What's happening
This bill exempts municipalities that elect integrated non-participating owner status in oil and gas wells from financial and liability obligations related to well operations.
Why it matters
Shifts liability and financial risk away from municipalities. By exempting municipalities from charges, taxes, fees, and liability related to oil and gas well operations, the bill reduces the potential fiscal and legal burdens that could otherwise deter local governments from participating as integrated non-participating owners.
Mandates operator responsibility for damages. The well operator must hold harmless, defend, and indemnify municipalities against any claims for personal injury or property damage, ensuring that the operator—not the municipality—is accountable for operational risks.
Maintains municipal eligibility for royalty payments. Municipalities that elect this status are still considered "lessees" for royalty purposes, meaning they retain rights to production royalties even while being shielded from costs and liabilities—potentially providing a revenue benefit without associated risks.
May influence municipal decisions on mineral rights participation. These protections could make it more attractive for municipalities to allow oil and gas development on their lands, possibly leading to increased participation and related economic activity, but also raising questions about local oversight and community impacts.
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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
- Referred to environmental conservation
- Held for consideration in environmental conservation
- Referred to environmental conservation
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5423
2019-2020 Regular Sessions
IN ASSEMBLY
February 12, 2019
Introduced by M. of A. GOODELL, FRIEND -- Multi-Sponsored by -- M. of A. GIGLIO -- 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.
LBD09250-01-9
A. 5423 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 clauses (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.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.