PRINTER'S NO. 4370
No. 2533 Session of 2008
INTRODUCED BY GEORGE, BELFANTI, BENNINGTON, CALTAGIRONE,
CARROLL, DeWEESE, GOODMAN, HALUSKA, JOSEPHS, KOTIK, KULA,
MARSHALL, McILHATTAN, MUNDY, MYERS, PETRONE, READSHAW,
SIPTROTH, SURRA, SWANGER, THOMAS, WALKO, WHEATLEY, J. WHITE,
WOJNAROSKI AND YOUNGBLOOD, SEPTEMBER 18, 2008
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
SEPTEMBER 18, 2008
AN ACT
1 Providing for duties of oil and gas well operators, for notice
2 of operations and surface use and compensation agreement, for
3 entry without surface use compensation agreement, for
4 restriction on issuance of permits for wells, for attorney
5 fees and costs and for emergency situations.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Surface
10 Owners' Protection Act.
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Department." The Department of Environmental Protection of
16 the Commonwealth.
17 "Gas." Fluid, either combustible or noncombustible, which is
1 produced in a natural state from the earth and which maintains a
2 gaseous or rarified state at a standard temperature of 60
3 degrees Fahrenheit and a pressure of 14.7 PSIA, manufactured
4 gas, byproduct gas or any mixture of gases.
5 "Oil" or "petroleum." Hydrocarbons in liquid form at a
6 standard temperature of 60 degrees Fahrenheit and a pressure of
7 14.7 PSIA.
8 "Oil or gas operations" or "operations." Activities
9 affecting land or water sources, no matter how slight, that are
10 associated with oil or gas exploration or production, including,
11 but not limited to:
12 (1) Construction, installation, maintenance or removal
13 of oil or gas wells.
14 (2) Construction, installation, maintenance or removal
15 of pipelines and equipment for gas, oil or water.
16 (3) Installation, maintenance and removal of all access
17 or service roads.
18 (4) Installation, maintenance or removal of oil or gas
19 production or storage equipment and facilities.
20 (5) Rework of oil and gas wells.
21 (6) Plugging of oil or gas wells.
22 (7) Actions taken to reclaim well sites.
23 (8) Actions taken regarding road and pipeline rights-of-
24 way.
25 "Person." Any natural person, association, partnership,
26 corporation, political subdivision or agency of the Federal or
27 State Government or other legal entity.
28 "Reclaim." To restore any portion of land affected by oil or
29 gas operations to the same, or substantially similar, condition
30 that existed prior to oil or gas operations, or as otherwise
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1 agreed to in a memorialized agreement between the operator and
2 the landowner or tenants.
3 "Surface." The uppermost portion of the earth's crust,
4 including land and aquatic features.
5 "Surface owner." A person who holds legal or equitable title
6 to the surface of a parcel of real property.
7 "Surface use and compensation agreement." An agreement
8 written, signed and notarized between a surface owner and an
9 operator stipulating the location of proposed oil or gas wells,
10 access roads and any other uses of the surface during oil or gas
11 exploration and production. An oil or gas operation lease
12 agreement entered into by a surface owner and an operator, which
13 pays the surface owner at least a one-eighth royalty on gas or
14 oil extracted from areas under the surface of the surface
15 owner's real property, shall be deemed a surface use and
16 compensation agreement for the purposes of this act.
17 "Tenant." A person who occupies a parcel of real property
18 belonging to the surface owner in subordination to the surface
19 owner's title and with the surface owner's assent, expressed or
20 implied.
21 "Water sources." Rivers, streams, creeks, rivulets,
22 impoundments, ditches, water courses, storm sewers, lakes,
23 dammed water, ponds, springs or all other bodies of surface
24 water, or parts thereof, whether natural or artificial, within
25 or on the boundaries of the surface owner.
26 "Well." A bore hole drilled or being drilled for the purpose
27 of or to be used for producing, extracting or injecting any gas,
28 petroleum or other liquid related to oil or gas production or
29 storage, including brine disposal, but excluding bore holes
30 drilled to produce potable water to be used as such. The term
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1 does not include a bore hole drilled or being drilled for the
2 purpose of or to be used for systems of monitoring, producing or
3 extracting gas from solid waste disposal facilities, as long as
4 the wells are subject to the act of July 7, 1980 (P.L.380,
5 No.97), known as the Solid Waste Management Act, and do not
6 penetrate a workable coal seam. The term also does not include a
7 bore hole drilled or being drilled for the purpose of or to be
8 used for degasifying coal seams if the following conditions are
9 satisfied:
10 (1) The bore hole is used to vent methane to the outside
11 atmosphere from an operating coal mine.
