HB 4338 — Oklahoma Brine Development Act; modifications; modifying definitions; defining terms; Corporation Commission; emergency.

"Brine well" means a well specifically drilled or operated for the primary purpose of extracting brine and shall not include a well drilled or operated for the primary purpose of producing oil or gas;

7.

"Solution gas" shall mean means all gas produced from brine wells from the brine common source of supply within the brine production unit area;

7.

"Solution“Solution gas owner"owner” shall mean means any person entitled to share in the proceeds from the sale of solution gas;

"Owner"“Owner” or "owners"“owners” means, unless a more specific term is used, shall mean any person or entity who qualifies as either a brine owner or a solution gas owner;

"Operator"“Operator” shall mean means a person who:

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"Effluent"“Effluent” shall mean the liquid remaining after extraction of the chemical substances from brine means the liquid remaining after extraction of the chemical substances from brine;brine or produced water.

Notwithstanding any other provision in this act, no contract or arrangement for further extraction of constituent elements or reclamation of the effluent into reclaimed water or any other commercial usage of the effluent shall result in additional costs or delays to the rights of the oil and gas operator to extract and dispose of subterranean water for, or incident to, the exploration, exploitation, or extraction of hydrocarbons.

To the extent the oil and gas operator determines at its sole discretion that any such contract or arrangement will result in additional costs or delays to its rights to extract and dispose of subterranean water, such effluent shall be considered oil and gas produced water and waste, subject to the provisions of the Oil and Gas Produced Water and Waste Recycling and Reuse Act;

"Brine“Brine production unit"unit” or "unit"“unit” shall mean means each separate specific area of land so designated by order of the Commission for production of brine and associated solution gas and the from brine wells, including the related injection of effluent;

13.ENR.

"Produced water unit" means the specific area of land so designated by order of the Commission for the commercial extraction and sale of constituent elements, or any one of the elements, or reclaimed water, from produced water.

The Commission, based upon the facts and circumstances, shall determine the size and shape of any produced water unit.

Unless a larger size unit is determined to be appropriate under the facts and circumstances, the produced water unit shall be the same size and cover the same geographical area as the spacing or drilling unit or horizontal spacing unit created pursuant to Section 87.1 of Title 52 of the Oklahoma Statutes, the horizontal well unitization created pursuant to Section 87.9 of Title 52 of the Oklahoma Statutes, or unitized management area created pursuant to Sections 287.1 through 287.15 of Title 52 of the Oklahoma Statutes, of the associated oil or gas well or wells from which the produced water is derived.

Each such produced water unit shall be limited to the equivalent same brine common source or sources of supply as the oil and gas common source or sources of supply of the associated oil or gas well from which produced water ENGR.

4338 Page 75 is13. being received for the extraction of constituent elements of such brine, unless a different size unit is determined to be appropriate under the facts and circumstances.

“Produced water unit” means the specific area of land so designated by order of the Commission for the commercial extraction and sale of constituent elements, or any one of the elements, or reclaimed water, from produced water.

The Commission, based upon the facts and circumstances, shall determine the size and shape of any produced water unit.

Unless a larger size unit is determined to be appropriate under the facts and circumstances, the produced water unit shall be the same size and cover the same geographical area as the spacing or drilling unit or horizontal spacing unit created pursuant to Section 87.1 of Title 52 of the Oklahoma Statutes, the horizontal well unitization created pursuant to Section 87.9 of Title 52 of the Oklahoma Statutes, or the unitized management area created pursuant to Sections 287.1 through 287.15 of Title 52 of the Oklahoma Statutes, of the associated oil or gas well or wells from which the produced water is derived.

Each such produced water unit shall be limited to the equivalent same brine common source or sources of supply as the oil and gas common source or sources of supply of the associated oil or gas well from which produced water is being received for the extraction of constituent elements of such brine, unless a different size unit is determined to be appropriate under the facts and circumstances.

Multiple produced water units may be created and exist for the produced water from the same associated oil and gas well or wells, provided that the applicant for each unit meets the definition of "operator"operator provided in this section for the rights to each constituent element sought to be unitized.

If the Commission has not previously established a drilling or spacing unit for the oil or gas well or wells from which the produced water is derived, the Commission shall in its discretion determine the size and shape of the produced water unit, taking into consideration all facts and circumstances including, but not limited to, the economics of collection, transportation, and processing produced water to recover any extracted constituent element.element;

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“Injection well” shall mean means a well authorized by the Commission for the injection of effluent or other solutions;

and ENR.

