SF 2490 — A bill for an act relating to oil and gas production, including filing requirements, the authority of the department of natural resources, confidential information, pooling orders, negotiation of surface damage, imposition and distribution of a tax, and jurisdiction, and providing civil penalties.

ecion5A. 8.4, uscton , oe 06, s mndd by dig he llwig ew aarah:

NW“Exploratory AAGAPH.well” means a well drilled beyond the known producing limits of a pool.

vryNEW esonSUBSECTION tig. s aricial r aent r nthr r ndpedety egged n e rdutin, sorg, tasprttin, xet y rirod, einn, rcliin, tetig, akeig, r rcesig f il r s, or gaed n e xporton or r odcton f talic mneas toile e olowng th he patmnt n r foe Aril 1f ch er:

()20A. Te ame dr wih he uinss s ing erte.

()“Well Telog” amemeans da onatrecord ifrmtinof fgeologic heformations rsn,penetrated bsies,by rthe uinsssborehole nggdwith inherespect civt.to both time and depth during drilling operations.

()Sec. Te lan f gaiaton.

() Fr a rprtin, he llwig ilns ppy:

() Te aw ner hch e orortin s hrtre.

() Te ams nd otct noraton or y eson tig as arsee.

Seate le 40, .

3 () Te ams f he naer, en, r xcuiv.

() Te ams nd otct noraton f l ffces.

() Te ams nd otct noraton f l wnrs f he bsies isonuced ner n sued ae.

Sc.

ecion 8.4, uscton , aagah , ode 22, is eded o ad s llws:

The kig nd iig f ll ehnial el ogs d te ilng f retinal reys f ke, nd he lng f rpots n ll oato, dilin^ nd odcio, ad he flig re f hage f apes nd re hps d f omlee cres ss std ecios hn rqesed n he prtent wthn ix nts ftr he opeton r bndnent f e wll,ulss terise tedd pruat o ecion 8A6A;

Sc.

ecion 8.4, de 06, s mned y ding e fllwig ew bscto:

NW USETIN.

ToSection low458A.4, rsubsection araces1, oCode y2026, fis heamended dpatmn'sby ues,adding guatos,the rfollowing rer.new paragraph:

ANEW aracePARAGRAPH hll. be aned n itng y he rctr itout aerng pn witen eust f n wer r plcat.

Te0b. wer r he aplcnt eqetig he aiace all mostate at t s mde aod aih ffrt o opy r s nale o mpy ith te peiic euiemnts ntied n he le, egltins, or drs rm hih t ees aarane, nd at e rqustd aiace il ot ilte he sic tet f hs cape.

pnEvery roerperson umisonacting oas hea retr,principal heor retoragent sallfor poveanother ror nyindependently heengaged rinein eqestthe thnproduction, outenstorage, astransportation, except by railroad, refining, reclaiming, treating, marketing, or processing of cip.oil or gas, or engaged in the exploration for or production of metallic minerals to file the following with the department on or before April 1 of each year:

(1) The retrname salunder rprtwhich nythe rinebusiness gatedis tbeing teoperated. ubeuet eaing r hewse ae ubic ny rane ganed.

Sc.(2) The name and contact information of the person, business, or businesses engaged in the activity.

EW(3) ETIN.The plan of organization.

48.6A(4) ofienilFor nfrmton.a corporation, the following filings apply:

Ifn(a) wnrThe eeslaw ounder ubitwhich fomaionthe atcorporation sis stdchartered. as nfdntal, e wnr il cner ih he eatmnt pior o biting e nfrmton o eify t aifes as nfdntal usunt o he prten's ues r ohewie ner a.

If(b) heThe fomtinnames sand etrmndcontact toinformation befor nfdntal,any eperson wnracting ilas sbit ad opes f e ifomain in nedctd orm t aeld onidntal n a cnsicostrustee. lctin n he ouen.

CofienialSenate fomtinFile sall2490, ep. itaned s nfdetal nd ld ihot ulic Seate le 40, .

43 aces(c) orThe aeiodnames fof vethe ar,manager, nlssagent, terie etndd by e iecor or odexecutive. as.

ofienial(d) fomtinThe aynames icldeand hecontact lown:information of all officers.

(5) The names and contact information of all owners if the business is conducted under an assumed name.

Sec.

5.

Section 458A.4, subsection 1, paragraph b, Code 2026, is amended to read as follows:

b.

The making and filing of all mechanical well logs and the filing of directional surveys if taken, and the filing of reports on well location, drilling, and production, and the filing free of charge of samples and core chips and of complete cores less tested sections when requested in the department within six months after the completion or abandonment of the well, unless otherwise extended pursuant to section 458A.6A ;

Sec.

6.

Section 458A.4, Code 2026, is amended by adding the following new subsection:

NEW SUBSECTION .

4A.

To allow for variances to any of the department’s rules, regulations, or orders.

A variance shall be granted in writing by the director without a hearing upon written request of an owner or applicant.

The owner or the applicant requesting the variance shall demonstrate that it has made a good faith effort to comply or is unable to comply with the specific requirements contained in the rules, regulations, or orders from which it seeks a variance, and that the requested variance will not violate the basic intent of this chapter.

Upon proper submission to the director, the director shall approve or deny the variance request within fourteen days of receipt.

The director shall report any variance granted at the subsequent hearing or otherwise make public any variance granted.

Sec.

7.

NEW SECTION.

458A.6A Confidential information.

If an owner seeks to submit information that is listed as confidential, the owner will confer with the department prior to submitting the information to verify it qualifies as confidential pursuant to the department’s rules or otherwise under law.

If the information is determined to be confidential, the owner will submit hard copies of the information in nonredacted form but labeled confidential in a conspicuous location on the document.

Confidential information shall be maintained as confidential and held without public Senate File 2490, p.

4 access for a period of five years, unless otherwise extended by the director for good cause.

Confidential information may include the following:

oetryMonetary muts,amounts, amntpayment ems,terms, ilingdrilling lgaios,obligations, or rsnlpersonal ifrmtininformation isedlisted non rfcesurface seuse remnt,agreements, iloil adand asgas ess,leases, ror iht-o-ayrights-of-way geeens.agreements.

nfratonInformation ocenngconcerning noigongoing omerilcommercial ngtitinsnegotiations rgadigregarding oenialpotential ror anedplanned otngrouting ndand caionfolocation of-eaeof isteamoff-lease thrigmidstream ysesgathering rsystems nfasrctre.or infrastructure.

ofienialConfidential olgcalgeological ror opyscalgeophysical llwell eodsrecords prtinngpertaining oto plraoryexploratory ls.wells.

noratonInformation butabout arpoeda rnserproposed ftransfer rmtsof ndpermits ases.and assets.

rpretryProprietary tmuaionstimulation ror mpetoncompletion hmcaschemicals hatthat qalfyqualify sas adetrade crt.secrets.

esoalPersonal eiclmedical nfraton.information.

