THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GEORGE, BELFANTI, CONKLIN, FRANKEL, GOODMAN, GRUCELA, HALUSKA, HORNAMAN, JOSEPHS, KORTZ, MUNDY, MYERS, PETRARCA, SIPTROTH, SOLOBAY, THOMAS, VITALI, WALKO AND WANSACZ, MARCH 31, 2009

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 31, 2009  

AN ACT

Preserving the uses and value of surface lands of this

Commonwealth from damage to the lands from coal bed methane

extraction or production; requiring disclosure statements as

to the impacts on surface lands of proposed coal bed methane

gas wells and related facilities to be provided to landowners

and tenants; providing for the jurisdiction of courts in the

enforcement thereof; regulating the installation and

operation of coal bed methane gas wells and related

facilities; regulating the impact of the installation of coal

bed methane gas wells and related facilities on surface lands

and waters; placing responsibilities on landowners and

occupiers; and imposing duties upon the Department of

Environmental Protection.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Coal Bed

Methane Gas Drilling Rights Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Coal bed methane gas."  Any fluid, either combustible or

noncombustible, which is produced in a natural state from coal

seams within the earth and which maintains a gaseous or rarified

state at standard temperature of 60 degrees Fahrenheit and

pressure 14.7 PSIA, any by-product gas or any mixture of gases.

"Coal bed methane gas operations" or "operations."  Any

activities affecting land or water sources, no matter how

slight, that are associated with coal bed methane gas

exploration or production, including, but not limited to, the

construction, installation, maintenance or removal of coal bed

methane gas wells. The construction, installation, maintenance

or removal of pipelines and equipment for coal bed methane gas

or water, installation, maintenance and removal of all access or

service roads, installation, maintenance or removal of coal bed

methane gas production or storage equipment and facilities,

rework of coal bed methane gas wells, plugging of coal bed

methane gas wells, actions taken to reclaim well sites and road

and pipeline rights-of-way.

"Department."  The Department of Environmental Protection of

the Commonwealth.

"Person."  Any natural person, association, partnership,

corporation, political subdivision or agency of the Federal or

State government or other legal entity.

"Reclaim."  To restore any portion of land affected by coal

bed methane gas operations to the same or substantially similar

condition that existed prior to coal bed methane gas operations,

or as otherwise agreed to in a memorialized agreement between

the operator and the land owner or tenants.

"Surface."  The uppermost portion of the earth's crust,

including the land and aquatic features.

"Surface owner."  A person who holds legal or equitable title

to the surface of a parcel of real property.

"Surface use and compensation agreement."  An agreement,

written, signed and notarized, between a surface owner and an

operator stipulating the location of proposed coal bed methane

gas wells, access roads and any other uses of the surface during

coal bed methane gas exploration and production. A coal bed

methane gas operation lease agreement entered into by a surface

owner and an operator, which pays the surface owner at least a

one-eighth royalty on coal bed methane gas extracted from areas

under the surface of the surface owner's real property, shall be

deemed a surface use and compensation agreement for the purposes

of this act.

"Tenant."  A person who occupies a parcel of real property

belonging to the surface owner in subordination to the surface

owner's title and with the owner's assent, express or implied.

"Water sources."  Any and all rivers, streams, creeks,

rivulets, impoundments, ditches, watercourses, storm sewers,

lakes, dammed water, ponds, springs or all other bodies of

surface water, or parts thereof, whether natural or artificial,

within or on the boundaries of the surface owner.

"Well."  A borehole drilled or being drilled for the purpose

of, or to be used for, producing, extracting or injecting any

coal bed methane gas or other liquid related to coal bed methane

gas production or storage, including brine disposal, but

excluding boreholes drilled to produce potable water to be used

as such. The term does not include a borehole drilled or being

drilled for the purpose of, or to be used for, systems of

monitoring, producing or extracting gas from solid waste

disposal facilities, as long as the wells are subject to the act

of July 7, 1980 (P.L.380, No.97), known as the Solid Waste

Management Act, and do not penetrate a coal seam. The term also

does not include a borehole drilled or being drilled for the

purpose of, or to be used for, degasifying coal seams if the

following conditions are satisfied:

