TITLE 47

MINES AND MINING

CHAPTER 3

OIL AND GAS WELLS — GEOLOGIC INFORMATION, AND PREVENTION OF WASTE

47-334.  use of surface land by owner or operator. (1) For the purposes of this section, the following definitions shall apply:

(a)  "Surface land" means land upon which oil and gas operations are conducted.

(b)  "Crops" means any growing vegetative matter used for an agricultural purpose, including forage for grazing and domesticated animals.

(c)  "Surface landowner" means a person who owns all or part of the surface land as shown by the records of the county in which the surface land is located. Surface landowner does not include the surface landowner’s lessee, renter, tenant or other contractually related person.

(d)  "Surface landowner’s property" means a surface landowner’s surface land, crops on the surface land and existing improvements on the surface land.

(e)  "Surface use agreement" means an agreement between an owner or operator and a surface landowner addressing the use and reclamation of surface land owned by the surface landowner and compensation for damage to the surface land caused by oil and gas operations that result in loss of the surface landowner’s crops on the surface land, loss of value of existing improvements owned by the surface landowner on the surface land and permanent damage to the surface land.

(2)  An owner or operator may:

(a)  Enter onto surface land under which the owner or operator holds rights to conduct oil and gas operations; and

(b)  Use the surface land:

(i)   To the extent reasonably necessary to conduct oil and gas operations; and

(ii)  Consistent with allowing the surface landowner the greatest possible use of the surface landowner’s property, to the extent that the surface landowner’s use does not interfere with the owner’s or operator’s oil and gas operations.

(3)  Except as is reasonably necessary to conduct oil and gas operations, an owner or operator shall:

(a)  Mitigate the effects of accessing the surface landowner’s surface land;

(b)  Minimize the interference with the surface landowner’s use of the surface landowner’s property; and

(c)  Compensate a surface landowner for unreasonable:

(i)   Loss of a surface landowner’s crops on the surface land;

(ii)  Loss of value to existing improvements owned by a surface landowner on the surface land; and

(iii) Permanent damage to the surface land.

(4)  For the purposes of this section, an owner or operator is not required to:

(a)  Obtain location or spacing exceptions from the department or commission; or

(b)  Utilize directional or horizontal drilling techniques that are not:

(i)   Technologically feasible;

(ii)  Economically practicable; or

(iii) Reasonably available.

(5)  The provisions of subsection (2) of this section do not apply to the extent that they conflict with or impair a contractual provision relevant to an owner’s or operator’s use of surface land for oil and gas operations.

(6)  (a) The provisions of this section do not prevent:

(i)   A person from seeking a remedy allowed by law; or

(ii)  An owner or operator and a surface landowner from addressing the use of surface land for oil and gas operations through a lease, a surface use agreement or another written contract.

(b)  An agreement described in paragraph (a)(ii) of this subsection shall control:

(i)   The use of surface land for oil and gas operations; and

(ii)  Compensation for damage to the surface land caused by oil and gas operations.

(7)  A nonbinding mediation may be requested by a surface landowner and an owner or operator by providing written notice to the other party if they are unable to agree on the amount of damages for unreasonable crop loss on the surface land, unreasonable loss of value to existing improvements owned by the surface landowner on the surface land, or unreasonable permanent damage to the surface land. A mediator may be mutually selected by a surface landowner and an owner or operator. The surface landowner and the owner or operator shall equally share the cost of the mediator’s services. The mediation provisions of this section do not prevent or delay an owner or operator from conducting oil and gas operations in accordance with applicable law.

(8)  A surface use bond shall be furnished to the department by the owner or operator in accordance with the following provisions:

(a)  A surface use bond does not apply to surface land where the surface landowner is a party or a successor of a party to:

(i)   A lease of the underlying privately owned oil and gas;

(ii)  A surface use agreement applicable to the surface landowner’s surface land; or

(iii) A contract, waiver or release addressing an owner’s or operator’s use of the surface landowner’s surface land.

(b)  The minimum surface use bond shall be in the amount of six thousand dollars ($6,000) per well site and shall be conditioned upon the performance by the owner or operator of the duty to protect a surface landowner against unreasonable loss of crops on surface land, unreasonable loss of value of existing improvements, and unreasonable permanent damage to surface land.

(c)  The surface use bond shall be furnished to the department on a form designed by the department after good faith negotiation and prior to the approval of the application for a permit to drill. The mediation process identified in this section may commence and is encouraged to be completed. The department may accept a surface use bond in the form of a cash account or a certificate of deposit. Interest will remain within the account. The department may allow the owner or operator, or a subsequent owner or operator, to replace an existing surface use bond with another bond that provides sufficient coverage. The surface use bond shall remain in effect by the operator until released by the department.

(d)  The surface use bond shall be payable to the department for the use and benefit of the surface landowner, subject to this section. The surface use bond shall be released to the owner or operator after the department receives sufficient information that:

(i)   A surface use agreement or other contractual arrangement has been reached;

(ii)  Final resolution of the judicial appeal process for an action for unreasonable damages has occurred and damages have been paid; or

(iii) Plugging and abandonment of the well is completed.

(e)  The department shall make a reasonable effort to contact the surface landowner prior to the department’s release of the surface use bond.

History:

[47-334, added 2017, ch. 271, sec. 27, p. 706; am. 2023, ch. 283, sec. 14, p. 866.]