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LEGISLATIVE UPDATE
Yesterday was the third reading deadline for bills to be heard in the opposite house. Approximately 100 bills failed to advance from the opposite house and are now dormant.
On Tuesday, Governor Mary Fallin signed HB 3158 (Hickman/Justice) into law this week. The bill affirms the Oklahoma Corporation Commission’s authority over oil and gas operations and gives them authority to respond in emergency situations “having potentially critical environmental or public safety impact and resulting from activities within its jurisdiction.” The bill went into effect immediately upon signing due to the emergency clause on the bill. Oklahoma Corporation Commissioner Dana Murphy issued a statement thanking the legislature for passing the bill and the Governor for her signature. “While I believe the OCC already had this jurisdiction, others challenged this interpretation and argued the OCC's emergency authority to quickly take action on oil and gas activities without having a hearing first was limited to situations relating to protecting fresh water,” Commissioner Murphy explained. “HB 3158 clarifies the OCC's jurisdiction to take emergency action.”
On Wednesday, the Senate adopted a floor substitute for HB 2599 (Wood/Sharp) by a vote of 44-2, and restored the bill’s title. The Senate author, Sen. Sharp, issued a press release on the bill’s passage. The bill prohibits unauthorized flights of an unmanned aircraft over a critical infrastructure facility, less than 400 feet above ground level or past the fence line of such sites. Exceptions are made for government, law enforcement, the owner of the critical infrastructure facility, and operators authorized by the FAA to conduct operations over that airspace. “What fences and barriers do to prevent trespassers at critical sites, House Bill 2599 is trying to do in the airspace with new technology of unmanned aircraft,” said the Sen. Ron Sharp. “Concerns have been raised that this bill isn’t needed because federal regulations already prohibit unmanned aircraft over such facilities. However, the FAA regulations are only guidelines to pilots and operators of unmanned aircraft to avoid such airspace, but there is not a strict prohibition currently.” The bill defines “critical infrastructure” as locations that are completely fenced in or obviously marked to prevent intruders such as, among others, refineries, electric power generation facilities, gas processing sites, water treatment plants and dams. The Senate amended the bill to require signage on critical infrastructure property that also forbids flight of unmanned aircraft without site authorization. The criminal penalty and misdemeanor offense were also removed and replaced with a provision that violators may be found civilly liable for damages to the critical infrastructure property, environment or human health. The bill will go back to the House for acceptance or rejection of Senate amendments, and is expected to be heard in the next few weeks. OKOGA, among other companies and associations, supported this bill.
In a repeat of last week’s actions, Rep. Richard Morrisette, D-Oklahoma City, filed proposed floor amendments to three different Senate bills this week in his effort to repeal SB 809. SB 1139 (Marlatt/Watson), extends the sunset date on OCC well plugging fund, was not heard on the floor because the House companion bill to extend the plugging fund, HB 2303 (Watson/Marlatt), was sent to the Governor. Morrisette’s amendment to SB 1283 (Fields/Pfeiffer) changing gross production tax apportionments to certain agency funds, was tabled on Thursday morning by a vote of 63-21. The same amendment filed on SB 1414 (Marlatt/Calvey) accounting for transfer of oil and gas wastewater for recycling and reuse in oil and gas operations, was tabled by a vote of 37-16.
SB 1414 was the second to last bill heard yesterday. The title was stricken on the bill, so it could be sent to conference to continue to work on language with surface owners. SB 1414 passed by a vote of 70-0. (OKOGA Supports) The House went into the evening and adjourned after 11:00 p.m.
The following bills impacting industry were sent to the Governor this week:
HB 1951 (Watson/Griffin) removes municipal exemptions for statewide one-call notification center. Passed the Senate 37-9. (OKOGA Supports)
HB 2303 (Watson/Marlatt) extends sunset date of the OCC Plugging Fund from 2016 to 2021. Title restored and passed the Senate 46-0. (OKOGA Supports)
HB 2357 (Watson/Marlatt) deleting references to hazardous substances in the Oklahoma Storage Tank Regulation Act and deletes the definition from the act. Passed the Senate 45-0.
HB 2444 (O’Donnell/Smalley) increases the maximum penalty from $10K to $100K for violations of pipeline safety regulations of the Corporation Commission or the Hazardous Liquid Transportation Safety Act. Passed the Senate 40-6.
SB 1219 (Fields/Pfeiffer) requires the Oklahoma Water Resources Board to develop rules for the taking and use of water stored in an aquifer pursuant to a site-specific aquifer storage and recovery plan, including issuing permits for use of water for this purpose. The bill also designates storage and recovery of water from an aquifer to be a beneficial use of water. Passed the House 63-1.
