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Introduced Version House Bill 3176 History

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Key: Green = existing Code. Red = new code to be enacted
H. B. 3176


(By Delegates Miley, Webster, Fleischauer,
Susman, Guthrie, Barker and Caputo)
[Introduced March 17, 2009; referred to the
Committee on Energy, Industry and Labor, Economic Development and Small Business then the Judiciary.]



A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §22-7A-1, §22-7A-2, §22-7A-3, §22-7A-4, §22-7A-5, §22-7A-6, §22-7A-7 and §22-7A-8, all relating to the production of oil and gas; enacting the surface owners protection act; creating certain duties owed by oil and gas operators to surface owners; requiring notice to the surface owner when oil and gas operations are initiated; providing for an agreement between surface owners and operators regarding use of the land; and requiring a bond or other surety in certain circumstances.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §22-7A-1, §22-7A-2, §22-7A-3, §22-7A-4, §22-7A-5, §22-7A-6, §22-7A-7 and §22-7A-8
, all to read as follows:
ARTICLE 7A. SURFACE OWNERS PROTECTION ACT.
§22-7A-1. Short title.

This article may be cited as the "Surface Owners Protection Act".
§22-7A-2. Definitions.
As used in the Surface Owners Protection Act:
(1) "Oil and gas operations" means all activities affecting the surface owner's land that are associated with exploration, drilling or production of oil or gas, through final reclamation of the affected surface;
(2) "Operator" means a person with the legal right to conduct oil and gas operations and includes the agents, employees and contractors of that person;
(3) "Reclaim" means to substantially restore the surface affected by oil and gas operations to the condition that existed prior to oil and gas operations, or as otherwise agreed to in writing by the operator and surface owner;
(4) "Surface owner" means a person who holds legal or equitable title, as shown in the records of the county clerk, to the surface of the real property on which oil and gas operations are to take place;
(5) "Surface use and compensation agreement" means an agreement between an operator and a surface owner specifying the rights and obligations of the surface owner and the operator concerning oil and gas operations; and
(6) "Tenant" means a person who occupies land or premises belonging to another in subordination to the owner's title and with the owner's assent, express or implied.
§22-7A-3. Notice of Operations; proposed surface use and compensation agreement.
(a) Prior to initial entry upon the land for activities that do not disturb the surface, including inspections, staking, surveys, measurements and general evaluation of proposed routes and sites for oil and gas operations, the operator shall provide at least fifteen business days' notice by certified mail or hand delivery to the surface owner.
(b) No less than thirty days before first entering the surface of the land to conduct oil and gas operations, an operator shall, by certified mail or hand delivery, give the surface owner notice of the planned oil and gas operations. The notice shall include:
(1) Sufficient disclosure of the planned oil and gas operations to enable the surface owner to evaluate the effect of the operations on the property;
(2) A copy of this Surface Owners Protection Act and article seven of this chapter;
(3) The name, address, telephone number and, if available, facsimile number and electronic mail address of the operator and the operator's authorized representative; and
(4) A proposed surface use and compensation agreement addressing, at a minimum, the following issues:
(A) Placement, specifications, maintenance and design of well pads, gathering pipelines and roads to be constructed for oil and gas operations;
(B) Terms of ingress and egress upon the surface of the land for oil and gas operations;
(C) Construction, maintenance and placement of all pits and equipment used or planned for oil and gas operations;
(D) Use and impoundment of water on the surface of the land;
(E) Removal and restoration of plant life;
(F) Surface water drainage changes;
(G) Actions to limit and effectively control precipitation runoff and erosion;
(H) Control and management of noise, weeds, dust, traffic, trespass, litter and interference with the surface owner's use;
(I) Interim and final reclamation;
(J) Actions to minimize surface damages to the property;
(K) Operator indemnification for injury to persons caused by the operator; and
(L) An offer of compensation for the use of and damages to the surface resulting from the oil and gas operations.
(c) A surface use and compensation agreement may not waive any state or federal environmental requirement.
(d) The notices required by this section shall be given to the surface owner in accordance with the notice provisions of section nine, article six of this chapter and rules promulgated thereunder regarding notice.
(e) Upon receipt of the notice required by this section, the surface owner may:
(1) Accept the proposed surface use and compensation agreement within twenty days; or
(2) Reject the proposed surface use and compensation agreement:
Provided, That failure to accept the proposed agreement within twenty days shall be deemed to be a rejection by the surface owner.
If the proposed agreement is rejected, the surface owner may enter into negotiations with the operator, including, if the parties agree, binding arbitration or mediation.
(f) Notices required by this section shall be deemed to have been received as demonstrated by the date of 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.
§22-7A-4. Entry without agreement.
(a) If, after thirty days from a surface owner receiving notice pursuant to subsection (b), section three of this article, no surface use and compensation agreement has been entered into, the operator may enter the surface owner's property and conduct oil and gas operations after depositing a surety bond, letter of credit from a banking institution, cash or a certificate of deposit with a West Virginia surety company or financial institution for the benefit of the surface owner in the amount of $5,000 per well location.
(b) The surety bond, letter of credit, cash or certificate of deposit shall only be released by the surety company or financial institution if:
(1) The surface owner provides notice that compensation for damages has been paid;
(2) The surface owner and the operator have executed a surface use and compensation agreement or otherwise agreed that the security should be released;
(3) There has been a final resolution of the judicial appeal in any action for damages and any awarded damages have been paid; or
(4) All wells have been plugged and abandoned and the operator has not conducted oil and gas operations on the surface owner's property for a period of six years.
(c) The bonding requirements of this section are in addition to those set forth in article six of this chapter.
§22-7A-5. Payment of legal fees, costs and damages.
In an action for compensation, if the court awards compensation or damages to a surface owner, it may also award attorney fees and costs if:
(1) The operator conducted oil and gas operations without providing notice as required by section three of this article;
(2) The operator conducted oil and gas operations without a surface use and compensation agreement and before depositing a bond or other surety as required by section four of this article; or
(3) The operator conducted oil and gas operations outside the scope of a surface use and compensation agreement and, when entering into the agreement, knew or should have known that oil and gas operations would be conducted outside the scope of the agreement.
§22-7A-6. Statute of limitations.
A surface owner entitled to bring an action pursuant to this article shall bring the action within three years after the damage has been discovered, or should have been discovered through due diligence, by the surface owner.
§22-7A-7. Emergency situation.
Notwithstanding any provisions of the Surface Owners Protection Act to the contrary, no notice, surface use and compensation agreement or bond shall be required in emergency situations for activities to protect health, safety or the environment.
§22-7A-8. Application of article.
The remedies provided by this article shall not preclude any person from seeking other remedies allowed by law.



NOTE: The purpose of this bill is to provide protections for surface owners of land that is being used to drill oil and gas wells; notice requirements are established when initial entry and entry of land to commence construction of drilling operations; creates a "Surface Use and Compensation Agreement" which is intended to spell out how the operations will proceed; requires operators to post a $5,000 bond or surety in favor of the surface owner if an agreement is not executed; and provides remedies and a statute of limitations for claims made pursuant to the article.


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