H-8450

   Amend Senate File 2490, as passed by the Senate, as follows:
   1.  Page 1, line 11, by striking <section 458A.29> and inserting <section 458A.30>
   2.  Page 1, after line 11 by inserting: 
   <Sec. ___.  Section 458A.1, Code 2026, is amended to read as follows:
   458A.1  Declaration of policy —— interpretation —— well prohibitions.
   1.  It is declared to be in the public interest to foster, to encourage, and to promote the development, production, and utilization of natural resources of oil and gas and metallic minerals in the state in such a manner as will prevent waste; to authorize and to provide for the operation and development of oil and gas and metallic minerals properties in such a manner that a greater ultimate recovery of oil and gas and metallic minerals be had and that the correlative rights of all owners be fully protected; and to encourage and to authorize such measures as will result in the greatest possible economic recovery of oil and gas and metallic minerals within the state to the end that the landowners, the royalty owners, the producers, and the general public realize and enjoy the greatest possible good from these vital natural resources. It is further declared that the general welfare of the people requires that the underground and surface water of the state to be protected from pollution and conserved in the best interests of the people of the state.
   2.  Ambiguities in this chapter and in rules adopted under this chapter shall be construed in favor of landowners, mineral-interest owners, and royalty-interest owners. For purposes of this subsection, “landowner” means a person holding legal or equitable title to the surface of land, a person holding a mineral interest severed from the surface, or a person holding a royalty or overriding royalty interest; and “ambiguity” is to be determined without deference to an administrative agency’s construction of the provision at issue.
   3.  Notwithstanding any other provision of this chapter or other Iowa law, no well or similar activity shall be dug or placed on the real property of any person who does not expressly consent to its placement.>
   3.  Page 2, line 1, by striking <the following>
   4.  Page 2, line 2, after <year> by inserting <, which filings the department shall maintain in an online, searchable registry, accessible to the public without fee or registration and updated promptly upon receipt of each filing, the following information>
   5.  Page 2, after line 14 by inserting: 
   <(6)  A list of all active and pending oil, gas, and metallic minerals leases held by the filer, by location and acreage.
   (7)  Summary financial information sufficient to evaluate the filer’s ability to perform surface damage, restoration, and abandonment obligations under this chapter.
   (8)  Confirmation of all bonds posted by the filer under this chapter or under rules adopted by the department, with documentation sufficient to establish current effectiveness.>
   6.  Page 3, by striking lines 1 through 4 and inserting <shall provide notice of the variance request to each landowner whose property is within one-half mile of the operation that is the subject of the request, and shall allow a public comment period of not less than fourteen days before issuing a decision. The director shall issue a written decision, supported by a contemporaneously public statement of reasons, not later than forty-five days after receipt of the request. The director shall report any variance granted at the subsequent hearing and shall contemporaneously make public any variance granted. A variance granted under this subsection is appealable to the district court by an affected landowner under the procedure set forth in section 458A.14 within thirty days of the date of issuance. The filing of a notice of appeal shall stay the effect of the variance pending the court’s final disposition of the appeal.>
   7.  Page 3, line 16, after <good cause.> by inserting <Notwithstanding any designation of confidentiality under this section, information subject to this section shall be disclosed to a landowner within the affected area upon written request, subject to execution of a nondisclosure agreement sufficient to protect the information from further disclosure to competitors of the submitting owner. For purposes of this section, “affected area” means the lands subject to the pooling order, spacing unit, or exploratory spacing unit that is the subject of the submission, together with lands within one-half mile thereof.>
   8.  Page 3, line 33, after <information.> by inserting <Notwithstanding any other provision of this section, information reported pursuant to rules adopted by the commission concerning fires, breaks, leaks, or blowouts, and any other information concerning safety incidents, environmental contamination, or spills, shall not be designated confidential under this section, regardless of any claim of commercial sensitivity.>
   9.  Page 4, line 3, by striking <the permitted> and inserting <the permitted>
   10.  Page 5, line 7, after <relevant.> by inserting <An application for establishment of an exploratory spacing unit under this subsection shall be subject to all of the following conditions:>
   11.  Page 5, after line 7 by inserting: 
   <a.  The department shall provide not less than sixty days’ notice of the hearing to each landowner within the proposed exploratory spacing unit and to each landowner whose property is within one-half mile of the proposed exploratory spacing unit.
