H-8164

   Amend House File 2702 as follows:
   1.  By striking everything after the enacting clause and inserting: 
   <Section 1.  NEW SECTION.  557D.1  Short title.
   This chapter shall be known and may be cited as the “Iowa Surface Owners Protection Act”.
   Sec. 2.  NEW SECTION.  557D.2  Applicability.
   This chapter applies to all of the following:
   1.  Real property and its improvements on which oil and gas operations are conducted.
   2.  Oil and gas operations commenced on or after July 1, 2026, except for all of the following:
   a.  Maintenance and ongoing production activities related to an oil or gas well producing or capable of producing oil or gas on July 1, 2026, for which the operator has a valid permit from the department of natural resources, except for all of the following:
   (1)  Reentries, workovers, and other oil or gas operations are subject to this chapter if the activities disturb additional surface.
   (2)  The duty to reclaim, as stated in section 557D.4, subsection 3, is applicable to a well that is not plugged or abandoned on July 1, 2026.
   b.  Oil and gas operations conducted within the scope of an agreement, entered into prior to July 1, 2026, between a surface owner and an operator that sets forth the rights and obligations of the parties with respect to surface activities conducted by the operator, including providing payment for damages to the surface owner.
   c.  Oil and gas operations conducted within the scope of a surface use and compensation agreement, entered into on or after July 1, 2026, between a surface owner and an operator are not required to strictly comply with sections 557D.4, 557D.5, or 557D.6 to the extent the agreement is not inconsistent with Iowa law.
   Sec. 3.  NEW SECTION.  557D.3  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Bank” means “bank”, “insured bank”, or “state bank” as those terms are defined in section 524.103.
   2.  “Banking institution” means a bank or credit union.
   3.  “Certified appraiser” means “certified real estate appraiser” as defined in section 543D.2.
   4.  “Credit union” means the same as defined in section 533.102.
   5.  “Department” means the department of natural resources.
   6.  “Oil and gas operations” means all activities affecting a surface owner’s land that are associated with exploration, drilling, or production of oil, gas, or metallic mineral resources that require a permit pursuant to section 458A.5, from initial exploration through final reclamation of the affected surface.
   7.  “Operator” means a person with the legal right to conduct oil and gas operations, including an agent, employee, or contractor of the person.
   8.  “Reclaim” means to substantially restore the surface affected by oil and gas operations to the condition that existed prior to the oil and gas operations, or as otherwise agreed to in writing by the operator and surface owner.
   9.  “Surface owner” means a person who holds legal or equitable title, as shown in the records of the county clerk, to the surface of the real property, which is suitable for agricultural use, and on which the operator has the legal right to conduct oil and gas operations.
   10.  “Surface use and compensation agreement” means an agreement between a surface owner and an operator specifying the rights and obligations of the surface owner and the operator concerning oil and gas operations, including providing payment for damages to the surface owner’s land.
   11.  “Tenant” means a person who holds a leasehold interest in agricultural land.
   Sec. 4.  NEW SECTION.  557D.4  Compensation for oil and gas operations.
   1.  a.  An operator shall compensate the surface owner for all damages to the land, land improvements, soil, water, groundwater, and crops including reductions in crop yields, as applicable, caused by entering, using, and occupying the surface owner’s land for oil and gas operations.
   b.  To the extent not otherwise included in paragraph “a”, an operator shall compensate the surface owner for the loss of agricultural production and the reduction in gross income attributable to the oil and gas operations on the surface owner’s land.
   c.  An operator shall compensate the surface owner for all of the following:
   (1)  Access, use, and the right to exclude persons from the surface owner’s land for the duration of the oil and gas operations.
   (2)  The reduction in land value of the tract caused by the oil and gas operations.
   2.  The amount of compensation may be determined by any method or formula mutually agreeable between the surface owner and the operator or as provided in section 557D.8. 
