Full Text of SB2079 95th General Assembly
SB2079 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 SB2079
Introduced 2/14/2008, by Sen. William R. Haine SYNOPSIS AS INTRODUCED: |
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765 ILCS 530/2 |
from Ch. 96 1/2, par. 9652 |
765 ILCS 530/3 |
from Ch. 96 1/2, par. 9653 |
765 ILCS 530/4 |
from Ch. 96 1/2, par. 9654 |
765 ILCS 530/6 |
from Ch. 96 1/2, par. 9656 |
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Amends the Drilling Operations Act. Provides that the Act applies to oil, gas and coalbed methane (instead of oil and gas). Provides that a drilling operator must give a surface owner written notice of the commencement of drilling and do so by certified mail postmarked at least 30 days prior to drilling (instead of 10 days) or by personal delivery at least 30 days prior to drilling (instead of 8 days). Provides that the operator shall pay money to the surface owner equal to the damages sustained by the owner and his or her tenant (instead of owner) for losses to agricultural production and income, land value, access, and improvements caused by drilling (instead of damages to crops, trees, improvements and livestock). Provides a crop valuation method (instead of an alternative crop valuation method). Provides that if the owner and operator do not agree on compensation, the owner may bring a legal action and if in the action the court awards a greater amount of compensation than the operator offered, the court shall award costs, interest on the compensation from the day drilling began, and attorney's fees (instead of no attorney's fees can be recovered if the operator relies on a third party appraisal). Provides that electrical lines, flow lines, and other underground structures (instead of flow lines and other underground structures) must be buried below the surface. Makes other changes. Effective immediately.
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A BILL FOR
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SB2079 |
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LRB095 15440 AJO 41432 b |
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| AN ACT concerning civil law.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Drilling Operations Act is amended by | 5 |
| changing Sections 2, 3, 4, and 6 as follows:
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| (765 ILCS 530/2) (from Ch. 96 1/2, par. 9652)
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| Sec. 2. As used in this Act:
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| (a) "Person" means any natural person, corporation, firm, | 9 |
| partnership,
venture, receiver, trustee, executor, | 10 |
| administrator, guardian, fiduciary or
other representative of | 11 |
| any kind and includes any government or any
political | 12 |
| subdivision or agency thereof;
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| (b) "Drilling operations" means the drilling, deepening or | 14 |
| conversion of
a well for oil or gas production, core hole or | 15 |
| drill hole for a stratigraphic
test;
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| (c) "Entry" means the moving upon the surface of land with | 17 |
| equipment to
commence drilling operations, but shall not | 18 |
| include entry for the survey
for or ascertaining or | 19 |
| identification of a well location;
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| (d) "Operator" means the person, whether the owner or not, | 21 |
| who applies
for or holds a permit for drilling operations or | 22 |
| who is named as the
principal on a bond for a permit for a well | 23 |
| that was issued by the
Department of Natural Resources;
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LRB095 15440 AJO 41432 b |
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| (e) "Surface owner" means the person in whose name the | 2 |
| surface of the
land on which drilling operations are | 3 |
| contemplated, and who is assessed for
purposes of taxes imposed | 4 |
| pursuant to the Property Tax Code according to the
records of | 5 |
| the assessor of the county where the land
is located as | 6 |
| certified by said assessor;
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| (f) "Assessor" means the supervisor of assessments, board | 8 |
| of assessors,
or county assessor, as the case may be, for the | 9 |
| county in which the land is
located;
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| (g) "Production operation" means the operation of a well | 11 |
| for the
production of oil ,
or gas , and coalbed methane,
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| including all acts, structures, equipment, and
roadways | 13 |
| necessary for such operation;
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| (h) "New well" means a well that is spudded after the | 15 |
| effective date of
this Act and does not utilize any part of a | 16 |
| well bore or drilling location
that existed prior to the | 17 |
| effective date of this Act;
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| (i) "Completion of the well" means completion of those | 19 |
| processes
necessary before production occurs, including the | 20 |
| laying of flow lines and
the construction of the tank battery. | 21 |
| If the well is not productive, the
date of completion of the | 22 |
| well is the day it is plugged and abandoned.
