Senate Bill No. 478
(By Senators Kessler, Barnes, White, Chafin and Wells)
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[Introduced March 5, 2009; referred to the Committee on Energy,
Industry and Mining; then to the committee on the Judiciary; and
then to the Committee on Finance.]
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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 the 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.
(a) As used in the Surface Owners Protection Act:
(1) "Oil and gas operations" means all activities affecting
the surface owner's land that are asssociated 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 operation. The notice shall include:
(1) Sufficient disclosure of the planned oil and gas
operations to enable the surface owner to evaluate the effecting 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 construced 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 damages 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. However, 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) Notice 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 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 institutions, 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 this
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 relates to the production of
oil and gas; enacts the Surface Owners Protection Act; creates
certain duties owed by oil and gas operators to surface owners;
requires notice to the surface owner when oil and gas operations
are initiated; provides for an agreement between the surface owners
and operators regarding use of the land; and requires a bond or
other surety in certain circumstances.
This article is new; therefore, strike-throughs and
underscoring have been omitted.