   b.  The applicant’s supporting evidence shall be made publicly available not later than thirty days before the hearing.
   c.  Each affected landowner shall have the right to cross-examine the applicant’s technical witnesses at the hearing.
   d.  The department shall make specific written findings of the evidentiary basis for any determination to establish an exploratory spacing unit.
   e.  An exploratory spacing unit established under this subsection shall expire two years after the date of the department’s order establishing the unit, unless the department, upon a new application and a full evidentiary hearing, determines that the existence of a pool has been established and converts the exploratory spacing unit into a spacing unit under subsection 1. Upon written application and a showing of good cause, the department may extend the life of an exploratory spacing unit for one additional period not to exceed one year.>
   12.  Page 6, line 15, after <subsection 1,> by inserting <and only if the producer has identified pools of existing hydrogen within the spacing unit,>
   13.  Page 6, line 16, by striking <not less than twenty-five> and inserting <more than seventy>
   14.  Page 6, line 17, after <spacing unit> by inserting <and constituting more than seventy percent of the number of the owners in the spacing unit>
   15.  Page 6, line 22, after <reasonable> by inserting <, provided that no application for a pooling order shall be considered by the department unless the applicant certifies, under oath, that the applicant has engaged in not less than ninety days of good faith negotiation with each nonconsenting owner on commercially reasonable lease terms prior to the filing of the application>
   16.  Page 7, line 28, by striking <two hundred> and inserting <one hundred ten>
   17.  Page 7, line 31, by striking <two hundred> and inserting <one hundred ten>
   18.  Page 8, line 8, by striking <twelve and one-half> and inserting <twenty-five>
   19.  Page 8, line 9, after <percent.> by inserting <Notwithstanding any other provision of this section, the producer’s right to recover costs against a nonconsenting owner under subsection 3 shall terminate five years after the date of first production from the well. Upon termination of cost recovery under this subsection, an unleased nonconsenting owner shall be deemed to have elected to participate as a working interest owner on a pro rata basis for all subsequent production, net of costs actually recovered to the date of termination.>
   20.  Page 8, line 15, after <notice shall> by inserting <include a certified accounting of all receipts, costs, and projected costs attributable to the well through the date of notice, and shall>
   21.  Page 8, line 16, after <order> by inserting <as a working interest owner>
   22.  Page 8, line 19, by striking <sixty> and inserting <one hundred eighty>
   23.  Page 8, line 19, after <notice> by inserting <and a certified accounting under paragraph “a”>
   24.  Page 8, line 23, after <subsection 4.> by inserting <The accounting shall be certified by an independent certified public accountant at the producer’s expense.>
   25.  Page 8, lines 26 and 27, by striking <continue receiving the royalty specified in subsection 4> and inserting <participate as a working interest owner>
   26.  Page 8, after line 32 by inserting: 
   <6.  During the time the producer is recovering costs from a nonconsenting owner under subsection 3, the producer shall deliver to each nonconsenting owner, on a quarterly basis, a written statement setting forth all of the following:
   a.  Production volumes and prices attributable to the well during the reporting period.
   b.  Costs incurred and recovered to date.
   c.  The producer’s good faith projection of the date on which cost recovery will be completed.
   d.  A computation of royalty amounts due to the nonconsenting owner under subsection 4.>
   27.  Page 8, line 33, by striking <6.> and inserting <7.>
   28.  Page 9, line 20, by striking <7.> and inserting <8.>
   29.  Page 9, line 20, before <An> by inserting <Notice of a pooling application shall inform each nonconsenting owner of the right to be represented at the hearing by the office of landowner advocacy established under section 458A.31.>
   30.  Page 9, line 27, by striking <penalty.> and inserting <penalty, which shall include all of the following:
   (1)  Documented calculations of dry-hole risk based on geological data and data from comparable wells in the same or analogous formations.
   (2)  A sworn certification by an officer of the applicant that the applicant engaged in at least ninety days of good faith negotiation with the nonconsenting owner on commercially reasonable lease terms prior to filing the application and attaching copies of all written offers made during that period.
