Current through Bulletin 2024-18, September 15, 2024
1. These rules and any subsequent revisions
as approved by the board are developed pursuant to the requirements of the
Surface Owner Protection Act of 2012 in Title 40, Chapter 6. It is the intent
of the board and the division to encourage owners or operators and surface land
owners to enter into surface use agreements. Surface use agreements should
fairly consider the respective rights of the owner or operator and the surface
land owner and also comply with the requirements of Subsection
R649-3-34.
2. For the purposes of Subsection R649-3-38,
these definitions are utilized.
2.1. "Crops"
means any growing vegetative matter used for an agricultural purpose, including
forage for grazing and domesticated animals.
2.2. "Oil and gas operations" means to
explore for, develop, or produce oil and gas.
2.3. "Surface land" means privately owned
land overlying privately owned oil and gas resources, upon which oil and gas
operations are conducted, and owned by a surface land owner.
2.4. "Surface land owner" means a person who
owns, in fee simple absolute, any or part of the surface land as shown by the
records of the county where the surface land is located. Surface land owner
does not include the surface land owner's lessee, renter, tenant, or other
contractually related person.
2.5.
"Surface land owner's property" means a surface land owner's surface land,
crops on the surface land, and existing improvements on the surface
land.
2.6. "Surface use agreement"
means an agreement between an owner or operator and a surface land owner
addressing the use and reclamation of surface land owned by the surface land
owner and compensation for damage to the surface land caused by oil and gas
operations that result in loss of the surface land owner's crops on the surface
land, loss of value of existing improvements owned by the surface land owner on
the surface land, and permanent damage to the surface land.
3. Oil and gas operations shall be conducted
in such manner as to prevent unreasonable loss of a surface land owner's crops
on surface land, unreasonable loss of value of existing improvements owned by a
surface land owner on surface land, and unreasonable permanent damage to
surface land.
4. In accordance with
Section
40-6-20,
an owner or operator may enter onto surface land under which the owner or
operator holds rights to conduct oil and gas operations and use the surface
land to the extent reasonably necessary to conduct oil and gas operations and
consistent with allowing the surface land owner the greatest possible use of
the surface land owner's property, to the extent that the surface land owner's
use does not interfere with the owner's or operator's oil and gas operations.
4.1. Except as is reasonably necessary to
conduct oil and gas operations, an owner or operator shall mitigate the effects
of accessing the surface land owner's surface land, minimize interference with
the surface land owner's use of the surface land owner's property, and
compensate a surface land owner for unreasonable loss of a surface land owner's
crops on the surface land, unreasonable loss of value to existing improvements
owned by a surface land owner on the surface land, and unreasonable permanent
damage to the surface land.
4.2. An
owner or operator may but is not required to obtain location or spacing
exceptions from the division or board or utilize directional or horizontal
drilling techniques that are not technologically feasible, economically
practicable, or reasonably available.
5. In accordance with Section
40-6-21,
non-binding mediation may be requested by a surface land owner and an owner or
operator, by providing written notice to the other party, if they are unable to
agree on the amount of damages for unreasonable crop loss on the surface land,
unreasonable loss of value to existing improvements owned by the surface land
owner on the surface land, or unreasonable permanent damage to the surface
land.
5.1. A mediator may be mutually
selected by a surface land owner and an owner or operator from a listing of
qualified mediators maintained by the division and the Utah Department of
Agriculture and Food, which includes the mediators identified on the Utah State
Courts website with "property" or "real estate" as an area of expertise, or a
mediator may be selected from any other source.
5.2. The surface land owner and the owner or
operator shall equally share the cost of the mediator's services.
5.3. The mediation provisions of this
subsection do not prevent or delay an owner or operator from conducting oil and
gas operations in accordance with applicable law.
6. A surface use bond shall be furnished to
the division by the owner or operator, in accordance with the following
provisions of Subsection R649-3-38 -6.
6.1. A
surface use bond does not apply to surface land where the surface land owner is
a party to, or a successor of a party to:
6.1.1. A lease of the underlying privately
owned oil and gas;
6.1.2. A surface
use agreement applicable to the surface land owner's surface land; or
6.1.3. A contract, waiver, or release
addressing an owner's or operator's use of the surface land owner's surface
land.
6.2. The surface
use bond shall be in the amount of $6,000 per well site and shall be
conditioned upon the performance by the owner or operator of the duty to
protect a surface land owner against unreasonable loss of crops on surface
land, unreasonable loss of value of existing improvements, and unreasonable
permanent damage to surface land.
6.3. The surface use bond shall be furnished
to the division on Form 4S after good faith negotiation and prior to the
approval of the application for permit to drill. The mediation process
identified in Subsection R649-3-38-5 may commence and is encouraged to be
completed.
6.4. The division may
accept a surface use bond in the form of a cash account as provided in
Subsection R649-3-1-10.2.1 or a certificate of deposit as provided in
Subsection R649-3-1-10.2.3. Interest will remain within the account.
6.5. The division may allow the owner or
operator, or a subsequent owner or operator, to replace an existing surface use
bond with another bond that provides sufficient coverage.
6.6. The surface use bond shall remain in
effect by the operator until released by the division.
6.7. The surface use bond shall be payable to
the division for the use and benefit of the surface land owner, subject to the
provisions of these rules.
6.8. The
surface use bond shall be released to the owner or operator after the division
receives sufficient information that:
6.8.1.
A surface use agreement or other contractual agreement has been
reached;
6.8.2. Final resolution of
the judicial appeal process for an action for unreasonable damages, as defined
in Subsection R649-3-38-6.2, has occurred and have been paid; or
6.8.3. Plugging and abandonment of the well
is completed.
6.9. The
division shall make a reasonable effort to contact the surface land owner prior
to the division's release of the surface use bond.