4338 Page 86 12.13.

14.

"Injection well" shall mean means a well authorized by the Commission for the injection of effluent or other solutions;

and 13.

"Manufacture"“Manufacture” shall mean means the complete process of drilling, completing, equipping and operating production and injection wells and of extracting and packaging brine;

"Oil“Oil or gas well"well” means a well drilled or operated for the primary purpose of extracting oil or gas as those terms are defined in Title 52 of the Oklahoma Statutes;

"Associated“Associated oil or gas production"production” means the oil or gas produced from an oil and gas well from which produced water is extracted as an incident to the production of the oil or gas and the produced water is utilized for the purpose of extracting its constituent elements therefrom;

"Constituent“Constituent elements"elements” means salts, metals, elementselements, and other mineralized substances that are naturally occurring and dissolved, entrainedentrained, or suspended in subterranean water in situ andand, after extraction from the ground, suspended in the brine or produced water, but specifically does not include skim oil or hydraulic fracturing fluid;

"Extracted“Extracted constituent element"element” means any constituent element extracted from the produced water through reconditioning or treating of the produced water by mechanical or chemical processes whichthat is saved and commercially utilized or sold;

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H.“Produced water” means the subterranean salt water, and the other liquid waste associated with, incidental to, or extracted during oil and gas drilling, completion, or production process.

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4338 Page 9 20.

"Produced water" means the subterranean salt water, and the other liquid waste associated with, incidental to or extracted during oil and gas drilling, completion or production process.

"Reclaimed“Reclaimed water"water” means produced water that has been reconditioned or treated by mechanical or chemical processes during or after the extraction of one or more constituent elements for commercial purposes.

Reclaimed water specifically does not include "recycledrecycled water"water as that term is defined by Section 86.7 of Title 52 of the Oklahoma Statutes for purposes of the Oil and Gas Produced Water and Waste Recycling and Reuse Act.

A party who, for commercial purposes, treats produced water by mechanical or chemical process for the extraction of one or more constituent elements such that the producedENR. water becomes reclaimed water as defined herein shall not be liable in tort or otherwise, before or after custody transfer, for the use, handling, treatment or processing by another party of such produced water or reclaimed water;

22.

"Recycler" means a person approved and authorized by the Commission who receives produced water, for the purpose of saving, ENGR.

4338 Page 107 extracting,produced reconditioningwater becomes reclaimed water as defined herein shall not be liable in tort or treatingotherwise, before or after custody transfer, for the sameuse, byhandling, mechanicaltreatment, or chemicalprocessing processesby intoanother aparty reusableof form;such produced water or reclaimed water;

22.

“Recycler” means a person approved and authorized by the Commission who receives produced water, for the purpose of saving, extracting, reconditioning, or treating the same by mechanical or chemical processes into a reusable form;

"Recycling“Recycling waste"waste” means the noncommercial by-products or residual liquids or solid materials whichthat remain after the recycling or extraction process.

To ensure Ensure that the drilling, casing and plugging of wells is done in such a manner as to prevent the escape of brine and ENGR.effluent from one formation to another and to prevent the pollution of fresh water supplies throughout the state.

C.

The enforcement and adherence to the Oklahoma Brine Development Act shall not apply to nor shall the Corporation ENR.

4338 Page 118 effluentCommission fromhave onejurisdiction formationover toClass anotherI, andIII, toIV preventor V wells regulated by the pollutionDepartment of freshEnvironmental waterQuality suppliespursuant throughoutto the state.federal Safe Drinking Water Act and 40 CFR Parts 144 through 148, inclusive, and the Oklahoma Environmental Quality Act.

C.D.

TheNothing enforcementherein and adherence to the Oklahoma Brine Development Act shall notbe applyconstrued to norobligate shall the Corporationoil Commissionand havegas jurisdictionoperator over Class I, III, IV or V wells regulated by the Department of Environmental Quality pursuant to theengage federalin Safeconstituent Drinkingmineral Waterextraction. Act and 40 CFR Parts 144 through 148, inclusive, and the Oklahoma Environmental Quality Act.

E.

A party who transfers produced water to another party for the commercial extraction and sale of one or more constituent elements, or to a recycler as defined in paragraph 22 of Section 502 of this title, shall not be liable in tort or otherwise, before or after custody transfer, for the use, handling, treatment, processing, or disposition by the receiving party or any subsequent party of such produced water or of any byproducts, residual materials, or waste derived therefrom.

This limitation of liability shall apply regardless of whether the transferring party is the operator of the produced water unit, operator of the oil or gas well from which the produced water is derived, a transporter, or a disposal operator.