   (3)  A specific factual finding by the department regarding the risk actually borne by the producer with respect to the well.>
   31.  Page 9, before line 31 by inserting: 
   <1.  Subsections 2 through 8 shall apply only if the surface owner does not own mineral rights in the spacing unit that is subject to a pooling order. An operator may only enter a site that is subject to a pooling order if the operator has a contract with the owner of the mineral rights of the real property on which the site is located.>
   32.  Page 9, line 31, by striking <1.> and inserting <2.>
   33.  Page 10, line 2, after <drill> by inserting <upon payment of the agreed damages>
   34.  Page 10, line 3, by striking <2.> and inserting <3.>
   35.  Page 10, line 4, by striking <subsection 1> and inserting <subsection 2>
   36.  Page 10, lines 9 and 10, by striking <After the operator has petitioned for appointment of appraisers, the operator may enter the site to drill.> and inserting <The operator shall not enter the site with heavy equipment for the purpose of drilling until the appraisers have filed their report under subsection 4 and the producer has either paid the recommended compensation to the surface owner or deposited the recommended compensation with the clerk of the district court for the benefit of the surface owner.>
   37.  Page 10, line 20, after <publication.> by inserting <As a condition of entry, the producer shall post a bond with the clerk of the district court, payable to the surface owner, in an amount equal to the greater of two hundred percent of the appraisers’ recommended compensation or fifteen thousand dollars per acre of surface area subject to the drilling operation. The bond shall remain in effect until the drilling operation is completed and all compensation, including any compensation awarded upon reassessment under subsection 8, has been paid. Upon producer default, insolvency, or failure to remediate damages, the bond shall be available to satisfy the surface owner’s claim.>
   38.  Page 10, line 21, by striking <3.> and inserting <4.>
   39.  Page 11, line 11, after <paid.> by inserting <Compensable damages under this section include but are not limited to the loss of use of land during drilling; diminution of market value of the land; crop damage; livestock loss and injury; damage to springs, wells, and other water sources; soil compaction and restoration costs; damage to improvements, fences, and drainage; lost quality of life during active operations; and consequential damages to adjoining or related operations.>
   40.  Page 11, line 16, by striking <4.> and inserting <5.>
   41.  Page 11, line 17, by striking <subsection 3> and inserting <subsection 4>
   42.  Page 11, line 29, by striking <subsection 3> and inserting <subsection 4>
   43.  Page 12, line 8, by striking <5.> and inserting <6.>
   44.  Page 12, line 10, by striking <subsection 3> and inserting <subsection 4>
   45.  Page 12, line 21, by striking <6.> and inserting <7.>
   46.  Page 12, line 22, by striking <subsection 3> and inserting <subsection 4>
   47.  Page 12, by striking lines 31 through 35 and inserting <of damages. If the damages meet or exceed ninety percent of the compensation recommended in the report of the>
   48.  Page 13, line 2, after <owner.> by inserting <If the damages awarded are less than ninety percent of the compensation recommended in the report of the appraisers, each party shall bear its own court costs and attorney fees.>
   49.  Page 13, after line 2 by inserting: 
   <8.  When operations continue beyond one year from the date of the appraisers’ report under subsection 4, the surface owner may petition the court annually for reassessment of continuing damages. A reassessment petition shall be subject to the procedures set forth in subsections 4 through 7.>
   50.  Page 13, before line 3 by inserting: 
   <Sec. ___.  NEW SECTION.  458A.27  Groundwater and aquifer protection.
   1.  The requirements of this section are in addition to, and not in substitution for, the water strata sealing and artesian water protection requirements prescribed by rule of the department at 561 IAC 17.6, as in effect on the effective date of this Act.
   2.  Not later than sixty days before commencing drilling of any well subject to this chapter, the operator shall arrange, at the operator’s sole expense, for a baseline water-quality test of every domestic, livestock, and irrigation water well located within a radius of two thousand five hundred feet of the proposed well pad. Testing shall be performed by a laboratory certified by the department and shall include, at a minimum, tests for methane, total dissolved solids, chlorides, sulfates, arsenic, barium, iron, manganese, and such other parameters as the department shall specify by rule. The operator shall deliver the baseline test results in writing to the owner of each tested water well and shall file the results with the department.
