Pennsylvania Act 2006-115 — DORMANT OIL AND GAS ACT

Act text

DORMANT OIL AND GAS ACT
                 Act of Jul. 11, 2006, P.L. 1134, No. 115             Cl. 58
                                  AN ACT

     Providing for the creation of a trust for the benefit of certain
        owners of interests in oil and gas; authorizing the trustee
        to enter into leases of interests in oil and gas under terms
        and conditions authorized by the court of common pleas;
        providing for the administration of the trust and for payment
        of moneys to the trustee; and imposing penalties for
        nonpayment.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

     Section 1.  Short title.
        This act shall be known and may be cited as the Dormant Oil
     and Gas Act.
     Section 2.  Purpose.
        The purpose of this act is to facilitate the development of
     subsurface properties by reducing the problems caused by
     fragmented and unknown or unlocatable ownership of oil and gas
     interests and to protect the interests of unknown or unlocatable
     owners of oil and gas. It is not the purpose of this act to vest
     the surface owner with title to oil and gas interests that have
     been severed from the surface estate.
     Section 3.  Definitions.
        The following words and phrases when used in this act shall
     have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Business association."  Includes any corporation, joint
     stock company, business trust, partnership or any association of
     two or more individuals for business purposes, whether organized
     or operated under Federal or State law.
        "Financial institution."  Includes a bank, private bank, bank
     and trust company, savings association, savings bank, trust
     company, savings and loan association and building and loan
     association, whether organized or operated under Federal or
     State law.
        "Gas."  Natural gas and all other volatile hydrocarbons not
     defined in this section as oil, including condensate because it
     originally was in a gaseous phase in the reservoir. The term
     does not include methane gas that is contained within or
     produced from underground coal beds or mined out of underground
     coal mine areas.
        "Oil."  Crude petroleum oil and all other hydrocarbons,
     regardless of gravity, produced at a well in liquid form by
     ordinary production methods. The term does not include liquid
     hydrocarbons that were originally in a gaseous phase in a
     reservoir.
        "Owner."  Any person having a legal or equitable interest in
     property subject to this act or the person's legal
     representative and any person who owns a royalty interest in oil
     or gas deposits.
        "Person."  Any natural person, corporation, association,
     partnership, receiver, trustee, executor, administrator,
     guardian, fiduciary or other representative of any kind. The
     term includes any department, agency or instrumentality of the
     Commonwealth or any governmental subdivision thereof.
        "Royalty interest."  An interest in an oil or gas lease which
     entitles the owner to share in the production of the oil or gas
     under a lease or the proceeds from a lease without the
     obligation to pay any costs of production under the lease.
        "Unknown owner or owners."  The owner or owners of interests
     in oil and gas who are unknown or whose present residence or
     other addresses cannot be found by reasonable efforts to do so.
     Section 4.  Creation of trust for unknown owners.
        (a)  General rule.--Any person who owns an interest in oil
     and gas underlying a tract of land may petition the appropriate
     division of the court of common pleas of the county in which the
     tract or any portion of the tract is located to declare a trust
     in favor of all unknown owners of an interest in the oil and gas
     underlying the tract whose identity, present residence or
     present address is unknown and cannot be determined by diligent
     efforts. The petitioner's interest may be in fee, by lease, a
     royalty or by ownership of correlative rights in an oil and gas
     reservoir.
        (b)  Requirements.--Before the court shall declare a trust in
     favor of an unknown owner or owners, the petitioner shall show
     to the satisfaction of the court that:
            (1)  Petitioner has made a diligent effort to locate the
        owner or claimant.
            (2)  Despite this diligent effort, petitioner has been
        unable to identify or to locate the present residence or
        other address of one or more owners or claimants of the oil
        or gas interest or interests in question.
            (3)  Appointment of a trustee will be in the best
        interest of all owners of interests in the oil and gas.
        (c)  Appointment.--Following a determination that the
     requirements of subsection (b) have been met, the court shall
     appoint a financial institution authorized to do business in
     this Commonwealth as trustee of a trust for the unknown owner or
     owners and shall authorize the trustee to execute and deliver
     one or more oil or gas leases or other instruments on terms and
     conditions approved by the court.
     Section 5.  Administration of trust.
        (a)  Governing law.--The trust shall be administered in
     accordance with the provisions of 20 Pa.C.S. (relating to
     decedents, estates and fiduciaries).
        (b)  Payments.--All bonuses, rental payments, royalties and
     other income due to the unknown owner or owners shall be paid to
     the trustee until the trust is terminated and notice of its
     termination given to all interested parties. The trustee shall
     distribute all moneys held in the trust to the person or persons
     entitled thereto as determined by the trustee or by order of the
     court that created the trust.
        (c)  Trust to remain in force.--A trust for unknown owners
     shall remain in force until the unknown owners of the oil and
     gas interests in question have been identified to the
     satisfaction of the trustee and received their share of any
     funds held in trust.
        (d)  Fiscal Code.--Funds held in a trust for unknown owners
     are subject to the provisions of Article XIII.1 of the act of
     April 9, 1929 (P.L.343, No.176), known as The Fiscal Code,
     relating to disposition of unclaimed and abandoned property.
     Section 6.  Responsibility of lessee or payor.
        Any lessee or other person who pays bonuses, rental payments,
     royalties and other income due to the unknown owners to the
     trustee shall not be liable for further claims by the unknown
     owners for any other income produced from the oil and gas
     interests subject to the trust.
     Section 7.  Penalty.
        Any person who fails to pay any bonuses, rental payments,
     royalties or other income due owners of interests in oil and gas
     who are unknown or cannot be found to the trustee within six
     months of the date of which those funds become due shall be
     liable for all attorney fees and court costs of collection, with
     interest to the date of payment.
     Section 8.  Effective date.
        This act shall take effect immediately.