House File 2702 H-8164 Amend House File 2702 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < Section 1. NEW SECTION . 557D.1 Short title. 4 This chapter shall be known and may be cited as the “ Iowa 5 Surface Owners Protection Act ”. 6 Sec. 2. NEW SECTION . 557D.2 Applicability. 7 This chapter applies to all of the following: 8 1. Real property and its improvements on which oil and gas 9 operations are conducted. 10 2. Oil and gas operations commenced on or after July 1, 11 2026, except for all of the following: 12 a. Maintenance and ongoing production activities related 13 to an oil or gas well producing or capable of producing oil or 14 gas on July 1, 2026, for which the operator has a valid permit 15 from the department of natural resources, except for all of the 16 following: 17 (1) Reentries, workovers, and other oil or gas operations 18 are subject to this chapter if the activities disturb 19 additional surface. 20 (2) The duty to reclaim, as stated in section 557D.4, 21 subsection 3, is applicable to a well that is not plugged or 22 abandoned on July 1, 2026. 23 b. Oil and gas operations conducted within the scope of 24 an agreement, entered into prior to July 1, 2026, between a 25 surface owner and an operator that sets forth the rights and 26 obligations of the parties with respect to surface activities 27 conducted by the operator, including providing payment for 28 damages to the surface owner. 29 c. Oil and gas operations conducted within the scope of 30 a surface use and compensation agreement, entered into on or 31 after July 1, 2026, between a surface owner and an operator are 32 not required to strictly comply with sections 557D.4, 557D.5, 33 or 557D.6 to the extent the agreement is not inconsistent with 34 Iowa law. 35 -1- HF 2702.3221 (1) 91 sb/js 1/ 11 #1.

Sec. 3. NEW SECTION . 557D.3 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Bank” means “bank” , “insured bank” , or “state bank” as 4 those terms are defined in section 524.103. 5 2. “Banking institution” means a bank or credit union. 6 3. “Certified appraiser” means “certified real estate 7 appraiser” as defined in section 543D.2. 8 4. “Credit union” means the same as defined in section 9 533.102. 10 5. “Department” means the department of natural resources. 11 6. “Oil and gas operations” means all activities affecting 12 a surface owner’s land that are associated with exploration, 13 drilling, or production of oil, gas, or metallic mineral 14 resources that require a permit pursuant to section 458A.5, 15 from initial exploration through final reclamation of the 16 affected surface. 17 7. “Operator” means a person with the legal right to conduct 18 oil and gas operations, including an agent, employee, or 19 contractor of the person. 20 8. “Reclaim” means to substantially restore the surface 21 affected by oil and gas operations to the condition that 22 existed prior to the oil and gas operations, or as otherwise 23 agreed to in writing by the operator and surface owner. 24 9. “Surface owner” means a person who holds legal or 25 equitable title, as shown in the records of the county clerk, 26 to the surface of the real property, which is suitable for 27 agricultural use, and on which the operator has the legal right 28 to conduct oil and gas operations. 29 10. “Surface use and compensation agreement” means an 30 agreement between a surface owner and an operator specifying 31 the rights and obligations of the surface owner and the 32 operator concerning oil and gas operations, including providing 33 payment for damages to the surface owner’s land. 34 11. “Tenant” means a person who holds a leasehold interest 35 -2- HF 2702.3221 (1) 91 sb/js 2/ 11

in agricultural land. 1 Sec. 4. NEW SECTION . 557D.4 Compensation for oil and gas 2 operations. 3 1. a. An operator shall compensate the surface owner 4 for all damages to the land, land improvements, soil, water, 5 groundwater, and crops including reductions in crop yields, 6 as applicable, caused by entering, using, and occupying the 7 surface owner’s land for oil and gas operations. 8 b. To the extent not otherwise included in paragraph “a” , 9 an operator shall compensate the surface owner for the loss 10 of agricultural production and the reduction in gross income 11 attributable to the oil and gas operations on the surface 12 owner’s land. 13 c. An operator shall compensate the surface owner for all 14 of the following: 15 (1) Access, use, and the right to exclude persons from 16 the surface owner’s land for the duration of the oil and gas 17 operations. 18 (2) The reduction in land value of the tract caused by the 19 oil and gas operations. 20 2. The amount of compensation may be determined by any 21 method or formula mutually agreeable between the surface owner 22 and the operator or as provided in section 557D.8. 23 3. A reservation or assignment of the compensation provided 24 in subsection 1 apart from the surface estate is prohibited 25 except to a surface owner of the land, a tenant of the surface 26 estate, an agricultural supply dealer as defined in section 27 570A.1, or a financial institution as defined in section 28 570A.1. 29 4. An operator shall not be responsible for allocating 30 compensation between the surface owner and any tenant, except 31 that an operator shall compensate a tenant of the surface 32 owner for any damages to crops including any reduction in crop 33 yields and the cost of repairing or replacing any leasehold 34 improvements damaged as a result of the operator’s oil and gas 35 -3- HF 2702.3221 (1) 91 sb/js 3/ 11