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| (Source: P.A. 88-670, eff. 12-2-94; 89-445, eff. 2-7-96.)
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| (765 ILCS 530/3) (from Ch. 96 1/2, par. 9653)
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| Sec. 3. This Act shall be applicable only for the drilling
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| operations of new wells except as explicitly provided in | 2 |
| paragraph (c) of
Section 6. It shall not apply for reworking | 3 |
| operations on a well.
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| This Act shall be applicable only when the surface owner | 5 |
| has not
consented in writing to the drilling operations and:
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| (A) there has been a complete severance of the ownership of | 7 |
| the oil ,
and
gas , and coalbed methane from the ownership of the | 8 |
| surface, or
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| (B) where the surface owner owns an interest in the oil ,
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| and gas , and coalbed methane , which
interest is the subject of | 11 |
| either:
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| (1) An integration proceeding brought pursuant to "An Act | 13 |
| in relation to
oil, gas, coal, and other surface and | 14 |
| underground resources and to repeal
an Act herein named", | 15 |
| approved July 24, 1945, as amended, or
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| (2) A proceeding brought pursuant to "An Act in relation to | 17 |
| oil and gas
interest in land", approved July 1, 1939, as | 18 |
| amended.
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| (Source: P.A. 85-1312.)
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| (765 ILCS 530/4) (from Ch. 96 1/2, par. 9654)
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| Sec. 4. Notice.
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| (a) Prior to commencement of the drilling of a well, the | 23 |
| operator shall
give a copy of the Act with a written notice to | 24 |
| the surface owner of the operator's intent to commence
drilling | 25 |
| operations.
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| (b) The operator shall, for the purpose of giving notice as | 2 |
| herein
required, secure from the assessor's office within 90 | 3 |
| days prior to the
giving of the notice, a certification which | 4 |
| shall identify the person in
whose name the lands on which | 5 |
| drilling operations are to be commenced and who
is assessed at | 6 |
| the time the certification is made. The written certification
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| made by the assessor of the surface owner shall be conclusive | 8 |
| evidence of
the surface ownership and of the operator's | 9 |
| compliance with the provisions of
this Act.
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| (c) The notice required to be given by the operator to the | 11 |
| surface owner
shall identify the following:
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| (1) The location of the proposed entry on the
surface | 13 |
| for drilling operations, and the date on or after which | 14 |
| drilling
operations shall be commenced.
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| (2) A photocopy of the drilling application to the | 16 |
| Department
of Natural Resources for
the well to be drilled.
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| (3) The name, address and telephone number of the | 18 |
| operator.
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| (4) An offer to discuss with the surface owner those | 20 |
| matters set forth
in Section 5 hereof prior to commencement | 21 |
| of drilling operations.
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| If the surface owner elects to meet the operator, the | 23 |
| surface owner
shall request the operator to schedule a meeting | 24 |
| at a mutually agreed time
and place within the limitations set | 25 |
| forth herein. Failure of the surface
owner to contact the | 26 |
| operator at least 5 days prior to the proposed
commencement of |
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| drilling operations shall be conclusively deemed a waiver
of | 2 |
| the right to meet by the surface owner.
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| The meeting shall be scheduled between the hours of 9:00 in | 4 |
| the
morning
and the setting of the sun of the same day and | 5 |
| shall be at least 3 days prior
to commencement of drilling | 6 |
| operations. Unless agreed to otherwise, the
place shall be | 7 |
| located within the county in which drilling operations are
to | 8 |
| be commenced where the operator or his agent shall be available | 9 |
| to
discuss with the surface owner or his agent those matters | 10 |
| set forth in Section
5 hereof.
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| The notice and a copy of the Act as herein required shall | 12 |
| be given to the surface owner by
either:
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| (A) certified mail addressed to the surface owner at | 14 |
| the address shown
in the certification obtained from the | 15 |
| assessor, which shall be postmarked
at least 30 10 days | 16 |
| prior to the commencement of drilling operations; or
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| (B) personal delivery to the surface owner at least 30 | 18 |
| 8 days prior to the
commencement of drilling operations.
