S T A T E   O F   N E W   Y O R K
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                                   516

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced  by M. of A. ROSENTHAL, ABINANTI -- read once and referred to
  the Committee on Environmental Conservation

AN ACT to amend the  environmental  conservation  law,  in  relation  to
  compulsory integration and unitization in oil and natural gas orders

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

  Section 1. Subdivision 2, subparagraphs 4 and  5  of  paragraph  a  of
subdivision 3 and subdivision 13 of section 23-0901 of the environmental
conservation law, subdivision 2 and subparagraphs 4 and 5 of paragraph a
of  subdivision  3 as amended and subdivision 13 as added by chapter 386
of the laws of 2005, are amended and two new subdivisions 14 and 15  are
added to read as follows:
  2.  The  department shall not make any order requiring the integration
of interests in any spacing unit or requiring the development or  opera-
tion of any field, pool or part thereof as a unit unless it finds, after
detailed study and analysis, notice and hearing, that the integration of
interests  in  spacing  units,  under  conditions  then existing in this
state, or in the field or pool to be affected, is necessary to carry out
the policy provisions of section 23-0301 of this article.   THE  DEPART-
MENT  SHALL  ALSO  CONSIDER  THE IMPACT THAT COMPULSORY INTEGRATION WILL
HAVE ON AN EXISTING MORTGAGE PRIOR TO MAKING AN INTEGRATION ORDER.
  (4) "NON-INTEGRATED, NON-PARTICIPATING  OWNER"  MEANS  AN  OWNER,  THE
OWNER'S HEIRS, SUCCESSORS AND ASSIGNS, WHOLLY OR PARTIALLY LOCATED WITH-
IN  THE  SPACING UNIT, WHO ELECTS NOT TO PARTICIPATE IN THE INITIAL WELL
IN A SPACING UNIT, REFUSES TO PAY  ANY  COSTS  ASSOCIATED  WITH  PARTIC-
IPATION,  REFUSES  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 REFUSES TO COMPLY WITH THE
REQUIREMENTS FOR INTEGRATION, INCLUDING THE  TERMS  OF  INTEGRATION,  AS
SPECIFIED  IN  AN ORDER OF INTEGRATION ISSUED PURSUANT TO THE COMPULSORY

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

                                                           LBD04063-01-5

A. 516                              2

INTEGRATION  PROVISIONS  OF  THIS  SECTION.  NOTWITHSTANDING  ANY  OTHER
PROVISION  OF LAW TO THE CONTRARY, ALL NON-INTEGRATED, NON-PARTICIPATING
PROPERTY OWNERS, IN ADDITION TO POSSIBLE PURCHASERS, SHALL  BE  PROVIDED
WITH  AN OPTION TO REFUSE INTEGRATION ALTOGETHER, AT OR BEFORE THE INTE-
GRATION HEARING REQUIRED PURSUANT TO THIS SECTION.
  (5) "Risk penalty" means the percentage applied to well costs to reim-
burse the well operator for the risk involved with the  exploration  for
and  development of a well or the percentage applied to other costs that
are subject to recoupment and a risk penalty, as provided  herein.    At
any time during a risk penalty phase, an owner subject to a risk penalty
may  pay  to  the well operator the full amount subject to recoupment by
the well operator, to terminate the risk penalty phase and  be  eligible
for other opportunities for participation as provided herein.
  [(5)]  (6)  "Well  costs"  means the costs incurred or estimated to be
incurred by the well operator in relation to the  drilling,  completion,
and  the  installation  of surface equipment, other than as described in
item E of clause (ii) of subparagraph 1 of paragraph c of this  subdivi-
sion,  including, without limitation, surveying, drill site preparation,
leasing of surface rights and access roads pertinent to the drill  site,
construction  of  access roads, permitting, drilling, stimulation, test-
ing, well logging, drilling insurance, plugging and abandonment  of  the
well,  environmental  mitigation  costs associated with drilling and any
other costs associated with the foregoing that the operator has incurred
or anticipates incurring, including a reasonable charge for  supervision
of the foregoing activities.
  13.  A. Any person taking title by operation of law to any oil and gas
interests integrated into a spacing unit pursuant to an order  of  inte-
gration,  shall  take such interests subject to the terms and conditions
of the final order of integration issued by the department duly recorded
in accordance with the provisions of this section and shall  be  subject
to  all  liabilities  and  benefits  associated  therewith,  unless such
person, within sixty days of the taking of such interest, elects  to  be
an  integrated  royalty  owner  and  notifies  the well operator of such
election.
  B. FULL COST AND LIABILITY FOR ANY DAMAGES CAUSED BY  WELL  OPERATIONS
SHALL  BE BORNE SOLELY BY THE WELL OPERATOR AND THE BURDEN OF PROOF WITH
RESPECT TO LIABILITY FOR SUCH DAMAGES SHALL BE UPON THE WELL OPERATOR.
  14. INTEGRATION ORDERS  ISSUED  PURSUANT  TO  THIS  SECTION  SHALL  BE
SUBJECT TO JUDICIAL REVIEW.
  15.  NO  PARTY  INVOLVED  WITH  COMPULSORY INTEGRATION MAY HAVE, ON OR
WITHIN ONE THOUSAND OR MORE FEET FROM THE PROPERTY BOUNDARY OF ANY POOL,
ANY:  A. SURFACE ACTIVITY INCLUDING, BUT NOT LIMITED  TO  ANY  DRILLING,
COMPRESSOR PITS OR CLOSED WASTE SYSTEMS, OR B. SUBSURFACE GAS STORAGE.
  S  2.  This  act  shall take effect on the sixtieth day after it shall
have become a law.