operations. The improvements must be approved or authorized by 1 the surface owner. 2 5. An operator shall reclaim all the surface affected by 3 the operator’s oil and gas operations once the oil and gas 4 operations are completed or the well is plugged or closed. 5 Sec. 5. NEW SECTION . 557D.5 Notice of operations —— 6 proposed surface use and compensation agreement. 7 1. Prior to initial entry upon the land for an activity that 8 does not disturb the surface, including an inspection, staking, 9 survey, measurement, or general evaluation of a proposed route 10 or site for oil and gas operations, the operator shall provide 11 at least ten business days’ notice by certified mail or hand 12 delivery to the surface owner. 13 2. No less than ninety days before first entering the 14 surface of the land to conduct oil and gas operations, an 15 operator shall, by certified mail or hand delivery, give the 16 surface owner notice of the planned oil and gas operations. 17 The notice shall include all of the following: 18 a. Sufficient disclosure of the planned oil and gas 19 operations to enable the surface owner to evaluate the effect 20 of the operations on the property. 21 b. A copy of the provisions of this chapter. 22 c. The name, address, telephone number and, if available, 23 facsimile number, and electronic mail address of the operator 24 and the operator’s authorized representative. 25 d. A proposed surface use and compensation agreement 26 addressing, at a minimum and to the extent known, all of the 27 following issues: 28 (1) The placement, specifications, maintenance, and design 29 of well pads, gathering pipelines, and roads to be constructed 30 for oil and gas operations. 31 (2) Terms of ingress and egress upon the surface of the land 32 for oil and gas operations. 33 (3) Construction, maintenance, and placement of all pits 34 and equipment used or planned for oil and gas operations. 35 -4- HF 2702.3221 (1) 91 sb/js 4/ 11

(4) Use and impoundment of water on the surface of the land, 1 the drilling of any water wells, and the quantity of water 2 removal. 3 (5) Removal and restoration of plant life. 4 (6) Surface water drainage changes. 5 (7) Actions to limit and effectively control precipitation 6 runoff and erosion. 7 (8) Control and management of noise, weeds, dust, traffic, 8 trespass, litter, and interference with the surface owner’s 9 use. 10 (9) Interim and final obligations to reclaim the surface 11 owner’s land. 12 (10) Actions to minimize surface damages to the property. 13 (11) Operator indemnification for injury to persons caused 14 by the operator. 15 (12) An offer of compensation for damages to the surface 16 affected by oil and gas operations. 17 3. If legal title and equitable title are not held by the 18 same person, notice shall be given to both the holder of legal 19 title and to the holder of equitable title. 20 4. a. Upon receipt of the notice required by subsection 2, 21 the surface owner may do any of the following: 22 (1) Accept the proposed surface use and compensation 23 agreement. 24 (2) Reject the proposed surface use and compensation 25 agreement. Failure to accept the proposed agreement within 26 ninety days shall be deemed to be a rejection by the surface 27 owner. 28 b. If the proposed agreement is rejected, the surface owner 29 may enter into negotiations with the operator, including, if 30 the parties agree, with the aid of mediation. 31 5. The operator and the surface owner may enter into a 32 mutually acceptable surface use and compensation agreement with 33 respect to the surface activities conducted by the operator. 34 6. Notices required under this section shall be deemed to 35 -5- HF 2702.3221 (1) 91 sb/js 5/ 11