(1)  (i)  the borehole is used to vent coal bed methane

to the outside atmosphere from an operating coal mine and

the coal bed methane is not then collected and used for

any commercial purpose;

(ii)  the borehole is regulated as part of the mining

permit pursuant to the act of June 22, 1937 (P.L.1987,

No.394), known as The Clean Streams Law, and the act of

May 31, 1945 (P.L.1198, No.418), known as the Surface

Mining Conservation and Reclamation Act; and

(iii)  the borehole is drilled by the operator of the

operating coal mine for the purpose of increased safety;

or

(2)  the borehole is used to vent coal bed methane to the

outside atmosphere pursuant to a Federally funded or State-

funded abandoned mine reclamation project.

"Well operator" or "operator."  The person designated as the

well operator or operator on the permit application or well

registration. Where a permit or registration was not issued, the

term shall mean any person who owns, manages, leases, controls

or possesses any coal bed methane gas well or any person who

locates, drills, operates, alters or plugs any coal bed methane

well or reconditions any such well with the purpose of

production therefrom. In cases where a well is used in

connection with the underground storage of coal bed methane gas,

the term also means a "storage operator."

Section 3.  Applicability.

The protections of this act shall apply to all surface lands

within this Commonwealth, whether publicly or privately owned,

and the leasehold interests of tenants on any such lands to the

extent any damage or any diminution in value to the tenant's

leasehold improvements result from oil or gas operations.

Section 4.  Duties of operators.

(a)  Duties.--Except to the extent otherwise provided in a

surface use and compensation agreement duly executed by a

surface owner and an operator, where coal bed methane gases are

not leased for extraction from the surface owner by the operator

in a lease paying at least a one-eighth royalty to the surface

owner, an operator shall timely:

(1)  Compensate fully the surface owner for all injuries

incurred, including:

(i)  Lost income or expenses incurred as a result of

being unable to dedicate land occupied by the gas

producer's operations, or to which access is prevented by

such operation, to the uses to which it was dedicated

prior to commencement of the operations as measured from

the date the operator first enters upon the land until

the date all reclamation is completed.

(ii)  The market value of crops destroyed, damaged or

prevented from reaching market.

(iii)  All damage to a water supply in use prior to

the commencement of the permitted activity.

(iv)  The cost of repair or replacement of personal

or real property damages by activities by or on behalf of

the operator.

(v)  The diminution in value of the surface lands and

other property, including both the surface lands actually

disturbed and any adjacent surface lands, the market

value of which is diminished by the presence of the well

and the surface disturbance and other appurtenances,

during the operator's use thereof for coal bed methane

gas production and related operations.

(2)  Reclaim entirely the surface affected by oil or gas

operations within nine months of the cessation of extracting

coal bed methane gas from any well on a surface owner's tract

of land.

(b)  Exception.--An operator shall not be responsible for

negotiating or allocating compensation between the surface owner

and any tenant, except that an operator shall compensate fully

any tenant of the surface owner for any diminution in value of

leasehold improvements, made by the tenant, damaged as a result

of the operator's coal bed methane gas operations.

Section 5.  Notice of operations and surface use and

compensation agreement.

(a)  Notice of proposed activity.--Prior to initial entry

upon a tract of land for activities that will not disturb the

surface, including inspections, staking, surveys, measurements

and general evaluations of proposed routes and sites for coal

bed methane gas operations, the operator shall provide at least

15 business days' notice by certified mail to the surface owner

of each tract on which the operator proposes any such activity

as well as a statement citing deeds, leases, rights-of-way,

easements and other rights relating to the operator's right of

access thereto.

(b)  Notice of application.--Prior to submission of any

application for a permit to the department under section 201 of

the act of December 19, 1984 (P.L.1140, No.223), known as the

Oil and Gas Act, and no less than 45 days before first entering

the surface of the land to conduct any coal bed methane gas

operations thereon, an operator shall, by certified mail,

provide the surface owner with notice of the scope and extent of

all planned operations, through and including the plugging and

removal of wells and the removal of pipelines, other equipment

and access roads. Copies of this notice shall also be sent to

surface owners within a one-half mile radius of each proposed

well site. Every notice shall include all of the following:

(1)  Topographical and underground maps of the relevant

areas, permits and any materials submitted by the operator to

obtain permits to enable the surface owner to evaluate the

effects that the operations might have on that owner's lands.

