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Who cares
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Sponsors
3 Co-sponsors
5 Multi-sponsors
History
- Referred to environmental conservation
Full text
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Sponsor's memo
BILL NUMBER:A9978
Title of bill
An act to amend the environmental conservation law, in relation to integrated royalty owners
Purpose or general idea of bill
The bill provides that an integrated royalty owner shall receive a royalty in an amount equal to the average royalty of all existing leases within a spacing unit (rather than an amount equal to the lowest royalty, that is not less than 1/8, in an existing lease within a spacing unit).
Summary of specific provisions
This bill amends Section 23-0901(3)(a)(3) of the Environmental Conservation Law to require a well operator to pay an integrated royalty owner a royalty equal to the aver- age royalty of all existing leases within a spacing unit subject to compulsory integration.
Justification
When an oil or gas drilling company receives a permit for drilling from the DEC in a spacing unit where the drilling company controls the mineral rights of 60% of the acreage within the spacing unit by negotiating leases with the owners of such acreage, then the drilling company can initiate a Compulsory Integration proceeding through the DEC to determine how the interests of the "uncontrolled" landowners will be integrated into the spacing unit. These uncontrolled landowners, who have not signed a lease or voluntary agreement with the drilling company, arc given a 30-day notice of the Compulsory Inte- gration proceeding and 21 days from the date they receive such notice to choose from three different categories at three different risk levels for potential compensation for oil or gas production if the well is successful: 1) a participating landowner, 2) a non-participating land- owner, or 3) an integrated royalty owner (this is also the default cate- gory if the landowner does not to make a choice).
Under current law, an integrated royalty owner (the least risk category) would receive the lowest royalty of all the existing leases in the spac- ing unit as long as it is not less than 1/8 (12.3%) of the value of the oil and/or gas produced and sold beneath the owner's property.
Since drilling companies only have to control 60% of the acreage in a spacing unit before requesting Compulsory Integration, there is less incentive for a drilling company to negotiate a more lucrative lease agreement with the remaining 40% of the landowners in a spacing unit. This bill would allow property owners subject to Compulsory Integration who choose to be integrated royalty owners to collect a royalty equal to the average of all existing leases within a spacing unit, rather than the lowest royalty, to equalize and enhance the opportunity for property owners who, for example, where not the first to sign leases, or who may have less land than others, to benefit from drilling activity beneath their property.
PRIOR LEGISLATIVE HISTORY:; New Bill
Fiscal implications
None to the State.
Effective date
Effective immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.