have been received five days after mailing by certified mail or 1 immediately upon hand delivery. 2 Sec. 6. NEW SECTION . 557D.6 Financial assurance for payment 3 of damages. 4 Prior to commencing oil and gas operations, the operator 5 shall file and maintain financial assurance with the department 6 utilizing one of the following methods: 7 1. The financial assurance shall consist of a surety bond 8 of a surety corporation authorized to do business in Iowa 9 as surety, an irrevocable letter of credit from a banking 10 institution, cash, or a certificate of deposit for the benefit 11 of the department and the surface owner in the amount of at 12 least fifty thousand dollars per well location. The surety 13 bond, irrevocable letter of credit, cash, or certificate of 14 deposit shall only be released by the department if any of the 15 following occur: 16 a. The surface owner provides notice that compensation for 17 damages has been paid. 18 b. The surface owner and the operator have executed a 19 surface use and compensation agreement or otherwise agreed that 20 the security should be released. 21 c. There has been a final resolution of the judicial appeal 22 in any action for damages and any awarded damages have been 23 paid. 24 d. All wells have been plugged and closed and the operator 25 has not conducted oil and gas operations on the surface owner’s 26 property for a period of six years. 27 2. The financial assurance shall consist of a blanket 28 surety bond of a surety corporation authorized to do business 29 in Iowa as surety, irrevocable letter of credit from a banking 30 institution, cash, or a certificate of deposit in the sum of 31 at least one hundred thousand dollars subject to the following 32 criteria: 33 a. The department shall hold the corporate surety bond, 34 irrevocable letter of credit, cash, or certificate of deposit 35 -6- HF 2702.3221 (1) 91 sb/js 6/ 11

for the benefit of the surface owners of this state and shall 1 ensure that such security is in a form readily payable to a 2 surface owner awarded damages in an action brought pursuant to 3 this chapter. 4 b. The corporate surety bond, irrevocable letter of credit, 5 cash or certificate of deposit shall remain in full force and 6 effect as long as the operator continues oil and gas operations 7 in Iowa. 8 c. The corporate surety bond, irrevocable letter of credit, 9 cash, or certificate of deposit shall not be released until 10 six years after the operator is not the operator or producer 11 of record of any well in Iowa and does not hold any outstanding 12 drilling permits in Iowa issued pursuant to chapter 458A. 13 d. In the event that, pursuant to a judgment, all or a 14 portion of the corporate surety bond, irrevocable letter of 15 credit, cash, or certificate of deposit has been used to pay a 16 surface owner, the operator shall immediately post additional 17 financial assurance so that the total amount posted equals 18 one hundred thousand dollars and, if the operator does not 19 post the additional financial assurance, the department shall 20 publish notice to that effect on its website and an applicable 21 electronic newsletter or press release. The department may 22 suspend the operator’s or producer’s permits issued pursuant 23 to section 458A.5 if the operator fails to post sufficient 24 financial assurance. 25 Sec. 7. NEW SECTION . 557D.7 Notification of operator —— 26 statute of limitations. 27 Any person, to receive compensation for crop yield damages 28 under section 557D.4 or 557D.8, shall notify the operator 29 of the potential reduction in crop yields at least fourteen 30 days prior to harvest. Any claim for relief for compensation 31 brought under this chapter must be commenced within the 32 limitations period provided in chapter 614. 33 Sec. 8. NEW SECTION . 557D.8 Determination of damages. 34 1. Before filing a petition with the county board of 35 -7- HF 2702.3221 (1) 91 sb/js 7/ 11

supervisors pursuant to this section or commencing a legal 1 action to recover compensation for damages identified in 2 section 557D.4, a person entitled to compensation shall prepare 3 a damages statement describing the damages and the amount of 4 compensation requested for those damages. If claiming damages 5 pursuant to section 557D.4, subsection 1, paragraph “c” , 6 the surface owner may obtain a written appraisal valuing the 7 person’s tracts affected or foreseeably affected by the oil 8 and gas operations. A certified appraiser, or an individual 9 possessing a temporary permit pursuant to section 543D.11, 10 shall conduct the appraisal. The operator shall be provided 11 with a copy of the damages statement, including the appraisal, 12 if applicable. The operator may make an offer for settlement 13 to the surface owner or tenant within thirty days of receiving 14 the damages statement. 15 2. The operator shall reimburse the reasonable actual costs 16 of the appraisal incurred by the surface owner for obtaining 17 the appraisal under this section or, at the election of the 18 surface owner, the operator shall pay the reasonable actual 19 costs directly to the appraiser. 20 3. The appraisal or opinion of value expressed in the 21 appraisal is inadmissible at a proceeding commenced under this 22 chapter, unless the information is offered by the surface 23 owner. Whether an appraisal is issued under this section does 24 not require or prohibit the introduction of specific evidence 25 offered at a proceeding commenced under this chapter. 26 4. A surface owner, tenant, or operator may file a petition 27 with the county board of supervisors where the oil and gas 28 operations are being conducted asking that a compensation 29 commission determine the damages and the amount of compensation 30 due pursuant to this chapter. If the board of supervisors by 31 resolution approves the petition, the surface owner, tenant, or 32 operator shall commence the proceeding by filing an application 33 with the chief judge of the judicial district for the county 34 for the appointment of a compensation commission as provided 35 -8- HF 2702.3221 (1) 91 sb/js 8/ 11