12 (2) The bore hole is regulated as part of the mining
13 permit pursuant to the act of June 22, 1937 (P.L.1987,
14 No.394), known as The Clean Streams Law, and the act of May
15 31, 1945 (P.L.1198, No.418), known as the Surface Mining
16 Conservation and Reclamation Act.
17 (3) The bore hole is drilled by the operator of the
18 operating coal mine for the purpose of increased safety.
19 (4) The bore hole is used to vent methane to the outside
20 atmosphere pursuant to a federally funded or State-funded
21 abandoned mine reclamation project.
22 "Well operator" or "operator." The person designated as the
23 well operator or operator on the permit application or well
24 registration. Where a permit or registration was not issued, the
25 term shall mean any person who owns, manages, leases, controls
26 or possesses any well or coal property, or any person who
27 locates, drills, operates, alters or plugs any well or
28 reconditions any well with the purpose of production from the
29 well.
30 Section 3. Duties of operators.
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1 (a) Nonlease extraction agreements.--Except to the extent
2 otherwise provided in a surface use and compensation agreement
3 duly executed by a surface owner and an operator, where oil or
4 gas are not leased for extraction from the surface owner by the
5 operator in a lease paying at least a one-eighth royalty to the
6 surface owner, an operator shall:
7 (1) Compensate fully the surface owner for damages
8 resulting in any diminution in value of the real property and
9 any real estate upon the tract, including, but not limited
10 to:
11 (i) Lost agricultural production and income.
12 (ii) Lost timber production.
13 (iii) Lost land value.
14 (iv) Lost use of and access to the surface owner's
15 land or water sources.
16 (v) Lost value of property improvements caused by
17 operations.
18 (2) Reclaim entirely the surface affected by oil or gas
19 operations within nine months of the cessation of extracting
20 oil or gas from any well on a surface owner's tract of land.
21 (b) Compensation.--An operator shall not be responsible for
22 negotiating or allocating compensation between the surface owner
23 and any tenant, except that an operator shall compensate fully
24 any tenant of the surface owner for any diminution in value of
25 leasehold improvements, made by said tenant, damaged as a result
26 of the operator's oil or gas operations.
27 Section 4. Notice of operations and surface use and
28 compensation agreement.
29 (a) Prior to entry.--No less than 15 business days prior to
30 initial entry upon a tract of land for activities that will not
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1 disturb the surface, including inspections, staking, surveys,
2 measurements and general evaluations of proposed routes and
3 sites for oil or gas operations, an operator shall provide
4 notice by certified mail to the surface owner of each tract on
5 which the operator proposes activity as well as a statement
6 citing deeds, leases, rights-of-way, easements and other rights
7 relating to the right of access of the operator to the tract of
8 land.
9 (b) Prior to application.--Prior to submission of an
10 application for a permit to the department under section 201 of
11 the act of December 19, 1984 (P.L.1140, No.223), known as the
12 Oil and Gas Act, and no less than 45 days before entering the
13 surface of the land to conduct any oil or gas operations, an
14 operator shall, by certified mail, provide the surface owner
15 with notice of the planned operations. Copies of the notice
16 shall also be sent to surface owners within a half-mile radius
17 of each proposed well site. The notice shall include:
18 (1) Sufficient disclosure of the planned operations,
19 including topographical and underground maps of the relevant
20 areas, permits and materials submitted by the operator to
21 obtain permits to enable the surface owner to evaluate the
22 effects the operations might have on the lands of the surface
23 owner.
24 (2) A copy of this act and a copy of the Oil and Gas
25 Act.
26 (3) The name, address, telephone number and, if
27 available, facsimile number and electronic mail address of
28 the operator and the authorized representative of the
29 operator.
30 (4) Information regarding required or recommended
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1 predrilling surveys and other provisions relating to:
2 (i) Protection of water sources.
3 (ii) Well location restrictions.
4 (iii) Casing, cementing and plugging plans for wells
5 and production-related horizontal bore holes pursuant to
6 the Oil and Gas Act.
7 (5) A proposed surface use and compensation agreement
8 addressing, to the extent known, the following:
9 (i) Placement, specifications, maintenance and
10 design of well pads, gathering pipelines, water
11 pipelines, storage facilities for water, oil or gas,
12 compressor stations, pump stations, meter pits and roads
13 to be constructed and other facilities of every type to
14 be constructed and utilized either temporarily or
15 permanently for operations.
16 (ii) The proposed frequency of ingress and egress
17 across or under the surface of the land for operations,
18 including pipelines, and the routes for the same.
19 (iii) Construction, maintenance and placement of
20 pits used or planned for operations.
21 (iv) Use and impoundment of water on the surface of
22 the land.
23 (v) Removal and restoration of the species of plant
24 life existing prior to commencement of any operations on
25 areas to be impacted by those operations.
26 (vi) Surface water drainage changes.
27 (vii) Plans and actions to limit and effectively
28 control precipitation runoff, sedimentation and erosion.
