SENATE BILL NO. 335
(By Senators Wagner, Craigo, Schoonover,
Macnaughtan, Dittmar and Wiedebusch)
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[Introduced February 13, 1995;
referred to the Committee on the Judiciary.]
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A BILL to amend and reenact section five, article seven, chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to further amend said article by adding thereto a new section, designated section five-a; and to amend chapter thirty-six of said code by adding thereto a new article, designated article two-a, all relating to providing the surface owner with certain notices; providing the surface owner with certain protections; requiring notice to surface owner of intent to drill; providing compensation to surface owner; providing for restoration of surface when drilling complete; making surface estate and mineral estate equal in law; and eliminating an implied easement for mineral owners.

Be it enacted by the Legislature of West Virginia:
That section five, article seven, chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty- one, as amended, be amended and reenacted; that said article be further amended by adding thereto a new section, designated section five-a; and that chapter thirty-six of said code be amended by adding thereto a new article, designated article two-a, all to read as follows:
CHAPTER 22. ENVIRONMENTAL RESOURCES.
ARTICLE 7. OIL AND GAS PRODUCTION DAMAGE COMPENSATION.

§22-7-5. Notification of claim.

Any surface owner, to receive compensation under section three of this article, shall notify the oil and gas developer of the damages sustained by the person within two years after the date that the oil and gas developer files notice that reclamation is commencing under section thirty, article six of this chapter. Such notice shall be given to surface owners prior to commencing reclamation by registered or certified mail, return receipt requested, and shall be complete upon mailing. A copy of the same notice shall immediately be filed with the office of oil and gas by the operator. If more than three tenants in common or other co-owners hold interests in such lands, the developer may give such notice to the person described in the records of the sheriff required to be maintained pursuant to section eight, article one, chapter eleven-a of this code or publish in the county in which the well is located or to be located a Class II legal advertisement as described in section two, article three, chapter fifty-nine of this code, containing such notice and information as the director shall prescribe by rule.

§22-7-5a. Notice to surface landowner of intent to drill oil or gas well; compensation for damages to surface; restoration of surface.

(a) As used in this section:
(1) "Completion of the well" means completion of those processes necessary before production occurs, including the laying of flow lines and the construction of the tank battery. If the well is not productive, the date of completion of the well shall be the day it is plugged and abandoned;
(2) "Drilling operations" means the drilling, deepening or conversion of a well for oil or gas production, core hole for oil or gas purposes, or drill hole for a stratigraphic test for oil or gas purposes;
(3) "Entry" means the moving upon the surface of land with equipment to commence drilling operations;
(4) "New well" means a well that is spudded after the first day of July, one thousand nine hundred ninety-five, and does not utilize any part of a well bore or drilling location that existed prior to that date;
(5) "Operator" means the person, whether the owner or not, who applies for or holds a permit for well work or who is named as the principal on a bond for a permit for a well that was issued by the department;
(6) "Person" means any natural person, corporation, firm, partnership, venture, receiver, trustee, executor, administrator, guardian, fiduciary, or other representative of any kind, and includes any government or any political subdivision or agency thereof;
(7) "Production operation" means the operation of a well for the production of oil or gas, including all acts, structures, equipment and roadways necessary for the operation;
(8) "Surface owner" means the person in whose name the surface of the land on which drilling operations are contemplated is assessed for purposes of taxes imposed according to the records of the county assessor of the county where the land is located as certified by the assessor.
(b) Notwithstanding other provisions of this article in conflict, this section is applicable only for the drilling operations of new wells except as provided in subsection (g) of this section. This section does not apply for reworking operations on a well. This section is not waiveable.
(c) (1) Prior to commencement of the drilling of a well, the operator shall give written notice to the surface owner of the operator's intent to commence drilling operations.
(2) The operator shall, for the purpose of giving notice, secure from the assessor's office at any time prior to the giving of the notice, a certification which identifies the person in whose name the lands on which drilling operations are to be commenced are assessed at the time the certification is made. For identifying the surface owner for purpose of giving the surface owner the notice required by this section the written certification made by the assessor of the surface owner satisfied the requirements of this section.
(3) The notice required to be given by the operator to the surface owner shall identify the following:
(A) The source of the operator's right of entry on the surface for drilling operations and the date on or after which drilling operations are expected to commence;
(B) The name, address and telephone number of the operator;
(C) An offer to discuss with the surface owner those matters set forth in subsection (d) of this section prior to commencement of drilling operations.
(4) If the surface owner elects to meet with the operator, the operator shall meet at a mutually agreed time and place within the limitations set forth herein. Failure of the surface owner to contact the operator at least fifteen days after receiving the notice shall be conclusively deemed a waiver of the right to meet by the surface owner. The meeting shall be scheduled between the hours of nine o'clock a.m. and nine o'clock p.m. of the same day, and shall be prior to entry onto the surface land for any purpose. Unless agreed to otherwise, the meeting place shall be located within the county in which drilling operations are to be commenced where the operator or his or her agent shall be available to discuss with the surface owner or his or her agent those matters set forth in subsection (d) of this section.
(5) The notice shall be given to the surface owner by either:
(A) Certified mail addressed to the surface owner at the address shown in the certification obtained from the assessor, which shall be postmarked at least thirty days prior to entering onto the surface land for any purpose; or
(B) Personal delivery to the surface owner at least twenty days prior to entering onto the surface land for any purpose.
(6) Notice to the surface owner as defined in this section shall be deemed conclusive notice of rights under this section to the record owners of all interest in the surface.
(d) The operator, or his agent shall, if the surface owner accepts the offer to meet, be available at the time agreed, date and place to discuss with the surface owner the following:
(1) Placement of roads to be constructed by the operator;
(2) Points of entry upon the surface for drilling operations;
(3) Construction and placement of pits and any surface or stream discharges used for drilling operations;
(4) Restoration of fences to be cut in order to make entry upon the surface for drilling operations;
(5) Use of water on the surface of the lands;
(6) Removal of trees and vegetation;
(7) Surface water drainage changes caused by drilling operations;
(8) Location of well head;
(9) Location of pipeline;
(10) Location of permanent equipment such as storage tanks and dryers; and
(11) The operators' exercise of other rights to use of the surface.
(f) The surface owner will be entitled to damages as set forth in article two, chapter twenty-two-b of this code.
(g) In conjunction with the plugging and abandonment of any well or the reworking of any well, the operator shall restore the surface and any improvements thereon to a condition as near as practicable to their condition prior to commencement of the work. The surface owner and operator may waive this requirement in writing, subject to the approval of the office of oil and gas that the waiver is in accordance with its administrative regulations.
CHAPTER 36. ESTATES IN PROPERTY.