Nothing in this subsection shall be construed to relieve the transferring party of liability for its own acts or omissions occurring prior to the point of custody transfer, including any obligation to comply with applicable environmental laws and regulations governing the handling, storage, and transportation of produced water prior to transfer.

The application shall allege the existence of the facts required to be found by the Commission as provided in Section 7 506 of this act title and allege that the party desiring to unitize the brine or produced water rights meets the criteria of subparagraphs a and b of paragraph 10 of Section 502 of this title.

In an application to enlarge the brine production unit or produced water unit area, brine ENGR.owners within the existing unit and brine owners in the area to be added to the unit shall be respondents to the application.

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4338 Page 129 ownersB. within the existing unit and brine owners in the area to be added to the unit shall be respondents to the application.

B.

Unitized management, operation and further development of the brine common source of supply for brine or produced water from oil or gas wells is reasonably necessary in order to effectively ENGR.develop the brine common source of supply and allow for the extraction of its constituent elements;

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4338 Page 13 develop the brine common source of supply and allow for the extraction of its constituent elements;

avoid the drilling of unnecessary wells, b.ENR.

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allow recovery and extraction of constituent elements from produced water, the Commission shall make a finding to that effect and enter an order creating the brine production unit or produced water unit, and ENGR.requiring unitized operation of the prospective brine common source of supply or portion thereof described in the order.

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4338 Page 14 requiring unitized operation of the prospective brine common source of supply or portion thereof described in the order.

B.

However, such drilling and spacing orders shall remain applicable to oil or gas wells and associated oil and gas production, and shall serve as general nonmandatory ENGR.ENR.

4338 Page 1511 guidelines for establishing the size, shape, and common source of supply of any produced water unit established under this act.

Each unit and unit area shall be limited to all or a portion of a single common source of supply Unless a larger size unit is determined to be appropriate under the facts and circumstances, a produced water unit may be the same size and cover the same geographical area as the spacing or drilling unit or horizontal spacing unit created pursuant to Section 87.1 of Title 52 of the Oklahoma Statutes, the horizontal well unitization created pursuant to Section 87.9 of Title 52 of the Oklahoma Statutes, or unitized management area created pursuant to Sections 287.1 through 287.15 of Title 52 of the Oklahoma Statutes, of the associated oil or gas well or wells from which the produced water is derived.

Each such produced water unit shall be limited to the equivalent common source or sources of supply as the oil and gas common source or sources of supply in the associated oil or gas well from which produced water is being received for the extraction of constituent elements of such produced water, unless the Commission determines ENGR.that the unitization of multiple brine common sources of supply is necessary to prevent waste or protect correlative rights.

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4338 Page 16 that the unitization of multiple brine common sources of supply is necessary to prevent waste or protect correlative rights.

B.

In the event a produced water unit consists solely of landsENR. situated within a single Oklahoma Corporation Commission- approved multiunit horizontal well created pursuant to Section 87.8 of Title 52 of the Oklahoma Statutes, the produced water from such multiunit horizontal well shall be allocated and shared by the brine owners in each unit utilizing the same allocation factors approved by the Commission for allocating the associated oil and gas ENGR.

4338 Page 1712 lands situated within a single Corporation Commission-approved multiunit horizontal well created pursuant to Section 87.8 of Title of the Oklahoma Statutes, the produced water from such multiunit horizontal well shall be allocated and shared by the brine owners in each unit utilizing the same allocation factors approved by the Commission for allocating the associated oil and gas production to the individual units.

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The fair, just and reasonable compensation to be awarded to any owner within the brine production unit or produced water unit who does not wish to participate in development of the unit by paying such owner'sowner’s share of unit costs;

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H.The fair, just and reasonable allocation and distribution to each owner and the value of such owner’s share of the brine, including the usable resources extracted from the brine, and solution gas, if any, produced from the unit;

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The fair, just and reasonable allocation and distribution to each owner and the value of such owner's share of the brine, including the usable resources extracted from the brine, and solution gas, if any, produced from the unit;

No order of the Commission creating a brine production unit and prescribing the plan of unitization applicable thereto to the brine production unit shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved by record owners of the right to drill of not less than fifty-five percent (55%) of the brine production unit area affected thereby and by owners of record of not less than fifty-five percent ENGR.ENR.

4338 Page 2014 (55%) (exclusive of royalty interest owned by lessees or subsidiaries of any lessee) of the royalty interest in and to the brine production unit area and the Commission has made a finding either in the order creating the unit or in a supplemental order that the plan of unitization has been so signed, ratified or approved by lessees and royalty brine owners of record owning the required percentage interest in and to the brine production unit area.

