Introduced Version
House Bill 2262 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 2262
(By Delegates Manypenny, Moye, Longstreth,
Rowan and Staggers)
[Introduced February 13, 2013; referred to the
Committee on the Judiciary then Finance.]
A BILL to amend and reenact §22-6A-16 of the Code of West Virginia,
1931, as amended, relating to requiring operators of natural
gas wells and surface owners to enter into surface use
agreements; setting forth the requirements of an agreement;
providing exceptions; setting forth the rights and
responsibilities of operators and surface owners; requiring
operators to give notice of drilling activities; requiring a
bond or other surety to be posted; establishing a cause of
action; permitting damages; and permitting activities
necessary to protect health, safety or the environment.
Be it enacted by the Legislature of West Virginia:
That §22-6A-16 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 6A. NATURAL GAS HORIZONTAL WELL CONTROL ACT.
§22-6A-16. Compensation of surface owners for drilling operations.
(a) The provisions of article seven of this chapter do not apply to horizontal wells governed by this article. In lieu
thereof, the provisions of article six-b of this chapter shall
provide for the compensation of surface owners for damage caused by
drilling horizontal wells.
(b) At least ten days prior to filing a permit application, an
operator shall, by certified mail return receipt requested or hand
delivery, give the surface owner notice of its intent to enter upon
the surface owner's land for the purpose of drilling a horizontal
well: Provided, That notice given pursuant to subsection (a),
section ten of this article satisfies the requirements of this
subsection as of the date the notice was provided to the surface
owner: Provided, however, That the notice requirements of this
subsection may be waived in writing by the surface owner. The
notice, if required, shall include the name, address, telephone
number, and if available, facsimile number and electronic mail
address of the operator and the operator's authorized
representative.
(c) No later than the date for filing the permit application,
an operator shall, by certified mail return receipt requested or
hand delivery, give the surface owner whose land will be used for
the drilling of a horizontal well notice of the planned operation.
The notice required by this subsection shall include:
(1) A copy of this code section;
(2) The information required to be provided by subsection (b), section ten of this article to a surface owner whose land will be
used in conjunction with the drilling of a horizontal well; and
(3) A proposed surface use and compensation agreement
containing an offer of compensation for damages to the surface
affected by oil and gas operations to the extent the damages are
compensable under article six-b of this chapter.
(d) The notices required by this section shall be given to the
surface owner at the address listed in the records of the sheriff
at the time of notice.
(a) Notwithstanding sections three through eight, article
seven of this chapter, this section applies to horizontal wells for
the purpose of compensation for surface owners and to mitigate the
impact and loss of use of the surface where a horizontal well is
located.
_____(b) The operator shall compensate the surface owner for
damages sustained by the surface owner, for loss of agricultural
production and income, decrease in land value, lost value of timber
crops, for lost use and enjoyment of the surface, lost access to
the surface owner's land and lost value of improvements caused by
the well construction and operation.
_____(c) The operator is not responsible for allocating
compensation between the surface owner and a tenant. However, the
operator shall compensate a surface owner's tenant for any
leasehold improvements damaged a result of the well operations if the improvements were approved and authorized by the surface owner.
The compensation shall equal the cost of repairing or replacing the
improvements.
_____(d) No later than thirty days prior to first entering the
surface of the land to conduct drilling operations, an operator
shall, by certified mail or hand delivery, give the surface owner
notice of the planned operation. The notice shall include:
_____(1) Sufficient disclosure of the planned operation to enable
the surface owner to evaluate the effect of the operations on the
property;
_____(2) A copy of article seven of this chapter, the West Virginia
Oil and Gas Production Damage Compensation Act;
_____(3) The name, address, telephone number and, if available,
facsimile number and electronic mail address of both the operator
and the operator's authorized representative;
_____(4) A copy of the provisions of this code, including section
nine, article twenty-one of this chapter, regarding a surface
owner's right to comment on permit applications and a reference to
the rules relating to the well work being proposed; and
_____(5) A proposed surface use and compensation agreement
addressing, at a minimum and to the extent known, the following
issues:
_____(A) Placement, specifications, maintenance and design of well
pads, gathering pipelines and roads to be constructed for drilling operations;
_____(B) Terms of ingress and egress upon the surface of the land
for oil and gas operations;
_____(C) Construction, maintenance and placement of all pits and
equipment used or planned for oil and gas operations;
_____(D) Use and impoundment of water on the surface of the land;
_____(E) Removal and restoration of plant life;
_____(F) Surface water drainage changes;
_____(G) Actions to limit and effectively control precipitation
runoff and erosion;
_____(H) Control and management of noise, dust, traffic, trespass
and interference with the surface owner's use;
_____(I) Interim and final reclamations;
_____(J) Actions to minimize surface damages to the property;
_____(K) Operator indemnification for injury to persons caused by
the operator; and
_____(L) An offer of compensation for damages to the surface
affected by oil and gas operations.
