1Providing for surface owner protection.

2The General Assembly of the Commonwealth of Pennsylvania
3hereby enacts as follows:

4Section 1. Short title.

5This act shall be known and may be cited as the Surface
6Owners Protection Act.

7Section 2. Applicability.

8This act applies in the following situations when oil and gas
9exploration or oil and gas operations are conducted:

10(1) Land owned by a surface owner, who does not own
11mineral rights for oil and gas production, and who sustains
12damages as provided in section 4(a) resulting from oil and
13gas exploration or oil and gas operations.

14(2) Land subject to leasehold interests where the tenant
15sustains damages to leasehold improvements resulting from oil
16and gas operations.

17Section 3. Definitions.

1The following words and phrases when used in this act shall
2have the meanings given to them in this section unless the
3context clearly indicates otherwise:

4"Department." The Department of Environmental Protection of
5the Commonwealth.

6"Gas." The term as defined in 58 Pa.C.S. (relating to oil
7and gas).

8"Oil." The term as defined in 58 Pa.C.S. (relating to oil
9and gas).

10"Oil and gas exploration." All activities affecting the land
11owned by the surface owner that are associated with the
12exploration for oil or gas.

13"Oil and gas operations." All activities affecting the land
14owned by the surface owner that are associated with drilling or
15extraction of oil or gas, including final reclamation of the
16surface land affected by oil and gas operations.

17"Operator." A person with the legal right to conduct oil and
18gas operations, including the agents, employees and contractors
19of that person.

20"Reclaim." To substantially restore the surface affected by
21oil and gas operations to the condition that existed prior to
22oil and gas operations, or as otherwise agreed to in writing by
23the operator and the surface owner.

24"Surface owner." A person who holds legal or equitable
25title, as shown in the records of the county recorder of deeds,
26to the surface of the real property on which the operator has
27the legal right to conduct oil and gas operations.

28"Surface use and compensation agreement." An agreement
29between an operator and a surface owner specifying the rights
30and obligations of the surface owner and operator concerning

1activities and measures to mitigate damages to the surface owner
2resulting from oil and gas operations by the operator.

3"Tenant." A person who occupies land or premises belonging
4to another in subordination to the owner's title and with the
5owner's assent, express or implied.

6Section 4. Compensation for oil and gas operations.

7(a) Surface owner.--An operator shall compensate the surface
8owner for damages sustained by the surface owner, as applicable,
9for loss of agricultural production and income, lost land value,
10lost use of and lost access to the surface owner's land and lost
11value of improvements caused by oil and gas exploration and oil
12and gas operations. The payments required by this section only
13apply to land affected by oil and gas exploration and oil and
14gas operations.

15(b) Tenant.--An operator shall not be responsible for
16allocating compensation between the surface owner and any
17tenant, except that an operator shall compensate a tenant of the
18surface owner for any leasehold improvements damaged as a result
19of the operator's oil and gas exploration or oil and gas
20operations if the improvements are approved and authorized by
21the surface owner. The compensation shall equal the cost of
22repairing or replacing the improvements.

23Section 5. Notices; surface use and compensation agreement.

24(a) General notice.--Prior to initial entry upon the land
25for activities that do not disturb the surface, including
26inspections, staking, surveys, measurements and general
27evaluation of proposed routes and sites for oil and gas
28operations, the operator shall provide at least five business
29days' notice by certified mail or hand delivery to the surface
30owner.

1(b) Exploration notice.--The following provisions shall
2apply:

3(1) No less than 15 days before entering the property of
4the surface owner to conduct oil and gas exploration, an
5operator shall, by certified mail or hand delivery, give the
6surface owner notice of planned oil and gas exploration. The
7notice shall include:

8(i) Sufficient disclosure of the planned oil and gas
9exploration to enable the surface owner to evaluate the
10effect of the operations on the surface owner's property,
11including applicable information listed in subsection (c)
12(1) that has the potential to damage the value or use of
13the property by the surface owner.

14(ii) A copy of this act.

15(iii) The name, address, telephone number and, if
16available, facsimile number and electronic mail address
17of the operator and the operator's authorized
18representative.

19(2) The surface owner may, within 30 days of receipt of
20the notice of proposed oil and gas exploration, submit to the
21operator a claim that outlines the anticipated damages to the
22value and use of the property resulting from the planned oil
23and gas exploration.

