What's happening
This bill exempts municipalities choosing integrated non-participating owner status in oil or gas wells from financial and liability obligations, while ensuring royalty payments.
Why it matters
Reduces Financial and Legal Risk for Municipalities. By exempting municipalities that choose integrated non-participating owner status from paying charges, taxes, or fees related to oil or gas well operations, this bill shields local governments from unexpected or burdensome financial obligations that private owners might face.
Protects Municipalities from Lawsuits. The bill explicitly states that municipalities will not be liable for personal injury or property damage claims connected to the drilling and operation of wells. It also requires well operators to defend and indemnify municipalities against such claims, reducing legal exposure and potential litigation costs for local governments.
Ensures Continued Revenue Stream. Despite the exemptions from costs and liabilities, municipalities are still entitled to receive royalty payments as if they were lessees. This provides a source of income from oil and gas production without the typical financial and legal risks associated with ownership.
May Influence Municipal Participation in Oil and Gas Projects. By removing significant barriers to participation, the bill could encourage more municipalities to engage with or allow oil and gas development on public lands, potentially affecting local economies, land use decisions, and community relations with the energy sector.
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Who cares
Headline styles
Protect Municipalities in Oil Wells
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
1 Multi-sponsor
History
- Held for consideration in environmental conservation
- Referred to environmental conservation
- Referred to environmental conservation
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4509
2017-2018 Regular Sessions
IN ASSEMBLY
February 2, 2017
Introduced by M. of A. GOODELL -- read once and referred to the Committee on Environmental Conservation
AN ACT to amend the environmental conservation law, in relation to rights and obligations of a municipality electing integrated non-participating owner status in gas and oil wells
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subparagraph 1 of paragraph a of subdivision 3 of section 23-0901 of the environmental conservation law, as amended by chapter 386 of the laws of 2005, is amended to read as follows:
(1) "Integrated non-participating owner" or "non-participating owner" means an owner who elects to reimburse the well operator, out of production proceeds, for such owner's proportionate share of the actual well costs of the initial well in a spacing unit and be subject to a risk penalty, and complies with all of the requirements for integration, including the terms of integration, as specified in an order of integration issued pursuant to the compulsory integration provisions of this section. The non-participating owner shall receive the full share of production attributable to such owner's proportionate interest in the spacing unit following the recoupment by the well operator of the owner's proportionate share of the actual well costs plus a risk penalty of two hundred percent of the share of the actual well costs allocable to such owner. In the case of a leased tract, a royalty shall be deducted from the non-participating owner's share of production, which shall not be subject to charges or costs, but shall be separately calculated and paid to the non-participating owner on behalf of the royalty owner as follows:
(i) During the recovery of the actual well costs, 1/16 or 6.25%,
(ii) During the recovery of the first 100% of the risk penalty, 3/32 or 9.38%,
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09133-01-7
A. 4509 2
(iii) During the recovery of the second 100% of the risk penalty, the lowest royalty fraction set forth in an existing lease in the unit, but no less than 1/8 or 12.5%.
A duly incorporated municipality under the laws of the state of New York, if electing integrated non-participating owner status, shall have no obligations to the well operator or any other owner for any charges, taxes or fees associated with the operation of the oil or gas well and, notwithstanding any other law to the contrary, shall not be liable by reason of the owner's status as an integrated non-participating owner for any claims for personal injury or property damage suffered by any person relating to the drilling and operation of the well, and the operator shall hold harmless, defend and indemnify such municipality in any action for damages arising out of the status of municipality as an integrated non-participating owner.
Nothing in this subparagraph relieves any lessee of its obligation to pay, from the commencement of production, any remaining royalty and overriding royalty owed under the terms of its lease. Any municipality electing integrated non-participating owner status shall be deemed a lessee for purposes of royalty payments under items (i), (ii) and (iii) of this subparagraph.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
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