Bill Text: NY A05423 | 2019-2020 | General Assembly | Introduced

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Bill Title: Relates to rights and obligations of a municipality electing integrated non-participating owner status in gas and oil wells; provides that such municipal owner shall not have obligations for taxes, charges, fees or liability for personal injury or damages.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2020-01-08 - referred to environmental conservation [A05423 Detail]

Download: New_York-2019-A05423-Introduced.html

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                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-par-
          ticipating owner status in gas and oil wells
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  Subparagraph 1 of paragraph a of subdivision 3 of section
     2  23-0901 of the environmental conservation law, as amended by chapter 386
     3  of the laws of 2005, is amended to read as follows:
     4    (1) "Integrated non-participating owner" or "non-participating  owner"
     5  means  an  owner  who  elects  to  reimburse  the  well operator, out of
     6  production proceeds, for such owner's proportionate share of the  actual
     7  well  costs  of  the  initial well in a spacing unit and be subject to a
     8  risk penalty, and complies with all of the requirements for integration,
     9  including the terms of integration, as specified in an  order  of  inte-
    10  gration issued pursuant to the compulsory integration provisions of this
    11  section.  The  non-participating  owner  shall receive the full share of
    12  production attributable to such owner's proportionate  interest  in  the
    13  spacing  unit  following  the  recoupment  by  the  well operator of the
    14  owner's proportionate share of the actual well costs plus a risk penalty
    15  of two hundred percent of the share of the actual well  costs  allocable
    16  to  such  owner.  In  the  case  of  a  leased tract, a royalty shall be
    17  deducted from the non-participating owner's share of  production,  which
    18  shall not be subject to charges or costs, but shall be separately calcu-
    19  lated  and  paid to the non-participating owner on behalf of the royalty
    20  owner as follows:
    21    (i) During the recovery of the actual well costs, 1/16 or 6.25%,
    22    (ii) During the recovery of the first 100% of the risk  penalty,  3/32
    23  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
     1    (iii)  During the recovery of the second 100% of the risk penalty, the
     2  lowest royalty fraction set forth in an existing lease in the unit,  but
     3  no less than 1/8 or 12.5%.
     4    A  duly  incorporated  municipality under the laws of the state of New
     5  York, if electing integrated non-participating owner status, shall  have
     6  no  obligations to the well operator or any other owner for any charges,
     7  taxes or fees associated with the operation of the oil or gas well  and,
     8  notwithstanding  any  other  law to the contrary, shall not be liable by
     9  reason of the owner's status as an  integrated  non-participating  owner
    10  for  any  claims  for personal injury or property damage suffered by any
    11  person relating to the drilling and operation of the well, and the oper-
    12  ator shall hold harmless, defend and indemnify such municipality in  any
    13  action for damages arising out of the status of municipality as an inte-
    14  grated non-participating owner.
    15    Nothing  in this subparagraph relieves any lessee of its obligation to
    16  pay, from the commencement of  production,  any  remaining  royalty  and
    17  overriding  royalty owed under the terms of its lease.  Any municipality
    18  electing integrated non-participating owner status  shall  be  deemed  a
    19  lessee  for  purposes  of  royalty  payments under clauses (i), (ii) and
    20  (iii) of this subparagraph.
    21    § 2. This act shall take effect immediately.