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Introduced Version Senate Bill 529 History

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Key: Green = existing Code. Red = new code to be enacted
Senate Bill No. 529

(By Senators Edgell, White, Barnes, Kessler and Wells)

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[Introduced February 10, 2010; referred to the Committee on Energy, Industry and Mining; and then to the Committee on the Judiciary.]

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A BILL to amend and reenact §22-6-6 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new article, designated §22-6A-1, §22-6A-2, §22-6A-3, §22-6A- 4, §22-6A-5, §22-6A-6, §22-6A-7, §22-6A-8, §22-6A-9 and §22- 6A-10, all relating to creating the Surface Owners' Rights Recognition Act; protecting the rights of surface owners of property where oil or gas wells are to be located; making legislative findings; requiring oil and gas operators to give notice of planned work and its impact upon the property before entry is made; setting forth notice requirements; prohibiting waivers; providing exceptions; setting forth civil penalties; and requiring separate bonds to be posted.

Be it enacted by the Legislature of West Virginia:

That §22-6-6 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding thereto a new article, designated §22-6A-1, §22-6A-2, §22-6A-3, §22-6A-4, §22-6A-5, §22-6A-6, §22-6A-7, §22-6A-8, §22-6A-9 and §22- 6A-10, all to read as follows:

ARTICLE 6. OFFICE OF OIL AND GAS; OIL AND GAS WELLS; ADMINISTRATION; ENFORCEMENT.

§22-6-6. Permit required for well work; permit fee; application; soil erosion control plan.

(a) It is unlawful for any person to commence any well work, including site preparation work which involves any disturbance of land, without first securing from the director a well work permit. An application may propose and a permit may approve two or more activities defined as well work.
(b) The application for a well work permit shall be accompanied by applicable bond as prescribed by section twelve, fourteen or twenty-three of this article, and the applicable plat required by section twelve or fourteen of this article.
(c) Every permit application filed under this section shall be verified and shall contain the following:
(1) The names and addresses of: (i) The well operator; (ii) the agent required to be designated under subsection (e) of this section; and (iii) every person whom the applicant must notify under any section of this article together with a certification and evidence that a copy of the application and all other required documentation has been delivered to all such persons;
(2) The name and address of every coal operator operating coal seams under the tract of land on which the well is or may be located, and the coal seam owner of record and lessee of record required to be given notice by section twelve, if any, if said owner or lessee is not yet operating said coal seams;
(3) The number of the well or such other identification as the director may require;
(4) The type of well;
(5) The well work for which a permit is requested;
(6) The approximate depth to which the well is to be drilled or deepened, or the actual depth if the well has been drilled;
(7) Any permit application fee required by law;
(8) If the proposed well work will require casing or tubing to be set, the entire casing program for the well, including the size of each string of pipe, the starting point and depth to which each string is to be set, and the extent to which each such string is to be cemented;
(9) If the proposed well work is to convert an oil well or a combination well or to drill a new well for the purpose of introducing pressure for the recovery of oil as provided in section twenty-five of this article, specifications in accordance with the data requirements of section fourteen of this article;
(10) If the proposed well work is to plug or replug the well: (i) Specifications in accordance with the data requirements of section twenty-three of this article; (ii) a copy of all logs in the operator's possession as the director may require; and (iii) a work order showing in detail the proposed manner of plugging or unplugging the well, in order that a representative of the director and any interested persons may be present when the work is done. In the event of an application to drill, redrill or deepen a well, if the well work is unsuccessful so that the well must be plugged and abandoned, and if the well is one on which the well work has been continuously progressing pursuant to a permit, the operator may proceed to plug the well as soon as the operator has obtained the verbal permission of the director or the director's designated representative to plug and abandon the well, except that the operator shall make reasonable effort to notify as soon as practicable the surface owner and the coal owner, if any, of the land at the well location, and shall also timely file the plugging affidavit required by section twenty-three of this article;