ARTICLE 2A. PRESERVATION OF SURFACE OWNERS' RIGHTS.

§36-2A-1. Findings, purpose and public policy.

The Legislature hereby makes the findings of fact regarding the historical practice of holding the surface as the inferior estate and the mineral estate severed therefrom as the superior (or dominant) estate:
(a) This holding has caused unnecessary and significant disturbance of the surface lands and structures thereon, including farms and residential homes throughout the state;
(b) Mineral owners not limited by countervailing surface interests and were not limited by the right of the surface owner to pursue contract damages or the ability of the surface owner to pursue tortious damages in the excessive acts;
(c) This holding has caused pollution of the waters and surface lands of the state;
(d) This holding has caused significant loss of subjacent support, caving in of surface lands and settling of surface lands; and
(e) Encouraged bad public policy.
§36-2A-2. Estates equal.
From the effective date of this section the surface estate of interest in any real property in the state shall be equal in the law with every mineral estate underlying a surface interest or estate to which the surface interest or estate is subject; each constitutes an interest in land equal to the other.
§36-2A-3. Findings, purpose and public policy.
From the effective date of this section no easement on an interest in surface real property by an interest in underlying minerals is implied.
§36-2A-4. Unequal estates void.
Any grant or reservation in a conveyance of real property which seeks to hold interests in the preservation of the beneficial use of interests in the surface subservient is null and void to the extent they are not equal with the non- surface estate's interest.
§36-2A-5. Presumption of equal rights.
When the ownership of any interest in minerals in real property is separated from ownership of any interest in the surface, it is presumed that the intent of the parties and the language of the instruments require an equal balance between the interest of the surface interest owner and the interest of the mineral interest owner.
§36-2A-6. Measure of damages.
(a) The measure of damages, for damages caused to the surface estate by the holder of any mineral interests, shall be the standard of negligence as in tortious acts and shall not be the breech of contract standard of whether the acts causing damage were necessary or unnecessary to the use and enjoyment of the mineral estate.
(b) The Legislature declares that the public policy of the state for compensation and damages to surface owners in the state shall not be diminished by any provision in a deed, lease or other conveyance of property in the state.

NOTE: The purpose of this bill is as follows: (1) Mandate notice of commencement of reclamation activities for the purposes of oil and gas production damage compensation; (2) Require the oil and gas well driller to meet with the surface owner before entering onto the surface owner's land to determine well placement; (3) Change the common law which presently makes the mineral estate dominant over the surface estate in order to make them equal; and (4) Change the measure of damages for surface damage from a contract measure of damage to a tort measure of damage.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added. Section five-a of article seven chapter twenty-two is new and article two-a of chapter thirty-six is new; therefore, strike-throughs and underscoring have been omitted.