Montana Code 82-10-504. Surface damage and disruption payments — dispute resolution — penalty for late payment
82-10-504. Surface damage and disruption payments — dispute resolution — penalty for late payment. (1) (a) The surface owner and the oil and gas developer or operator shall attempt to negotiate in good faith an agreement on damages. The oil and gas developer or operator shall pay the surface owner a sum of money or other compensation equal to the amount of damages sustained by the surface owner for loss of agricultural production and income, lost land value, and lost value of improvements caused by oil and gas operations.
Terms Used In Montana Code 82-10-504
- Agricultural production: means the production of any growing grass, crops, or trees attached to the surface of the land or farm animals with commercial value. See Montana Code 82-10-502
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Gas: means all natural gases and all other fluid hydrocarbons, including methane gas or any other natural gas found in any coal formation, as produced at the wellhead and not defined as oil in subsection (3). See Montana Code 82-1-111
- Lost land value: means the value of the highest and best reasonably available use of the land directly utilized by oil and gas operations and production, other than uses appurtenant to the mineral estate. See Montana Code 82-10-502
- Oil: means crude petroleum oil and other hydrocarbons, regardless of gravity, that are produced at the wellhead in liquid form by ordinary production methods and that are not the result of condensation of gas before or after it leaves the reservoir. See Montana Code 82-1-111
- Oil and gas developer or operator: means the person who acquires the oil and gas lease for the purpose of extracting oil and gas. See Montana Code 82-10-502
- Oil and gas operations: means the exploration for or drilling of an oil and gas well that requires entry upon the surface estate and is begun subsequent to June 1, 1981, and the production operations directly related to the exploration or drilling. See Montana Code 82-10-502
- Person: includes a corporation or other entity as well as a natural person. See Montana Code 1-1-201
- Process: means a writ or summons issued in the course of judicial proceedings. See Montana Code 1-1-202
- Surface owner: means the person who holds record title to or has a purchaser's interest in the surface of the land. See Montana Code 82-10-502
(b)The amount of damages may be determined by any formula mutually agreeable between the surface owner and the oil and gas developer or operator. When determining damages, consideration must be given to the period of time during which the loss occurs.
(c)At any time during the negotiation, at the request of either party and upon mutual agreement, the surface owner and the oil and gas developer or operator may enter into a dispute resolution process, including mediation.
(d)The surface owner may elect to receive annual damage payments over a period of time, except that the surface owner must be compensated by a single sum payment for harm caused by exploration only.
(e)The payments under this subsection (1) may cover only land directly affected by oil and gas operations and production. Payments under this subsection (1) are intended to compensate the surface owner for damage and disruption. A person may not reserve or assign damage and disruption compensation apart from the surface estate except to a tenant of the surface estate.
(2)An oil and gas developer or operator who fails to timely pay an installment under any annual damage agreement negotiated with a surface owner is liable for payment to the surface owner of twice the amount of the unpaid installment if the installment payment is not paid within 60 days of receipt of notice of failure to pay from the surface owner.