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| (C) Notice to the surface owner as defined in this Act | 20 |
| shall be deemed
conclusive notice to the record owners of | 21 |
| all interest in the surface.
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| (Source: P.A. 95-331, eff. 8-21-07; 95-493, eff. 1-1-08.)
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| (765 ILCS 530/6) (from Ch. 96 1/2, par. 9656)
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| Sec. 6. Compensation of surface owners for drilling and | 25 |
| producing
operations and duties after cessation of production. |
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| (A) The operator shall pay the surface owner a sum of money | 2 |
| equal to the amount of damages sustained by the surface owner | 3 |
| and the surface owner's tenant, if any, for any shall be | 4 |
| entitled to reasonable compensation from
the operator for | 5 |
| damages as follows : | 6 |
| (1) Damage to To growing crops, trees, shrubs, fences, | 7 |
| roads,
structures, improvements, personal property, and | 8 |
| livestock thereon caused by the drilling of a new
well. The | 9 |
| surface owner shall also be entitled to reasonable | 10 |
| compensation
from the operator for subsequent damages.
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| (2) Subsequent damage to To growing crops, trees, | 12 |
| shrubs,
fences, roads, structures, improvements, personal | 13 |
| property, and livestock thereon.
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| (3) Loss of agricultural production and income, lost | 15 |
| land value, lost use of and access to the surface owner's | 16 |
| land, and lost value of improvements caused by drilling | 17 |
| operations. For the loss of the value of agricultural | 18 |
| production and income corresponding to lands taken out of | 19 |
| production because of the use thereof by the operator for | 20 |
| roads and production equipment, any recovery shall only be | 21 |
| applicable if the area adjacent to the roads and production | 22 |
| equipment are planted and harvested. The value of the | 23 |
| commercial crop shall be calculated by: (i) determining the | 24 |
| average per acre yield for the crop on adjacent lands; (ii) | 25 |
| determining the price received for the sale of the crop on | 26 |
| adjacent lands less the cost of seed planting, chemicals, |
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| fertilizers, and harvesting; (iii) determining the acreage | 2 |
| of the area utilized by roads and production equipment; and | 3 |
| (iv) attributing the determined crop yield to the | 4 |
| determined acreage utilized and applying the determined | 5 |
| price. The initial determination of the value of the crop | 6 |
| shall be determined by the surface owner and submitted to | 7 |
| the operator. The surface owner and operator shall mutually | 8 |
| agree as to the value of the crop utilizing the above | 9 |
| referenced formula for the initial crop year and all | 10 |
| subsequent crop years. | 11 |
| The surface
owner and surface owner's tenant, if any, | 12 |
| shall also be entitled to reasonable compensation for all | 13 |
| negligent
acts of the operator that cause measurable damage | 14 |
| to the productive capacity of
the soil. In addition, the | 15 |
| operator shall not utilize any more of the
surface estate | 16 |
| than is reasonably necessary for the exploration, | 17 |
| production
and development of the mineral estate. | 18 |
| Except as provided for in subparagraph (3) above for | 19 |
| loss of agricultural production and income, the amount of | 20 |
| damage set forth in this paragraph (A) may be determined by | 21 |
| any formula mutually agreeable between the surface owner | 22 |
| and the operator. When determining damage, consideration | 23 |
| must be given to the length of the period of time during | 24 |
| which the loss occurs. The surface owner may elect to be | 25 |
| paid damages in installments over a period of time. | 26 |
| Provided, however, that the surface owner must be |
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| compensated for harm caused only by drilling the well (not | 2 |
| by production) by a single lump sum payment. These payments | 3 |
| will only apply to land directly affected by drilling | 4 |
| operations. Payments under this Section are intended to | 5 |
| compensate the surface owner for damage and disruption. Any | 6 |
| reservation or assignment of the compensation apart from | 7 |
| the surface estate, except to a tenant of the surface | 8 |
| estate, is prohibited. In the absence of an agreement | 9 |
| between the surface owner and a tenant as to the division | 10 |
| of compensation payable under this Section, the tenant is | 11 |
| entitled to recover from the surface owner that portion of | 12 |
| the compensation attributable to the tenant's share of the | 13 |
