Regular Session 2021-2022 Senate Bill 0806 P.N. 2000

HOUSE AMENDED

PRIOR PRINTER'S NOS. 973, 1105, 1353

PRINTER'S NO. 2000

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

806

Session of

2021

INTRODUCED BY YAW, BARTOLOTTA, HUTCHINSON, BAKER, MENSCH,

YUDICHAK, PITTMAN, TARTAGLIONE AND BROOKS, JUNE 25, 2021

AS REPORTED FROM COMMITTEE ON ENVIRONMENTAL RESOURCES AND

ENERGY, HOUSE OF REPRESENTATIVES, AS AMENDED,

OCTOBER 24, 2022

AN ACT

Amending the act of July 20, 1979 (P.L.183, No.60), entitled "An

act regulating the terms and conditions of certain leases

regarding natural gas and oil," further providing for

definitions, for payment information to interest owners and

for accumulation of proceeds from production.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "division order" and "interest

owner" in section 1.2 of the act of July 20, 1979 (P.L.183,

No.60), known as the Oil and Gas Lease Act, are amended and the

section is amended by adding a definition to read:

Section 1.2. 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:

* * *

"Division order." An agreement signed by [an interest owner]

a royalty owner directing the distribution of proceeds from the

sale of oil, gas, casing head gas or other related hydrocarbons.

The order shall direct and authorize the payor to make payment

for [the] products taken in accordance with the [division order]

lease at the royalty owner's share established by the division

order.

["Interest owner." A person who is legally entitled to

payment from the proceeds derived from the sale of oil or gas

from an oil or gas well located in this Commonwealth.]

* * *

"Royalty owner." Any owner of oil or gas in place or oil or

gas rights, subject to a lease covering such oil or gas in place

or oil or gas rights. The term includes the owner of an interest

in an oil or gas lease which entitles him to share in the

production of the oil or gas under such lease and the owner of

any interest in the oil or gas in place, or oil or gas rights,

who has not executed an oil and gas lease, to the extent that

the owner is not designated an "operator" under 58 Pa.C.S. §

3203 (relating to definitions).

Section 2. Sections 3.2 and 3.3 of the act are amended to

read:

Section 3.2. Payment information to [interest owners] royalty

owners for oil, natural gas and natural gas liquids

from a conventional formation.

Whenever payment is made [for oil or gas production to an

interest owner, whether pursuant to a division order, lease,

servitude or other agreement,] to a royalty owner for the

production of oil, gas or natural gas liquids from a

conventional formation, pursuant to an oil and gas lease, all of

the following information, at a minimum, shall be included on

the check stub provided to the royalty owner or on an attachment

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to the form of payment provided to the royalty owner, unless the

information is otherwise provided on a regular basis:

(1) A name, number or combination of name and number

that identifies the lease, property, unit or well or wells

for which payment is being made; and the county in which the

lease, property or well is located.

(2) Month and year of [gas production] oil, gas or

natural gas liquids production for which payment is being

made.

(3) Total barrels of crude oil or number of Mcf of gas

or volume of natural gas liquids sold.

(4) Price received per barrel, Mcf or gallon.

(5) Total amount of severance and other production taxes

and other deductions permitted under the lease, with the

exception of windfall profit tax.

(6) Net value of total sales from the property less

taxes and deductions from paragraph (5).

(7) [Interest] Royalty owner's interest, expressed as a

decimal or fraction, in production from paragraph (1).

(8) [Interest] Royalty owner's share of the total value

of sales prior to deduction of taxes and deductions from

paragraph (5).

(9) [Interest] Royalty owner's share of the sales value

less the [interest] royalty owner's share of taxes and

deductions from paragraph (5).

(10) Contact information, including an address and

telephone number.

Section 3.3. [Accumulation of proceeds from production.

(a) General rule.--Proceeds from production of oil and gas

may be accumulated and remitted to the persons entitled thereto

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annually for the 12 months' accumulation of proceeds totaling

less than $100.

(b) Owner to be paid.--Notwithstanding any other provision

of this section to the contrary, all accumulated proceeds shall

be paid to the owner thereof when production ceases or upon

relinquishment or transfer of the payment responsibility.]

Payment information to royalty owners for oil, natural gas and

natural gas liquids from an unconventional formation.

(a) Payment information.--Whenever payment is made to a

royalty owner for the production of oil, gas or natural gas

liquids from an unconventional formation, pursuant to an oil and

gas lease, all of the following information, at a minimum, shall

be included on the check stub provided to the royalty owner or

on an attachment to the form of payment provided to the royalty

owner, unless the information is otherwise provided on a regular

basis:

(1) A common well name and the American Petroleum

Institute identification number that identifies the well for

which payment is being made.