   3.  A reservation or assignment of the compensation provided in subsection 1 apart from the surface estate is prohibited except to a surface owner of the land, a tenant of the surface estate, an agricultural supply dealer as defined in section 570A.1, or a financial institution as defined in section 570A.1. 
   4.  An operator shall not be responsible for allocating compensation between the surface owner and any tenant, except that an operator shall compensate a tenant of the surface owner for any damages to crops including any reduction in crop yields and the cost of repairing or replacing any leasehold improvements damaged as a result of the operator’s oil and gas operations. The improvements must be approved or authorized by the surface owner.
   5.  An operator shall reclaim all the surface affected by the operator’s oil and gas operations once the oil and gas operations are completed or the well is plugged or closed.
   Sec. 5.  NEW SECTION.  557D.5  Notice of operations —— proposed surface use and compensation agreement.
   1.  Prior to initial entry upon the land for an activity that does not disturb the surface, including an inspection, staking, survey, measurement, or general evaluation of a proposed route or site for oil and gas operations, the operator shall provide at least ten business days’ notice by certified mail or hand delivery to the surface owner.
   2.  No less than ninety days before first entering the surface of the land to conduct oil and gas operations, an operator shall, by certified mail or hand delivery, give the surface owner notice of the planned oil and gas operations. The notice shall include all of the following:
   a.  Sufficient disclosure of the planned oil and gas operations to enable the surface owner to evaluate the effect of the operations on the property.
   b.  A copy of the provisions of this chapter.
   c.  The name, address, telephone number and, if available, facsimile number, and electronic mail address of the operator and the operator’s authorized representative.
   d.  A proposed surface use and compensation agreement addressing, at a minimum and to the extent known, all of the following issues:
   (1)  The placement, specifications, maintenance, and design of well pads, gathering pipelines, and roads to be constructed for oil and gas operations.
   (2)  Terms of ingress and egress upon the surface of the land for oil and gas operations.
   (3)  Construction, maintenance, and placement of all pits and equipment used or planned for oil and gas operations.
   (4)  Use and impoundment of water on the surface of the land, the drilling of any water wells, and the quantity of water removal.
   (5)  Removal and restoration of plant life.
   (6)  Surface water drainage changes.
   (7)  Actions to limit and effectively control precipitation runoff and erosion.
   (8)  Control and management of noise, weeds, dust, traffic, trespass, litter, and interference with the surface owner’s use.
   (9)  Interim and final obligations to reclaim the surface owner’s land.
   (10)  Actions to minimize surface damages to the property.
   (11)  Operator indemnification for injury to persons caused by the operator.
   (12)  An offer of compensation for damages to the surface affected by oil and gas operations.
   3.  If legal title and equitable title are not held by the same person, notice shall be given to both the holder of legal title and to the holder of equitable title.
   4.  a.  Upon receipt of the notice required by subsection 2, the surface owner may do any of the following:
   (1)  Accept the proposed surface use and compensation agreement.
   (2)  Reject the proposed surface use and compensation agreement. Failure to accept the proposed agreement within ninety days shall be deemed to be a rejection by the surface owner.
   b.  If the proposed agreement is rejected, the surface owner may enter into negotiations with the operator, including, if the parties agree, with the aid of mediation.
   5.  The operator and the surface owner may enter into a mutually acceptable surface use and compensation agreement with respect to the surface activities conducted by the operator.
   6.  Notices required under this section shall be deemed to have been received five days after mailing by certified mail or immediately upon hand delivery.
   Sec. 6.  NEW SECTION.  557D.6  Financial assurance for payment of damages.