(2)  A copy of this act and a copy of the Oil and Gas

Act.

(3)  The name, address, telephone number and, if

available, facsimile number and electronic mail address of

the operator and the operator's authorized representative.

(4)  Information regarding required or recommended

predrilling surveys and other provisions relating to:

(i)  protection of water sources;

(ii)  well location restrictions; and

(iii)  casing, cementing and plugging plans for wells

and production-related horizontal boreholes pursuant to

the Oil and Gas Act.

(5)  A proposed written surface use and compensation

agreement addressing, to the extent known, the following:

(i)  Placement, specifications, maintenance and

design of well pads, gathering pipelines, water or brine

pipelines, storage facilities for water or coal bed

methane gas, compressor stations, transmission pipelines,

pump stations, meter pits and roads to be constructed and

any and all other facilities of every type to be

constructed and utilized either temporarily or

permanently for operations.

(ii)  Proposed frequency of all ingress and egress

across or under the surface of the land for operations,

including pipelines, and the routes for same.

(iii)  Construction, maintenance and placement of all

pits used or planned for operations.

(iv)  Extent of use and impoundment of water on the

surface of the land.

(v)  Removal and restoration of the species of plant

life existing prior to commencement of any operations on

areas to be impacted by those operations.

(vi)  Surface water drainage changes.

(vii)  Plans and actions to limit and effectively

control storm water runoff and sedimentation and erosion,

topsoil storage and road steepness, side slope, drainage

structures and their frequency.

(viii)  Control and management of noise, weeds,

sewage disposal, dust, traffic, trespass, litter and any

other interference with the surface owner's or tenant's

use and enjoyment of the surface.

(ix)  Interim and final proposals to reclaim the

surface.

(x)  Plans or actions to be undertaken to minimize

damages to the surface.

(xi)  Operator indemnification for injury to persons

or properties other than that of the surface owner when

caused by the operations.

(xii)  All efforts an operator will take to restrict

access to the surface owner's land by third parties

utilizing the operator's access roads and rights-of-way.

(xiii)   Specifications for the revegetation of the

well site, pits, disposal areas, access roads, pipelines

and other facilities or uses associated with the well

work, road surfaces, soil preparation, temporary seed

species and permanent seed species.

(xiv)  Particular specifications for maintenance at

all times of existing roads used by the surface owner

that the operator proposes to utilize, including, without

limitation, gating appliance specifications, locations

and gating practices.

(xv)  An offer of compensation for damages to the

surface brought about in whole or in part by operations.

(6)  A plat that shall show the tract of land upon which

each well is to be located, the name of the surface landowner

of record and lessor, if any, the name of all surface

landowners or water purveyors whose water supplies are within

one-half mile of the proposed well location, the name of the

owner of record and operator of all known underlying workable

coal seams, if any, the acreage in the tract to be drilled,

the proposed location of each well determined by survey, the

courses and distances of such location from two or more

permanent identifiable points or landmarks on the tract

boundary corners, the proposed angle and direction of such

well, if the well is to deviate substantially from the

vertical course, the number or other identification to be

given the well, the workable coal seams, if any, underlying

the tract of land upon which the well is to be drilled or

altered, which are cased off in accordance with section 207

of the Oil and Gas Act. The plat shall also include the

location of all water sources, placement of well pads,

gathering pipelines, water pipelines, storage facilities for

oil, gas or water, all compressor stations, meter pits and

pump stations and roads to be constructed for coal bed

methane gas operations, placement of all pits and equipment

used or planned, use and impoundment of water on the surface

of the land.

(c)  Address.--The notice required by this section shall be

sent to the surface owner at the address shown by the property

tax records at the time the notice is given. If the property tax

records for the county or the records in the recorder's office

for the county where the property is located disclose that the

land's legal title and equitable title are not held by the same

person, notice shall be given to both the holder of legal title

and to the holder of equitable title at the addresses shown by

the records of the property tax records at the time the notice

is given.

(d)  Owner's option.--Upon receipt of the notice required by

subsection (b) the surface owner may:

(1)  accept the proposed surface use and compensation

agreement within 45 days of receipt; or

(2)  reject the proposed surface use and compensation

agreement and enter into a surface use and compensation

agreement that sets forth the rights and obligations of the

parties.

