THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY GODSHALL, BLOOM, BURNS, GEIST, GERGELY, HESS, MARSHALL, MILLARD, MIRABITO, READSHAW, STABACK, SWANGER, WHITE AND YOUNGBLOOD, JUNE 21, 2011

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, JUNE 21, 2011  

AN ACT

Amending the act of July 11, 2006 (P.L.1134, No.115), entitled

"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," further providing for purpose, for definitions

and for creation of trust for unknown owners.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2 of the act of July 11, 2006 (P.L.1134,

No.115), known as the Dormant Oil and Gas Act, is amended to

read:

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 2.  Section 3 of the act is amended by adding

definitions to read:

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:

"Bonus."  Money or other property given for the execution of

an oil or gas lease, deed or other instrument conveying an oil

or gas interest. The term does not include rental or royalty

payments that are used to maintain an oil or gas interest.

* * *

"Correlative rights."  The rights of each owner of oil and

gas interests in a common pool or source of supply of oil and

gas to have a fair and reasonable opportunity to obtain and

produce the owner's just and equitable share of the oil and gas

in the pool or source of supply, without being required to drill

unnecessary wells or incur other unnecessary expense to recover

or receive the oil or gas or its equivalent.

* * *

Section 3.  Section 4 of the act is amended to read:

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 or by ownership of the surface tract that overlays

the oil and gas interest that is the subject of the petition.

(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.

(2.1)  Service of process has occurred in accordance with

Pa.R.C.P. No. 410 (relating to real property actions) and

that original process was served upon all surface owners

whose tracts overlay all or any part of the tract or tracts

of land that are the subject of the petition.

(3)  Appointment of a trustee will be in the best

interest of all owners of interests in the oil and gas.

(4)  By a preponderance of the evidence, the trust is

likely to result in the commercial development of the

subsurface properties.

(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 a

deed of sale or one or more oil or gas leases or other

instruments on terms and conditions approved by the court.

(d)  Deeds of sale, leases or other instruments.--Where a

deed of sale, lease or other instrument is authorized under

subsection (c), the trustee shall provide a credit to the sale

price for the costs incurred under subsection (b). The trustee

shall eliminate bonus payments as a factor in calculating the

fair market value of the relevant interests.

Section 4.  This act shall take effect in 60 days.