29 (viii) Control and management of noise, weeds, dust,
30 traffic, trespass, litter and other interferences with
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1 the use and enjoyment of the surface by the surface owner
2 or tenant.
3 (ix) Interim and final proposals to reclaim the
4 surface.
5 (x) Plans or actions to be undertaken to minimize
6 damages to the surface.
7 (xi) Operator indemnification for injury to persons
8 or properties other than that of the surface owner when
9 caused by the operations.
10 (xii) Efforts to restrict access to the land of the
11 surface owner by third parties utilizing the access roads
12 and rights-of-way of the operator.
13 (xiii) An offer of compensation for damages to the
14 surface affected by operations.
15 (6) A plat that shows:
16 (i) The tract of land upon which each well is to be
17 located.
18 (ii) The name of the surface landowner of record and
19 lessor, if any.
20 (iii) The name of all surface landowners or water
21 purveyors whose water supplies are within one half-mile
22 of the proposed well location.
23 (iv) The location of water sources.
24 (v) Placement of well pads, gathering pipelines,
25 water pipelines, storage facilities for oil, gas or
26 water, compressor stations, meter pits and pump stations
27 and roads to be constructed for oil and gas operations.
28 (vi) Placement of pits and equipment used or
29 planned, and use and impoundment of water on the surface
30 of the land.
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1 (vii) The workable coal seams, if any, underlying
2 the tract of land upon which the well is to be drilled or
3 altered, which are to be cased off in accordance with
4 section 207 of the Oil and Gas Act.
5 (viii) The name of the owner of record or operator
6 of known underlying workable coal seams, if any.
7 (ix) The acreage in the tract to be drilled.
8 (x) The proposed location of each well determined by
9 survey.
10 (xi) The courses and distances of the proposed well
11 locations from two or more permanent identifiable points
12 or landmarks on the tract boundary corners.
13 (xii) The proposed angle and direction of a well, if
14 the well is to be deviated substantially from the
15 vertical course.
16 (xiii) The number or other identification to be
17 given to the wells.
18 (c) Persons to be notified.--The notices required under this
19 section shall be sent to the surface owner at the address shown
20 by the property tax records at the time the notice is given. If
21 the property tax records for the county or the records in the
22 recorder's office for the county where the property is located
23 disclose that legal and equitable title of the land are not held
24 by the same person, notice shall be given to both the holder of
25 the legal title and to the holder of the equitable title at the
26 addresses shown by the property tax records at the time the
27 notice is given.
28 (d) Surface owner options.--Upon receipt of the notice
29 required under subsection (b), the surface owner may:
30 (1) agree to the proposed surface use and compensation
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1 agreement within 45 days of receipt; or
2 (2) reject the proposed surface use and compensation
3 agreement and enter into a mutually acceptable surface use
4 and compensation agreement that sets forth the rights and
5 obligations of the parties.
6 (e) Presumption of receipt.--Notices to the surface owners
7 required under this act shall be deemed to have been received 15
8 days after mailing by certified mail.
9 Section 5. Entry without surface use and compensation
10 agreement.
11 (a) Requirements.--If, after 45 days from the date on which
12 a surface owner receives notice pursuant to section 4(b), no
13 surface use and compensation agreement has been executed by the
14 operator and surface owner, the operator may file applications
15 for permits with the department for the oil or gas wells
16 proposed to be located on the surface owner's property after
17 depositing a surety bond, letter of credit from a banking
18 institution, cash or certificate of deposit with a Pennsylvania
19 surety company or financial institution for the benefit of a
20 surface owner in an amount equal to the greater of:
21 (1) 120% of the operator's best compensation offer as to
22 each oil or gas production facility's location; or
23 (2) $250,000 per production facility location.
24 (b) Release.--The surety bond, letter of credit, cash or
25 certificate of deposit shall only be released by the surety
26 company or financial institution back to the operator if:
27 (1) the surface owner provides an affidavit that
28 compensation for use of and damages to the surface owner's
29 land have been paid in full to the surface owner;
30 (2) the surface owner and the operator have executed a
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1 surface use and compensation agreement or otherwise agreed
2 the surety should be released;
3 (3) there has been a final resolution of the judicial
4 appeal in any action for damages brought by the surface owner
5 and any awarded damages have been paid; or
6 (4) all wells on the land of the surface owner have been
7 plugged and abandoned in accordance with law and the operator
8 has not conducted oil or gas operations on the property of
9 the surface owner for a period of four years.
10 Section 6. Restriction on issuance of permits for wells.
11 The department shall not issue new permits or renew existing
12 permits for wells where an operator is not complying with the
13 terms of this act. The department may resume issuing permits to
14 the operator only when the operator demonstrates to the
15 department it is in compliance with this act.
