{"data":{"id":"us-ky/krs-349.085","jurisdiction":"us-ky","citation":"KRS 349.085","heading":"Duties of person requesting pooling order -- Notice to interested persons --","body":"Review board to rule on request for pooling order -- Contents of pooling order\n-- Rights and financial shares of interested parties -- Escrow account.\n(1) The person requesti ng a pooling order shall provide to the department a list of all\npersons reasonably known to own an oil or gas interest and all coal interest holders,\nin any tract upon which the coalbed methane well will be located from the surface\nto a depth of one hundr ed (100) feet below the base of the deepest coal seam to be\npenetrated. A pooling order shall be made only after the department provides notice\nto all persons reasonably known to own an oil or gas interest and all coal interest\nholders in any tract upon wh ich the well will be located and any tract or portion\nthereof proposed to be pooled in any drilling unit, from the surface to a depth of one\nhundred (100) feet below the base of the deepest coal seam to be penetrated, after a\nhearing has been held. After f iling an application for a pooling order under KRS\n349.080(1), where unknown or nonlocatable owners exist, or at the request of the\npermit applicant or person requesting a pooling order, the permit applicant shall\npublish, at least twenty (20) days prior t o the hearing on the application for the\npooling order, one (1) notice in the newspaper of the largest circulation in each\ncounty in which any tract, or portion thereof, proposed to be pooled is located. The\nnotice shall:\n(a) State that an application for a pooling order is being filed with the review\nboard;\n(b) Describe any tract, or portion thereof, proposed to be pooled;\n(c) In the case of an unknown owner, identify the name of the last known owner;\n(d) In the case of a nonlocatable owner, identify the o wner and the owner's last\nknown address; and\n(e) State that any party claiming an interest in any tract, or portion thereof,\nproposed to be pooled should contact the permit applicant at the published\naddress and provide a copy of the notification to the re view board within\ntwenty (20) days of the date of the publication.\n(2) The review board shall grant or deny the request for a pooling order and issue an\norder consistent with the intent and purposes of KRS Chapters 350 and 352 and this\nchapter, taking into  consideration the following factors that it considers applicable\nin the particular proceeding:\n(a) The area which may be drained efficiently and economically by the proposed\ncoalbed methane well or wells and the spacing requirements of KRS 349.075;\n(b) The plan of development of the coal and the need for proper ventilation of any\nmines or degasification of any affected coal seams;\n(c) The nature and character of any coal seam or seams which will be affected by\nthe proposed coalbed methane well or wells;\n(d) The surface topography and mineral boundaries of the lands underlaid by the\ncoal seams to be included in the unit;\n(e) Evidence relevant to the proper boundary of the drilling unit;\n(f) The nature and extent of ownership of each coalbed methane owner or\nclaimant and whether conflicting claims exist;\n(g) Whether the applicant for the drilling unit proposes to be the operator of the\ncoalbed methane well or wells within the drilling unit; and if so, whether the\napplicant has a lease or other agreement from t he owners or claimants of a\nmajority interest in the proposed drilling unit;\n(h) Whether a disagreement exists among the coalbed methane owners or\nclaimants over the designation of the operator for any coalbed methane wells\nwithin the u nit, and if so, relevant evidence to determine which operator can\nproperly and efficiently develop the coalbed methane within the unit for the\nbenefit of the majority of the coalbed methane owners;\n(i) If more than one person is interested in operating a c oalbed methane well\nwithin the unit, the estimated cost submitted by each such person for drilling,\ncompleting, operating, and marketing the coalbed methane from any proposed\ncoalbed methane well or wells;\n(j) Any other available geological or scientific d ata pertaining to the pool which\nis proposed to be developed;\n(k) The correlative rights of the operators and owners of the coalbed methane, so\nthat each operator and owner may obtain his or her just and equitable share of\nproduction from the coalbed methane; and\n(l) Any other factor the review board determines should be considered consistent\nwith KRS Chapters 350 and 352 and this chapter.\n(3) Upon consideration of the matters raised at the hearing, the review board shall\nrender a decision based upon whethe r to grant a pooling order, and shall enter a\nwritten order containing findings of fact and conclusions which address any relevant\nconsiderations in subsection (2) of this section and based thereon shall issue and file\nwith the department a written order g ranting the pooling order with any applicable\nconditions or denying the pooling order.\n(4) A pooling order shall authorize the drilling, deepening, or reopening, and the\noperation of a well for the production of coalbed methane on the tracts or portions\nthereof pooled; shall designate the operator to drill and operate the well; shall\nprescribe the time and manner in which all owners of working interests in the\npooled tracts or portions thereof may elect to participate therein; shall provide that\nall reasonable costs and expenses of drilling, deepening, converting or reopening,\nand the completing, operating, plugging, and abandoning the well shall be borne,\nand all production from the well shall be shared, by all owners of working interests\nin proportion to t he net mineral acres in the pooled tracts owned or under lease to\neach owner; and shall make provision for the payment of the reasonable and actual\ncost thereof, including a reasonable charge for supervision, by all those who elect to\nparticipate therein.\n(5) A pooling order shall establish a procedure for the owner who claims a working\ninterest and who does not decide to become a participating working interest owner\nto elect to either:\n(a) Surrender, by means of sale or lease, the interest to a participati ng working\ninterest owner on a reasonable basis and for a reasonable consideration, which\nif not agreed upon shall be one -eighth (1/8) of the production attributable to\nthe well; or\n(b) Share in the operation of the well as a nonparticipating working interest owner\non a carried basis after the proceeds allocable to his or her share equal to two\nhundred percent (200%) of the share of the costs allocable to his or her\ninterest.\n(6) A coalbed methane owner or claimant whose identity and location remain unknown\nat the conclusion of the hearing concerning the entry of a pooling order for which\npublic notice was given and whose interest is pooled pursuant to KRS 349.080(1)\nshall be deemed to have elected to lease the interest to the coalbed methane\noperator, exclusive of one-eighth (1/8) of the production attributable to the unleased\ninterest, and shall not be entitled to make the election established in subsection (5)\nof this section.\n(7) Except as provided in this section, a coalbed methane owner who does not mak e an\nelection under the pooling order within thirty (30) days of the entry of the order\nshall be deemed to have leased the coalbed methane interest to the coalbed methane\nwell operator in the manner established in subsection (6) of this section.\n(8) A person whose interest is subject to a coalbed methane lease or other agreement\nwhich grants to another the right to operate or conduct operations shall not own an\noperating interest for the purposes of this section.\n(9) A certified copy of any pooling order en tered under this section shall be entitled to\nbe recorded in the office of the county clerk of the county or counties in which all or\nany portion of the pooled tract is located, and the record of the order, from the time\nof lodging the order for record, shall be notice of the order to all persons.\n(10) Each pooling order for a coalbed methane well issued pursuant to KRS 349.080(1)\nshall provide for the establishment of an interest -bearing escrow account to be\nmaintained by the department. The escrow account  shall receive deposits and hold\npayment for costs and proceeds attributable to the conflicting interests as follows:\n(a) Each participating working interest owner, except for the unit operator, shall\ndeposit in the escrow account the owner's proportionate  share of the costs\nallocable to the ownership interest claimed by each participating working\ninterest owner as set forth in the pooling order; and\n(b) The unit operator shall collect all proceeds from the sale or use of coalbed\nmethane and deposit in the escrow account all proceeds attributable to the\nconflicting interests of lessors, lessees, or royalty owners and all proceeds in\nexcess of the recovery of all capital costs and expenses and all ongoing\noperational expenses including reasonable overhead cos ts and operating fees\nattributable to conflicting working interests.\n(11) The department shall order payment of principal and accrued interest from the\nescrow account to all legally entitled entities within thirty (30) days of receipt by the\ndepartment of notification of the final legal determination of entitlement or upon\nagreement of all entities claiming an ownership interest in the coalbed methane.\nUpon the department's final determination:\n(a) Each legally entitled participating working interest owner shall receive a\nproportionate share of the proceeds attributable to the conflicting ownership\ninterest;\n(b) Each legally entitled nonparticipating working interest owner shall receive a\nproportionate share of the proceeds attributable to the conflicting ow nership\ninterest, less the cost of being carried as a nonparticipating working interest\nowner as determined by the election of the person under the applicable\npooling order;\n(c) Each person leasing or deemed to have leased its coalbed methane ownership\ninterest to the unit operator shall receive a share of the royalty proceeds as set\nout in the applicable pooling order attributable to the conflicting interests of\nthe lessees;\n(d) The unit operator shall receive the costs contributed to the escrow account by\neach legally entitled participating working interest owner, but only to the\nextent that the costs and expenses described in subsection (10)(b) of this\nsection have not been recouped from production proceeds;\n(e) Each participating working interest owner w ho is determined not to hold an\nownership interest shall receive a refund of all amounts placed in escrow\npursuant to subsection (10)(a) of this section plus interest earned thereon; and\n(f) All amounts remaining in escrow, after distribution of amounts de scribed in\nparagraphs (a), (b), (c), (d), and (e) of this subsection, shall be distributed to\nthe legally entitled participating working interest owners in proportion to their\ninterests.","path":["KRS Chapter 349"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=32740","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:34Z","sha256":"d30506f6206a7c7ac9a1ec71a83ddee9cc4f3b53adb25c3e4a2a2062662b35bd","source_id":"us-ky","stale":false,"prev":"us-ky/krs-349.080","next":"us-ky/krs-349.090"},"notice":"GroundRules: Original legal text. Not legal advice."}