SB2696 93RD GENERAL ASSEMBLY

LRB093 20575 LCB 46386 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB2696

Introduced 2/4/2004, by J. Bradley Burzynski

SYNOPSIS AS INTRODUCED:

765 ILCS 530/2	from Ch. 96 1/2, par. 9652
765 ILCS 530/4	from Ch. 96 1/2, par. 9654
765 ILCS 530/6	from Ch. 96 1/2, par. 9656

Amends the Drilling Operations Act. Adds the production and storage of methane gas to the definition of "drilling operations". Defines "agricultural production". Provides that the notice to the owner include a statement advising the surface owner that he or she may have a right to damages and advising the surface owner to seek legal counsel. Provides that a surface owner shall be entitled to reasonable compensation from the operator for damages to agricultural production and income caused by the drilling of a new well or by subsequent productions on the property. Provides that a surface owner shall be entitled to compensation for the diminution in value, if any, of the surface lands and other property after completion of the surface disturbance, the cost of repair of personal property, and lost use of and access to the surface owner's land. Effective immediately.

A BILL FOR

AN ACT concerning drilling operations.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Drilling Operations Act is amended by changing Sections 2, 4, and 6 as follows:

(765 ILCS 530/2) (from Ch. 96 1/2, par. 9652)

Sec. 2. As used in this Act:

(a) "Person" means any natural person, corporation, firm, partnership, venture, receiver, trustee, executor, administrator, guardian, fiduciary or other representative of any kind and includes any government or any political subdivision or agency thereof;

(b) "Drilling operations" means the drilling, deepening or conversion of a well for oil or gas production, including the production and storage of methane gas, core hole or drill hole for a stratigraphic test;

(c) "Entry" means the moving upon the surface of land with equipment to commence drilling operations, but shall not include entry for the survey for or ascertaining or identification of a well location;

(d) "Operator" means the person, whether the owner or not, who applies for or holds a permit for drilling operations or who is named as the principal on a bond for a permit for a well that was issued by the Department of Natural Resources;

(e) "Surface owner" means the person in whose name the surface of the land on which drilling operations are contemplated, and who is assessed for purposes of taxes imposed pursuant to the Property Tax Code according to the records of the assessor of the county where the land is located as certified by said assessor;

(f) "Assessor" means the supervisor of assessments, board of assessors, or county assessor, as the case may be, for the county in which the land is located;

(g) "Production operation" means the operation of a well for the production of oil or gas including all acts, structures, equipment, and roadways necessary for such operation;

(h) "New well" means a well that is spudded after the effective date of this Act and does not utilize any part of a well bore or drilling location that existed prior to the effective date of this Act;

(i) "Completion of the well" means completion of those processes necessary before production occurs, including the laying of flow lines and the construction of the tank battery. If the well is not productive, the date of completion of the well is the day it is plugged and abandoned.

(j) "Agricultural production" means the production of any growing grass, crops, or trees attached to the surface of the land, whether or not the grass, crops, or trees are to be sold commercially, and the production of any farm animals, whether or not the animals are to be sold commercially.

(Source: P.A. 88-670, eff. 12-2-94; 89-445, eff. 2-7-96.)

(765 ILCS 530/4) (from Ch. 96 1/2, par. 9654)

Sec. 4. Notice.

(a) At least 30 days prior Prior to commencement of the drilling of a well, the operator shall give written notice to the surface owner of the operator's intent to commence drilling operations.

(b) The operator shall, for the purpose of giving notice as herein required, secure from the assessor's office within 90 days prior to the giving of the notice, a certification which shall identify the person in whose name the lands on which drilling operations are to be commenced and who is assessed at the time the certification is made. The written certification made by the assessor of the surface owner shall be conclusive evidence of the surface ownership and of the operator's compliance with the provisions of this Act.

(c) The notice required to be given by the operator to the surface owner shall identify the following:

(1) The location of the proposed entry on the surface for drilling operations, and the date on or after which drilling operations shall be commenced.

(2) A photocopy of the drilling application to the Department of Natural Resources for the well to be drilled.

(3) The name, address and telephone number of the operator.

