Oil and Gas at Your Door? (2005 Edition) - Earthworks

SURFACE USE AGREEMENTS
Surface Use Agreements
Surface Use Agreements (SUA) are sometimes referred to as Surface Damage Agreements
(SDA) or Surface Use and Damage Agreements (SUDA). They are all agreements negotiated by
the surface owner and a company representative.
They may be negotiated with a company whether or not the surface owner owns the mineral
rights. As mentioned in Chapter II, some states require a company to negotiate an agreement
with a surface owner who does not also own the mineral rights. Whether or not there is a surface
compensation law, many companies will approach landowners with pre-written SUAs that
they hope will be signed on the spot.
Before You Negotiate a Surface Use Agreement
1. What are the potential drawbacks of signing an SUA?
• According to an attorney who works with surface owners, when a surface use agreement
is signed a landowner typically gives up his or her right to sue for trespass arising
from unreasonable use of the surface. Also, in many cases, the amounts of money
paid are so small and the written concessions are so minimal that a landowner might
benefit from refusing to sign an SUA, and instead, retain his or right to sue for unreasonable
behavior that occurs anytime during the lifetime of the lease. The theory
behind this strategy is that the potential threat of suit will keep the oil or gas company
on best behavior during the lifetime of the lease, which is a greater benefit than the
pittance sometimes offered in “damages,” and the minimal written concessions contained
in most surface use agreements. Bear in mind, of course, that suing for trespass
is an expensive endeavor and may not be feasible even if a landowner retains
that right. It is, however, possible that simply filing a trespass suit may lead to improvements
on the part of the oil and gas company, in their attempts to avoid the suit or
reduce damages.
• Be aware that if you do negotiate an SUA there may be unintended omissions (on your
part) or items that the company will not put into the agreement. Because you have
signed the agreement, you may be out of luck if problems arise that are not addressed
in the agreement. Or again, you may have to go to court to resolve these issues.
See Terry Fitzgerald’s story for an explanation as to why she and her husband Jim
refused to sign a surface use agreement.
2. What are the benefits of signing an SUA?
• The main benefit of negotiating an SUA is that it provides you with a signed legal document
outlining the issues you and the company have agreed upon. And both you and
the company know that if the company does not live up to the agreement, you can
take them to court; and if you win, they will likely have to pay your attorney fees.
• You have the opportunity in negotiating SUAs to include issues that are important to
you. For example, protection of certain areas of your property; getting the company to
agree to upgrade your road or put in fences. If you don’t negotiate an SUA, you may
never realize many of these sorts of benefits.
If You Negotiate an SUA
• Take some time to review the examples of SUAs below, and suggestions on items to
include. But do not feel limited by what you see. If there is something you want in the
agreement, try to negotiate with the company to get that included.
• Negotiating SUAs allows you to establish a relationship with the company. Depending on
the tone of the negotiations, your relationship may be a positive or negative experience.
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