February Legislative Affairs

Aaron Meek & Dave Hampton

Hampton and Milligan

Earthquakes have been a hot topic lately. The OCC has taken the lead on this issue by directing the reduction of injection volumes for disposal wells located near seismically active areas. SB 1517 (Sen. Marlatt) and HB 3158 (Rep. Hickman) would enlarge the power of the OCC by allowing it to immediately respond to “emergency situations having potentially critical environmental or public safety impact” without notice or hearing.

Oklahoma faces a large budget shortfall this year, prompting many proposals to fill the gap and avert future budget crises caused by falling oil and gas prices. Among the ideas that have surfaced are raising the cap on the state’s rainy day fund (Senate Joint Resolution 44), creating a “Revenue Replacement Endowment Fund” consisting of yearly deposits of 5% of gross production tax revenue (Senate Joint Resolution 61), and creating an Energy Stabilization Fund which would essentially serve as a second rainy day fund tied exclusively to gross production tax revenue (HB 2763).

Other relevant bills are as follows:

SB 1024 (Sen. Mazzei) would put the gross production tax exemption for marginal wells on hold for two years.

SB 1132 (Sen. Griffin) would exempt from the 5% withholding a publicly-traded partnership entity.

SB 1413 (Sen. Marlatt) would establish a natural gas energy standard of 75% of all electricity generation in the state by 2020. Oklahoma currently generates roughly 40% of our electricity using natural gas.

SB 1485 (Sen. Marlatt) would establish a statute of limitations for nuisance claims against oil and gas exploration and production activities of two years from when the exploration and production activities were commenced.

HB 2850 (Rep. Kouplen) would make it unlawful to locate a well within a radius of 1,000 feet from any occupied structure unless waived by the surface owner.

HB 2787 (Rep. Hardin) would extend the authority of the OCC to include the condition and safety of roads and bridges that are used in the transportation of disposal fluids.

SB 1139 (Sen. Marlatt) and HB 2303 (Rep. Watson) would extend the sunset on the plug well fund from July 1, 2016, to July 1, 2021.

HB 2680 (Sen. Johnson) would exempt from taxable income any dividend payment from an Oklahoma corporation that is not an S corporation.

There are also several shell bills that we will continue to monitor and update if and when text is added. Among these bills are HB 3181, the Oil and Gas Act of 2016, and HB 2576, the County Clerk Filing Requirements Act. Shell bills are bills that are introduced but initially contain essentially no text. The text is added later after negotiations on the bill conclude.

If you know of legislative or regulatory activity that you would like the Legislative Affairs Committee to analyze and discuss, please let us know by contacting Aaron Meek at meek@hampton-milligan.com or (405) 235-5620.