(e)  Presumed receipt.--If correctly addressed to the record

owner of the surface, notices to the surface owners required by

this act shall be deemed to have been received 15 days after

mailing by certified mail.

(f)  Waiver.--A surface use and compensation agreement may

not waive damages for breach of the agreement, or for pollution

of water sources or supplies, for negligence or failure to

perform tasks in a workmanlike manner consistent with best

practices in the field of coal bed methane gas production or for

unforeseen damages.

Section 6.  Entry without surface use compensation agreement.

(a)  Filing of application.--If, after 45 days from the date

on which a surface owner receives notice under section 5(b), no

surface use and compensation agreement has been executed by the

operator and surface owner, the operator may file applications

for permits with the department for the coal bed methane gas

wells and related facilities proposed to be located on the

surface owner's property after depositing a surety, bond, letter

of credit from a banking institution or certificate of deposit

with a Pennsylvania surety company or financial institution for

the benefit of a surface owner in the amount equal to 120% of

the operator's best compensation offer as to each coal bed

methane gas production facility's location or at least $25,000

per production facility's location. The surety bond letter,

letter of credit, cash or certificate of deposit shall only be

released by the surety company or financial institution back to

the operator if:

(1)  the surface owner provides an affidavit that

compensation for use of or damages to his land have been paid

in full to him;

(2)  the surface owner and the operator have executed a

surface use and compensation agreement or otherwise agreed

that the surety should be released;

(3)  there has been a final resolution of the judicial

appeal in any action for damages brought by the surface owner

and any awarded damages have been paid; or

(4)  all coal bed methane gas wells on the surface

owner's land have been plugged and abandoned in accordance

with law, all production and support facilities have been

removed and the operator has not conducted oil or gas

operations on the surface owner's property for a period of

four years.

(b)  Blanket surety bond.--When a coal bed methane gas well

operator proposes to operate more than one coal bed methane gas

well, instead of posting the bond required in subsection (a),

that operator may at the operator's election post a blanket

surety bond, letter of credit from a banking institution or a

certificate of deposit with a Pennsylvania surety company or

financial institution in the sum of $500,000 subject to the

following criteria:

(1)  the surety company or financial institution shall

hold the corporate surety bond, letter of credit or

certificate of deposit for the benefit of the surface owner

and shall ensure that such security is in a form readily

payable to a surface owner awarded damages in an action

brought under this act;

(2)  the bond, letter of credit, cash or certificate of

deposit shall remain in full force and effect as long as the

operator continues coal bed methane gas operations in this

Commonwealth;

(3)  the bond, letter of credit, cash or certificate of

deposit shall not be released until six years after the

operator has deposited with the surety company or financial

institution a certified statement from the department that,

according to its records, the operator is not an operator of

record of any well in this Commonwealth and does not hold any

outstanding permits to drill coal bed methane gas wells

within this Commonwealth; and

(4)  in the event that, pursuant to a judgment, all or a

portion of the bond, letter of credit or certificate of

deposit has been used to pay a surface owner, the operator

shall immediately post additional security so that the total

amount posted equals $500,000 and, if the operator does not

post the additional security, the surety or financial

institution shall publish notice to that effect in a paper of

general circulation in each county of the state in which coal

bed methane gas is produced and the department is prohibited

from issuing permits to any operator posting a blanket surety

bond, letter of credit from a banking institution or

certificate of deposit under subsection (b) where the

operator shall let the amount of security fall below

$500,000.

Section 7.  Restriction on issuance of permits for wells.

The department shall not issue new permits or renew existing

permits for coal bed methane gas wells where the operator

thereof is not complying with the terms of this act, but may do

so once the operator demonstrates to the department that the

operator is again in compliance with this act.

Section 8.  Damages.

(a)  Civil action.--Any person having an interest which is or

may be adversely affected by any violations of the provisions of

this act may commence a civil action either to compel compliance

with the terms of this act or to seek damages for any injury to

the property of that person resulting from such a breach of the

provisions of this act or both. Any other provision of the law

to the contrary notwithstanding, the courts of common pleas

shall have jurisdiction over and venue in such actions as set

forth in the Pennsylvania Rules of Civil Procedure concerning

actions in assumpsit.