16 Section 7. Attorney fees and costs.
17 (a) General rule.--In an action brought pursuant to this
18 act, if a court finds that compensation is owed under section 3,
19 the court may also award the prevailing party attorney fees and
20 costs if:
21 (1) the operator conducted operations without providing
22 notice as required under section 4(b);
23 (2) the operator conducted operations without a surface
24 use and compensation agreement and before either depositing
25 or maintaining a bond or other surety as required under
26 section 5;
27 (3) the operator conducted operations outside the scope
28 of a surface use and compensation agreement and, when
29 entering into the agreement, knew or should have known that
30 operations would be conducted outside the scope of the
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1 agreement; or
2 (4) the surface owner failed to exercise good faith in
3 complying with the provisions of this act or the terms of a
4 surface use and compensation agreement.
5 (b) Clear and convincing evidence standard.--In an action
6 brought pursuant to this act, if a court finds that compensation
7 is owed under section 3, the court may also award the prevailing
8 party attorney fees, costs and treble damages if the court
9 finds, by clear and convincing evidence, that:
10 (1) the operator willfully and knowingly entered upon
11 the premises for the purpose of commencing the drilling of a
12 well:
13 (i) without giving notice as required under section
14 4(b); or
15 (ii) without a surface use and compensation
16 agreement with the surface owner and before depositing a
17 bond or other surety pursuant to section 5; or
18 (2) either the surface owner or the operator willfully
19 and knowingly violated the terms of a surface use and
20 compensation agreement between them.
21 Section 8. Protection of water supplies.
22 (a) Restoration and replacement.--A well operator who
23 affects a public or private water supply by pollution or
24 diminution shall restore or replace the affected supply with an
25 alternate source of water adequate in quantity and quality for
26 the purposes served by the supply.
27 (b) Investigation requests.--A landowner or water purveyor
28 suffering pollution or diminution of a water supply as a result
29 of the drilling, alteration or operation of an oil or gas well
30 may so notify the department and request that an investigation
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1 be conducted. Within ten days of the notification, the
2 department shall investigate the claim and shall, within 45 days
3 following notification, make a determination. If the department
4 finds that the pollution or diminution was caused by the
5 drilling, alteration or operation activities, or if the
6 department presumes the well operator responsible for pollution
7 pursuant to subsection (c), then the department shall issue
8 orders to the well operator necessary to assure compliance with
9 subsection (a). The orders may include orders requiring the
10 temporary replacement of a water supply where it is determined
11 that the pollution or diminution may be of limited duration.
12 (c) Presumption.--Unless rebutted by one of the five
13 defenses established under subsection (d), it shall be presumed
14 that a well operator is responsible for the pollution of a water
15 supply that is within 2,500 feet of the oil or gas well, where
16 the pollution occurred within six months after the completion of
17 drilling or alteration of the well.
18 (d) Defenses.--In order to rebut the presumption of
19 liability established under subsection (c), the well operator
20 must affirmatively prove one of the following five defenses:
21 (1) The pollution existed prior to the drilling or
22 alteration activity as determined by a predrilling or
23 prealteration survey.
24 (2) The landowner or water purveyor refused to allow the
25 operator access to conduct a predrilling or prealteration
26 survey.
27 (3) The water supply is not within 2,500 feet of the
28 well.
29 (4) The pollution occurred more than six months after
30 completion of drilling or alteration activities.
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1 (5) The pollution occurred as the result of some cause
2 other than the drilling or alteration activity.
3 (e) Preservation of defenses.--Any operator electing to
4 preserve its defenses under subsection (d)(1) or (2) shall
5 retain the services of an independent certified laboratory to
6 conduct the predrilling or prealteration survey of water
7 supplies. A copy of the results of the survey shall be submitted
8 to the department and the landowner or water purveyor in a
9 manner prescribed by the department.
10 (f) Equitable remedies.--Nothing in this section shall
11 prevent any landowner or water purveyor who claims pollution or
12 diminution of a water supply from seeking any other remedy that
13 may be provided by law or in equity.
14 Section 9. Remedies not exclusive.
15 The remedies provided by this act are not exclusive and do
16 not preclude a person from utilizing any other remedies allowed
17 by statute, common law, deed or contract.
18 Section 10. Emergency situations.
19 Notwithstanding any provision of this act to the contrary, no
20 notice, surface use and compensation agreement or bond shall be
21 required in emergency situations for activities determined by
22 the department to be necessary to protect public health and
23 safety or the environment.
24 Section 11. Severability.
25 The provisions of this act are severable. If any provision of
26 this act or its application to any person or circumstance is
27 held invalid, the invalidity shall not affect other provisions
28 or applications of this act which can be given effect without
29 the invalid provision or application.
30 Section 20. Effective date.
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1 This act shall take effect in 120 days.
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