in section 6B.4. The application shall contain all of the 1 following information: 2 a. The name and address of the applicant and a description 3 of the land on which the damage is claimed to have occurred. 4 b. A description of the nature of the damage claimed to have 5 occurred and the amount of the compensation requested. 6 c. The name and address of the operator claimed to have 7 caused the damage or the name and address of the affected 8 surface owner or tenant. 9 5. a. After the commissioners have been appointed, the 10 applicant shall serve notice on the operator, or the surface 11 owner and the tenant, stating all of the following: 12 (1) That a compensation commission has been appointed to 13 determine the damages caused by the oil and gas operations. 14 (2) The name and address of the applicant and a description 15 of the land on which the damage is claimed to have occurred. 16 (3) The date, time, and place when the commissioners will 17 view the premises and proceed to appraise the damages and that 18 the operator, surface owner, or tenant may appear before the 19 commissioners. 20 b. The county attorney may assist in coordinating the 21 proceedings, but does not become an attorney for the operator, 22 surface owner, or tenant by doing so. The county attorney may 23 assist the commission with preparing its written report. 24 6. The commissioners shall view the land at the time 25 provided in the notice and assess the damages sustained by 26 the surface owner or tenant by reason of the oil and gas 27 operations and they shall file their report with the sheriff. 28 The appraisement of damages returned by the commissioners is 29 final unless appealed. After the appraisement of damages 30 has been delivered to the sheriff by the compensation 31 commission, the sheriff shall give written notice by ordinary 32 mail to the operator, surface owner, and tenant of the date 33 the appraisement of damages was made, the amount of the 34 appraisement, and that any interested party may appeal to the 35 -9- HF 2702.3221 (1) 91 sb/js 9/ 11

district court within thirty days of the date of mailing. The 1 sheriff shall endorse the date of mailing of notice on the 2 original appraisement of damages. At the time of appeal, the 3 appealing party shall give written notice to the adverse party 4 or the adverse party’s attorney and the sheriff. 5 7. Chapter 6B applies to this section to the extent it is 6 applicable and consistent with this section. 7 8. The operator shall pay all costs of the assessment made 8 by the commissioners and reasonable attorney fees and costs 9 incurred by the landowner, as determined by the commissioners, 10 if the award of the commissioners exceeds one hundred ten 11 percent of the final offer of the operator prior to the 12 determination of damages. The operator shall file with the 13 sheriff an affidavit setting forth the most recent offer made 14 to the surface owner or tenant. Commissioners shall receive 15 a per diem of fifty dollars and actual and necessary expenses 16 incurred in the performance of their official duties. The 17 operator shall also pay all costs occasioned by the appeal, 18 including reasonable attorney fees to be taxed by the court, 19 unless on the trial of the appeal the same or a lesser amount 20 of damages is awarded than was allowed by the compensation 21 commission from which the appeal was taken. 22 Sec. 9. NEW SECTION . 557D.9 Damages. 23 In an action brought pursuant to this chapter, if the court 24 finds that compensation is owed for damages, the court may also 25 award the surface owner attorney fees and costs if any of the 26 following occurred: 27 1. The operator conducted oil and gas operations without 28 providing notice as required by section 557D.5, subsection 2. 29 2. The operator conducted oil and gas operations without a 30 surface use and compensation agreement and before filing and 31 maintaining financial assurance as required pursuant to section 32 557D.6. 33 3. The operator conducted oil and gas operations outside 34 the scope of a surface use and compensation agreement and, when 35 -10- HF 2702.3221 (1) 91 sb/js 10/ 11

entering into the agreement, knew or should have known that oil 1 and gas operations would be conducted outside the scope of the 2 agreement. 3 4. The operator failed to exercise good faith in complying 4 with the provisions of this chapter or the terms of a surface 5 use and compensation agreement. 6 5. The operator willfully and knowingly violated the 7 surface use and compensation agreement. 8 Sec. 10. NEW SECTION . 557D.10 Remedies not exclusive. 9 The remedies provided by this chapter are not exclusive and 10 do not preclude a person from seeking other remedies allowed 11 by law. > 12 2. Title page, lines 1 and 2, by striking < oil and gas, 13 geologic hydrogen, hydrocarbons, or other minerals > and 14 inserting < oil, gas, or metallic mineral resources > 15 ______________________________ HARRIS of Appanoose -11- HF 2702.3221 (1) 91 sb/js 11/ 11 #2.