Comecil7. nfrmton ht, f icosd, old e lkey o ase ustntal am o he mptiie ostin f te eron ovdig he nomaio.

Sc.Commercial information that, if disclosed, would be likely to cause substantial harm to the competitive position of the person providing the information.

ecionSec. 8.7, bsctons 3nd, ode 2, ae aened o ad s olws:

An8. rer sabisig paing its r aool all secfy e ize d hae f ah nit d he oaion d nmbr f he rmttd ell eron lls n codnce th a esoaly nfom paing a.

UpnSection ppiaton,458A.7, fsubsections e3 dretrand fns4, hatCode ael2026, rlldare tamended heto rsciedread oatonas wuldfollows: t rdue n ayng anites, r at ufce cndtins uld bsanialy d o he udenr hzrd of ilig uch l, te iecor s uhoizd o ner an dr pritingtea wll o e iled t aoaton ohr tan at rscibd y uh paing dr;

oevr,3. he dretr sal ncude n e rer utale rviins o pevnt e roucion om e saing it f re hn ts jst nd utale hre f e il nd s n he ol.

An order establishing spacing units for a pool shall specify the size and shape of each unit and the location and number of the permitted well thereon wells in accordance with a reasonably uniform spacing plan.

Upon application, if the director finds that a well drilled at the prescribed location would not produce in paying quantities, or that surface conditions would substantially add to the burden or hazard of drilling such well, the director is authorized to enter an order permitting the a well to be drilled at a location other than that prescribed by such spacing order;

however, the director shall include in the order suitable provisions to prevent the production from the spacing unit of more than its just and equitable share of the oil and gas in the pool.

nAn rerorder sabisigestablishing nisunits orfor aola salpool ovrshall llcover lndsall trmnedlands rdetermined livedor oebelieved ndrlidto ybe heoo,underlaid ndby mythe epool, oifedand ymay hebe retrmodified romby methe odirector iefrom otime nlueto adiinaltime easto temiedinclude oadditional eareas deladdetermined yto hebe ol.underlaid by the pool.

henWhen fundfound cesrynecessary orfor ethe reetinprevention fof ase,waste, ror oto oidavoid ethe SeateSenate leFile 40rp.2490, p.

5 diligdrilling fof nncesayunnecessary elswells ror oto rtetprotect oreltvecorrelative iht,rights, an drorder etblshngestablishing pcigspacing ntsunits nin aoola ypool emay oifedbe modified by ethe iecordirector oto nreseincrease ethe izesize fof acngspacing itsunits nin ethe polpool ror yany onezone fof ethe ol,pool, ror oto emitpermit ethe rllngdrilling fof adiinaladditional llswells thnwithin a aingspacing itunit non aeaonbea niormreasonable panuniform nplan ein oo,the rpool, nyor oeany fzone heof o.the pool.

rersOrders fof ethe dretrdirector aymay ebe peaedappealed oto ethe eprtentdepartment thnwithin hitythirty ys.days.

Sc.Sec.

ecion9. 8.7, de 06, s mned y ding e fllwng ew bscto:

NWSection USETIN.458A.7, Code 2026, is amended by adding the following new subsection:

NEW SUBSECTION .

fIf hethe patmntdepartment sis abeunable oto etrmnedetermine tethe xitnceexistence fof aola ndpool eand ppopiaethe craeappropriate oacreage eto ebrcdbe itinembraced apaingwithin ita dspacing heunit hpeand hrofthe aedshape thereof based on ethe vdeceevidence nroucdintroduced tat erig,hearing, hethe patentdepartment ymay etalshestablish nan xloatryexploratory pcngspacing ntunit orfor hethe rpsepurpose fof diligdrilling neone ror oemore xportryexploratory elswells nin rerorder oto talihestablish tethe xitnceexistence fof aola ndpool eand ppopiaethe izeappropriate dsize hpeand fshape teof paigthe nitspacing ounit eto pledbe rapplied utrefor eelpentfuture fdevelopment eof po.the pool.

nIn sabisingestablishing ethe iesize ndand hpeshape fof hethe portoyexploratory sacngspacing it,unit, ethe eprtetdepartment mymay osierconsider hethe zesize dand haeshape of acngspacing itsunits talihedestablished yheby earmetthe ordepartment efor amethe polsame rpool omtinor nformation thrin ras,other eareas, izethe dsize hpeand fshape ntsof frunits imlrfor evlometsimilar ndevelopment terin ain,other esrvirbasins, oeingreservoir rmodeling ohror peimnayother atapreliminary ndata eon olthe rpool orato,or adformation, nyand herany ifomainother heinformation earmetthe emsdepartment eevnt.deems relevant.

Sc.Sec.

Setin10. 58., ode 26, s eded o ad s fllws:

48.8Section Itertin458A.8, fCode rctoal2026, rcs.is amended to read as follows:

Whn458A.8 woIntegration rof oefractional earteytracts. wnd rats e mbacd wthn a aing i, or en ere e epraey wnd iteess n ll r aat f he acng nt, en he nes ad oyly wnrs f he ats ay ol hir neess fr he eeopent d peaton f e paing i, in te bsne—f—olntry oln-—te eprten,—pn he aplcain f ny ntrstd ero,—h-1 ntr n rdr polng l iteess-n he a--gunt or e evlpmnt ad peaios f heuit— Ech olng rer hll e mde ferntie nd erng—ad hal eupon-rmsnd cndtins at r—jstand asnbl,—nd ht ffrd o te wnrof ah rat r—ntrst n he acng it he Seate le 40, .

61. opotuiy o ecw--or civ/ itout necsaryxpns, a ut nd uiabe har— pertons cienttohe d--lngf awll pn ny rton f apaig nit veed by aolng rer hll edemd or ll roseso e he cndct f e peatons on ch eartey wed rct n te rilng nt y he eeal wer—of e nt.— at prtinof heroucion lcatd o ah ret-nlued n a oaeng it oerd y a oig-odersal, henroucd, be emd ra11-uross—o-ae eenpodced om e rat by all rlld n t.

