By:  Swinford                                                     H.B. No. 1803


A BILL TO BE ENTITLED
AN ACT
relating to surface use planning and restoration for oil and gas mineral leases. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS SECTION 1. Title 3, Natural Resource Code, Chapter 91, is amended by adding Subchapter P to read as follows:
SUBCHAPTER P. SURFACE USE ACT
Section 91.701. Legislative findings and intent. The legislature finds that. 1. It is necessary to exercise the police power of the state to protect the public welfare of Texas, which is greatly dependent on agriculture, ranching, and wildlife, and to protect the economic well being of individuals engaged in agricultural, ranching, and wildlife production. 2. Exploration for and development of oil and gas reserves in this state affect the use of certain land. 3. The mineral estate is dominant over the surface estate; however, owners of the surface estate and other persons should be justly compensated for injury to their persons or property and interference with the use of their property caused by oil and gas development. Section 91.702. PURPOSE AND INTERPRETATION. It is the purpose of this chapter to provide the maximum amount of constitutionally permissible protection to surface owners and other persons from the undesirable effects of development of minerals. This chapter is to be interpreted in light of the legislative intent expressed herein. Sections 91.704 and 91.705 shall be interpreted to benefit surface owners, regardless of whether the mineral estate was separated from the surface estate and regardless of who executed the document which gave the mineral developer the right to conduct drilling operations on the land. Sections 91.706 through 91.708 must be interpreted to benefit all persons. Section 91.703. Definitions. In this chapter: 1. "Agricultural production" means agricultural use as defined in Tax Code Section 23.51(2), and wildlife management as defined in Tax Code Section 23.51(7). 2. "Drilling operations" means the entry upon the surface estate for drilling purposes after September 1, 2003, the drilling of an oil and gas well, and the production and completion operations ensuing from the drilling which require entry upon the surface estate, and oil and gas geophysical and seismograph exploration activities. 3. "Mineral developer" means the person who acquires the mineral estate or lease for the purpose of extracting or using the minerals for nonagricultural purposes. 4. "Mineral estate" means an estate in or ownership of all or part of the minerals underlying a specified tract of land. 5. "Minerals" mean oil and gas. 6. "Surface estate" means an estate in or ownership of the surface of a particular tract of land. 7. "Surface owner" means any person who holds record title to the surface of the land as an owner. Section 91.704. DAMAGE AND DISRUPTION PAYMENTS. The mineral developer shall pay the surface owner a sum of money equal to the amount of damages sustained by the surface owner, if any, for loss of agricultural production and income, lost land value, lost use of and access to the surface owner's land, and lost value of improvements caused by drilling operations. The amount of damages may be determined by any formula mutually agreeable or agreed to between the surface owner and the mineral developer. When determining damages, consideration must be given to the amount of land and the period of time during which the loss occurs and the surface owner may elect to be paid damages in annual installments over a period of time; except that the surface owner must be compensated for harm caused by exploration only by a single sum payment. Payments under this section are intended to compensate the surface owner for anticipated and foreseeable damage and disruption; any reservation or assignment of such compensation apart from the surface estate except to a tenant of the surface estate is prohibited. The payments contemplated by this section shall not in any way be construed to limit the amount of damages a surface owner would otherwise be entitled to recover from unforeseen, accidental, or omitted acts. Section 91.705. NOTICE OF DRILLING OPERATIONS. Except in instances where there are unknown heirs, imperfect titles, or surface owners whose whereabouts cannot be ascertained with reasonable diligence, the mineral developer shall give the surface owner written notice of the drilling operations contemplated at least thirty days (30) prior to the commencement of the operations, unless waived by mutual agreement of both parties. If the mineral developer plans to begin drilling operations within thirty days (30) of the termination date of the mineral lease, the required notice under this section may be given at any time prior to the commencement of drilling operations. This notice must be given to the record surface owner at that person's address as shown by the records of the county clerk or county tax assessor at the time the notice is given. This notice must sufficiently disclose the plan of work, the amount of land to be affected, and operations to enable the surface owner to evaluate the effect of drilling operations on the surface owner's use of the property. Included with this notice must be a statement from the mineral developer advising the surface owner of the surface owner's rights and options under this chapter. If a mineral developer fails to give notice as provided under this section, the surface owner may seek any appropriate relief in the court of proper jurisdiction and may receive actual damages. The prevailing party is entitled to recover reasonable court costs and attorneys fees. Section 91.706. AGREEMENT - OFFER OF SETTLEMENT. Unless both parties provide otherwise by written agreement, at the time the notice required by section 91.705 is given, the mineral developer shall make a written offer of settlement to the person seeking compensation for damages at the time notice required by section 91.705 is given. The person seeking compensation may accept or reject any offer so made. Notwithstanding Section 91.707(a), the mineral developer shall not enter the site with heavy equipment until the parties agree and a written contract is signed. Section 91.707. REJECTION - LEGAL ACTION - FEES AND COSTS. A. If agreement is not reached, or if the mineral developer is not able to contact all parties, the mineral developer shall petition the district court in the county in which the drilling site is located for appointment of appraisers to make recommendations to the parties and to the court concerning the amount of damages, if any. Once the mineral developer has petitioned for appointment of appraisers, the operator may enter the surface estate. B. If the mineral developer and the surface owner do not mutually agree on a third party appraiser, the mineral developer shall select one appraiser, the surface owner shall select one appraiser, and the two selected appraisers shall select a third appraiser for appointment by court. Unless for good cause shown, additional time is allowed by the district court, the three appraisers shall be selected within twenty (20) days of the service of notice as provided by Section 91.705. If either of the parties fails to appoint an appraiser or if the two appraisers cannot agree on the selection of the third appraiser within the required time period, the remaining required appraisers shall be selected by the district court upon application of either party. The appraisers shall inspect the real property and consider the surface damages, which the surface owner has sustained or will sustain by reason of the drilling operations. They shall then file a written report within thirty (30) days of the date of their appointment with the clerk of the court. The appraisers shall make a valuation and determine the amount of compensation to be paid by the operator to the surface owner and the manner in which the amount shall be paid. Said appraisers shall then make a report of their proceedings to the court. The court shall make a ruling on the valuation based on the submitted report. The compensation of the appraisers shall be fixed and determined by the court. The operator and the surface owner shall share equally in the payment of the appraisers' fees and court costs. C. Within ten (10) days after the report of the appraisers is filed, the clerk of the court shall forward to each party, a copy of the report and a notice stating that each party is bound by the report. Section 91.708. APPLICATION OF CHAPTER. The remedies provided by this chapter do not preclude any person from seeking other remedies allowed by law. SECTION 2. This Act takes effect September 1, 2003. SECTION 3. The importance of this legislation and the crowded condition of the calendar in both houses creates an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended.