KRS 353.595: Notice to surface owner of intent to drill oil or gas well -- Compensation

for damage to surface -- Restoration of surface.

(1) As used in this section:

(a) "Person" means any natural person, corporation, firm, partnership, venture,

receiver, trustee, executor, administrator, guardian, fiduciary, or other

representative of any kind, and includes any government or any political

subdivision or agency thereof.

(b) "Drilling operations" means the drilling, deepening, or conversion of a well

for oil or gas production, core hole for oil or gas purposes, or drill hole for a

stratigraphic test for oil or gas purposes.

(c) "Entry" means the moving upon the surface of land with equipment to

commence drilling operations, but shall not include entry for the survey for or

ascertaining or identification of a well location.

(d) "Operator" means the person, whether the owner or not, who applies for or

holds a permit for drilling operations or who is named as the principal on a

bond for a permit for a well that was issued by the department.

(e) "Surface owner" means the person in whose name the surface of the land on

which drilling operations are contemplated, and who is assessed for purposes

of taxes imposed according to the records of the property valuation

administrator of the county where the land is located as certified by the

property valuation administrator.

(f) "Production operation" means the operation of a well for the production of oil

or gas, including all acts, structures, equipment, and roadways necessary for

the operation.

(g) "New well" means a well that is spudded after July 13, 1990, and does not

utilize any part of a well bore or drilling location that existed prior to July 13,

1990.

(h) "Completion of the well" means completion of those processes necessa ry

before production occurs, including the laying of flow lines and the

construction of the tank battery. If the well is not productive, the date of

completion of the well shall be the day it is plugged and abandoned.

(2) This section shall be applicable o nly for the drilling operations of new wells except

as provided in subsection (7) of this section. This section shall not apply for

reworking operations on a well. This section shall be applicable only when the

surface owner has not consented in writing to the drilling operations and:

(a) There has been a complete severance of the ownership of the oil and gas from

the ownership of the surface; or

(b) The surface owner owns an interest in the oil and gas.

(3) (a) Prior to commencement of the drilling of a w ell, the operator shall give written

notice to the surface owner of the operator's intent to commence drilling operations.

(b) The operator shall, for the purpose of giving notice, secure from the property

valuation administrator's office, within ninety (9 0) days prior to the giving of

the notice, a certification which shall identify the person in whose name the

lands on which drilling operations are to be commenced and who is assessed

at the time the certification is made. The written certification made by the

property valuation administrator of the surface owner shall be conclusive

evidence of the surface ownership.

(c) The notice required to be given by the operator to the surface owner shall

identify the following:

1. The location of the proposed entry on the surface for drilling operations

and the date on or after which drilling operations shall commence.

2. A photocopy of the drilling application to the department for the well to

be drilled.

3. The name, address, and telephone number of the operator.

4. An offer to discuss with the surface owner those matters set forth in

subsection (4) of this section prior to commencement of drilling

operations.

(d) If the surface owner elects to meet the operator, the surface owner shall

request the operator to schedule a meeting at a mutually agreed time and place

within the limitations set forth herein. Failure of the surface owner to contact

the operator at least five (5) days prior to the proposed commencement of

drilling operations shall be conclusively deemed a waiver of the right to meet

by the surface owner. The meeting shall be scheduled between the hours of

nine o'clock in the morning and the setting of the sun of the same day and

shall be at least three (3) days prior to co mmencement of drilling operations.

Unless agreed to otherwise, the place shall be located within the county in

which drilling operations are to be commenced where the operator or his agent

shall be available to discuss with the surface owner or his agent t hose matters

set forth in subsection (4) of this section.

(e) The notice shall be given to the surface owner by either:

1. Certified mail addressed to the surface owner at the address shown in the

certification obtained from the property valuation administ rator, which

shall be postmarked at least ten (10) days prior to the commencement of

drilling operations; or

2. Personal delivery to the surface owner at least eight (8) days prior to the

commencement of drilling operations.

(f) Notice to the surface owner as defined in this section shall be deemed

conclusive notice to the record owners of all interest in the surface.

(4) The operator, or his agent shall, if the surface owner accepts the offer to discuss, be

available at the time agreed, date, and place to discuss with the surface owner the

following:

(a) Placement of roads to be constructed by the operator;

(b) Points of entry upon the surface for drilling operations;

(c) Construction and placement of pits used for drilling operations;

(d) Restoration of fe nces to be cut in order to make entry upon the surface for

drilling operations;

(e) Use of water on the surface of the lands;

(f) Removal of trees; and

(g) Surface water drainage changes caused by drilling operations.

(5) The surface owner shall be entitle d to reasonable compensation from the operator

for damages to growing crops, trees, shrubs, fences, roads, structures,

improvements, and livestock thereon caused by the drilling of a new well. The

surface owner shall be entitled to reasonable compensation from the operator for

subsequent damages to growing crops, trees, shrubs, fences, roads, structures,

improvements, and livestock caused by subsequent production operations of the

operator thereon. The surface owner shall be entitled to reasonable compensat ion

for all negligent acts of the operator that cause measurable damage to the productive

capacity of the soil. In addition, the operator shall not utilize any more of the

surface estate than is reasonably necessary for the exploration, production and

development of the mineral estate.

(6) The compensation required pursuant to subsection (5) of this section shall be paid in

any manner mutually agreed upon by the operator and the surface owner, but the

failure to agree upon, or make the compensation required , shall not prevent the

operator from commencement of drilling operations. The operator shall tender to

the surface owner payment by check or draft in accordance with the provisions of

this section no later than ninety (90) days after completion of the wel l. The surface

owner's remedy shall be an action for compensation in the Circuit Court in which

the lands, or the greater part thereof, are located on which drilling operations were

conducted. If the operator fails to tender payment within the ninety (90) day period

or if the tender is not reasonable, the surface owner shall be entitled to reasonable

compensation as provided in this section, as well as attorney's fees. If the operator

relies on a third -party appraiser's assessment of damages there shall be no award of

attorney's fees.

(7) In conjunction with the plugging and abandonment of any well or the reworking of

any well, the operator shall restore the surface and any improvements thereon to a

condition as near as practicable to their condition prior t o commencement of the

work. The surface owner and operator may waive this requirement in writing,

subject to the approval of the department that the waiver is in accordance with its

administrative regulations.

(8) Nothing in this section shall be construed to diminish the rights of the operator or

surface owner as they exist by established common law. Any compensation paid

and accepted pursuant to the provisions of subsections (5) and (6) of this section

shall be a complete bar to the assertion of any other remedy for such damages.