2-When ahtwo ooing dr sal akepovson or emore riligseparately adowned peatontracts fare a-1onembraced hewithin acnga nt—adspacing unit, or hewhen pymntthere fare h—eaonbleseparately talowned otinterests fin heall elor ya hepart nes of tressthe nspacing heunit, acngthen it—pusthe aeaonbeowners hageand orroyalty -peviin.-owners nof ethe vettracts fmay nypool sptetheir sinterests ofor chthe ot,development teand eprtetoperation halof etrmnethe heroerspacing ot.-unit. f n wer sall il nd prae—or y he xenes f iling d oertng hewll o—te ee--tf thr,—ten—-eower o—r---ngr peatng hl, pon mpyig ih he ems o—scton 8A10—hve ain n he hreof odcton fom he aing it crung ote neret f ah f te t--—wers r hepamnt f aroorinae haref teexpnss— ll h-ol nd s ubect o e in hal bemrktd n-sod nd h—r-ces ppied nayent f te xpnss-eurd y he in s rvidd r n ecion 48A1.

In hethe seceabsence fof lutayvoluntary ooigpooling, pruatthe odepartment, sbsctonupon ,the dapplication nly f e rduer as eniied ols of isigany atralinterested drgnperson, wtinshall heenter acngan it,order epooling dretr,all pninterests hein pliaionthe yspacing eunit wnrfor rthe wersdevelopment fand toperations lssof hnthe wnt-fveunit. ecnt f he ea f e saing i, sall tr n rdr ooig ll nersts n e pcig nit fr he veopent d peaion ero.

nyEach chpooling oligorder odrshall mybe uhoizemade stafter eoerynotice dand iskhearing, natesand gintshall nncnsningbe nesupon terms and conditions that are just and reasonable, and that afford to the owner of each tract or apeiicinterest el.in the spacing unit the Senate File 2490, p.

Ech6 chopportunity oligto odrrecover salor ereceive, adewithout trunnecessary ntceexpense, nda arngjust dand ithequitable rmsshare. d cndtins at re st nd aonbl.

OprtinsOperations nidntincident to ethe rllngdrilling fof aella onwell yupon orionany fportion aacngof nta cveedspacing yunit aoligcovered rdrby hlla epooling emedorder rshall llbe rpsesdeemed Seatefor leall 40,purposes .to be the conduct of the operations upon each separately owned tract in the drilling unit by the several owners of the unit.

7That portion of the production allocated to eeach etract odutincluded fin ucha eatonsspacing onunit ahcovered eprteyby oneda atpooling norder heshall, ntwhen yproduced, hebe vealdeemed wersfor eeo.all purposes to have been produced from the tract by a well drilled on it.

Wen2. rdcer hat rton f e roucion loaed r aplcale o ch rct nlued n ant ovrd y a polng der all e emd or l uross o ae een podced om ch rct y ael riled eeo.

EahEach ooingpooling drorder salshall roidemake rprovision hefor ilingthe ddrilling oertinand foperation aellof na ewell pcigon nitrndthe rspacing teunit, ametand ffor tethe otpayment teeo,of sthe roiddreasonable nactual hscost ubecin.of the well by the owners of interests in the spacing unit, plus a reasonable charge for supervision.

TeIn irctrthe isevent ecfcalyof uhoizdany odispute rvieas hatto esuch rduercosts, hllthe bedepartment tildshall odetermine llthe rdutonproper rmcosts. he el hat ud e rcevedy he wer r nes, or ose neit e ell ws rild r peatd, fer ymnt f oaly s rvied in e ese, f y, pliale o ah rat r nerst r ater yent f e oyltyf rqird ndr ubetin , ad blgtins aabe ut f odcto, util e rduers hve en ad he munt e ner he rms f e olig oderr rdr etlig he spte.

nIf hean vntowner fshall ydrill dsptedos,and heoperate, iecoror hllpay temiethe heexpenses rprof os.drilling and operating the well for the benefit of others, then, the owner so drilling or operating shall, upon complying with the terms of section 458A.10, have a lien on the share of production from the spacing unit accruing to the interest of each of the other owners for the payment of a proportionate share of the expenses.

TeAll ooigthe rdroil haland etrinegas esubject ntretto fthe ahlien wnrshall inbe emarketed nt,and ndsold yand roiethe hatproceeds chapplied werin opayment gres ih te rouer or e ayet y he wer f e wnr's are of ethe ots,expenses lessecured heby werthe slien gredas tewie,provided hllfor ein etildsection to458A.10. civ, ubet to ylty r miar liaton, te hae f he odcton f e ell plcble o e rat of e ocosetig wnr.

ach2. ner o os ot gee sall e ttld o ecive om e roucr he ne's sare f e rdutin ppiabe o he we's nerst ater e rduer as coeed he llwng, ujct o he povsons f bscton :

OneIn ndedthe ecntabsence fof hevoluntary ncnsningpooling ne'spursuant hreto ofsubsection e1, otand fonly nyif elythe curedproducer rfcehas qipetidentified eyndpools teof elhadexisting onetin,natural icldnghydrogen tckwithin ak,the spraor,spacing teaes,unit, rthe upigdirector, qupmntupon dthe ipn,application pusby ethe unredowner prcntor fowners eof ononenignot onr'sless arethan ftwenty-five epercent otof fthe oertigarea heof llthe omecngspacing ihunit, irtshall roucinenter ndan cntnungorder tilpooling eall ononetiginterests wnr'sin liqusedthe iteetspacing rvrtsunit derfor hrthe poisonsdevelopment nand isoperation eton.thereof.

UpAny osuch wopooling ndedorder rcntmay fauthorize htcost otinrecovery fand herisk otspenalties Seateagainst lenonconsenting 40,owners .for a specific well.

8Each adsuch xpnespooling forder rlln,shall rwokng,be epnigmade rafter lugngnotice bc,and tsin,hearing ndand opltng,with terterms dutigand nyconditions ahthat cntibtinsare ceve,just ndand preasonable. o o unred rcnt f at prton f e ost f wly qird qupmnt n e el, up o d nluing e elhad onetin, wich ud ave ben hrgale o he ncnsning ner f e wer ad prtciatd hren, f he ncnening ne's rct r iteest s bect o aese r her ntact r il d gs evlpmnt.

Operations incident to the drilling of a well upon any portion of a spacing unit covered by a pooling order shall be deemed for all purposes Senate File 2490, p.

7 to be the conduct of such operations upon each separately owned tract in the unit by the several owners thereof.

When produced, that portion of the production allocated or applicable to each tract included in a unit covered by a pooling order shall be deemed for all purposes to have been produced from such tract by a well drilled thereon.

3.

Each pooling order shall provide for the drilling and operation of a well in the spacing unit, and for the payment of the cost thereof, as provided in this subsection.

The director is specifically authorized to provide that the producer shall be entitled to all production from the well that would be received by the owner or owners, for whose benefit the well was drilled or operated, after payment of royalty as provided in the lease, if any, applicable to each tract or interest or after payment of the royalty if required under subsection 4, and obligations payable out of production, until the producers have been paid the amount due under the terms of the pooling order or order settling the dispute.

In the event of any disputed cost, the director shall determine the proper cost.

The pooling order shall determine the interest of each owner in the unit, and may provide that each owner who agrees with the producer for the payment by the owner of the owner’s share of the costs, unless the owner has agreed otherwise, shall be entitled to receive, subject to royalty or similar obligations, the share of the production of the well applicable to the tract of the nonconsenting owner.

Each owner who does not agree shall be entitled to receive from the producer the owner’s share of the production applicable to the owner’s interest after the producer has recovered the following, subject to the provisions of subsection 4:

a.

One hundred percent of the nonconsenting owner’s share of the cost of any newly acquired surface equipment beyond the wellhead connections, including stock tanks, separators, treaters, or pumping equipment and piping, plus one hundred percent of the nonconsenting owner’s share of the cost of operating the well commencing with first production and continuing until the nonconsenting owner’s relinquished interest reverts under other provisions in this section.

b.

Up to two hundred percent of that portion of the costs Senate File 2490, p.

8 and expenses of drilling, reworking, deepening or plugging back, testing, and completing, after deducting any cash contributions received, and up to two hundred percent of that portion of the cost of newly acquired equipment in the well, up to and including the wellhead connections, which would have been chargeable to the nonconsenting owner if the owner had participated therein, if the nonconsenting owner’s tract or interest is subject to a lease or other contract for oil and gas development.

uingDuring ethe imetime ethe rduerproducer sis eovrngrecovering otscosts rmfrom a ocosetngnonconsenting werowner sas uhoiedauthorized nin aooinga drpooling isedorder prsantissued opursuant becionto ,subsection aocnsntng2, wera fnonconsenting arctowner rof iteesta ntract aacngor ntinterest htin sa otspacing ujetunit othat aeaeis rnot ohersubject ntatto a lease or ilother dcontract asfor veopentoil alland egas ttlddevelopment shall be entitled to aotfrea oyltycost-free teetroyalty eulinterest oequal weveto dtwelve nehafand prcnt.one-half percent.

pnUpon ullfull ymntpayment fof ethe ecveaberecoverable otscosts sas pciiedspecified in bsctonsubsection ,3, ethe olowngfollowing allshall cu:occur:

Wihina. iry as he rduer hll tiy he nncnsning ner o fr to e ocosetig wer he opotuiy o aricpae ner he olng rer s aokig iteest nr.

TeWithin otcethirty hlldays atethe atproducer heshall noneningnotify onerthe ynonconsenting lctowner oto atiipteoffer nto ethe ooingnonconsenting drowner rthe ayopportunity eectto oparticipate nineunder ecivngthe hepooling yltyorder ecfidas na usetinworking 4.interest owner.

WihinThe xtynotice ysshall terstate cevigthat oic,the henonconsenting nncnsningowner nermay allelect fomto heparticipate odcerin eherthe epooling nncnsningorder neror shsmay omaeelect nto letincontinue oreceiving atiiptethe uderroyalty especified olig rdr s aoring teest nr r onine rcevig he yaty pciid in becionsubsection .4.

fb. he ncnsning ner ils o sond o e otce wthn he me pciied n rgrph b,the ncnsntng oner al e eeed o lct o ntnue cevng he ryaty pcfid n ubecin .

WihinWithin vesixty uiessdays ysafter ferreceiving eeiignotice, otcethe fnonconsenting eecionowner omshall aocosetiginform werthe rproducer pnwhether xprainthe fnonconsenting heowner tmewishes pcfidto nmake argrphan ",election heto odcrparticipate salunder otfythe hepooling dretrorder rgrdngas hea ncnsningworking ne'sinterest lctonowner ror ckcontinue terof.receiving the royalty specified in subsection 4.

Seatec. le 40, .

If the nonconsenting owner fails to respond to the notice within the time specified in paragraph “b”, the nonconsenting owner shall be deemed to elect to continue receiving the royalty specified in subsection 4.

d.

Within five business days after receiving notice of election from a nonconsenting owner or upon expiration of the time specified in paragraph “b”, the producer shall notify the director regarding the nonconsenting owner’s election or lack thereof.

Senate File 2490, p.

nAn pliatonapplication orfor oingpooling allshall ovdeprovide tat astleast ethe fllwng:following:

,a. A erifcae f evie onaiing l esos hat hve aoyly itret r re nes nsde he ilig nd sacng it.

,A Thecertificate plcat'sof teetservice ypecontaining nall epersons rllngthat ndhave acnga uit.royalty interest or are owners inside the drilling and spacing unit.

Theb. gal scipin f he ads d te earmet dckt umer talihig he rling d paing it ugt to e oed.

AThe taemntapplicant’s htinterest wotype rin rethe eartlydrilling wedand rctsspacing runit. spaatly wed teess n he iling d paig nit hve ot lntriy ooed hir teess nd ny ld polng rer r he rllng d paing i.

Thec. ercan trlum ntiute ll mbr f he el sbjct o e ppicton, f eustng ot ecvry r ik pnatis.

AThe istlegal fdescription lof onosetigthe wnrslands nand ethe elldepartment atdocket henumber aplcatestablishing sthe ekigdrilling ostand coeyspacing ndunit iksought enliesto aistbe atpooled. e ie f ilng he pictin.

,d. The st eovry d isk natis he plcat s rqusin, f ny.

AnA pliantstatement althat poidetwo tor arngmore tseparately astowned etracts fllwng:or separately owned interests in the drilling and spacing unit have not voluntarily pooled their interests and any valid pooling order for the drilling and spacing unit.

,e. A opy f e lcton ete, el roosl, nd athriaton r xpndtue et o he wers n e diling d pcig ni.

The mesAmerican dpetroleum ntrstsinstitute fwell lnumber onosetigof wnrsthe ndwell ulesedsubject noneningto nesthe napplication, heif ll.requesting cost recovery or risk penalties.

Evdecef. o utfy he plcaion f ask eaty.

Sc.A list of all nonconsenting owners in the well that the applicant is seeking cost recovery and risk penalties against at the time of filing the application.

NEWg. CTON.

5A.6The Prmssoncost orecovery terand terisk —penalties ngoitinthe fapplicant ufaeis aags.requesting, if any.

7.

An applicant shall provide at hearing at least the following:

a.

A copy of the election letter, well proposal, and authorization for expenditure sent to the owners in the drilling and spacing unit.

b.

The names and interests of all nonconsenting owners and unleased nonconsenting owners in the well.

c.

Evidence to justify the application of a risk penalty.

Sec.

11.

NEW SECTION.

458A.26 Permission to enter site —— negotiation of surface damages.

eoreBefore teingentering atea htsite sthat ubetis subject to aolnga oderpooling drorder ecionunder 8A8,section r458A.8, ator sthat ihinis nwithin portoyan sacngexploratory it,spacing runit, urossfor fpurposes nof ilan doil asand prtin,gas noperation, oertran saloperator eciveshall itenreceive rmssonwritten rmpermission hefrom ufcethe onersurface oowner trto heenter ie.the site.

IfheIf ufaethe wnrsurface osowner otdoes rntnot witengrant emssonwritten opermission heto eatrthe ooperator ntrto heenter te,the esite, oertrthe saloperator otshall nernot heenter tethe rsite urossfor fpurposes nof ilan doil enteand ieSenate 49,File .2490, p.

010 gsgas praio.operation.

2.

BfoeBefore ntrngentering aitea atsite sthat bjctis osubject aooigto odra udrpooling ecionorder 8A8,under rsection at458A.8, sor ihinthat nis portoywithin sacngan it,exploratory thspacing evyunit, qimetwith orheavy heequipment rpsefor fthe ilin,purpose of drilling, an eatroperator halshall egtitenegotiate thwith hethe rfcesurface werowner rfor hethe pymntpayment fof yany amgesdamages atthat ymay ebe auedcaused yby hethe iligdrilling oerton.operation.

fIf hethe atisparties geeagree ndand ecteexecute arttna onratwritten frcontract ametfor fpayment amgs,of hedamages, ertorthe yoperator ntrmay heenter tethe osite dil.to drill.

If ethe ariesparties odo tnot echreach nan geeetagreement orfor ametpayment fof dmge,damages, tethe praoroperator hllshall tnot ntrenter hethe iesite oto rll.drill.

Beoreb. teig ito aeotaton der rarah a, te peaor hll rvie awiten scipion f e p-ot pocdre ecrbed n rarph c.

ABefore uraceentering nrinto aya elienegotiation urhrunder cmuncaionparagraph th“a”, anthe eatroperator oneringshall aosbleprovide remeta orwritten heayentdescription of ythe aageopt-out atprocedure aydescribed ein uedparagraph y“c”. he ilig oeaton by ovdng ebal r iten tie o he prtor at sats ht he ufae wer os ot ih o isus he mttr uthr, nd y bmting o e ttrny eerl ntie hruh ail r ecrnic ans atng he m.

Upnc. rcept f ch oice om e srace nr, he toney gneal hll rwrd aopy ohe prao.

AferA eeitsurface fowner oicemay omdecline hefurther rfcecommunication nerwith rsantan tooperator rarphconcerning c,a hepossible prtoragreement allfor tthe niiaepayment uthrof cntctany thdamage hethat rfcemay werbe rcaused urossby fthe ndrilling geeentoperation frby heproviding ymntverbal for nywritten maesnotice atto aythe eoperator usdthat ystates hethat diligthe oeaton,surface cetowner htdoes tenot praorwish hllto otnuediscuss othe povdematter hefurther, raceand nerby thsubmitting oiesto terisethe qurdattorney ygeneral lw.notice through mail or electronic means stating the same.

TeUpon ufaereceipt wnrof aysuch ecndnotice uhfrom efsalthe ysurface nacingowner, tethe peaorattorney ndgeneral tiyigshall heforward toneya nealcopy houhto althe oroperator. ecroic an.

Unessd. e ufae wnr esids he rfua, te ufae wnr's nd all e emd naalale fr n geeen.

AnAfter praorreceipt ilaigof tenotice otatfrom roibtonthe nsurface prarahowner ispursuant bjctto oparagraph aiil“c”, ealythe foperator otshall ssnot hninitiate enfurther touandcontact larswith rthe achsurface olton.owner for purposes of an agreement for the payment of any damages that may be caused by the drilling operation, except that the operator shall continue to provide the surface owner with notices otherwise required by law.

The surface owner may rescind such refusal by contacting the operator and notifying the attorney general through mail or electronic means.

Unless the surface owner rescinds the refusal, the surface owner’s land shall be deemed unavailable for an agreement.

e.

An operator violating the contact prohibition in paragraph “d” is subject to a civil penalty of not less than ten thousand dollars for each violation.

orFor rpsespurposes fof isthis cton,section, il“oil dgasand prain"gas mansoperation” emeans aethe ssame efnedas ndefined ctonin 8A30.section 458A.30.

Sc.Sec.

NEW12. CTON.

5A.7NEW ImoitonSECTION. f x — ax te ente ie 29, .

11458A.27 —Imposition vlatonof apyes.tax —— tax rate Senate File 2490, p.

11 —— valuation taxpayers.

orFor ethe riilgeprivilege fof eeingsevering ror trctngextracting loil ror asgas fomfrom hethe nslands itinwithin hethe ae,state, hrethere sis eiedlevied aeeanea txseverance ntax heon luethe fvalue eof ilthe doil asand xratd,gas hihextracted, hllwhich eshall nbe adiionin oaddition yto terany aesother mosdtaxes yimposed a.by law.

heThe veaneseverance axtax hllshall ebe xsix erentpercent fof ethe arfair aretmarket vluevalue fof ethe iloil ror sgas ponupon tacionextraction tat ethe elhad.wellhead.

xenesExpenses nuredincurred yby ethe roucrproducer rirprior oto auaionvaluation eare ntnot edctbedeductible fomfrom xaletaxable au.value.

hnWhen wnrsipownership fof loil ror asgas rduedproduced sis ard,shared, aheach onerowner alshall ebe esoniberesponsible orfor amntpayment fof tsits oprtoateproportionate sareshare fof vraceseverance a.tax.

A axaertaxpayer aingpaying veaneseverance axtax non loil or sgas rdutinproduction aymay euctdeduct ethe aestaxes adpaid romfrom yany oalyroyalty or hrother aontsamounts edue ror oto ecmebecome edue oto hethe neestinterest nesowners fof schsuch rdcton,production, nin oprtonproportion oto ethe ntretinterest wnrhi,ownership, nin wichwhich secase ethe eronperson eeiigreceiving tethe oalyroyalty ror terother ametpayment sallshall tnot ebe ibleliable rfor evraceseverance x.tax.

heThe patmntdepartment fof eeuerevenue aymay optadopt lsrules pruatpursuant oto caperchapter 7Ao17A dmniterto isadminister cton.this section.

Sc.Sec.

NEW13. CTON.

5A.8NEW RveueSECTION. stibton.

Reenes458A.28 eeiedRevenue rmdistribution. he veane ax olctd prsat to cion 8A27 hll e stibted s low:

1)1. he eerne ax eenes hll e stibted o cunis s olow:

()Revenues Nnereceived ndfrom netetsthe erentseverance ftax veacecollected axpursuant veueto echsection ar458A.27 hllshall ebe itrbueddistributed oas chfollows: onty n e tte n poprton o e outys hae f oal tte ouaton acodig o he st eet fdral cenil esu.

()a. Fve ecet f evrnce x evnue ch ar hll e dstibtd o he ontes n ich nd s oatd rm hih ol r as s odced n oorion o ch ony's are f te ale f il d as rdcton or at ar.

()(1) DstibtinsThe oseverance oniestax derrevenues isshall aarahbe haldistributed eto uedcounties xlsielyas rfollows: ny f e olowng upse:

()(a) ToNine nsrutand ndnine-tenths inainpercent unyof oas.severance tax revenue each year shall be distributed to each county in the state in proportion to the county’s share of total state population according to the most recent federal decennial census.

()(b) ToFive fstpercent outyof oprtyseverance xtax olecins.revenue each year shall be distributed to the counties in which land is located from which oil or gas is produced in proportion to each county’s share of the value of oil and gas production for that year.

or(2) dstibtonsDistributions edto orcounties rpssunder fthis hisparagraph bprarahshall iison,be teused outyexclusively allfor optany aorepndngof eythe atefollowing dcton.purposes:

Fie(a) erentTo fconstruct vraceand axmaintain veuecounty chroads. er hal e ente ie 49, .

2(b) dpoitdTo noffset hecounty adproperty setax xcollections. ud stblshd ndr etin 32..

1)For endistributions ecntused ffor eerncepurposes xof evnethis achsubparagraph ardivision, sallthe ecounty psiedshall nadopt hea veacecorresponding axlevy contrate ihnreduction. te evionet frt und talihd ndr ecion 57A fr uroes f upotig he ter alty ntitve amiiseed y he viion ruat o ecion 6.4, icldig aares, ppr, miteane, nd sclanous prpss, ncuing s ovdd in is rarph, ntwthtadng etin .5A, uscton .

()b. () The nes eosted rsant o is rarah sall e ed o pprt eontaton rjets n sbwteseds s sinaed y e eprtent f riutue ad ad searshp hat e at f ig-pioiy wtrseds ienifed y e atr esuces orintig oucl.

()Five Tepercent onysof eostdseverance uruattax orevenue hiseach rgrphyear hllshall ebe uedSenate oFile pprt2490, eontrtonp. rjets n aerhds eerll, icldng eioal aerhds, s sinaed y he vsin, ad ig-ririy atrseds eniied y e aer eouces corintng oncl.

()12 Indeposited pprtngin rjctsthe nroad teshdsuse dtax sbatrsedsfund asestablished oiddunder nsection ubargrph312.1. ), ll f e oloing pl:

()c. Te emnsrain roecs ust ilze ter alty pacies s ecrbed n e oa utiet edcion raegy as fned n cton 5B17.

()(1) TeTen ivsinpercent hllof mleentseverance mostaiontax ojctsrevenue aseach oiddyear nshall ubargrphbe iiiondeposited )in ythe roiingseverance frtax ariiptinaccount ywithin erosthe woenvironment odfirst afund galestablished tretunder nsection ariutual8.57A adfor sedpurposes nof rin.supporting the water quality initiative administered by the division pursuant to section 466B.42, including salaries, support, maintenance, and miscellaneous purposes, including as provided in this paragraph, notwithstanding section 8.57A, subsection 3.

To(2) vry(a) xetThe ratia,moneys tedeposited ivsonpursuant hllto rviethis orparagraph llboatveshall atiiatonbe yused schto rsnssupport hodemonstration ldprojects aealin nerstsubwatersheds nas giclurldesignated by the department of agriculture and lcaedland thnstewardship hethat aeare ubaerhe.part of high-priority watersheds identified by the water resources coordinating council.

()(b) TeThe ivsinmoneys hlldeposited mleentpursuant mostaionto ojctsthis nparagraph ashall otshrebe aisused sto eeriedsupport ydemonstration heprojects viin.in watersheds generally, including regional watersheds, as designated by the division, and high-priority watersheds identified by the water resources coordinating council.

Ecet(3) orIn egeo-fildsupporting acies,projects hein ae'swatersheds areand fsubwatersheds eas muntprovided allin ntsubparagraph xeed(2), ftyall rcnt f e stmaed ot f sabising te rctce s eerind y he viion r fy erent of ethe cualfollowing stapply: f sabihig he rcic, hiheer s lss.

ente(a) ieThe 49,demonstration .projects must utilize water quality practices as described in the Iowa nutrient reduction strategy as defined in section 455B.171.

3(b) ()The Tedivision emnsraionshall oecsimplement haldemonstration eprojects sedas oprovided uatein ohersubparagraph ronsdivision out(a) eby eaibltyproviding ndfor lueparticipation fby talshngpersons smiarwho terhold altya rctcs.legal interest in agricultural land used in farming.

TeTo ivsinevery halextent rmoepractical, feldthe ydivision vntsshall rprovide urossfor fcollaborative lowngparticipation nerstdby esossuch opersons etalihwho aerhold uliya ratieslegal ninterest chin esos'agricultural giclurlland ln.located within the same subwatershed.

()(c) TeThe ivsindivision halshall odutimplement atrdemonstration uaityprojects auaioson wthna upotedcost-share bwteshd.basis as determined by the division.

ihinExcept aesoabefor eiodedge-of-field aterpractices, cuuatngthe noratonstate’s rmshare uhof vauains,the heamount dviionshall alnot reteexceed nfifty greaedpercent aabseof fthe aerestimated altycost pacies.of establishing the practice as determined by the division or fifty percent of the actual cost of establishing the practice, whichever is less.

nySenate noratonFile dntfing2490, aesonp. ldng a lgal teet n grcutual ad r pciic giclurl lnd hll e aofienil rcrd.

()13 Te(d) onysThe eostddemonstration uruatprojects oshall his rgrph hll be edused oto pprteducate dcaionother dpersons urechabout nthe aanerfeasibility atand ecoraesvalue rsnsof hoestablishing ldsimilar aealwater nerstquality npractices. giclurl lnd sd or rmng o mleet atr uaity aties, icldig he talihmnt f uh rctces n teseds gnealy, d ot iitd o ubaerhes r ig-piriy wtesed.

()The Tedivision onysshall eostdpromote uruatfield oday hisevents rgrphfor aypurposes eof uedallowing ointerested otactpersons thto esosestablish owater ordnaequality hepractices mleenaionon ofsuch fotspersons’ ovdedagricultural nland. is aarah.

()(e) TeThe onysdivision eostdshall uruatconduct owater hisquality rgrphevaluations aywithin esupported uedsubwatersheds. y e eprtent f riutue nd ad tearsip o spprt ran il nd tr cnsraton fors, hch y iclde t re ot mied omnaemnt rctcs rlted o bortnton, ndcain, he e f ereale r evous pveet, nd il uliy esoaton.

heWithin oesa salreasonable eperiod aloatdafter naccumulating aos-sareinformation ssfrom ssuch roiddevaluations, nthe hatrdivision 61.shall create an aggregated database of water quality practices.