   3.  The operator shall arrange, at the operator’s sole expense, for follow-up water quality testing of each water well tested under subsection 2 at six months, twelve months, and twenty-four months after completion or plugging of the subject oil or gas well. Results shall be delivered to the water well owner and filed with the department within thirty days of testing.
   4.  When a water well tested under subsection 2 or 3 experiences a material decline in quality, or is newly shown to be contaminated with any constituent typically associated with oil and gas drilling or hydraulic stimulation, the water well is located within a radius of two thousand five hundred feet of an oil or gas well, and the contamination is first identified within five years after spudding of the oil or gas well, there shall be a rebuttable presumption that the drilling operation caused the contamination. The presumption may be rebutted only by clear and convincing evidence. In any proceeding when the presumption applies, the operator shall bear the burden of providing to the affected landowner a replacement water supply, adequate in quantity and quality, pending final determination.
   5.  Every operator shall post, as a condition of permit issuance, financial assurance in the form of a surety bond, letter of credit, or cash deposit, in an amount determined by the department by rule but not less than one million dollars per well, to be available for remediation of aquifer contamination, provision of replacement water supplies, and plugging and abandonment of contaminated water wells. Financial assurance under this subsection shall be in addition to, and not in substitution for, the compliance bond required by section 458A.4, subsection 1, paragraph “d”, or any other bonding or financial assurance requirement of this chapter.>
   51.  Page 13, line 3, by striking <458A.27> and inserting <458A.28>
   52.  Page 13, line 10, after <wellhead.> by inserting <Production attributable to the cost-free royalty interest of an unleased nonconsenting owner under section 458A.8, subsection 5, shall be exempt from the tax imposed by this section.>
   53.  Page 13, by striking lines 13 through 20 and inserting: 
   <4.  The severance tax shall be paid by the producer as a cost of doing business. Notwithstanding any agreement to the contrary, a producer shall not deduct the severance tax paid under this section from any royalty payment, lease bonus, or other payment due or to become due to an interest owner of oil or gas production, and shall not otherwise pass the economic incidence of the tax to an interest owner.>
   54.  Page 13, line 23, by striking <458A.28> and inserting <458A.29>
   55.  Page 13, line 25, by striking <section 458A.27> and inserting <section 458A.28>
   56.  Page 13, line 32, by striking <Five> and inserting <Thirty-five>
   57.  Page 16, line 18, by striking <Seventy and one-tenth> and inserting <Thirty and six-tenths>
   58.  Page 16, after line 20 by inserting: 
   <e.  (1)  Seven and five-tenths percent of severance tax revenue each year shall be deposited in the surface owner compensation fund created in subparagraph (2).
   (2)  A surface owner compensation fund is created within the state treasury under the control of the department.
   (3)  Moneys in the surface owner compensation fund shall be available to pay awards of surface damages under section 458A.26 when the producer has defaulted, become insolvent, cannot be located, or is otherwise unable to satisfy the award. Upon payment from the fund, the fund shall be subrogated to the surface owner’s claim against the producer.
   (4)  The department shall administer the surface owner compensation fund and adopt rules pursuant to chapter 17A for the disposition of claims against the fund.
   f.  Two percent of severance tax revenue each year shall be deposited in an account within the state treasury for the exclusive use of the office of landowner advocacy established under section 458A.31.>
   59.  Page 16, line 21, by striking <e.> and inserting <g.>
   60.  Page 17, line 4, by striking <458A.29> and inserting <458A.30>
   61.  By striking page 18, line 21, through page 19, line 28, and inserting: 
   <Sec. ___.  NEW SECTION.  458A.31  Office of landowner advocacy.
   1.  There is established within the department the office of landowner advocacy. The office shall be independent of the divisions of the department responsible for permitting and enforcement under this chapter.
   2.  The office shall have all of the following powers and duties:
   a.  To intervene, on behalf of affected landowners, in pooling, spacing, variance, and other proceedings before the department under this chapter.
   b.  To review, on request of a landowner, any report of appraisers filed under section 458A.26, and to assist the landowner in evaluating and, where appropriate, contesting the report.
   c.  To provide counsel, or lay representation where lawful, to unrepresented landowners in proceedings under this chapter.
   d.  To maintain public records of producer performance on surface damage, restoration, and abandonment obligations.
   e.  To publish an annual report on industry practices and emerging issues affecting landowners.
