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.