BILL ANALYSIS Ó
AB 1966
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CONCURRENCE IN SENATE AMENDMENTS
AB 1966 (Ma)
As Amended August 24, 2012
Majority vote
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|ASSEMBLY: |63-0 |(May 31, 2012) |SENATE: |36-0 |(August 29, |
| | | | | |2012) |
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Original Committee Reference: NAT. RES.
SUMMARY : Requires, for oil and gas production related
activities, the owner of mineral rights in real property to give
the surface owner up to five days' notice for
non-surface-disrupting activities and 30 days' notice for
surface-disrupting activities prior to the first entry upon the
property.
The Senate amendments delete the contents of the bill and
instead:
1)Require, for oil and gas drilling activities, the owner of
mineral rights to give a written notice to the surface owner
or lessee prior to the first entry under the following
circumstances:
a) If the mineral rights owner intends to enter the
property for the purpose of undertaking
non-surface-disrupting activities such as surveying, water
and mineral testing, and removal of debris and equipment
not involving use of an articulated vehicle on the
property, the owner is required to provide a minimum of
five days' notice. Reasonable attempts must be made to
deliver the notice by acknowledged personal delivery, but
if that cannot occur, the notice must be delivered by
registered letter and be received a minimum of five days
prior to the entrance on the property. The notice is
required to specify 1) date of entry; 2) estimated length
of time the property will be occupied; and, 3) general
nature of the work.
b) If the mineral rights owner intends to enter the
property for the purpose of excavation or other
surface-disrupting activities such as drilling new wells,
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constructing structures, bringing articulated vehicles or
excavation equipment on the property, or reclamation of the
property after the surface has been disturbed, the owner
agent must provide a minimum of 30 days' notice. The
notice is required to specify 1) the extent and location of
the prospecting, mining, or extraction operation; and, 2)
the approximate time or times of entry and exit upon the
property. If a mineral rights owner's entry to the
property ceases for a period of one year or more, any
further entry by the mineral rights owner for the purpose
of surface-disturbing activities requires a minimum of 30
days' written notice.
2)Waive notice requirements for excavation or other
surface-disrupting activities if a mineral rights owner has
been authorized by the Division of Oil, Gas, and Geothermal
Resources (DOGGR) to drill a relief well or to take other
immediate actions in response to an emergency situation, or if
DOGGR is drilling a relief well or taking other immediate
actions in response to an emergency situation. An "emergency"
means an immediate action is necessary to protect life,
health, property, or natural resources.
3)Waive notice requirements in the bill if the owner of the
property has a current, already negotiated surface use, access
use, or similar agreement with the mineral rights owner.
EXISTING LAW :
1)Requires DOGGR to supervise the drilling, operation,
maintenance and abandonment of oil and gas wells, production
facilities, and pipelines to prevent damage to life, health,
property, underground and surface waters, and natural
resources.
2)Requires an owner of mineral rights in real property to give a
written notice to the surface owner prior to the first entry
upon the real property to prospect for, mine, or extract any
mineral. If the mineral rights owner has not complied with
this notice requirement, the surface owner may request a court
to enjoin the prospecting, mining, or extracting operation
until the mineral rights owner has complied.
AS PASSED BY THE ASSEMLBY , required, as of January 1, 2014, an
operator to provide a surface land owner with a 10-day written
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notice of intent to enter the surface land owner's property for
the purpose of extracting oil, gas, or minerals.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS : According to the author, "Ýi]n instances where
surface ownership and sub-surface (mineral) ownership is
different, the sub-surface owner may enter the surface owner's
property at any point after providing an initial notice upon
entry at the first instance to prospect for or extract any
mineral. However, the notice Ýrequirement] is very limited and
does not include any specifics regarding timing. At a minimum,
surface owners should be provided advance notice when well
operators plan to enter the property for purposes of
extraction?"
Several other oil and gas producing states have minimum notice
requirements when the mineral rights owner enters property for
the purpose of production-related activities. For example,
North Dakota, which recently passed Alaska to become the
second-leading oil-producing state in the nation (trailing only
Texas), requires seven days' notice to the surface owner of
activities that do not disturb the surface and 20 days' notice
for drilling operations. New Mexico requires the same notice
requirements as proposed in this bill.
These other states, however, require more substantive
information in the notice than what is required in this bill.
For example, New Mexico's notice requires 1) sufficient
disclosure of the planned oil and gas operations to enable the
surface owner to evaluate the effect of the operations on the
property; 2) a copy of the state's Surface Owners Protection
Act; 3) the name, address, telephone number and, if available,
facsimile number and electronic mail address of the operator and
the operator's authorized representative; and, 4) 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 oil and gas
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
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plant life; f) surface water drainage changes; g) actions to
limit and effectively control precipitation runoff and erosion;
h) control and management of noise, weeds, dust, traffic,
trespass, litter and interference with the surface owner's use;
i) interim and final reclamation; 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.
For activities that do not disturb the surface in North Dakota,
state law requires the notice to include 1) the name, address,
telephone number, and, if available, the electronic mail
address of the mineral developer or the mineral developer's
designee; 2) an offer to discuss and agree to consider
accommodating any proposed changes to the proposed plan of work
and oil and gas operations before commencement of oil and gas
operations; and, 3) a sketch of the approximate location of the
proposed drilling site.
For a notice of drilling operations, North Dakota law requires
the notice to include 1) sufficient disclosure of the plan of
work and operations to enable the surface owner to evaluate the
effect of drilling operations on the surface owner's use of the
property; 2) a plat map showing the location of the proposed
well; and, 3) a form prepared by the director of the oil and gas
division advising the surface owner of the surface owner's
rights and options under law, including the right to request the
state department of health to inspect and monitor the well site
for the presence of hydrogen sulfide.
For violations of the notice requirements in North Dakota,
punitive damages are available to the surface owner. For
violations in New Mexico, treble damages are available. This
bill maintains current remedies in California law, which merely
allows the surface owner to request a court to enjoin the
prospecting, mining, or extracting operation until the mineral
rights owner has complied.
It is unclear why this bill is not as comprehensive and
stringent as either the North Dakota or New Mexico statutes.
A related bill, SB 550 (Florez) of 2010, would have required an
operator to provide to the surface owner a 10-day written notice
of the intent to enter the surface owner's property for the
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purpose of the extraction of underlying oil, gas, or minerals.
SB 550 was vetoed by Governor Schwarzenegger with the following
message:
This bill requires an oil and gas operator to provide
to the surface owner a 10-day written notice of the
intent to enter the surface owner's property for the
purpose of the extraction of underlying oil, gas, or
minerals. This bill also requires the operator to
provide to the surface owner a copy of the applicable
recorded short form or memorandum of oil, gas, or
minerals lease within 10 days prior to entering the
property.
The Department of Conservation (Department) does not
currently resolve mineral rights or surface rights
disputes. But this bill would create an expectation
on the part of the landowner that the Department will
now regulate in this arena. This means that
violations of the provisions of the bill could be
subject to the imposition of penalties by the
Department. In essence, this bill creates a
regulatory program in search of a problem. These
disputes should be resolved in the courts, not through
the Department's enforcement processes.
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092 FN:
0005799