Provided, however, in any instance where a royalty brine owner has, through lease or other agreement, previously authorized pooling or unitization of a size equal to or larger than the size specified in the Commission order, said lease or other agreement shall be deemed to be such royalty the brine owner'sowner’s authorization to unitize, and no additional signature, ratification or approval shall be necessary from such owner, unless the lease provides for a different production sharing formula than set out in the plan of unitization.

Further provided, however, in any instance where a royalty owner has the brine owners of record have, through lease or other agreement, previously consented to have the unit boundaries and the allocation formula established by the Commission, said lease or other agreement shall be deemed to be such royalty the brine owner'sowner’s authorization to unitize, and no additional signature, ratification or approval shall be necessary from such owner.

Where the plan of unitization has not been so signed, ratified or approved by lessees and royalty brine owners of record owning the required ENGR.percentage interest in and to the brine production unit area at the time the order creating the unit is made, the Commission shall hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by lessees and royalty brine owners of record owning the required percentage interest in and to the brine production unit area and shall, in respect to such hearings, make and enter a finding of its determination in such regard.

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4338 Page 21 percentage interest in and to the brine production unit area at the time the order creating the unit is made, the Commission shall hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by lessees and royalty brine owners of record owning the required percentage interest in and to the brine production unit area and shall, in respect to such hearings, make and enter a finding of its determination in such regard.

A participating brine owner shall have a one-time election to sell, and any brine owner in the unit with brine refining equipment shall have the obligation to buy, the brine produced from theENR. unit at the value determined by the Commission;

provided however, nothing herein shall require the purchasing brine owner to purchase brine when it is not producing brine from the unit for its own account.

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4338 Page 2215 D.the unit at the value determined by the Commission;

provided however, nothing herein shall require the purchasing brine owner to purchase brine when it is not producing brine from the unit for its own account.

D.

Upon the filing of an application for the establishment of a produced water unit and prior to the adjudication of the Commission of such application, the applicant may, or shall in the instance where the applicant has accepted produced water prior to the approval of a produced water unit, seek emergency relief atfrom the Commission for the immediate production, commercial extraction and sale of constituent elements or reclaimed water from produced water derived from the associated oil or gas well, and the Commission shall grant such relief upon a showing that such emergency relief is reasonable and necessary under the established facts and circumstances to prevent waste.

The applicant shall have the right to collect all proceeds from the sale of brine or its constituent elements and reclaimed water prior to the entry of a final order establishing the produced water unit, provided that, unless otherwise provided by a written lease or contract with the brine owner, a set royalty share of the gross sales proceeds of the constituent elements and reclaimed water ENGR.extracted, saved and sold, shall be held in suspense by the applicant for the benefit of any unleased brine owners within the proposed produced water unit until the Commission enters a final order establishing the produced water unit.

H.Such royalty share and the royalty options set forth in the order of the Commission approving the produced water unit shall be set by the Commission at prevailing fair market value rate and may be adjusted based upon all reasonable evidence introduced including, but not limited to, evidence of the highest royalty paid for any arm’s length negotiated brine leases within the produced water unit and any adjoining produced water unit.

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4338 Page 23 extracted, saved and sold, shall be held in suspense by the applicant for the benefit of any unleased brine owners within the proposed produced water unit until the Commission enters a final order establishing the produced water unit.

Such royalty share and the royalty options set forth in the order of the Commission approving the produced water unit shall be set by the Commission at prevailing fair market value rate and may be adjusted based upon all reasonable evidence introduced including, but not limited to, evidence of the highest royalty paid for any arm's length negotiated brine leases within the produced water unit and any adjoining produced water unit.

SectionENR. 510.

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4338 Page 16 Section 510.

result in greater ultimate recovery of brine or produced water, or ENGR.c.

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4338 Page 24 c.

SectionENR. 516.

Sections 2 501 through 16 515 of this act title shall not have any effect on any existing brine, solution gas or brine and solution gas units which have been created voluntarily or by a judicial decree to the extent such unit was established as of ENGR.

4338 Page 2517 theSection date516. of this act September 1, 1990.

Sections 2 501 through 16 515 of this act title shall not have any effect on any existing brine, solution gas or brine and solution gas units which have been created voluntarily or by a judicial decree to the extent such unit was established as of the date of this act September 1, 1990.

