Source: http://www.wvlegislature.gov/mobile/legislation/bill_text.cfm?orig=H&type=B&num=4268&year=2018&sess=RS&doc=hb4268%20intr.htm
Timestamp: 2018-03-24 23:44:28
Document Index: 479606370

Matched Legal Cases: ['§22', '§22', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§37', '§22', '§22']

HTML Bill Text
BillsHB 4268
to the Committee on Energy then the Judiciary.]
A BILL to amend and reenact §22C-9-3 and §22C-9-4 of the Code of West Virginia, 1931, as amended, to amend and reenact §37-7-2 of said code; and to amend said code by adding thereto a new chapter, designated §37B-1-1, §37B-1-2, §37B-1-3, §37B-1-4, §37B-1-5, §37B-1-6, §37B-1-7, §37B-2-1, §37B-2-2, §37B-2-3, §37B-2-4, §37B-2-5, §37B-2-6, §37B-2-7, §37B-2-8, and §37B-2-9, all relating generally to real property; providing an exception to waste and trespass for certain oil or natural gas developments; providing short titles; providing declarations of public policy and legislative findings; providing definitions; providing that consent for the lawful use and development of oil or natural gas mineral property by the persons owning an undivided three fourths of the royalty interests, as defined, in an oil or natural gas mineral property is permissible, is not waste, and is not trespass; providing that nonconsenting cotenants may elect a production royalty interest or a working interest share of production; providing that interests owned by unknown or unlocatable owners be reserved, reported, and deposited in a fund hereby created, known as the Unknown and Unlocatable Interest Owners Fund, to be administered by the State Treasurer in conjunction with the West Virginia Uniform Unclaimed Property Act until said reserved interests are claimed or transferred to the Oil and Gas Reclamation Fund for the plugging of oil and gas wells; providing methods for determination of leasehold and contractual terms, including reviews and determinations by the Oil and Gas Conservation Commission; empowering the Oil and Gas Conservation Commission to enforce certain provisions hereof; providing liability protection for damages resulting from the lawful use or development of oil or natural gas mineral property; requiring surface use agreements in specified circumstances; preserving common law rights; providing for severability of provisions; providing reporting requirements and administrative duties, including civil penalties for noncompliance under the West Virginia Uniform Unclaimed Property Act; and providing for rule-making authority.
(a) The “oil and gas conservation commission” shall be composed of five members. The director of the Division Department of Environmental Protection and the chief of the office of oil and gas shall be members of the commission ex officio. The remaining three members of the commission shall be appointed by the Governor, by and with the advice and consent of the Senate, and may not be employees of the Division Department of Environmental Protection. Of the three members appointed by the Governor, one shall be an independent producer and at least one shall be a public member not engaged in an activity under the jurisdiction of the Public Service Commission or the federal energy regulatory commission. The third appointee shall possess a degree from an accredited college or university in petroleum engineering or geology and must be a registered professional engineer with particular knowledge and experience in the oil and gas industry and shall serve as commissioner and as chair of the commission.
(4) Serve as technical advisor regarding oil and gas to the Legislature, its members and committees, to the chief of office of oil and gas, to the Division Department of Environmental Protection and to any other agency of state government having responsibility related to the oil and gas industry.
(j) The commission is hereby empowered and it is the commission’s duty to execute and carry out, administer, and enforce the provisions of §37B-1-1 et seq. of this code concerning mineral development by cotenants for all wells at all depths. The commission has jurisdiction and authority over all persons and property necessary therefor. The commission is authorized to make such investigation of records and facilities as the commission deems proper.
If a tenant in common, joint tenant, or parcener commit commits waste, he or she shall be is liable to his or her cotenants, jointly or severally, for damages. The lawful use or development of oil or natural gas and their constituents in compliance with the provisions of §37B-1-1 et seq. of this code is not the commission of waste.
As used in this article, and in the absence of specific contract language to the contrary:
“Nonconsenting Cotenant” means an owner who for any reason chooses not to consent to a lawful use of the mineral property agreed to by persons owning, cumulatively, at least an undivided three fourths interest in and to the mineral property.
“Operator” means any owner of at least an undivided three fourths interest of the right to develop, operate and produce oil, natural gas, or their constituents, and to appropriate the oil, natural gas, or their constituents produced therefrom.
§37B-1-4. Lawful use and development by cotenants; election of interests; reporting and remitting of interests of unknown or unlocatable cotenants; establishment of terms and provisions for development.