   Prior to commencing oil and gas operations, the operator shall file and maintain financial assurance with the department utilizing one of the following methods: 
   1.  The financial assurance shall consist of a surety bond of a surety corporation authorized to do business in Iowa as surety, an irrevocable letter of credit from a banking institution, cash, or a certificate of deposit for the benefit of the department and the surface owner in the amount of at least fifty thousand dollars per well location. The surety bond, irrevocable letter of credit, cash, or certificate of deposit shall only be released by the department if any of the following occur:
   a.  The surface owner provides notice that compensation for damages has been paid.
   b.  The surface owner and the operator have executed a surface use and compensation agreement or otherwise agreed that the security should be released.
   c.  There has been a final resolution of the judicial appeal in any action for damages and any awarded damages have been paid.
   d.  All wells have been plugged and closed and the operator has not conducted oil and gas operations on the surface owner’s property for a period of six years.
   2.  The financial assurance shall consist of a blanket surety bond of a surety corporation authorized to do business in Iowa as surety, irrevocable letter of credit from a banking institution, cash, or a certificate of deposit in the sum of at least one hundred thousand dollars subject to the following criteria:
   a.  The department shall hold the corporate surety bond, irrevocable letter of credit, cash, or certificate of deposit for the benefit of the surface owners of this state and shall ensure that such security is in a form readily payable to a surface owner awarded damages in an action brought pursuant to this chapter.
   b.  The corporate surety bond, irrevocable letter of credit, cash or certificate of deposit shall remain in full force and effect as long as the operator continues oil and gas operations in Iowa.
   c.  The corporate surety bond, irrevocable letter of credit, cash, or certificate of deposit shall not be released until six years after the operator is not the operator or producer of record of any well in Iowa and does not hold any outstanding drilling permits in Iowa issued pursuant to chapter 458A.
   d.  In the event that, pursuant to a judgment, all or a portion of the corporate surety bond, irrevocable letter of credit, cash, or certificate of deposit has been used to pay a surface owner, the operator shall immediately post additional financial assurance so that the total amount posted equals one hundred thousand dollars and, if the operator does not post the additional financial assurance, the department shall publish notice to that effect on its website and an applicable electronic newsletter or press release. The department may suspend the operator’s or producer’s permits issued pursuant to section 458A.5 if the operator fails to post sufficient financial assurance.
   Sec. 7.  NEW SECTION.  557D.7  Notification of operator —— statute of limitations.
   Any person, to receive compensation for crop yield damages under section 557D.4 or 557D.8, shall notify the operator of the potential reduction in crop yields at least fourteen days prior to harvest. Any claim for relief for compensation brought under this chapter must be commenced within the limitations period provided in chapter 614.
   Sec. 8.  NEW SECTION.  557D.8  Determination of damages.
   1.  Before filing a petition with the county board of supervisors pursuant to this section or commencing a legal action to recover compensation for damages identified in section 557D.4, a person entitled to compensation shall prepare a damages statement describing the damages and the amount of compensation requested for those damages. If claiming damages pursuant to section 557D.4, subsection 1, paragraph “c”, the surface owner may obtain a written appraisal valuing the person’s tracts affected or foreseeably affected by the oil and gas operations. A certified appraiser, or an individual possessing a temporary permit pursuant to section 543D.11, shall conduct the appraisal. The operator shall be provided with a copy of the damages statement, including the appraisal, if applicable. The operator may make an offer for settlement to the surface owner or tenant within thirty days of receiving the damages statement. 
   2.  The operator shall reimburse the reasonable actual costs of the appraisal incurred by the surface owner for obtaining the appraisal under this section or, at the election of the surface owner, the operator shall pay the reasonable actual costs directly to the appraiser. 
   3.  The appraisal or opinion of value expressed in the appraisal is inadmissible at a proceeding commenced under this chapter, unless the information is offered by the surface owner. Whether an appraisal is issued under this section does not require or prohibit the introduction of specific evidence offered at a proceeding commenced under this chapter.
