S750-2011 Actions

• Jan 4, 2012: REFERRED TO JUDICIARY
• Jan 5, 2011: REFERRED TO JUDICIARY

S750-2011 Memo

BILL NUMBER:S750

TITLE OF BILL:
An  act to amend the general obligations law, in relation to extending
from 3 days to 5 days the period to cancel a  lease  of  oil  and  gas
rights

PURPOSE:
To  extend  the  cancellation period for a gas or oil lease from three
days to five days.

SUMMARY OF PROVISIONS:
Section 5-333 of General Obligations Law is amended to allow  for  the
extension of the cancellation period for a gas or oil lease from three
to five days.

JUSTIFICATION:
Discovery  of oil and gas accumulations and advances in technology are
bringing renewed  opportunity  for  leasing  activity  in  New  York's
Southern Tier. Landowners have an opportunity to lease or convey their
real  property  rights  to  oil  and  gas  exploration and production.
Landowners  should  control  this  relationship  through  their  lease
contract  where  the  rights and duties of oil and gas exploration and
producing  companies  should  be  clearly  delineated.    Payment   of
royalties  for  actual  oil  and  gas  produced,  use  of property for
production (i.e. roads, pipeline placement, etc.), crop  and  property
damages should all be defined in the lease contract.

Because  of  the  complex  and  multi-faceted  nature of this business
relationship  between  landowner  and  oil  and  gas  exploration  and
production  company,  research  and  consultation  with an experienced
attorney  is  essential  before  entering  into  contract.  For   many
landowners,  particularly  rural  farmers,  three  business days is an
insufficient amount of time to  investigate  this  important  business
transaction.  Five  business  days,  a traditional business week, is a
more adequate time frame for landowners  to  acquire  the  appropriate
legal counsel.

LEGISLATIVE HISTORY:
2009-2010: S.4683/A.2371 Reported to 3rd Calendar Reading
2008:      S.7825/A.11259-A  Passed Senate

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Effective thirty days after enactment into law and shall apply
to oil or gas leases entered into on or after such effective date.

S750-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                     750

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 5, 2011
                                 ___________

  Introduced  by  Sen.  YOUNG  -- read twice and ordered printed, and when
    printed to be committed to the Committee on Judiciary

  AN ACT to amend the general obligations law, in  relation  to  extending
    from  3  days  to  5  days the period to cancel a lease of oil and gas
    rights

    THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section  1.  Subdivision 5 of section 5-333 of the general obligations
  law, as added by chapter 386 of the laws of 2005, is amended to read  as
  follows:

    5.  On  or after January first, two thousand six, any oil or gas lease
  shall contain the following statement printed in at least ten point bold
  type:

    THIS IS A LEASE OF OIL AND GAS RIGHTS, NOT A  SALE,  CONTAINING  TERMS
  THAT  MAY  BE NEGOTIATED BY YOU. YOU HAVE THE RIGHT TO CANCEL THIS LEASE
  WITHIN [THREE] FIVE BUSINESS DAYS AFTER EXECUTION OF THE LEASE BY  NOTI-
  FYING  THE  LESSEE  THAT  YOU  HAVE  CANCELED THIS CONTRACT. IN ORDER TO
  CANCEL THIS LEASE, YOU MUST EXECUTE A NOTICE OF CANCELLATION IN THE FORM
  PROVIDED BELOW, MAIL IT TO THE LESSEE AND REFUND ALL AMOUNTS PAID TO YOU
  BY THE LESSEE WITHIN THE [THREE-DAY] FIVE-DAY CANCELLATION  PERIOD.  THE
  MAILING  MUST BE POSTMARKED WITHIN THE [THREE-DAY] FIVE-DAY CANCELLATION
  PERIOD TO BE EFFECTIVE.
                     NOTICE OF CANCELLATION
           I/WE HEREBY CANCEL THIS LEASE.
    DATED:

    SIGNATURE(S):

    THE PERSON PRESENTING THIS LEASE TO YOU IS [ ] NOT [ ] A MEMBER OF
    (name of organization)        AND THEREFORE IS [ ] IS NOT [ ]  SUBJECT
  TO  A  CODE  OF  CONDUCT.  IF THE PERSON PRESENTING THIS LEASE TO YOU IS
  SUBJECT TO A CODE OF CONDUCT, A COPY OF THE  CODE  OF  CONDUCT  MUST  BE

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD02631-01-1

 S. 750                              2

  PRESENTED  TO  YOU  WITH  THIS LEASE. IF APPLICABLE, THE CODE OF CONDUCT
  PROVIDES A DISPUTE RESOLUTION MECHANISM FOR ANY  DISPUTE  THAT  YOU  MAY
  HAVE  REGARDING  THE MANNER BY WHICH THIS LEASE WAS PRESENTED TO YOU. IF
  YOU  HAVE  ANY SUCH DISPUTE, YOU MAY INVOKE THE DISPUTE RESOLUTION MECH-
  ANISM OF THE CODE OF CONDUCT BY CONTACTING THE PERSON OR PERSONS  DESIG-
  NATED  IN  THE  CODE  OF  CONDUCT.  THE FAILURE OF THE LESSEE TO PAY ANY
  ROYALTIES TO YOU AS REQUIRED UNDER THE TERMS OF THE LEASE FOR  A  PERIOD
  OF  FOUR  CONSECUTIVE MONTHS OR MORE SHALL BE A DEFAULT UNLESS OTHERWISE
  PROVIDED BY LAW, AND WILL RESULT IN CANCELLATION OF THE LEASE APPLICABLE
  TO THE TARGET FORMATION OF THE WELL WITHIN THE SPACING  UNIT,  FOLLOWING
  WRITTEN  NOTIFICATION  TO  THE LESSEE OF YOUR INTENT TO CANCEL AND SIXTY
  DAYS FOR THE LESSEE TO CURE THE DEFAULT. IF THE LESSEE HAS A  BONA  FIDE
  DISPUTE  REGARDING  THE  GROUNDS  FOR CANCELLATION, SUCH DISPUTE AND THE
  REASONS THEREFOR MUST BE PROVIDED TO YOU IN WRITING OR THE DEFAULT  MUST
  BE  CURED  WITHIN  SUCH  SIXTY  DAY PERIOD, OTHERWISE THE LEASE SHALL BE
  CANCELLED.
    S 2. This act shall take effect on the thirtieth day  after  it  shall
  have  become  a law and shall apply to oil or gas leases entered into on
  or after such effective date.