(Iowa Capital Dispatch) The House Natural Resources Committee advanced two bills Thursday to help regulate oil and gas drilling as exploration for geological hydrogen in Iowa is ongoing.
The language in both bills is modeled after laws in oil-rich states to help detail landowner rights around gas and oil resources and land restoration.
House Study Bill 740, would offer protections to landowners for land or crop damage incurred via oil, gas or hydrogen well operations.
Kevin Kuhle, speaking on behalf of the Iowa Farm Bureau Federation in a subcommittee hearing on the bill Thursday morning, said the bill would “help ensure landowners and farmers are protected and compensated for damages.”
This is one of several bills legislators have entertained related to oil, gas, hydrogen and mineral rights this session. Several companies have initiated exploratory efforts in Iowa to determine if geological hydrogen can be extracted from deep in Iowa’s subsurface.
The bill would require operators to compensate landowners and farm tenants for damage to land or crops related to oil and gas operations from the “initial exploration through final reclamation” of the surface area.
Brittany Lumley, speaking on behalf of Koloma, a company that has drilled several exploratory wells in Iowa searching for hydrogen, said the bill, as written “causes a lot of confusion.”
Lumley said the company, which registered as undecided on the bill, is “not at all against doing something” to make sure landowners know their rights and protections in this process.
“We just want to make sure that it is workable and doesn’t cause confusion, which ultimately causes anger,” Lumley said.
Rep. Austin Harris, R-Moulton, said the bill “needs a lot of work” and said lawmakers plan to work with stakeholders to come to an agreement.
The “Iowa surface owners protection act” as the bill is short titled, was advanced by the House Natural Resources Committee with a vote of 14-7.
House File 843, is another bill that the House Natural Resources Committee Chair Devon Wood said would “put some guardrails” on the potentially emerging hydrogen industry.
This bill, which was introduced last session, is a companion to Senate File 546 and sets “pooling” standards in Iowa to help ensure Iowans who don’t enter agreements with a drilling company will still be compensated for hydrogen, oil or gas that is extracted from their property.
HF 843 was debated in a subcommittee hearing Wednesday. The bill language was brought forward by Koloma and faced opposition from several farm commodity groups last year. While the language in the bill is the same, Lumley and Kuhle both spoke in the subcommittee hearing and said Koloma and Iowa Farm Bureau have been working to find common ground on the issue.
“Our goal in all this is to have state laws that create a positive environment that allows both exploration drilling companies and landowners to each succeed and reap the benefits of our natural resources while protecting farmers and landowners,” Kuhle said.
The pooling process is when a company works to make deals with all of the landowners who are sitting on top of a resource, like oil, natural gas or hydrogen.
Since a well cannot respect property lines when it is extracting a resource from underground, the legislation lays out that when a company signs a deal with one property to drill for a resource, it has to talk to other landowners in the determined pool area and negotiate royalties with landowners.
Landowners who do not make an agreement with the company, dubbed “nonconsenting landowners” in the bill, will be automatically given a 12.5% royalty.
Current law does not require a royalty be paid to nonconsenting landowners.
The bill provides that after the well operator has recouped 200% of their expenses, nonconsenting landowners will be reapproached and asked to become consenting landowners, with a negotiated royalty, or they will become working interest partners.
The oil or gas producers could then request “cost recovery and risk penalties” against nonconsenting landowners, according to the bill text.
Rep. Norlin Mommsen, R-DeWitt, was concerned with this section of the bill and said that he as a hypothetical, nonconsenting landowner, could be billed for costs incurred “even though I want nothing to do with you.”
“I’m losing the right to decide whether I’m a part of your company or not,” Mommsen said.
Lumley argued the nonconsenting landowner would first have the option to become a consenting landowner and negotiate a royalty higher than the 12.5% they had received, before they would become a working interest partner and incur some of the costs of the operation.
Mommsen said he was still concerned with the treatment of nonconsenting landowners per the bill.
“Because you will run into those people that no matter how beneficial it is to them, they will just be a no,” Mommsen said.
Lumley said that while these rules are a new idea to Iowa, they are “not new to the industry.”
“This is how they work across the country,” Lumley said.
Rep. Elinor Levin, D-Iowa City, said Iowans would also benefit from language to protect them from “nuisance contact from leasing agencies,” to preempt constant calls and mailers to landowners if the industry were to take off.
Wood said that could be something to “hammer out” down the line, but she reiterated that “right now, there are no guardrails on the books” and urged her colleagues to support the bill so that the conversation could continue past the funnel deadline.
In the House Natural Resources Committee meeting Thursday, Wood said she plans to introduce a “robust amendment” to the bill on the floor, but said it was not ready in time for the committee meeting.
Rep. Kenan Judge said the bill will help the state move forward with this industry.
“I think it’s a time in the state where any new business we can look at is good for us, and quite frankly, could be very advantageous for landowners,” Judge said.
The bill advanced with a vote of 16-5.
Water monitoring
The committee also advanced House File 2117 to expand the number of water monitoring wells in the state. The bill would allocate $100,000 for a pilot project to retrofit existing private wells with equipment that would allow the Iowa Geological Survey to monitor groundwater.
It advanced with a vote of 20-1. Rep. Amy Nielsen, D-North Liberty was the sole no vote.