BUDGET
Minority leaders Rep. Scott Inman, D-Del City, and Sen. John Sparks, D-Norman, announced at a press conference Thursday morning, on behalf of the House and Senate Democratic caucuses, their intention to hold a joint, bipartisan meeting to discuss potential solutions addressing the state's budget crisis. Sen. Sparks said an open meeting was decided upon as to hopefully avoid past instances in which the state's budget was hastily compiled and approved by the legislature. The caucuses' plans in solving the budget shortfall involved establishing recurring revenue sources such as restoring income tax cuts, expanding Medicaid, indexing the gross production tax of the price of oil and potentially eliminating tax credits and exemptions. Inman said, "Our solution is to find a way to restore the revenue that was there to begin with." He said bipartisan efforts ultimately are necessary to solve the issue. The proposed bipartisan meeting, which is open to the public, is currently scheduled for Tuesday at 1 p.m. in Room 419C. (eCap reports)
Tax Issues
Earlier this week, the state's Incentive Review Commission met and heard from a national economic development effort, as well as those who oppose economic development incentives. The Commission also discussed what incentive programs they would be tasked with reviewing, which includes alternative fuel vehicle programs. Over the next four years the Commission will need to review all state incentive programs. This year they will review the four largest incentives. The Commission must provide an annual report to legislators on their findings. (Journal Record (sub req’d) and Duncan Banner reports)
Today’s Oklahoman Editorial discusses legislative appropriators’ ideas to cap certain tax credits and/or defer payments to a later date. “As they grapple with budget drafting in the midst of a $1.3 billion shortfall, Oklahoma lawmakers need to recall the lessons of the past. Proposals that simply kick the can down the road can quickly backfire, as legislators have learned the hard way. One particular target is the tax credit for financially at-risk oil wells, which could be capped at $25 million a year. Officials say that would “save” $105 million in this year's budget.”
Rep. Brian Renegar, D-McAlester, told KOCO that this is not the time to be giving tax rebates. The Oklahoma Tax Commission said this year the state is paying out $41 million in rebates to operators of “economically at-risk” oil wells that are no longer profitable at current oil and gas prices. Officials with the OTC said next year they plan to pay out $158 million to operators as the number of “economically at-risk” wells continue to increase. “The Legislature has been very partial to these oil and gas interests,” Renegar said. He argued that oil companies shouldn’t be given a break just because they are down in profits. “With the reduction of our funding to education, health care, roads, and county bridges, it’s very, very questionable, whether we should continue to go down this path,” Renegar said. He would like a moratorium placed on the rebate program.
ELECTION UPDATE
When the candidate filing period ended last Friday, 417 people had filed for office, a considerably higher number than in recent years. In 2012, the previous presidential election year, 275 people filed for office and in 2008, there were 296 who filed. Every Senate incumbent had at least one challenger. Tuesday was the end of the two-day withdrawal and challenge period, and thirteen candidates withdrew. Challengers to Rep. John Enns, R-Enid, Rep. Mark McBride, R-Moore, and Rep. Michael Rogers, R-Broken Arrow, withdrew, so the representatives are re-elected without opposition. Hearings for contested candidates will be scheduled soon. The state Election Board carries a list of all withdrawals and contests of candidacies. (NewsOK and eCap report)
ECONOMIC UPDATE
This week Moody's Investors Service published special reports on how low oil prices are affecting Oklahoma, North Dakota and California, pointing out that Oklahoma's $1.3 billion budget gap has forced state leaders to make difficult decisions. "We expect the state to cut spending further in next year's budget and to find new sources of recurring revenues, but the sheer size of the imbalance will require one-off solutions such as using reserves," the report stated. Oil and natural gas production severance taxes are down 51 percent from March 2015 to March 2016 while oil taxes earmarked for the state's general revenue fund are down 98 percent through the first nine months of the fiscal year, according to the report. "These revenues will be pressured as prices stay low," the report stated. Besides production taxes, the oil and natural gas industry slowdown also has hurt the state by contributing to lower sales tax collections, Moody's said. State sales taxes are down 7 percent year to date. (NewsOK reports)
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SEISMIC ACTIVITY
Oklahoma Insurance Commissioner John Doak announced a public hearing to investigate a rise in earthquake insurance rates. The hearing will include data gathered by the Oklahoma Insurance Department as well as comments from insurers and citizens. “We’ve seen some rate increase filings up to 100 percent come through the office and we want to make sure we have a reasonably competitive market. There needs to be a valid financial basis for any rate increase and healthy competition that benefits consumers,” said Doak. The hearing is scheduled for May 24 from 8:00 a.m. to 10:00 a.m. at the Oklahoma Insurance Department, 3625 NW 56th St., Suite 100, Oklahoma City. Any person who wishes to be heard must notify the Department in advance no later than May 17 by emailing General Counsel Gordon Amini at Gordon.Amini@oid.ok.gov. Comments will be strictly limited to the issues of competition and pricing in the earthquake insurance market. The hearing is not a forum to discuss complaints about claim denials or manmade causes of earthquakes. The hearing notice is available here. (NewsOK and OK Energy Today report)
The Oklahoma Insurance Department is also hosting a series of outreach events on earthquake insurance beginning May 3. Consumers will be able to meet one-on-one with insurance experts. Those with specific questions should bring their earthquake insurance policy. The full list of events, located in Medford, Pawnee, Alva, Fairview, Enid, Guthrie and Perry, can be found here.