(11) If the proposed well work is to stimulate an oil or gas well, specifications in accordance with the data requirements of section thirteen of this article;
(12) The erosion and sediment control plan required under subsection (d) of this section for applications for permits to drill; and
(13) Any other relevant information which the director may require by rule.
(d) An erosion and sediment control plan shall accompany each application for a well work permit. except for a well work permit to plug or replug any well Such plan shall contain methods of stabilization and drainage, including a map or maps of the project area indicating the amount of acreage disturbed, including, but not limited to, acreage disturbed for pipelines and their construction. The erosion and sediment control plan shall meet the minimum requirements of the West Virginia erosion and sediment control manual as adopted and from time to time amended by the division, in consultation with the several soil conservation districts pursuant to the control program established in this state through section 208 of the federal Water Pollution Control Act Amendments of 1972 (33 U.S.C. 1288). The erosion and sediment control plan shall become part of the terms and conditions of a well work permit except for a well work permit to plug or replug any well, which is issued and the provisions of the plan shall be carried out where applicable in the operation. The erosion and sediment control plan shall set out the proposed method of reclamation which shall comply with the requirements of section thirty of this article.
(e) The well operator named in such application shall designate the name and address of an agent for such operator who shall be the attorney-in-fact for the operator and who shall be a resident of the State of West Virginia upon whom notices, orders or other communications issued pursuant to this article or article eleven of this chapter, twenty-two, may be served, and upon whom process may be served. Every well operator required to designate an agent under this section shall within five days after the termination of such designation notify the director of such termination and designate a new agent.
(f) The well owner or operator shall install the permit number as issued by the director in a legible and permanent manner to the well upon completion of any permitted work. The dimensions, specifications and manner of installation shall be in accordance with the rules of the director.
(g) The director may waive the requirements of this section and sections nine, ten and eleven of this article in any emergency situation, if the director deems such action necessary. In such case the director may issue an emergency permit which would be effective for not more than thirty days, but which would be subject to reissuance by the director.
(h) The director shall deny the issuance of a permit if the director determines that the applicant has committed a substantial violation of a previously issued permit, including the erosion and sediment control plan, or a substantial violation of one or more of the rules promulgated hereunder, and whether or not a finding or order has been entered pursuant to section three or four of this article. If a finding or order has been entered pursuant to section three or four of this article, the permit shall not be denied unless the applicant has failed to abate or seek review of the violation within the time prescribed by the director pursuant to the provisions of sections three and four of this article and the rules promulgated hereunder, which time may not be unreasonable: Provided, That in the event that the director does find that a substantial violation has occurred and that the operator has failed to abate or seek review of the violation in the time prescribed, the director may suspend the permit on which said violation exists, after which suspension the operator shall forthwith cease all well work being conducted under the permit: Provided, however, That the director may reinstate the permit without further notice, at which time the well work may be continued. The director shall make written findings of any such determination and may enforce the same in the circuit courts of this state and the operator may appeal such suspension pursuant to the provisions of section forty of this article. The director shall make a written finding of any such determination.
(i) Any person who violates any provision of this section shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $5,000, or be imprisoned in the county jail not more than twelve months, or both fined and imprisoned confined not more than twelve months in a correctional facility or both fined and confined.
ARTICLE 6A. THE SURFACE OWNERS' RIGHTS RECOGNITION ACT.
§22-6A-1. Short title.