The proceeds derived from the sale of brine, produced water, solution gas, or brine and solution gas production shall be paid to persons legally entitled thereto, commencing no later than six (6) months after the date of first sale, and thereafter no later than sixty (60) days the last day of the second succeeding month after the end of the calendar month within which proceeds are received for subsequent production.production such production is sold.

Provided, proceeds from the sale of brine, produced water, and solution gas from lands covered by a pending application for unitization pursuant to this act shall be paid to persons legally entitled thereto within six (6) months from the entry of a final order of unitization, together with interest thereon at the rate of six percent (6%) per annum to be compounded ENGR.annually, calculated from the date of first sale after the filing of the application for unitization.

Such payment is to be made to persons entitled thereto by the operator of such production.

Provided, such operator may remit proceeds from production may be remitted to the persons entitled to such proceeds from production semiannually for the aggregate of six (6) months’ accumulation of monthly proceeds of amounts less than Twenty-five Dollars ($25.00) annually for the twelve (12) months’ accumulation of proceeds totaling at least Ten Dollars ($10.00) but less than One Hundred Dollars ($100.00).

Amounts less than Ten Dollars ($10.00) may be held but shall be remitted when production ceases or by the payor upon relinquishment of payment responsibility.

Proceeds totaling less than One Hundred Dollars ($100.00) but more than Twenty-five Dollars ($25.00) shall be remitted monthly if requested by the ENR.

4338 Page 2618 annually,person calculatedentitled fromto the dateproceeds. of first sale after the filing of the application for unitization.

SuchAmounts paymentless isthan toTen beDollars made($10.00) toshall personsbe entitledremitted theretoannually if requested by the operatorperson ofentitled suchto production.the proceeds.

Provided, such operator may remit to the persons entitled to such proceeds from production semiannually for the aggregate of six (6) months' accumulation of monthly proceeds of amounts less than Twenty-five Dollars ($25.00).

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Owner'sOwner’s interest, expressed as a decimal, in production from the unit;

Owner'sOwner’s share of the total value of sales prior to any deductions;

Owner'sOwner’s share of the total value of sales after any deductions;

C.ENR.

Any operator that violates this section shall be liable to the persons legally entitled to the proceeds from production for the unpaid amount of such proceeds with interest thereon at the rate of twelve percent (12%) per annum to be compounded annually, calculated from the last day of the production month.

D.

The district court for the county in which the unit is located shall have jurisdiction over all proceedings brought pursuant to this section.

The prevailing party in any proceeding ENGR.

4338 Page 2819 broughtC. pursuant to this section shall be entitled to recover any court costs and reasonable expert witness and attorney's attorney fees.

Any operator that violates this section shall be liable to the persons legally entitled to the proceeds from production for the unpaid amount of such proceeds with interest thereon at the rate of twelve percent (12%) fifteen percent (15%) per annum to be compounded annually, calculated from the last day of the production month.

D.

The district court for the county in which the unit is located shall have jurisdiction over all proceedings brought pursuant to this section.

The prevailing party in any proceeding brought pursuant to this section shall be entitled to recover any court costs and reasonable expert witness and attorney’s attorney fees.

E.

All payments under this section to owners or any other person or governmental entity legally entitled to the payment may be made by electronic means including, but not limited to, electronic funds transfer, Automated Clearing House (ACH), direct deposit, wire transfer, or any other similar form of transfer, upon the mutual written consent of the payor and payee.

Within five (5) days of the date of delivery or service of the notice of intent to drill, it shall be the duty of the operator and ENGR.ENR.

4338 Page 2920 the surface owner to enter into good faith good-faith negotiations to determine the surface damages.

PassedENR. the House of Representatives the 25th day of March, 2026.

Presiding Officer of the House of Representatives Passed the Senate the ___ day of __________, 2026.

Presiding Officer of the Senate ENGR.

4338 Page 3021 Passed the House of Representatives the 6th day of May, 2026.

Presiding Officer of the House of Representatives Passed the Senate the 4th day of May, 2026.

Presiding Officer of the Senate OFFICE OF THE GOVERNOR Received by the Office of the Governor this ____________________ day of ___________________, 20_______, at _______ o'clock _______ M.

By:

_________________________________ Approved by the Governor of the State of Oklahoma this _________ day of ___________________, 20_______, at _______ o'clock _______ M.

_________________________________ Governor of the State of Oklahoma OFFICE OF THE SECRETARY OF STATE Received by the Office of the Secretary of State this __________ day of ___________________, 20_______, at _______ o'clock _______ M.

By:

_________________________________ ENR.

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