OKOGA COMMITTEES
Committee on Environment
This week the Committee on Environment met and discussed a number of issues including: Produced Water Working Group status, the ODEQ’s Draft Minor Source General Permit for Oil & Gas facilities, USFWS request for information for delisting the American Burying Beetle, Bureau of Land Management’s Venting and Flaring rule, an open OWRB board seat and a roundtable discussion. A meeting summary will be sent to the committee.
COMPLIANCE SEMINAR
There will be a free compliance assistance seminar for the oil and gas industry on May 19, 2016, from 1:00 to 4:00 p.m., at the Francis Tuttle Technology Center in Oklahoma City. Jessica Parker with the US Department of Labor Wage and Hour Division will be presenting information on enforcement of federal labor laws and common violations in the industry. Click here for more information.
ESA
Incidental Take Permit Applications: Amended Oil and Gas Industry Conservation Plan for the American Burying Beetle; Oklahoma. The U.S. Fish and Wildlife Service, invite the public to comment on incidental take permit applications for take of the federally listed American burying beetle resulting from activities associated with the geophysical exploration and construction, maintenance, operation, repair, and decommissioning of oil and gas well field infrastructure and pipelines within Oklahoma. If approved, the permits would be issued under the approved Amended Oil and Gas Industry Conservation Plan Associated with Issuance of Endangered Species Act Section 10(a)(1)(B) Permits for the American Burying Beetle in Oklahoma (ICP). Comments must be received on or before May 23, 2016.
Feds seek to protect threatened bird’s habitat in Oklahoma. Associated Press. Landowners in more than a dozen northwest Oklahoma counties are being urged to apply for a federal program aimed at protecting the habitat of lesser prairie chicken. The U.S. Department of Agriculture's Natural Resources Conservation Service in Oklahoma announced Monday that it's opened a second round of signups for landowners to participate in the project. The goal is to improve the habitat for the stocky, ground dwelling bird that's native to the prairie grasslands in Colorado, Kansas, New Mexico, Oklahoma and Kansas. Loss of habitat prompted the bird's listing as a threatened species under the Endangered Species Act in 2014.
Leaked BLM sage grouse draft memos spark fears. E&E News. In early March at a hotel in downtown Denver, delegates for Western governors were handed paper copies of a Bureau of Land Management draft instruction memo on how to ensure cattle grazing does not harm habitat for the greater sage grouse. The draft document caused a stir for some members of the state-federal Sage-Grouse Task Force, who are working closely with the Obama administration to ensure that the bird, which narrowly avoided an Endangered Species Act listing, can thrive alongside public lands users, including thousands of ranchers.
Endangered and Threatened Wildlife and Plants; Revisions to the Regulations for Petitions. The U.S. Fish and Wildlife Service and National Marine Fisheries Service have revised their proposed improvements to the regulations governing the Endangered Species Act petitioning process. (Press Release) Comments on the proposed rule will be accepted on or before May 20, 2016.
FEDERAL REGISTER
Draft Integrated Review Plan for the National Ambient Air Quality Standards for Particulate Matter. The Environmental Protection Agency announced the availability for public review of the draft document titled Draft Integrated Review Plan for the National Ambient Air Quality Standards for Particulate Matter (draft IRP). The draft IRP contains the current plans for the review of the air quality criteria for particulate matter and the primary and secondary national ambient air quality standards for PM. The primary PM NAAQS are set to protect the public health and the secondary PM NAAQS are set to protect the public welfare from exposures to PM in ambient air. Comments should be received on or before June 23, 2016.
National Wetland Plant List. The U.S. Army Corps of Engineer, as part of an interagency effort with the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service and the U.S. Department of Agriculture Natural Resources Conservation Service, is announcing the availability of the final 2016 National Wetland Plant List (NWPL). The 2016 NWPL will become effective on May 1, 2016.
ARTICLES OF INTEREST
Business Wire: ExxonMobil and Employees Contribute more than $1.4 Million to Oklahoma Colleges and Universities
Science Codex: Induced earthquakes come under closer scrutiny at SSA Annual Meeting
American Oil & Gas Reporter: Legal Update – Regulatory Initiatives Target Oil and Gas
KOCO: Oklahoma insurance commissioner concerned about quake insurance
Journal Record: Hearing set on earthquake insurance rate increases (sub req’d)
WFAA 8 (ABC-Dallas): Oil and gas industry helping Oklahoma get it right on earthquakes
OK Energy Today: Five Years Later and FracFocus is Stronger Than Ever
AP: Adjusting to life and leaner wallets after the gas boom
NewsOK: Federal fracking rule in hands of federal judge in Wyoming
Washington Examiner: Panel: Money keeps animals on endangered species list
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