DEPARTMENT OF ENVIRONMENTAL QUALITY  
OIL, GAS, AND MINERALS 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 the natural resources and environmental  
protection act, 1994 PA 451, MCL 324.61506, sections 9 and 251 of the executive  
organization act of 1965, 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 the natural resources and environmental protection act, 1994 PA  
451, MCL 324.101 to 324.90106.  
(b) “ANSI” means the American National Standards Institute.  
(c) “API” means the American Petroleum Institute.  
(d) Aquifer means a geological formation, group of formations, or part of a  
formation that is capable of yielding a significant amount of water to a well or spring.  
(e) “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.  
(f) “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.  
(g) “Bottom hole” means the terminus of a wellbore.  
(h) “Brine” means all nonpotable water resulting, obtained, or produced from the  
exploration, drilling, or production of oil or gas, or both.  
(i) “Central production facility” means production equipment that 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.  
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(j) “Conformance bond” means a surety bond that has been executed by a surety  
company authorized to do business in this state, 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.  
(k) “Directionally drilled well,” means a well purposely deviated from the vertical  
using controlled angles to reach an objective location.  
(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 that is designed to deter access and 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 that contains less than 1000 milligrams per liter of  
total dissolved solids.  
(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.  
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(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, that is issued by  
the supervisor, conforms with the act and rules promulgated under the act, and clarifies or  
explains the applicability of the act or rules to commonly recurring facts or  
circumstances.  
(z) Mineral water” means water that contains 1000 milligrams per liter or more of  
total dissolved solids.  
(aa) 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; 2015 AACS; 2019 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.  
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(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) “Producing interval” means any section of a wellbore that is open to, or intended  
to be open to, a formation or part of a formation that is intended to produce or is capable  
of producing oil or gas, or both, after well completion operations. The section of the  
wellbore may be open to the formation or part of the formation by any means, and may  
include but is not limited to, a section of a wellbore that is either uncased or has  
perforated casing.  
(i) “Psi” means pounds per square inch.  
(j) “Psig” means pounds per square inch gauge.  
(k) “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.  
(l) “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.  
(m) “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.  
(n) “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.  
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(o) “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.  
(p) “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.  
(q) “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.  
(r) “Surface water” means a body of water, and the associated sediments, which has  
a top surface that is exposed to the atmosphere and 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.  
(s) “Underground source of drinking water” means fresh water or mineral water  
within an aquifer or portion of an aquifer that satisfies either of the following criteria:  
(i) The aquifer or portion thereof supplies a public water system.  
(ii) The aquifer or portion thereof contains a sufficient quantity of ground water to  
supply a public water system and meets either of the following criteria:  
(A) The aquifer or portion thereof currently supplies drinking water for human  
consumption.  
(B) The aquifer or portion thereof contains ground water that has fewer than  
10,000 milligrams per liter total dissolved solids.  
(t) “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.  
(u) “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.  
(v) “Well location” means the surface location of a well.  
(w) "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; 2015 AACS; 2018 AACS.  
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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 this state, 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.  
Page 6  
(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 1976 PA 399, MCL 325.1001 to 325.1023.  
(I) Identification of the existing local zoning designation of the surface location  
of the well.  
(c) If the applicant intends to utilize high volume hydraulic fracturing, the  
application shall include a list showing the specific identity and associated CAS number  
of each chemical constituent the applicant anticipates will be added to the primary carrier  
fluid, except that the specific identities and CAS numbers of trade secret chemicals may  
be withheld under the provisions of paragraph (i) of this rule.  
(i) If the specific identity of a chemical constituent and its associated CAS  
number are a trade secret, the applicant may withhold the specific identity of the  
chemical constituent and its associated CAS number, but shall list the chemical family  
associated with the chemical constituent, or provide a similar description, and provide a  
statement that a claim of trade secret protection has been made by the entity entitled to  
make such a claim.  
(ii) Listing of a chemical constituent under the requirements of this subdivision  
does not preclude a permittee from utilizing other chemical constituents in a high volume  
hydraulic fracturing operation; however, the chemical constituents actually used shall be  
submitted under the requirements of rule 1406 of these rules.  
(d) 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 or e-filed  
using a procedure approved by the supervisor.  
(e) 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 or e-filed using a procedure approved by the supervisor. The application  
shall be submitted to the supervisor at the offices of the Michigan Department of  
Environmental Quality, Office of Oil, Gas, and Minerals, P.O. Box 30256, Lansing,  
Page 7  
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  
location 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.  
(f) When the proposed well location is 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.  
(g) A person shall file an environmental impact assessment as instructed by the  
supervisor.  
(h) A person shall file an organization report if a current organization report is not  
on file with the supervisor.  
(i) A person shall file a conformance bond or statement of financial responsibility  
pursuant to R 324.210.  
(j) 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.  
(k) A person shall provide additional information as required in R 324.802 with an  
application for a permit to drill and operate an injection well or to convert a previously  
drilled well to an injection well.  
(l) 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 supervisor shall process a permit application for a well and issue or deny a  
permit to drill and operate pursuant to section 61525 of the act. 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; 2015 AACS; 2018 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  
Page 8  
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 permittee provides an adequate description of the proposed directional  
redrill, including the depth, angle, and path of the deviation, and the bottom hole location.  
(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, Office of Oil, Gas, and Minerals, 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; 2015 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 well location 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  
well location 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 well location shall be made at a safe distance from the lost hole.  
(c) The permittee provides an adequate description of the new bottom hole location.  
(d) The new well location 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, Office of Oil, Gas, and Minerals, P.O. Box 30256, Lansing, Michigan 48909. In  
Page 9  
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; 2015 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 greater than 165 feet from the permitted location, then a  
new permit and an additional fee are required. If the permittee requests a change in the  
well location to a location less than 165 feet from the permitted location, then the change  
will require a revised permit and no additional fee. A change of location for an injection  
well, regardless of distance, requires a new permit and an additional fee. 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.  
Page 10  
(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 revised permit has been issued by the supervisor or authorized representative of the  
supervisor.  
(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, Office of Oil,  
Gas, and Minerals, 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  
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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,  
Office of Oil, Gas, and Minerals, 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, Office of Oil, Gas, and Minerals, 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 file an organization report pursuant  
to R 324.201(2)(h).  
(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 is 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; 2015 AACS; 2018 AACS.  
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R 324.207  
permit.  
Suspension of oil and gas operations due to failure to transfer  
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) Subject to subrule (2) of this rule, 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) If a permit is subject to termination under this rule, the permittee may submit a  
written request to the supervisor to extend the permit at least 30 days before the  
scheduled termination date. Upon receipt of a request, the supervisor may extend the  
permit for a period of up to 2 additional years provided there have been no significant  
changes in the features or conditions described in R 324.201, or in requirements of these  
rules or the act, that would require modifications of the permit.  
(3) Terminated permits may not be reactivated or transferred and the permit fee shall  
not be refunded.  
History: 1996 AACS; 2018 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.  
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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 this state 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.  
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(ii) A tangible net worth of not less than $2,000,000.00.  
(iii) Total assets in this state 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, statutory 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; 2015 AACS.  
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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) $20,000.00 for wells up to and including 2,000 feet deep, true vertical depth.  
(ii) $40,000.00 for wells deeper than 2,000 feet, but not deeper than 4,000 feet, true  
vertical depth.  
(iii) $50,000.00 for wells deeper than 4,000 feet, but not deeper than 7,500 feet,  
true vertical depth.  
(iv) $60,000.00 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 shall 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  
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