DORMANT OIL AND GAS ACT
Act of Jul. 11, 2006, P.L. 1134, No. 115 Cl. 58
AN ACT
Providing for the creation of a trust for the benefit of certain
owners of interests in oil and gas; authorizing the trustee
to enter into leases of interests in oil and gas under terms
and conditions authorized by the court of common pleas;
providing for the administration of the trust and for payment
of moneys to the trustee; and imposing penalties for
nonpayment.
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 Dormant Oil
and Gas Act.
Section 2. Purpose.
The purpose of this act is to facilitate the development of
subsurface properties by reducing the problems caused by
fragmented and unknown or unlocatable ownership of oil and gas
interests and to protect the interests of unknown or unlocatable
owners of oil and gas. It is not the purpose of this act to vest
the surface owner with title to oil and gas interests that have
been severed from the surface estate.
Section 3. 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:
"Business association." Includes any corporation, joint
stock company, business trust, partnership or any association of
two or more individuals for business purposes, whether organized
or operated under Federal or State law.
"Financial institution." Includes a bank, private bank, bank
and trust company, savings association, savings bank, trust
company, savings and loan association and building and loan
association, whether organized or operated under Federal or
State law.
"Gas." Natural gas and all other volatile hydrocarbons not
defined in this section as oil, including condensate because it
originally was in a gaseous phase in the reservoir. The term
does not include methane gas that is contained within or
produced from underground coal beds or mined out of underground
coal mine areas.
"Oil." Crude petroleum oil and all other hydrocarbons,
regardless of gravity, produced at a well in liquid form by
ordinary production methods. The term does not include liquid
hydrocarbons that were originally in a gaseous phase in a
reservoir.
"Owner." Any person having a legal or equitable interest in
property subject to this act or the person's legal
representative and any person who owns a royalty interest in oil
or gas deposits.
"Person." Any natural person, corporation, association,
partnership, receiver, trustee, executor, administrator,
guardian, fiduciary or other representative of any kind. The
term includes any department, agency or instrumentality of the
Commonwealth or any governmental subdivision thereof.
"Royalty interest." An interest in an oil or gas lease which
entitles the owner to share in the production of the oil or gas
under a lease or the proceeds from a lease without the
obligation to pay any costs of production under the lease.
"Unknown owner or owners." The owner or owners of interests
in oil and gas who are unknown or whose present residence or
other addresses cannot be found by reasonable efforts to do so.
Section 4. Creation of trust for unknown owners.
(a) General rule.--Any person who owns an interest in oil
and gas underlying a tract of land may petition the appropriate
division of the court of common pleas of the county in which the
tract or any portion of the tract is located to declare a trust
in favor of all unknown owners of an interest in the oil and gas
underlying the tract whose identity, present residence or
present address is unknown and cannot be determined by diligent
efforts. The petitioner's interest may be in fee, by lease, a
royalty or by ownership of correlative rights in an oil and gas
reservoir.
(b) Requirements.--Before the court shall declare a trust in
favor of an unknown owner or owners, the petitioner shall show
to the satisfaction of the court that:
(1) Petitioner has made a diligent effort to locate the
owner or claimant.
(2) Despite this diligent effort, petitioner has been
unable to identify or to locate the present residence or
other address of one or more owners or claimants of the oil
or gas interest or interests in question.
(3) Appointment of a trustee will be in the best
interest of all owners of interests in the oil and gas.
(c) Appointment.--Following a determination that the
requirements of subsection (b) have been met, the court shall
appoint a financial institution authorized to do business in
this Commonwealth as trustee of a trust for the unknown owner or
owners and shall authorize the trustee to execute and deliver
one or more oil or gas leases or other instruments on terms and
conditions approved by the court.
Section 5. Administration of trust.
(a) Governing law.--The trust shall be administered in
accordance with the provisions of 20 Pa.C.S. (relating to
decedents, estates and fiduciaries).
(b) Payments.--All bonuses, rental payments, royalties and
other income due to the unknown owner or owners shall be paid to
the trustee until the trust is terminated and notice of its
termination given to all interested parties. The trustee shall
distribute all moneys held in the trust to the person or persons
entitled thereto as determined by the trustee or by order of the
court that created the trust.
(c) Trust to remain in force.--A trust for unknown owners
shall remain in force until the unknown owners of the oil and
gas interests in question have been identified to the
satisfaction of the trustee and received their share of any
funds held in trust.
(d) Fiscal Code.--Funds held in a trust for unknown owners
are subject to the provisions of Article XIII.1 of the act of
April 9, 1929 (P.L.343, No.176), known as The Fiscal Code,
relating to disposition of unclaimed and abandoned property.
Section 6. Responsibility of lessee or payor.
Any lessee or other person who pays bonuses, rental payments,
royalties and other income due to the unknown owners to the
trustee shall not be liable for further claims by the unknown
owners for any other income produced from the oil and gas
interests subject to the trust.
Section 7. Penalty.
Any person who fails to pay any bonuses, rental payments,
royalties or other income due owners of interests in oil and gas
who are unknown or cannot be found to the trustee within six
months of the date of which those funds become due shall be
liable for all attorney fees and court costs of collection, with
interest to the date of payment.
Section 8. Effective date.
This act shall take effect immediately.
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