(2) Month and year of oil, gas or natural gas liquids

production for which payment is being made.

(3) Total barrels of crude oil or number of Mcf or MMBtu

of gas and volume of natural gas liquids produced and sold

from each well.

(4) Price received by the payor per unit of oil, natural

gas and natural gas liquids produced and sold.

(5) The aggregate amounts for each category of

deductions for each well incurred by the payor which reduces

the royalty owner's payment, including all severance and

other production taxes.

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(6) Net and gross value of the payor's total sales from

the sale of oil, gas and natural gas liquids from each well

less any deductions identified in paragraph (5).

(7) Royalty owner's legal and contractual interest in

the payor's share, expressed as a decimal or fraction.

(8) Royalty owner's share of the gross value of the

payor's total sales for the oil, gas and natural gas liquids

before any deductions identified in paragraph (5).

(9) Royalty owner's share of the sales value less the

royalty owner's share of taxes and any deductions identified

in paragraph (5).

(10) Payor's contact information, including an address

and telephone number.

(b) Summary statements.--A payor may make available and

provide for a summary statement format for a royalty owner to

receive the information under subsection (a) upon the mutual

consent of the royalty owner and payor . The summary statement

shall conspicuously disclose that the royalty owner has the

right to receive the information under subsection (a) in its

entirety upon written request, sent by certified mail, to the

payor. Upon receipt of a written request under this subsection,

the payor shall provide all the information under subsection (a)

in its entirety from the month of the notice and each subsequent

month thereafter and for any prior period requested by the

royalty owner. Nothing in this subsection shall be construed as

a waiver of the ability of a royalty owner to receive the

information under subsection (a).

information to a royalty owner as required under this section,

the royalty owner may send a written request for the information

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to the payor by certified mai l. The royalty owner shall identify

the lease information under subsection (a)(1) in the written

request. If the payor does not provide payment information or

does not supply a reason for not providing the payment

information within 60 days after receiving the written request,

the royalty owner may bring a civil action to enforce the

provisions of this section and to recover any resulting attorney

fees or court costs incurred in the civil action.

(d) Transmission of information.--All information required

to be included under subsection (a) may be provided or made

available to a royalty owner by electronic means, including, but

not limited to, electronic mail or a website or database

accessible to the royalty owner, upon the mutual written consent

of the information payor and the royalty owner.

(D) TRANSMISSION OF INFORMATION.--IF A ROYALTY OWNER HAS

ALREADY BEEN RECEIVING THE PAYMENT INFORMATION REQUIRED UNDER

THIS ACT ELECTRONICALLY BEFORE THE EFFECTIVE DATE OF THIS

SUBSECTION OR UPON THE MUTUAL WRITTEN CONSENT OF THE INFORMATION

PAYOR AND THE ROYALTY OWNER, ALL INFORMATION REQUIRED TO BE

INCLUDED UNDER SUBSECTION (A) MAY BE PROVIDED OR MADE AVAILABLE

TO THE ROYALTY OWNER BY ELECTRONIC MEANS, INCLUDING, BUT NOT

LIMITED TO, ELECTRONIC MAIL OR A WEBSITE OR DATABASE ACCESSIBLE

TO THE ROYALTY OWNER.

(e) Remittance of proceeds.--

(1) Except as provided under subsection (f) or as

otherwise provided in the lease , all proceeds due and payable

to the royalty owner under the terms of the lease from the

sale or production of oil, gas and natural gas liquids shall

be remitted in a timely manner as follows:

(i) no later than 120 days from the date of the

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<--

first sale of oil, gas or natural gas liquids; and

(ii) thereafter, within 60 days after the end of the

month when the production is sold.

(2) A payor shall not be required to comply with

paragraph (1) if any of the following apply:

(i) There is a lack of marketable record title in

the royalty owner.

(ii) There is bona fide dispute concerning the

royalty owner's interest.

(iii) The owner of interest is missing or not able

to be located.

(3) Failure to remit a timely payment of the proceeds as

required under paragraph (1) shall result in a mandatory

payment of an interest penalty to be set at the legal rate of

interest in accordance with section 202 of the act of January

30, 1974 (P.L.13, No.6), referred to as the Loan Interest and

Protection Law, until the payment of production proceeds due

and payable to the royalty owner under the terms of the lease

is made, unless otherwise provided for in the lease.

(f) Accumulation of proceeds.--Proceeds from the production

of oil, gas and natural gas liquids may be accumulated and

remitted annually for a 12-month accumulation of proceeds

totaling less than $100, unless production permanently ceases or

a relinquishment or transfer of the payment responsibility

occurs.

Section 3. This act shall take effect in 120 days.

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