24(c) Operation notice.--No less than 30 days before first
25entering the property of the surface owner to conduct oil and
26gas operations, an operator shall, by certified mail or hand
27delivery, give the surface owner notice of the planned oil and
28gas operations. The notice shall include:

29(1) Sufficient disclosure of the planned oil and gas
30operations to enable the surface owner to evaluate the effect

1of the operations on the surface owner's property, including
2the following information and State law requirements under 58
3Pa.C.S. (relating to oil and gas) that has the potential to
4damage the value or the use of the property by the surface
5owner:

6(i) Placement, specifications, maintenance and
7design of well pads, gathering pipelines and roads to be
8constructed for oil and gas operations.

9(ii) Planned routes of ingress and egress upon the
10surface of the land and the anticipated traffic load on
11each route resulting from the oil and gas operations.

12(iii) Construction, maintenance and placement of all
13pits and equipment used or planned for oil and gas
14operations.

15(iv) Use and impoundment of water on property of the
16surface owner.

17(v) Plans to remove and restore plant life on the
18property.

19(vi) The likelihood for any change in the surface
20water drainage on the property of the surface owner as a
21result of the oil and gas operations and plans to restore
22such drainage.

23(vii) Actions to limit and effectively control
24precipitation runoff and erosion.

25(viii) Control and management of noise, weeds, dust,
26traffic, trespass, litter and interference with the use
27of the property by the surface owner.

28(ix) Interim and final reclamation.

29(2) A copy of this act.

30(3) The name, address, telephone number and, if

1available, facsimile number and electronic mail address of
2the operator and the operator's authorized representative.

3(4) A proposed surface use and compensation agreement
4that shall contain, at a minimum and to the extent known, the
5following:

6(i) A summary of the elements of the proposed oil
7and gas operations listed in paragraph (1).

8(ii) Actions to minimize the likelihood of damages
9to the use or value of the surface owner's property
10arising from oil and gas operations from the requirements
11contained in paragraph (1).

12(iii) Operator indemnification for injury to persons
13caused by the operator.

14(iv) An offer of compensation for actual damages
15incurred by the surface owner resulting from oil and gas
16exploration.

17(v) An offer of compensation to include an amount
18for actual damages incurred by the surface owner
19resulting from oil and gas exploration and an amount for
20damages to the surface owner resulting from the proposed
21oil and gas operations.

22(d) Owner of record.--The notices required by this section
23shall be given to the surface owner at the address shown by the
24records of the county recorder of deeds at the time the notice
25is given. If legal title and equitable title are not held by the
26same person, notice shall be given to both the holder of the
27legal title and to the holder of equitable title at the
28addresses shown by the records of the county recorder of deeds
29at the time the notice is given.

30(e) Agreement.--Upon receipt of the notice required by

1subsection (c), the surface owner may:

2(1) accept the proposed surface use and compensation
3agreement within 20 days; or

4(2) reject the proposed surface use and compensation
5agreement; provided that, failure to accept the proposed
6agreement within 20 days shall be deemed to be a rejection of
7the proposed agreement by the surface owner. If the proposed
8agreement is rejected, the surface owner may enter into
9negotiations with the operator, including, if the parties
10agree, binding arbitration or mediation.

11(f) Receipt.--Notices required by this act shall be deemed
12to have been received five days after mailing by certified mail
13or immediately upon hand delivery.

14(g) Mitigation of damage.--The operator and the surface
15owner may enter into a mutually acceptable agreement specifying
16the rights and obligations of the surface owner and operator
17concerning activities and measures to mitigate damages to the
18surface owner resulting from oil and gas operations by the
19operator.

20Section 6. Entry without agreement; bond.

21If, after 30 days from a surface owner's receiving notice of
22planned oil and gas operations pursuant to section 5(c), no
23surface use and compensation agreement has been entered into,
24the operator may enter the property of the surface owner and
25conduct oil and gas operations, after compliance with either of
26the following:

27(1) After depositing a surety bond, a letter of credit
28from a financial institution chartered or authorized to do
29business in this Commonwealth and regulated and examined by a
30Federal agency or the Commonwealth, or cash or a certificate

1of deposit with a corporate surety licensed to do business in
2this Commonwealth and approved by the department, or for the
3benefit of the surface owner in the amount of $10,000 per
4well location. The surety bond, letter of credit, cash or
5certificate of deposit shall only be released if:

6(i) The surface owner provides notice that
7compensation for damages has been paid.

8(ii) The surface owner and the operator have
9executed a surface use and compensation agreement or
10otherwise agreed that the security should be released.

11(iii) There has been a final resolution of any
12judicial appeal in any action for damages and any awarded
13damages have been paid.