   4.  A surface owner, tenant, or operator may file a petition with the county board of supervisors where the oil and gas operations are being conducted asking that a compensation commission determine the damages and the amount of compensation due pursuant to this chapter. If the board of supervisors by resolution approves the petition, the surface owner, tenant, or operator shall commence the proceeding by filing an application with the chief judge of the judicial district for the county for the appointment of a compensation commission as provided in section 6B.4. The application shall contain all of the following information:
   a.  The name and address of the applicant and a description of the land on which the damage is claimed to have occurred.
   b.  A description of the nature of the damage claimed to have occurred and the amount of the compensation requested.
   c.  The name and address of the operator claimed to have caused the damage or the name and address of the affected surface owner or tenant.
   5.  a.  After the commissioners have been appointed, the applicant shall serve notice on the operator, or the surface owner and the tenant, stating all of the following:
   (1)  That a compensation commission has been appointed to determine the damages caused by the oil and gas operations.
   (2)  The name and address of the applicant and a description of the land on which the damage is claimed to have occurred.
   (3)  The date, time, and place when the commissioners will view the premises and proceed to appraise the damages and that the operator, surface owner, or tenant may appear before the commissioners.
   b.  The county attorney may assist in coordinating the proceedings, but does not become an attorney for the operator, surface owner, or tenant by doing so. The county attorney may assist the commission with preparing its written report.
   6.  The commissioners shall view the land at the time provided in the notice and assess the damages sustained by the surface owner or tenant by reason of the oil and gas operations and they shall file their report with the sheriff. The appraisement of damages returned by the commissioners is final unless appealed. After the appraisement of damages has been delivered to the sheriff by the compensation commission, the sheriff shall give written notice by ordinary mail to the operator, surface owner, and tenant of the date the appraisement of damages was made, the amount of the appraisement, and that any interested party may appeal to the district court within thirty days of the date of mailing. The sheriff shall endorse the date of mailing of notice on the original appraisement of damages. At the time of appeal, the appealing party shall give written notice to the adverse party or the adverse party’s attorney and the sheriff.
   7.  Chapter 6B applies to this section to the extent it is applicable and consistent with this section.
   8.  The operator shall pay all costs of the assessment made by the commissioners and reasonable attorney fees and costs incurred by the landowner, as determined by the commissioners, if the award of the commissioners exceeds one hundred ten percent of the final offer of the operator prior to the determination of damages. The operator shall file with the sheriff an affidavit setting forth the most recent offer made to the surface owner or tenant. Commissioners shall receive a per diem of fifty dollars and actual and necessary expenses incurred in the performance of their official duties. The operator shall also pay all costs occasioned by the appeal, including reasonable attorney fees to be taxed by the court, unless on the trial of the appeal the same or a lesser amount of damages is awarded than was allowed by the compensation commission from which the appeal was taken.
   Sec. 9.  NEW SECTION.  557D.9  Damages.
   In an action brought pursuant to this chapter, if the court finds that compensation is owed for damages, the court may also award the surface owner attorney fees and costs if any of the following occurred:
   1.  The operator conducted oil and gas operations without providing notice as required by section 557D.5, subsection 2.
   2.  The operator conducted oil and gas operations without a surface use and compensation agreement and before filing and maintaining financial assurance as required pursuant to section 557D.6.
   3.  The operator conducted oil and gas operations outside the scope of a surface use and compensation agreement and, when entering into the agreement, knew or should have known that oil and gas operations would be conducted outside the scope of the agreement.
   4.  The operator failed to exercise good faith in complying with the provisions of this chapter or the terms of a surface use and compensation agreement.
   5.  The operator willfully and knowingly violated the surface use and compensation agreement.
   Sec. 10.  NEW SECTION.  557D.10  Remedies not exclusive.
   The remedies provided by this chapter are not exclusive and do not preclude a person from seeking other remedies allowed by law.>
   2.  Title page, lines 1 and 2, by striking <oil and gas, geologic hydrogen, hydrocarbons, or other minerals> and inserting <oil, gas, or metallic mineral resources>

______________________________
HARRIS of Appanoose