(3.5) A statement advising the surface owner that he or she may have a right to damages and advising the surface owner to seek legal counsel.

(4) An offer to discuss with the surface owner those matters set forth in Section 5 hereof prior to commencement of drilling operations.

(5) If the surface owner elects to meet the operator, the surface owner shall request the operator to schedule a meeting at a mutually agreed time and place within the limitations set forth herein. Failure of the surface owner to contact the operator at least 5 days prior to the proposed commencement of drilling operations shall be conclusively deemed a waiver of the right to meet by the surface owner.

(6) The meeting shall be scheduled between the hours of 9:00 in the morning and the setting of the sun of the same day and shall be at least 3 days prior to commencement of drilling operations. Unless agreed to otherwise, the place shall be located within the county in which drilling operations are to be commenced where the operator or his agent shall be available to discuss with the surface owner or his agent those matters set forth in Section 5 hereof.

(7) The notice herein required shall be given to the surface owner by either:

(A) certified mail addressed to the surface owner at the address shown in the certification obtained from the assessor, which shall be postmarked at least 10 days prior to the commencement of drilling operations; or

(B) personal delivery to the surface owner at least 8 days prior to the commencement of drilling operations.

(C) Notice to the surface owner as defined in this Act shall be deemed conclusive notice to the record owners of all interest in the surface.

(Source: P.A. 89-445, eff. 2-7-96.)

(765 ILCS 530/6) (from Ch. 96 1/2, par. 9656)

Sec. 6. Compensation of surface owners for drilling and producing operations and duties after cessation of production.

(A) The surface owner shall be entitled to reasonable compensation from the operator for damages to agricultural production and income, growing crops, trees, shrubs, fences, roads, structures, improvements and livestock thereon caused by the drilling of a new well, including compensation for the diminution in value, if any, of the surface lands and other property after completion of the surface disturbance, determined according to the actual use made thereof by the surface owner immediately prior to the commencement of the drilling operations, the cost of repair of personal property up to the value of replacement by personal property of like age, wear, and quality, and lost use of and access to the surface owner's land. The surface owner shall also be entitled to reasonable compensation from the operator for subsequent damages to agricultural production and income, growing crops, trees, shrubs, fences, roads, structures, improvements and livestock thereon caused by subsequent production operations of the operator thereon, including compensation for the diminution in value, if any, of the surface lands and other property after completion of the surface disturbance, determined according to the actual use made thereof by the surface owner immediately prior to the commencement of the drilling operations, the cost of repair of personal property up to the value of replacement by personal property of like age, wear, and quality, and lost use of and access to the surface owner's land. The surface owner shall also be entitled to reasonable compensation for all negligent acts of operator that cause measurable damage to the productive capacity of the soil. In addition, the operator shall not utilize any more of the surface estate than is reasonably necessary for the exploration, production and development of the mineral estate.

(B) The compensation required pursuant to paragraph (A) above shall be paid in any manner mutually agreed upon by the operator and the surface owner, but the failure to agree upon, or make the compensation required, shall not prevent the operator from commencement of drilling operations; provided, however, that operator shall tender to the surface owner payment by check or draft in accordance with the provisions herein no later than 90 days after completion of the well. The surface owner's remedy shall be an action for compensation in the circuit court in which the lands or the greater part thereof are located on which drilling operations were conducted; provided, however, that if operator fails to tender payment within the 90-day period or if the tender is not reasonable, surface owner shall be entitled to reasonable compensation as provided herein as well as attorney's fees.

If operator relies on a third party appraiser or fair market value, such amount shall be conclusively deemed to be reasonable, and there shall be no award of attorney's fees.

(C) In conjunction with the plugging and abandonment of any well, the operator shall restore the surface to a condition as near as practicable to the condition of the surface prior to commencement of drilling operations; provided, however, that the surface owner and operator may waive this requirement in writing, subject to the approval of the Department of Natural Resources that the waiver is in accordance with its rules.

(D) Where practicable and absent a written agreement to the contrary with the surface owner, all flow lines and other underground structures must be buried to a depth not less than 36 inches from the surface.

(Source: P.A. 89-445, eff. 2-7-96.)