   3.  The office shall be funded by a dedicated allocation of two percent of severance tax revenues pursuant to section 458A.29, subsection 1, paragraph “f”.
   Sec. ___.  NEW SECTION.  458A.32  Landowner private right of action.
   1.  For purposes of this section:
   a.  “Landowner” means a person holding legal or equitable title to the surface of land affected by an oil and gas operation; a person holding a mineral interest that is or may be affected by an oil and gas operation, whether or not severed from the surface; a person holding a royalty or overriding royalty interest in production from an oil and gas operation; and a successor in interest to any of the foregoing.
   b.  “Producer” means the same as defined in section 458A.2 and includes any person acting as a principal or agent for a producer in the production, storage, transportation, refining, marketing, or processing of oil or gas.
   c.  “Violation” means a failure to comply with any provision of this chapter, any rule adopted under this chapter, any order of the department, any bond required under this chapter, any pooling order, any surface damage award, any lease or surface use agreement filed with or known to the department, or any local ordinance not preempted under this chapter.
   2.  A landowner aggrieved by a violation may bring a civil action against any producer responsible for the violation in the district court of the county in which the oil and gas operation is located, or in the district court of any county in which the producer transacts business. The action may be brought without regard to whether the department has taken any enforcement action with respect to the violation and without regard to whether administrative remedies have been exhausted.
   3.  In an action under this section, the court may grant any of the following forms of relief, cumulatively or in the alternative:
   a.  Injunctive relief, including temporary restraining orders, preliminary injunctions, and permanent injunctions, to restrain the violation or to compel compliance.
   b.  Compensatory damages for harm caused by the violation, including all categories of compensable damages enumerated in section 458A.26, subsection 4.
   c.  Restitution and disgorgement of any profit, royalty, or other economic benefit obtained by the producer in connection with the violation.
   d.  Civil penalties of not less than five hundred dollars and not more than twenty-five thousand dollars per violation, payable to the aggrieved landowner, with each day of continued violation constituting a separate violation for penalty purposes.
   e.  Declaratory relief.
   f.  Any other relief the court deems appropriate, including appointment of a receiver when necessary to secure compliance or the preservation of landowner rights.
   4.  The court shall award reasonable attorney fees, expert witness fees, and costs of suit to a prevailing landowner. A producer shall not recover attorney fees or costs in an action under this section unless the court specifically finds that the landowner’s action was frivolous, unreasonable, or without foundation.
   5.  An action under this section shall be commenced within six years after the violation is discovered or, in the exercise of reasonable diligence, should have been discovered.
   6.  The right of action established by this section is in addition to, and does not supplant, any other remedy available at law or in equity, including remedies available under section 458A.17, remedies available at common law, and remedies available under any lease, surface use agreement, or other contract. Nothing in this section shall be construed to limit the remedies of the department, the attorney general, or any other public officer with enforcement authority under this chapter.
   7.  Any agreement purporting to waive, limit, or restrict a landowner’s right of action under this section, whether entered into before or after the violation giving rise to the action, is void and unenforceable as against public policy.>
   62.  Page 19, after line 29 by inserting: 
   <Sec. ___.  FUTURE REPEAL AND REAUTHORIZATION.
   1.  Section 458A.8, subsections 3 through 9, and sections 458A.26, 458A.27, 458A.28, 458A.29, 458A.30, and 458A.31, as enacted or amended by this Act or as subsequently amended, are repealed July 1, 2031.
   2.  The general assembly may affirmatively reauthorize each provision listed in subsection 1 prior to its repeal.
   Sec. ___.  REPORT —— LEGISLATIVE SERVICES AGENCY.  The legislative services agency shall prepare for delivery to the general assembly not later than January 15, 2031, a report evaluating the operation of section 458A.8, subsections 3 through 9, and sections 458A.26, 458A.27, 458A.28, 458A.29, 458A.30, and 458A.31, as enacted or amended by this Act, including information concerning the number and outcome of proceedings under each section, economic effects on landowners and producers, and any recommended modifications.>
   63.  Title page, line 5, by striking <and jurisdiction> and inserting <a private right of action for landowners, and an office of landowner advocacy>
   64.  By renumbering as necessary.

______________________________
THOMSON of Floyd