()Any Ntwthtadiginformation nyidentifying hera ovsinperson fholding awa olegal einterest cntay, he patmnt f giulure d and ewrdhp my se nes epsied usunt o is aagaph o ry ot he rvsins f hs argaph n aot-hae ais in mbnainagricultural ithland heror nesspecific vilbleagricultural oland eshall eprmetbe of riulue nd ad tearshp rm a ateconfidential rrecord. dral sure.

()(4) NtThe oremoneys andeposited enpursuant rentto fthis eparagraph onysshall eoitdbe prsantused oto issupport raraheducation ayand eoutreach edin ora stsmanner fthat enteencourages iepersons 49,who .hold a legal interest in agricultural land used for farming to implement water quality practices, including the establishment of such practices in watersheds generally, and not limited to subwatersheds or high-priority watersheds.

4(5) amiisrainThe ndmoneys mleenatondeposited fpursuant eto atrthis uaiyparagraph iitatvemay diiserdbe yused heto iiio.contract with persons to coordinate the implementation of efforts provided in this paragraph.

eeny(6) ndThe n-tnhmoneys erentdeposited fpursuant veaceto axthis veueparagraph echmay erbe hllused eby eostedthe ndepartment eof apaeragriculture eifand fndland etalihdstewardship udrto ecionsupport 5E.urban soil and water conservation efforts, which may include but are not limited to management practices related to bioretention, landscaping, the use of permeable or pervious pavement, and soil quality restoration.

itrbuiosThe omoneys heshall uniesbe dallocated oon hea ndscost-share derbasis tisas usetonprovided hllin echapter ae161A. urtrly n n ont qal to e-orth f e stmae f nual tal veace ax rveues tmaed or e uret fsal er y he veue etiatng omtte.

Te(7) haeNotwithstanding orany odcigother outesprovision hllof belaw lcltedto ingthe unycontrary, routinthe atadepartment omof heagriculture irand fsclland er'sstewardship veanemay axuse euns.moneys deposited pursuant to this paragraph to carry out the provisions of this paragraph on a cost-share basis in combination with other moneys available to the department of agriculture and land stewardship from a state or federal source.

(8) Not more than ten percent of the moneys deposited pursuant to this paragraph may be used for costs of Senate File 2490, p.

14 administration and implementation of the water quality initiative administered by the division.

d.

Seventy and one-tenth percent of severance tax revenue each year shall be deposited in the taxpayer relief fund established under section 8.57E.

e.

Distributions to the counties and to the funds under this subsection shall be made quarterly in an amount equal to one-fourth of the estimate of annual total severance tax revenues estimated for the current fiscal year by the revenue estimating committee.

The share for producing counties shall be calculated using county production data from the prior fiscal year’s severance tax returns.

yBy eteberSeptember 515 fof cheach ar,year, ethe eprmetdepartment fof rveuerevenue hllshall potreport ctalactual anngsearnings rfor hethe otsmonths fof tethe reeingpreceding sclfiscal earyear rfor hchwhich simtesestimates rewere edused nin cmptigcomputing itrbuios.distributions.

TeThe earmetdepartment fof evnuerevenue alshall akemake ajutmnsadjustments oto isriutosdistributions drngduring hethe rrntcurrent iclfiscal earyear nin an ontamount qalequal oto hethe ffrncedifference twenbetween eenesrevenues rndearned ndand atulactual isrbuiosdistributions orfor hethe eedngpreceding icalfiscal a.year.

orFor rpsespurposes fof isthis cton,section, ivson"mas“division” temeans dviionfthe oildivision nsrvtinof ndsoil terconservation altyand raedwater ihinquality tecreated eprmetwithin fthe grcutuedepartment ndof ndagriculture twadsipand rsantland ostewardship sctonpursuant 9..to section 159.5.

Sc.Sec.

NEW14. CTON.

5A.9NEW AmiisrtinSECTION. cnfdntalty.

The458A.29 patmntAdministration fconfidentiality. eeue hll nualy lue d ases il r s roucin fr aato, in prpiae nit masrs, t he ir akt vle f he rdct, ter e mnig s oplted r e il r s s xtated t e wllead.

1.

The department of revenue shall annually value and assess oil or gas production for taxation, in appropriate unit measures, at the fair market value of the product, after the mining is completed or the oil or gas is extracted at the wellhead.

nual,Annually, on ror frebefore ueJune ,1, ror sas onsoon heeatrthereafter as ethe arfair aretmarket auevalue sis eemieddetermined nerunder usetonsubsection ,1, tethe eprmetdepartment fof evnuerevenue alshall crifycertify ethe alaionvaluation fof ethe podctproduct oto ethe outycounty sesorassessor fof ethe outycounty rmfrom hchwhich hethe loil or sgas aswas odce,produced, ndand uhsuch auaionvaluation allshall ebe tredentered onupon tethe sssmetassessment olsrolls fof hethe uny.county.

Reors3. ecied, olctd, r ratd n he amiisrtin f he eerne tx hll e ofietil s fllws:

enteRecords iereceived, 49,collected, .or created in the administration of the severance tax shall be confidential as follows:

5Senate .File 2490, p.

All15 xpyera. tuns d etrn noraton all e cnfdetal n, xcpt s uhried eow, o rrnt r frmr fical, fie, eplye, r gnt f he ae r ay oltcal bdviion erof all scose y uh ifomain otind n he ore f erice s nffcil, ofie, epoye, r gn.

apaerAll eurstaxpayer ndreturns eunand ifomainreturn salinformation ncudeshall thutbe miatonconfidential lland, aemnt,except rpot,as smares,authorized dbelow, llno tercurrent taor ndformer cuetsofficial, nerofficer, aditemployee, rroiddor yagent heof apyerthe nstate codaceor ihany hepolitical povsinssubdivision fthereof isshall hptrdisclose egringany veanesuch a.information obtained in the course of service as an official, officer, employee, or agent.

WihotTaxpayer ritnreturns atorzaionand omreturn heinformation xayr,shall oinclude crrntwithout rlimitation rmrall ffcal,statements, fier,reports, plye,summaries, rand gntall fother tedata taeand rdocuments nyunder liiclaudit ubiisonor hrefprovided hllby eeaethe txpyrtaxpayer rtrnsin daccordance etrnwith nomaionthe rtinngprovisions oof xesthis ipoedchapter yregarding isseverance hptr,tax. xet or ny f e oloing rasns:

()b. Ifomaion y e eeaed o mloes f he dpatent f veue nd plyes f he patent f jstce r ffcil uroes.

