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PRIOR PRINTER'S NOS. 973, 1105
PRINTER'S NO. 1353
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
806
Session of
2021
INTRODUCED BY YAW, BARTOLOTTA, HUTCHINSON, BAKER, MENSCH,
YUDICHAK, PITTMAN AND TARTAGLIONE, JUNE 25, 2021
AS AMENDED ON THIRD CONSIDERATION, JANUARY 25, 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.
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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. ยง
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.
(a) Payment information.--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, 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:
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(1) A common well name[, number or combination of name
and number] and the American Petroleum Institute
identification number that identifies [the lease, property,
unit or well or wells] the well for which payment is being
made[; and the county in which the lease, property or well is
located].
(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 [of gas]
or MMBtu of gas and volume of natural gas liquids [sold]
produced and sold from each well.
(4) Price received [per barrel, Mcf or gallon] by the
payor per unit of oil, natural gas and natural gas liquids
produced and sold.
(5) [Total amount of severance and other production
taxes and other deductions permitted under the lease, with
the exception of windfall profit tax.] 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.
(6) Net and gross value of the payor's total sales from
the [property less taxes and deductions from paragraph (5)]
sale of oil, gas and natural gas liquids from each well less
any deductions identified in paragraph (5) .
(7) [Interest owner's] Royalty owner's legal and
contractual interest in the payor's share, expressed as a
decimal or fraction[, in production from paragraph (1)].
(8) [Interest owner's] Royalty owner's share of the
[total] gross value of the payor's total sales [prior to
deduction of taxes and deductions from] for the oil, gas and
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natural gas liquids before any deductions identified in
paragraph (5).
(9) [Interest owner's] Royalty owner's share of the
sales value less the [interest owner's] royalty owner's share
of taxes and any deductions [from] identified in paragraph
(5).
(10) [Contact] Payor's contact information, including an
address and telephone number.
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
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.
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(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
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
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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.
(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
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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).
(c) Noncompliance.-- Subject to the provisions of section
3.3, if IF a payor does not provide the payment information to a
royalty owner as required under this section, the royalty owner
may send a written request for the information 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
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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.
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
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.]
(c) (E) Remittance of proceeds.--
(1) Except as provided under subsection (d) (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
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.
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(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.
(d) (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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