HOUSE BILL No. 5261


     October 9, 1997, Introduced by Reps. DeVuyst, DeHart, Voorhees, Wetters, Goschka, Bobier, Jellema, Lowe, Anthony, Brater, Raczkowski, Middleton, Gilmer, Cassis, Green, Bodem, Bogardus and Birkholz and referred to the Committee on Forestry and Mineral Rights.


        A bill to amend 1994 PA 451, entitled

   "Natural resources and environmental protection act,"

   (MCL 324.101 to 324.90106) by adding section 61503b.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         SEC. 61503B.  (1) IF A PERSON WHO ENTERS INTO A GAS LEASE AS

 2    A LESSEE PLANS TO OR DOES CHARGE THE LESSOR FOR ANY PORTION OF

 3    POSTPRODUCTION COSTS, THE LESSEE SHALL DO BOTH OF THE FOLLOWING:

 4         (A) PROVIDE THE LESSOR WITH DETAILED INFORMATION IN WRITING

 5    REGARDING ALL OPERATIONS RELATED TO GAS PRODUCTION ASSOCIATED

 6    WITH THAT PROPERTY.

 7         (B) PRIOR TO ASSESSING ANY POSTPRODUCTION COSTS, PROVIDE THE

 8    LESSOR IN WRITING WITH A SPECIFIC ITEMIZED ACCOUNTING OF ALL

 9    POSTPRODUCTION COSTS PROPOSED TO BE ASSESSED.  HOWEVER, A LESSEE

10    SHALL NOT CHARGE POSTPRODUCTION COSTS FOR ANY OF THE FOLLOWING:




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 1         (i) GAS GATHERING LINES.

 2         (ii) PUMPING COSTS FOR THE REMOVAL OF WATER ASSOCIATED WITH

 3    GAS.

 4         (iii) CARBON DIOXIDE REMOVAL.

 5         (iv) TRANSPORTATION COSTS OUTSIDE OF THIS STATE.

 6         (2) IF THE LESSOR OBJECTS TO ANY ASPECT OF THE OPERATIONS,

 7    INCLUDING THE EMPLOYMENT OF A PARTICULAR OPERATOR, OR TO THE

 8    ASSESSMENT OF POSTPRODUCTION COSTS AS NOTIFIED UNDER SUBSECTION

 9    (1), THE LESSOR SHALL BE GIVEN NOT LESS THAN 10 DAYS TO OBJECT.

10    ALL OBJECTIONS SHALL BE PROVIDED IN WRITING TO THE LESSEE.  IF

11    THE LESSOR OBJECTS, THE LESSEE SHALL POLL ALL PRODUCTION INTER-

12    ESTS IN WRITING.  THE LESSOR, AS WELL AS OTHER INTERESTS, SHALL

13    BE GRANTED A VOTE PROPORTIONAL TO THEIR PRODUCTION INTEREST AS TO

14    THAT ASPECT OF THE OPERATION OR TO THE ASSESSMENT.  FOR ANY

15    ACTION IN WHICH THERE HAS BEEN AN OBJECTION, THE LESSOR SHALL NOT

16    PROCEED WITH ANY OBJECTED-TO ACTION UNLESS A MAJORITY OF ALL PRO-

17    DUCTION INTERESTS APPROVE THIS ACTION.

18         (3) AS USED IN THIS SECTION, "PRODUCTION INTEREST" MEANS ALL

19    OF THE FOLLOWING:

20         (A) THE LESSEE'S INTEREST.

21         (B) OTHER WORKING INTERESTS.

22         (C) A LESSOR'S INTEREST IF THE LESSOR IS BEING OR IS PRO-

23    POSED TO BE ASSESSED POSTPRODUCTION COSTS.











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