| damages sustained. The tenant shall not be entitled to file | 14 |
| an additional or separate claim against the operator for | 15 |
| compensation payable under this Section. For the loss of | 16 |
| the value of a commercial crop corresponding to lands taken | 17 |
| out of production because of the use thereof by the | 18 |
| operator for roads and production equipment. Any recovery | 19 |
| shall only be applicable if the area adjacent to said roads | 20 |
| and production equipment are planted and harvested. The | 21 |
| value of the crop shall be calculated by: (i) determining | 22 |
| the average per acre yield for the crop on adjacent lands; | 23 |
| (ii) determining the price received for the sale of the | 24 |
| crop on adjacent lands less the cost of seed planting, | 25 |
| chemicals, fertilizers and harvesting; (iii) determining | 26 |
| the acreage of the area utilized for roads and production |
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| equipment; and (iv) attributing the determined crop yield | 2 |
| to the determined acreage utilized and applying the | 3 |
| determined price. The initial determination of the value of | 4 |
| the crop shall be determined by the surface owner and | 5 |
| submitted to the operator. The surface owner and operator | 6 |
| shall mutually agree as to the value of the crop utilizing | 7 |
| the above referenced formula for the initial crop year and | 8 |
| all
subsequent crop years.
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| (4) For all negligent
acts of operator that cause | 10 |
| measurable damage to the productive capacity of
the soil. | 11 |
| (A-5) The operator shall not utilize any more of the
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| surface estate than is reasonably necessary for the | 13 |
| exploration, production
and development of the mineral estate.
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| (B) The compensation required pursuant to paragraph (A) | 15 |
| above shall be
paid in any manner mutually agreed upon by the | 16 |
| operator and the surface
owner, but the failure to agree upon, | 17 |
| or make the compensation required,
shall not prevent the | 18 |
| operator from commencement of drilling operations;
provided, | 19 |
| however, that operator shall tender to the surface owner | 20 |
| payment by
check or draft in accordance with the provisions | 21 |
| herein no later than 90 days
after completion of the well. If | 22 |
| the The surface owner rejects the offer of the operator, the | 23 |
| surface owner may bring owner's remedy shall be an
action for | 24 |
| compensation in the circuit court in which the lands or the
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| greater part thereof are located on which drilling operations | 26 |
| were
conducted . If the amount of compensation awarded by the |
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| court is greater than that which had been offered by the | 2 |
| operator, or the ; provided, however, that if operator fails to | 3 |
| tender payment
within the 90-day period , the court shall award | 4 |
| the or if the tender is not reasonable, surface owner | 5 |
| reasonable
shall be entitled to reasonable compensation as | 6 |
| provided herein as well as
attorney's fees , any costs assessed | 7 |
| by the court, and interest at the statutory rate on the final | 8 |
| amount of the final compensation awarded by the court from the | 9 |
| day drilling is commenced .
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| If operator relies on a third party appraiser or fair | 11 |
| market value, such
amount shall be conclusively deemed to be | 12 |
| reasonable, and there shall be no
award of attorney's fees.
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| (C)
In conjunction with the plugging and abandonment of any | 14 |
| well, the
operator shall restore the surface to a condition as | 15 |
| near as practicable to
the condition of the surface prior to | 16 |
| commencement of drilling operations;
provided, however, that | 17 |
| the surface owner and operator may waive this
requirement in | 18 |
| writing, subject to the approval of the Department of Natural
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| Resources that the waiver is in accordance with its
rules.
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| (D)
Where practicable and absent a written agreement to the | 21 |
| contrary
with the surface owner, all electrical lines, all flow | 22 |
| lines , and other underground structures
must be buried to a | 23 |
| depth not less than 36 inches from the surface.
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| (Source: P.A. 95-493, eff. 1-1-08.)
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| Section 99. Effective date. This Act takes effect upon | 26 |
| becoming law.
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