This article may be cited as the "Surface Owners' Rights Recognition Act".
§22-6A-2. Legislative findings and intent.
(a) The Legislature finds that:
(1) Surface owners of property who do not own the minerals have no right to the royalty or any other benefit from the production of oil and gas after the use of the surface when drilling a well on property;
(2) Often when the mineral and surface owners are the same, a predecessor in title may have agreed to an operator's "standard" lease that provides little or no protections for the use of the surface;
(3) The construction of an oil or gas well site, the construction of an access road to the well site, the laying of a pipeline from wells on the surface can have an enormous impact on value, use and enjoyment by the surface owner of the property;
(4) Under the common law, unless changed by the terms of a severance deed or a lease, the operator who intends to drill an oil or gas well has only the right to do what is "fairly necessary" on the surface in order to produce the oil or gas;
(5) At present when an operator plans to drill a well the only required notice to the surface owner is a copy of the operator's application for a permit to drill the well on the property at the time the application for the well work permit is filed. Thus, an operator may come onto the property, perform a survey, locate the well site and roads without providing any notice to the surface owner;
(6) The surface owner has fifteen days to comment on the permit application. However, the surface owner cannot comment that the permit application would violate the surface owner's "fairly necessary" rights. The surface owner cannot generally comment on where the well site and access road will be located. Instead, the surface owner can only comment on how the proposed well site and access road will be constructed.
(7) If the permit application would violate the surface owner's "fairly necessary" rights, a surface owner's only recourse is to file a civil action in circuit court that may require the posting of a bond. These requirements are often beyond the financial resources of the surface owner;
(8) At present, the short fifteen-day notice can catch surface owners off-guard. The lack of adequate time and lack of expertise and financial resources, all too often put the surface owner at a significant disadvantage. As a result, many operators fail to accommodate a surface owner's concerns and impact the property significantly more than is necessary;
(9) While a surface owner may be entitled to compensation for the use of the surface, there is no right to be compensated for the diminution in the value that the drilling, access roads and pipelines cause; and
(10) Although the gas will be produced from under the surface owners' land, and although the gas will be produced out of a well placed on their land and piped to market across their property, surface owners have no right to connect to the well or gathering pipelines for their domestic use of the gas.
(b) It is the intent of the Legislature to protect the interests of surface owners when there are plans to commence oil and gas operations on that property.
§22-6A-3. Definitions.
The words or terms used in this article, and any variation to the form of those words or terms required by the context, have the meanings ascribed to them in article six of this chapter unless a different meaning clearly appears from the context.
§22-6A-4. Notice to surface owners.
Unless this article specifically provides to the contrary, all notices required to be given to surface owners by this article shall be given to the same surface owners and in the manner set forth in section nine, article six of this chapter.
§22-6A-5. Notice of entry on to surface land.
(a) Before an operator may enter onto property for any purpose other than to enter a neighboring property or for the purposes identified in subsection (b) of this section, the operator shall provide notice, including the purpose of the entry, date of entry and its expected duration, to the surface owner of the property. This may be done by telephone, U.S. Postal Service or personal visit to a surface owner occupying the land. If the surface owner is not residing on the property, the notice must be received by that owner at his or her residence. Upon agreement with the surface owner, any required notice may be in electronic form. The provisions of this subsection may be waived after the completion of well work if there is a written contract setting forth the reasons therefor. Any waiver may be withdrawn at any time by the surface owner via a written communication to the operator.
(b) A minimum of ten day's written notice must be given to a surface owner prior to initial physical entry upon the property for all well work. For purpose of this subsection, well work includes, but not limited to, drilling, redrilling, deepening, stimulating, pressuring by injection of any fluid, converting from one type of well to another, combining or physically changing to allow the migration of fluid from one formation to another or plugging, replugging of any well, inspections, staking, surveys, measurements and general evaluation of proposed sites and routes for surface operations, including the planning for any of the aforesaid work. The notice shall include:
(1) The names of the operator and operator's authorized representative entering onto the land, their physical and mailing business addresses, telephone numbers, and if available, the facsimile numbers and electronic mail addresses;
(2) The anticipated dates, times and duration of entry onto the property;
(3) A copy of The West Virginia Oil and Gas Production Damage Compensation Act;
(4) A copy of this article, other code provisions concerning a surface owner's rights relating to well work permits and rules promulgated regarding these statutes;
(5) A copy of the soil erosion and sediment control manual of the Office of Oil and Gas;
(6) A written document explaining a surface owner's right to appeal the real property tax assessment after the drilling of a well if the owner believes that the drilling has decreased the value of the property; and
(7) An offer to meet with the surface owner either on the land or at another mutually agreed location prior to or at the time of the first entry.
§22-6A-6. Notice of planned use of surface land for well work; offer of surface use and compensation agreement.
(a) An operator may plan and prepare for its proposed surface use and compensation agreement as provided elsewhere in this section prior to and without first entering onto the surface of the land. In such an event the required notice of planned operations may be made at the same time as the notice of entry onto the property. The surface owner has five days to rescind a surface use and compensation agreement after he or she has signed it.
(b) An operator must provide a minimum of thirty days notice of its planned operations to the surface owner before filing its application for a well work permit pursuant to article six of this chapter. This notice shall include:
