senate Bill S3659

2011-2012 Legislative Session

Relates to integrated royalty owners in the New York Marcellus Shale region

download bill text pdf

Sponsored By

Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

do you support this bill?

Actions

view actions (2)
Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to environmental conservation
Mar 01, 2011 referred to environmental conservation

S3659 - Bill Details

See Assembly Version of this Bill:
A3082
Current Committee:
Law Section:
Environmental Conservation Law
Laws Affected:
Amd §23-0901, En Con L
Versions Introduced in 2009-2010 Legislative Session:
S7758, A10956

S3659 - Bill Texts

view summary

Provides that integrated royalty owners in the New York Marcellus Shale region shall receive a royalty equal to the highest royalty in an existing lease in the spacing unit, but no less than 18.75 percent.

view sponsor memo
BILL NUMBER:S3659

TITLE OF BILL:
An act
to amend the environmental conservation law, in relation to integrated
royalty owners in the New York Marcellus Shale region

PURPOSE OR GENERAL IDEA OF BILL:
To increase the statutory minimum royalty for landowners in the New
York Marcellus Shale region who are involuntarily included in a
natural gas drilling unit through compulsory integration.

SUMMARY OF SPECIFIC PROVISIONS:
§ 23-0901, subsection 3 of Environmental Conservation law is amended
to increase the minimum royalty payment for landowners who undergo
compulsory integration in the New York Marcellus Shale region from
12.5 percent to the highest royalty in an existing lease in the
drilling unit, but no less than 18.75 percent.

JUSTIFICATION:
When a natural gas drilling company applies for a permit from the
Department of Environmental Conservation (DEC) to drill a well, the
company proposes a drilling unit from which gas will be extracted.
These unit boundaries may cut across property lines and include land
owned by people that have not, for various reasons, signed a lease
with a gas company for development.

If a natural gas company controls 60% of the acreage in a drilling
unit through leases or ownership, the DEC will schedule a Compulsory
Integration hearing which will give the driller the remaining
non-leased landowners' subsoil gas rights to that gas formation.

In this case, there are three options for compulsorily integrated land
owners offered by law. The first two include sharing in the
considerable costs and complexities of natural gas exploration and
well-drilling. As a result, the third option is typically chosen by
landowners and they enter into a contract to receive the
statutorily-set minimum royalty rate of 12.5 percent.

For years, this minimum royalty amount was consistent with what leased
landowners in the same drilling unit where receiving when they signed
a lease with a natural gas company. With technical advances in the
drilling industry and the prospect of exploration in the Marcellus
Shale formation, leased New York landowners have seen average royalty
payments increase dramatically and they are now are consistently in
the 18 to 20 percent range, with some lease agreements offering up to
30 percent royalties.

Given this positive change in market trends, landowners who are
involuntarily integrated into drilling units now are receiving
considerably lower royalty rates than their neighbors in the same
unit. This bill seeks to equalize royalty rates by increasing the
minimum royalty offered to compulsorily integrated landowners in the
New York Marcellus Shale region to be equal to the highest royalty in
the unit or 18.75 percent at the minimum.


PRIOR LEGISLATIVE HISTORY:
,in 0
S.7758 of 2009.

FISCAL IMPLICATIONS:
None to the state.

EFFECTIVE DATE:
Immediately.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3659

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              March 1, 2011
                               ___________

Introduced  by  Sen. VALESKY -- read twice and ordered printed, and when
  printed to be committed to the Committee on Environmental Conservation

AN ACT to amend the environmental conservation law, in relation to inte-
  grated royalty owners in the New York Marcellus Shale region

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subparagraph 3 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:
  (3) "Integrated royalty owner" means an owner who has  either  elected
to be an integrated royalty owner or who does not elect to become either
a  participating  owner  or  a non-participating owner. [The integrated]
INTEGRATED royalty [owner] OWNERS, OTHER THAN INTEGRATED ROYALTY  OWNERS
IN THE NEW YORK MARCELLUS SHALE REGION, shall receive a royalty equal to
the lowest royalty in an existing lease in the spacing unit, but no less
than  one-eighth.    INTEGRATED ROYALTY OWNERS IN THE NEW YORK MARCELLUS
SHALE REGION SHALL RECEIVE A ROYALTY EQUAL TO THE HIGHEST ROYALTY IN  AN
EXISTING  LEASE IN THE SPACING UNIT, BUT NO LESS THAN 18.75 PERCENT. The
integrated royalty owner shall have no obligation 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 royalty owner for any claims for personal injury or  property
damage  suffered by any person relating to the drilling and operation of
the well.
  S 2. This act shall take effect immediately.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03289-01-1

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.