()Without Uonwritten rorauthorization oiefrom othe hetaxpayer, apae,no ifrmtincurrent ayor beformer lesdofficial, yofficer, heemployee, earmntor fagent eene,of pnthe rttnstate aplctin,or oany nypolitical hersubdivision vrnenalthereof nityshall frelease etaxpayer nityreturns sowsand ficentreturn asninformation opertaining bainto etaxes nfrmtinimposed orby fiialthis bsies,chapter, ujetexcept ofor xeutonany fof aofieniaiythe gremnt.following reasons:

()(1) IfomaionInformation almay ebe dmssblereleased nto utemployees rof amiisrtiethe roeeinsdepartment eltdof orevenue heand eerneemployees txof rthe ohrdepartment txsof njustice ilfor rofficial aspurposes. oucion r n cme f rduers or nrs, r yatis.

Unts(2) fUpon rdctonprior eorednotice yto hethe xayrtaxpayer, ndinformation hemay txpye'sbe xalereleased aueby reotthe ofienialdepartment dof ayrevenue, eupon rlesd.written application, to any other governmental entity if the entity shows sufficient reason to obtain the information for official business, subject to execution of a confidentiality agreement.

Vilaios(3) fInformation hsshall scionbe alladmissible ein bectcourt oor eadministrative ameproceedings pohbtinsrelated ndto natisthe htseverance ppytax oor throther ioaiostaxes fon cnfdetaltyoil euiemntsor picblegas oproduction taor ndon crdsincome inof eproducers utoyor fowners, he eatmnt f eene or rpsesroyalties. f crrig ut ts tis.

Sc.c.

NEWUnits CTON.of production reported by the taxpayer and the taxpayer’s taxable value are not confidential and may be released.

5A.04. Eclsie uisicin nd epess eepio.

ForViolations rpsesof fthis issection cto:shall be subject to the same prohibitions and penalties that apply to other violations of confidentiality requirements applicable to data and records in the custody of the department of revenue for purposes of carrying out its duties.

enteSec. ie 490r.

1615. .

‘Cmecilyresoabe"mansNEW aodtinSECTION. hat uld alow aesoaly rdet peaor o uly, fetvey, nd eonmialy xlot, eelp, rdce, ocss, d rasort ol nd s, s eerind asd n he jetie tadrd f a esoaby rdet peatr nd t n n ndviuaied asesmnt f n tul peatrs cpciy o c.

'landgs458A.30 peaton"easExclusive njurisdiction ctvtyand socatdexpress wthpreemption. he portin, eelpen, roucio, roesig, ad rasprtton f il d a, icudng rlin, tstn, googcal mpig, oin, xcvaio, ydauic facure iultin, oplton, inennc, ewrin, rcoplton, spsa, lugig nd anonen, ecndry d trtary cvey, ephsial uvys eatd o il d as dveomet, nd meiaion tviie.

1.

For purposes of this section:

Senate File 2490, p.

16 a.

“Commercially reasonable” means a condition that would allow a reasonably prudent operator to fully, effectively, and economically exploit, develop, produce, process, and transport oil and gas, as determined based on the objective standard of a reasonably prudent operator and not on an individualized assessment of an actual operator’s capacity to act.

b.

“Oil and gas operation” means an activity associated with the exploration, development, production, processing, and transportation of oil and gas, including drilling, testing, geological sampling, boring, excavation, hydraulic fracture stimulation, completion, maintenance, reworking, recompletion, disposal, plugging and abandonment, secondary and tertiary recovery, geophysical surveys related to oil and gas development, and remediation activities.

nAn iloil dand asgas prtinoperation sis ubectsubject oto ethe xluiveexclusive jriditinjurisdiction fof hsthis tae.state.

EcptExcept sas rviedprovided nin usctonsubsection 3, aony,a iy,county, rcity, teror oiiclother ubivsinpolitical hllsubdivision otshall eactnot renact frceor nenforce dianean rordinance teror esue,other rmeasure, nor enmetan amendment or viionfrevision nof rdnacean rordinance heror asr,other tatmeasure, ns,that lmis,bans, rlimits, hewieor eglaesotherwise nregulates lan ndoil asand ertongas ihinoperation tewithin oudristhe rboundaries ursdctonor fjurisdiction eof esecivethe uty,respective ty,county, city, or liialpolitical udiiso.subdivision.

heThe thriyauthority fof aouty,a t,county, city, or hrother oltialpolitical sbdviinsubdivision oto eglaeregulate nan iloil dand asgas praionoperation sis peslyexpressly peeped,preempted, cetexcept hatthat aonya rcounty ityor ycity nct,may en,enact, ramend, efoceor nenforce dianean rordinance thror esueother fmeasure heif rinnethe rordinance thror masreother esmeasure lldoes fall eof oloin:the following:

Onya. eglaes ciity laed o n l nd as oertin ht ccrs t r ove e urace f e rund ad onens oering re d eegecy epos, tafi, lghs, r is, r mpss ntce r esoabe ebak rqurmets.

1)Only sregulates omerillyactivity asnal.related to an oil and gas operation that occurs at or above the surface of the ground and concerns governing fire and emergency response, traffic, lights, or noise, or imposes notice or reasonable setback requirements.

()b. An diane r ter esue s onierd ria ace to e merialy esoabe f he diane r ter esue hs en inffct or t at ive ars d as loed he ol nd s peatons t se o onine urng at eio.

Dos(1) otIs rhbitcommercially rreasonable. fetiely oibt n il nd s oertin oduted y aesoaly rdet peaor.

Seate(2) leAn 40,ordinance .or other measure is considered prima facie to be commercially reasonable if the ordinance or other measure has been in effect for at least five years and has allowed the oil and gas operations at issue to continue during that period.

7c. .

IsDoes otnot hrwseprohibit reptdor yeffectively taeprohibit ran eerloil a.and gas operation conducted by a reasonably prudent operator.

Sc.Senate File 2490, p.

REEL.17 d.

SctonIs 8A6,not oeotherwise 06,preempted sby eele.state or federal law.

AYSec. INLIR AT ASLE Pesdnt f he nte pekr f he use Ihrey eriy hat is ll rgiatd n he nte nd is on s ente le 40, iey-irt eerl ssmly.

HRLS16. MIHSN eceary f e eate Aprvd 026 IM YNLDS ovror

REPEAL.

Section 458A.6, Code 2026, is repealed.

______________________________ ______________________________ AMY SINCLAIR PAT GRASSLEY President of the Senate Speaker of the House I hereby certify that this bill originated in the Senate and is known as Senate File 2490, Ninety-first General Assembly.

______________________________ W.

CHARLES SMITHSON Secretary of the Senate Approved _______________, 2026 ______________________________ KIM REYNOLDS Governor