S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4958
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 9, 2021
                                ___________
 
 Introduced  by M. of A. GOODELL, FRIEND -- 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:
 
   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  inte-
 gration 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 calcu-
 lated  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.
                                                            LBD08951-01-1
              

 A. 4958                             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 OPER-
 ATOR SHALL HOLD HARMLESS, DEFEND AND INDEMNIFY SUCH MUNICIPALITY IN  ANY
 ACTION FOR DAMAGES ARISING OUT OF THE STATUS OF MUNICIPALITY AS AN INTE-
 GRATED 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.