(1) Sufficient disclosure of the planned surface operations to enable the surface owner to evaluate the impact of the operations on the property;
(2) Copies of documents required to be given to the surface owners under subsection (b), section five of this article if not previously provided;
(3) The names, business addresses, telephone numbers and, if available, facsimile numbers and electronic mail addresses of the operator and the operator's authorized representative; and
(4) A proposed surface use and compensation agreement that addresses, at a minimum, the following:
(A) Proposed location, design specifications and planned maintenance for wells, well sites, pipelines and access roads;
(B) Terms and types of ingress and egress upon the surface of the land for surface operations;
(C) Placement, construction and maintenance of all pits and equipment used or planned for the surface;
(D) Use and storage of water and plans for disposition of used water;
(E) Removal and restoration of soil and plant life;
(F) Surface waters and drainage changes;
(G) Plans to limit and control precipitation runoff and erosion;
(H) Control and management of noise, weeds, dust, traffic, trespass, litter and other damage to or interference with the surface owner's use of the property;
(I) Interim and final reclamation;
(J) Plans to minimize surface damages to the property; and
(K) Compensation for the use of and damages to the surface resulting from the surface operations.
(c) A surface use and compensation agreement:
(1) May not waive any state or federal environmental requirement;
(2) May include a waiver of the surface owner's right to comment on the operator's well work permit application except for commenting on provisions of the permit that are inconsistent with the surface use and compensation agreement;
(3) May include a waiver of the thirty day period from the receipt of the notice before a permit may be issued;
(4) May not waive or agree to an amount of damages for breach of the agreement, for pollution of water sources or supplies not identified in the agreement, for negligence or failure to perform tasks in a workmanlike manner or for unforeseen damages;
(5) Must be in writing or, if the surface owner so agrees, in an electronic form; and
(6) If signed by a surface owner who states that he or she has the authority to act on behalf of the other surface owners, it creates a presumption that the surface use and compensation agreement recognizes and protects the surface owner's rights and interests. This presumption that can only be rebutted by clear and convincing evidence to the contrary or fraud.
(d) Upon receipt of the notice required by this section, the surface owner may:
(1) Accept the proposed surface use and compensation agreement; or
(2) Reject the proposed surface use and compensation agreement and enter into negotiations with the operator, including, if the parties agree, binding arbitration or mediation. If the surface owner has not signed a surface use and compensation agreement with the operator within thirty days of receiving the operators proposed agreement, the operator may submit the operator's permit application.
(e) Notice required by this section shall be deemed to have been received on the same date as evidenced by the date on the receipt of certified mail or of personal service. Receipt of notice is not deemed incomplete by refusal to accept. In the event of refusal, notice shall be deemed to have been received as demonstrated by the date of refusal to accept certified mail.
§22-6A-7. Entry without agreement.
If, after thirty days from the surface owner's receipt of notice pursuant to section six of this article, a surface use and compensation agreement has not been signed by the parties the operator may apply for a well work permit pursuant to article six of this chapter, and upon granting of the permit, enter the property to perform the well work. The operator, when furnishing the bond required by section twenty-six, article six of this chapter is required to post a separate $5,000 bond. The operator may, at a later time, place the well under the operator's blanket bond if:
(1) The operator and the surface owner enter into an agreed surface use and compensation agreement before reclamation has been completed;
(2) The surface owner signs a release after reclamation has been completed regarding compensation for damages;
(3) The operator demonstrates the surface owner has, pursuant to article seven of this chapter, received the amount of compensation determined by binding arbitration;
(4) The operator demonstrates that it has paid a judgement in favor of the surface owner entered by a court of competent jurisdiction; or
(5) Two years have elapsed after the date that the operator files notice that reclamation has commenced under section thirty, article six of this chapter and serves it on the surface owner unless an action has been filed in the appropriate court or an arbitration proceeding pursuant to article seven of this chapter has been initiated and the action or proceedings are still pending.
§22-6A-8. Emergencies.
Notwithstanding any provision of this article to the contrary, no notice or surface use and compensation agreement is required for actions needed to be taken to protect health, safety or the environment if a state oil and gas inspector declares that an emergency exists.
§22-6A-9. Waiver.
No provision of this article may be waived unless a waiver is specifically provided in this article.
§22-6A-10. Enforcement and remedies.
(a) An operator who fails to comply with the requirements of this article is subject to the same civil penalty and enforcement action as provided by subsection (a), section thirty-four, article six of this chapter. The civil penalty for subsequent violations of this article within five years of a previous violation of this article shall be twice the amount otherwise provided.
(b) An operator or other person who fails to comply with this article is liable to the surface owner, for each violation, for three times the surface owner's actual damages or $200, whichever is greater.
(c) The remedies provided by this section do not affect or preclude any other remedies allowed by law.



NOTE: The purpose of this bill is to create the "Surface Owners' Rights Recognition Act." The bill protects the rights of surface owners of property where oil or gas wells are to be located. The bill makes legislative findings. The bill also requires operators to give notice of planned work, its impact upon the property before entry is made and sets forth what is required in that notice. The bill provides exceptions, prohibits waivers, except when specifically provided for. The bill further sets forth civil penalties and requires the posting of bonds.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Article 6A is new; therefore, strike-throughs and underscoring have been omitted.
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