14(iv) All wells have been plugged and abandoned and
15the operator has not conducted oil and gas operations on
16the surface owner's property for a period of six years.

17(2) After posting a blanket security bond, letter of
18credit from a financial institution chartered or authorized
19to do business in this Commonwealth and regulated and
20examined by a Federal agency or the Commonwealth, cash or a
21certificate of deposit with a corporate surety licensed to do
22business in this Commonwealth and approved by the department
23in the sum of $25,000 subject to the following criteria:

24(i) The corporate surety shall hold the blanket
25security bond, letter of credit, cash or certificate of
26deposit for the benefit of the surface owners of this
27Commonwealth and shall ensure that such security is in a
28form readily payable to a surface owner awarded damages
29in an action brought pursuant to this act.

30(ii) The blanket security bond, letter of credit,

1cash or certificate of deposit shall remain in full force
2and effect as long as the operator continues oil and gas
3operations in this Commonwealth.

4(iii) The blanket security bond, letter of credit,
5cash or certificate of deposit shall not be released
6until six years after the operator has deposited with the
7corporate surety a certified statement from the
8department that, according to the records of the
9department, the operator is not the operator of record of
10any oil or gas well in this Commonwealth, and does not
11hold any outstanding permits for the drilling issued
12under 58 Pa.C.S. (relating to oil and gas) and its
13regulations.

14(iv) In the event that, pursuant to a judgment, all
15or a portion of the bond, letter of credit, cash or
16certificate of deposit has been used to pay a surface
17owner, the operator shall immediately post additional
18security so that the total amount equals $25,000 and, if
19the operator does not post the additional security, the
20corporate surety shall publish notice to that effect in a
21paper of general circulation in each county of the
22Commonwealth in which the operator conducts oil and gas
23operations.

24Section 7. Court-awarded damages.

25In an action brought pursuant to this act, if a court finds
26that compensation is owed under section 4, the court may also
27award the prevailing party either of the following if one of the
28criteria is met:

29(1) Attorney fees and costs, if any of the following
30apply:

1(i) the operator conducted oil and gas operations
2without providing notice as required under section 5(b)
3and (c);

4(ii) the operator conducted oil and gas operations
5without a surface use and compensation agreement entered
6into between the operator and the surface owner and
7before depositing a bond or other surety as required
8under section 6;

9(iii) the operator conducted oil and gas operations
10and did not comply with the terms of the surface use and
11compensation agreement, and when entering into the
12agreement, knew or should have known that compliance with
13the terms of the agreement would not be met; or

14(iv) the surface owner failed to exercise good faith
15in complying with the provisions of this act or the terms
16of the surface use and compensation agreement.

17(2) Attorney fees, costs and treble damages if the court
18finds, by clear and convincing evidence, either of the
19following:

20(i) The operator willfully and knowingly entered
21upon the premises for the purpose of drilling an oil or
22gas well:

23(A) Without giving notice to the surface owner
24as required under section 5(b).

25(B) Without a surface and compensation agreement
26entered into between the operator and the surface
27owner and before depositing a bond or other surety
28pursuant to section 6.

29(ii) Either the surface owner or the operator
30willfully and knowingly violated the terms of the surface

1use and compensation agreement.

2Section 8. Remedies not exclusive.

3The remedies provided by this act are not exclusive and do
4not preclude a person from seeking other remedies allowed by
5law.

6Section 9. Emergency situations.

7Notwithstanding any provisions of this act to the contrary,
8no notice, surface use compensation agreement or bond shall be
9required in emergency situations for activities to protect
10health, safety or the environment.

11Section 10. Temporary provision; applicability.

12The provisions of this act shall apply to all oil and gas
13operations commenced on or after July 1, 2013, except the
14following:

15(1) Maintenance and outgoing production activities
16related to an oil and gas well producing or capable of
17producing oil or gas on June 30, 2013, for which the operator
18has a valid permit issued under 58 Pa.C.S. (relating to oil
19and gas), provided that:

20(i) reentries, workovers and other oil or gas
21operations are subject to this act if the activities
22disturb additional surface of the land; and

23(ii) the duty to reclaim, as stated in section 4(c),
24is applicable to such an oil or gas well that is not
25plugged and abandoned on July 1, 2013.

26(2) Oil and gas operations conducted within the scope of
27an agreement, entered into prior to July 1, 2013, between a
28surface owner and an operator that sets forth rights and
29duties of the parties with respect to activities conducted by
30the parties to mitigate the impact of oil and gas operations

1on the surface owner.

2Section 11. Effective date.

3This act shall take effect immediately.