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History
- Referred to environmental conservation
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Relates to integrated royalty owners in the New York Marcellus Shale region
In Assembly Committee · Rules · Sponsor Donna Lupardo
Full text
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Sponsor's memo
Title of bill
An act to amend the environmental conservation law, in relation to integrated royalty owners in the New York Marcellus Shale region
Purpose or general idea of bill
To increase the statutory minimum royalty for landowners in the New York Marcellus Shale region who are involuntarily included in a natural gas drilling unit through compulsory integration.
Summary of specific provisions
§ 23-0901, subsection 3 of Environmental Conservation law is amended to increase the minimum royalty payment for landowners who undergo compulsory integration in the New York Marcellus Shale region from 12.5 percent to the highest royalty in an existing lease in the drilling unit, but no less than 18.75 percent.
Justification
When a natural gas drilling company applies for a permit from the Department of Environmental Conservation (DEC) to drill a well, the company proposes a drilling unit from which gas will be extracted. These unit boundaries may cut across property lines and include land owned by people that have not, for various reasons, signed a lease with a gas company for development.
If a natural gas company controls 60% of the acreage in a drilling unit through leases or ownership, the DEC will schedule a Compulsory Integration hearing which will give the driller the remaining non-leased landowners' subsoil gas rights to that gas formation.
In this case, there are three options for compulsorily integrated land owners offered by law. The first two include sharing in the considerable costs and complexities of natural gas exploration and well-drilling. As a result, the third option is typically chosen by landowners and they enter into a contract to receive the statutorily-set minimum royalty rate of 12 .5 percent.
For years, this minimum royalty amount was consistent with what leased landowners in the same drilling unit where receiving when they signed a lease with a natural gas company. With technical advances in the drilling industry and the prospect of exploration in the Marcellus Shale formation, leased New York landowners have seen average royalty payments increase dramatically and they are now are consistently in the 18 to 20 percent range, with some lease agreements offering up to 30 percent royalties.
Given this positive change in market trends, landowners who are involuntarily integrated into drilling units now are receiving considerably lower royalty rates than their neighbors in the same unit. This bill seeks to equalize royalty rates by increasing the minimum royalty offered to compulsorily integrated landowners in the New York Marcellus Shale region to be equal to the highest royalty in the unit or 18.75 percent at the minimum.
Prior legislative history
New bill.
Fiscal implications
None to the state.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.