(a) If an operator or owner makes reasonable efforts to negotiate with all royalty owners in an oil or natural gas mineral property and royalty owners vested with at least three fourths of the right to develop, operate, and produce oil, natural gas, or their constituents, including without limitation tenants in common, joint tenants or coparceners, consent to the lawful use or development of the oil or natural gas mineral property, the operator’s or owner’s use or development of the oil or natural gas mineral property is permissible, is not waste, and is not trespass. In that case, the consenting cotenants and their lessees, operators, agents, contractors or assigns are not liable for damages for waste or trespass due to the lawful use or development and shall pay nonconsenting royalty owners in accordance with subsections (b) and (c) of this section, reserve the amounts specified in subsection (d) of this section for the benefit of unknown or unlocatable interest owners, and report and remit the reserved interests as provided in subsection (d) of this section.
(1) A prorata share of production royalty, paid on the gross proceeds received at the first point of sale to an unaffiliated third-party purchaser and free of post-production expenses, equal to the highest royalty percentage paid to his or her consenting cotenants in the same mineral property, under a bona fide, arms-length lease transaction and lease bonus and delay rental payments, calculated on a weighted-average net mineral acre basis: Provided, That an operator shall calculate the production royalty payable under this section based upon unprocessed gas produced and sold to an affiliate if such sale results in a higher payment made to the nonconsenting cotenant; or
(c) A nonconsenting cotenant shall have 45 days following the operator’s written delivery of its best and final lease offer in which to make his or her election for either a production royalty or a revenue share as specified in subsection (b) of this section. If the nonconsenting cotenant fails to deliver a written election to the operator prior to the expiration of such 45-day period, he or she shall be deemed to have made the election set forth in subdivision (1), subsection (b) of this section.
(e) Unless otherwise agreed to in writing or defined by this section, any nonconsenting cotenant and any unknown or unlocatable interest owner who elects or is deemed to elect a production royalty under subdivision (1), subsection (b) of this section is subject to and shall benefit from the other terms and provisions defined by the leasehold executed by a consenting cotenant which contains terms and provisions most favorable to the nonconsenting cotenant or the unknown or unlocatable interest owner: Provided, That nonconsenting cotenants and unknown or unlocatable interest owners shall not be subject to or liable under any warranty of title and any jurisdictional or choice of law provisions.
(a) With respect to any tract of mineral property where an interest in the oil or natural gas in place is owned by a nonconsenting cotenant and is used or developed pursuant to §37B-1-4 of this code, in no event shall drilling be initiated upon, or other surface disturbance occur on, the surface of or above such tract of minerals without the surface owner’s consent regardless of whether such surface owner possesses any actual ownership in the mineral interest: Provided, That this subsection shall not require surface owner consent for tracts of mineral property otherwise subject to an existing surface use agreement, oil and gas lease which includes surface use rights, or other valid contractual arrangement in which the owner of the surface has granted rights to the operator to use the surface in conjunction with oil or natural gas operations.
(f) After deducting the claims paid and the expenses specified in subsection (e) of this section and maintaining a sum of money which the administrator estimates will be needed to pay claims and expenses duly allowed from the reserved interests received and deposited in the fund, the administrator shall determine the amount that is transferrable from the Fund. Beginning July 1, 2023, and every six months thereafter, the administrator shall transfer the amount the administrator determines is transferrable to the Oil And Gas Reclamation Fund established under §22-6-29 of this code and expended for the purposes provided by that section and §22-10-6 of this code.
NOTE: The purpose of this bill is to provide an exception to waste and trespass for certain oil and natural gas use and development to encourage the efficient economic development of oil and natural gas resources. The bill provides that use and development of oil and gas mineral property that has been consented to by three fourths of the oil and gas owners is permissible, is not waste, and is not a trespass. The bill provides that cotenants and operators are not liable for damages for the development and use of the property if they pay nonconsenting cotenants in accordance with either of two defined options and report and reserve interests for unknown or unlocatable tenants. The bill provides a method to determine certain leasehold and contractual terms, including review and determination by the Oil and Gas Conservation Commission in limited circumstances. The bill provides for the creation of a fund to accept deposits of reserved interests for unknown or unlocatable cotenants which is administered by the State Treasurer as provided and in conjunction with the Uniform Unclaimed Property Act. The bill provides that after a specified time, the administrator may transfer the unclaimed funds to the Oil and Gas Reclamation Fund for the plugging of oil and gas wells. The bill provides for penalties for noncompliance as part of the Uniform Unclaimed Property Act and provides for rule making authority by the State Treasurer regarding the created fund and by the Oil and Gas Conservation Commission. The bill provides certain protections for surface owners where oil and natural gas are owned by a nonconsenting cotenant and provides liability protection for nonconsenting cotenants with respect to development of oil and natural gas. Finally, the bill provides that its provisions are severable.