(b)  Fees and costs.--In an action brought to enforce the

provisions of this act or the terms of a surface use and

compensation agreement to this act, if a court finds that

compensation is owed under section 4, the court may also award

the prevailing party attorney fees and costs if:

(1)  the operator conducted operations without providing

notice as required by section 5(b);

(2)  the operator conducted operations without a surface

use and compensation agreement and before either depositing

or maintaining a bond or other surety as required by section

6;

(3)  the operator conducted operations outside the scope

of a surface use and compensation agreement and, when

entering into the agreement, knew or should have known that

the operations would be conducted outside the scope of the

agreement; or

(4)  the surface owner failed to exercise good faith in

complying with the provisions of this act or the terms of a

surface use and compensation agreement.

Section 9.  Protection of water supplies.

(a)  Operator.--Any coal bed methane gas well operator who

affects a public or private water supply by pollution or

diminution shall restore or replace the affected supply with an

alternate source of water adequate in quantity or quality for

the purposes served by the supply.

(b)  Owner or purveyor.--Any landowner or water purveyor

suffering pollution or diminution of a water supply as a result

of the drilling, alteration or operation of a coal bed methane

gas well may so notify the department and request that an

investigation be conducted. Within ten days of such

notification, the department shall investigate any such claim

and shall, within 45 days following notification, make a

determination. If the department finds that the pollution or

diminution was caused by the drilling, alteration or operation

activities or if it presumes the well operator responsible for

pollution under subsection (c), then it shall issue such orders

to the well operator as are necessary to assure compliance with

subsection (a). Such orders may include orders requiring the

temporary replacement of a water supply where it is determined

that the pollution or diminution may be of limited duration.

(c)  Presumption.--Unless rebutted by one of the five

defenses established in subsection (d), it shall be presumed

that a well operator is responsible for the pollution of a water

supply that is within 1,000 feet of the coal bed methane gas

well where the pollution occurred within six months after the

completion of drilling or alteration of the well.

(d)  Rebutting presumption.--In order to rebut the

presumption of liability established in subsection (c), the well

operator must affirmatively prove one of the following five

defenses:

(1)  The pollution existed prior to the drilling or

alteration activity as determined by a predrilling or

prealteration survey.

(2)  The landowner or water purveyor refused to allow the

operator access to conduct a predrilling or prealteration

survey.

(3)  The water supply is not within 1,000 feet of the

well.

(4)  The pollution occurred more than six months after

completion of drilling or alteration activities.

(5)  The pollution occurred as the result of some cause

other than the drilling or alteration activity.

(e)  Certified laboratory.--Any operator electing to preserve

its defenses under subsection (d)(1) or (2) shall retain the

services of an independent certified laboratory to conduct the

predrilling or prealteration survey of water supplies. A copy of

the results of any such survey shall be submitted to the

department and the landowner or water purveyor in a manner

prescribed by the department.

(f)  Other remedies.--Nothing in this act shall prevent any

landowner or water purveyor who claims pollution or diminution

of a water supply from seeking any other remedy that may be

provided at law or in equity.

Section 10.  Remedies not exclusive.

The remedies provided by this act are not exclusive and do

not preclude a person from utilizing any other remedies allowed

by statute, common law, deed or contract.

Section 11.  Emergency situations.

Notwithstanding any provisions of this act to the contrary,

no notice, surface use and compensation agreement or bond shall

be required in emergency situations with regard to any

activities which the department shall order a surface owner or

tenant to allow the operator or others to undertake to protect

the public health and safety or the environment.

Section 12.  Local regulation.

Nothing contained in this act shall be construed to limit or

prevent cities of any class, townships of either class or

boroughs from adopting local ordinances limiting how and where

coal bed methane wells and their attendant facilities may be

installed, pursuant to their governmental powers to protect the

health, safety and welfare of landowners and residents of a

municipality or to minimize damage to lands located therein.

Section 13.  Severability.

The provisions of this act are severable. If any provision of

this act or its application to any person or circumstance is

held invalid, the invalidity shall not affect other provisions

or applications of this act which can be given effect without

the invalid provision or application.

Section 30.  Effective date.

This act shall take effect immediately.