all parties of
record.
7) An integration order
establishing a drilling unit shall terminate one year from the effective date
of the order unless a well has been drilled on the unit within that time. If a
well has been drilled on the unit within that time, the integration order shall
terminate when the well is plugged.
k) Notice of Order - Recordation
Within 10 days after an order has been issued, a copy of the
order shall be mailed by the Department to each person or his or her attorney
of record who has entered an appearance in the matter pursuant to which the
order is issued and to each working interest owner who has not agreed to an
integration. The petitioner shall cause to be recorded in the office of the
county clerk of the county or counties in which the drilling unit is situated a
copy of the order providing for integration of the separate interests.
l) Order - Final Administrative
Decision
The Director's order is a final administrative decision of
the Department, pursuant to Section 10 of the Act.