_____(e) The notices required by this section shall be given to the
surface owner notified pursuant to section ten of this article.
_____(f) Upon receipt of the surface owners compensation agreement,
the surface owner may:
_____(1) Accept the proposed surface owners agreement within twenty
days; or
_____(2) Reject the proposed surface use and compensation agreement
and enter into negotiations with the operator, including, if the
parties agree, to mediation or binding arbitration.
_____(g) If the surface owner fails to enter into a surface use and
compensation agreement with the operator within thirty days of
receiving the operators proposed agreement, it shall be deemed a
rejection by the surface owner.
_____(h) Notwithstanding subsections (f) and (g) of this section,
if, after thirty days of its receipt a surface use and compensation
agreement has not been entered into, the operator may enter the
surface owner's property and instigate drilling operations by
depositing a surety bond, letter of credit from a banking
institution, cash or a certificate of deposit with a surety company
or financial institution in the amount of $25,000. The secretary
shall provide a certified statement that, according to the records
of the department, the operator is eligible for release. The
surety bond or letter of credit from a banking institution, cash or
certificate of deposit shall be held for the benefit of the surface
owner and shall ensure that such security is in a form readily
payable to a surface owner awarded damages. The surety bond,
letter of credit from a banking institution, cash or certificate of
deposit may only be released if:
_____(1) The surface owner provides notice that compensation for
damages has been paid;
_____(2) The surface owner and the operator have executed a surface
use and compensation agreement or otherwise agreed that the
security should be released;
_____(3) There has been a final resolution of a judicial appeal in
any action for damages and any awarded damages have been paid; or
_____(4) All wells have been plugged and abandoned and the operator
has not conducted operations on the surface owner's property for
six years.
_____(i) Before any action for damages may be filed, the surface
owner shall give thirty days notice of intent to file suit. If a
court determines that compensation is due under this section, the
court may also award to the prevailing party:
_____(1) Attorney fees and costs if:
_____(A) The operator conducted oil and gas operation without
providing notice as required by subsection (d);
_____(B) The operator conducted operations without a surface use
and compensation agreement and before depositing a bond or other
surety as required by this section;
_____(C) The operator conducted operations outside the scope of the
agreement;
_____(D) The court awarded damages exceeding ten percent of the
last offer made by the operator prior to institution of the suit;
or
_____(E) The surface owner failed to exercise good faith in complying with this section or the terms of the surface use and
compensation agreement; or
_____(2) Attorney fees costs and treble damages if the court finds,
by clear and convincing evidence, that:
_____(A) The operator willfully and knowingly enters upon the
premises for the purpose of commencing the drilling of the well
without giving notice of entry as required by this section or
without a surface use and compensation agreement; or
_____(B) Either party willfully and knowingly violated the surface
use and compensation agreement.
_____(j) The remedies provided by this section are not exclusive
and do not prohibit a person from seeking other remedies allowed by
law.
_____(k) This section does not prohibit activities that may violate
the agreement that are required in emergencies to protect health,
safety or the environment.
NOTE: The purpose of this bill is to require operators of
natural gas wells and surface owners to enter into surface use
agreements. It sets forth the requirements of an agreement and
provides exceptions. It sets forth the rights and responsibilities
of operators and surface owners. The bill requires operators to
give notice of drilling activities and requires a bond or other
surety to be posted. The bill establishes a cause of action and
permits damages. The bill permits activities necessary to protect
health, safety or the environment.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would be added.