May/June Legislative Affairs

The legislative session has ended. The following bills were passed and signed by the Governor:

HB 3158 confirms that the OCC has the complete authority to regulate saltwater disposal wells and to immediately respond to “emergency situations having potentially critical environmental or public safety impact” (e.g., earthquakes) without notice or hearing.

SB 1122 directs the OCC to work with the Secretary of Energy and Environment, the OWRB, and the DEQ to encourage industrial use of water produced in oil & gas operation. It has been suggested that increased industrial use of wastewater could reduce the use of injection wells.

HB 1951 removes the municipal exemption from the requirement that excavators call the statewide one-call notification center.

HB 2303 extends the termination date for the OCC plugging fund from 2016 to 2021 and requires the balance to be maintained at $5 million.

HB 2599 prohibits flying a drone below 400 feet above “critical infrastructure” and it would prohibit flying a drone so close to “critical infrastructure” as “to interfere with the operations of or cause a disturbance to the facility.” The bill defines “critical infrastructure” to include several types of facilities, including refineries, natural gas compressor stations, LNG terminals or storage facilities, gas processing plants, natural gas distribution facilities, pipeline interconnections, and aboveground pipelines.

HB 2763 creates the Revenue Stabilization Fund. This bill attempts to stabilize state revenue derived from gross production taxes so that in the future state revenues will not be so heavily impacted by movements in oil & gas prices. The bill is complex, but in general it creates a moving five-year average of gross production tax collections and when gross production tax collections exceed the moving five-year average, some gross production tax revenue is deposited in the Revenue Stabilization Fund. The state can tap a portion of the funds in the Revenue Stabilization Fund during years when collections to the General Revenue Fund decline from the previous year.

SB 1577 imposes a cap of $12.5 million per year for the economically at-risk tax rebate. The bill also redefines an “economically at-risk oil or gas lease” so that after January 1, 2015, it means any oil or gas lease with production per well of 10 barrels of oil or 60 MCF of gas per day or less operated at a net loss or net profit which is less than the total gross production tax remitted for such lease during the previous calendar year. Prior to January 1, 2015, “economically at-risk oil or gas lease” was defined as any oil or gas lease operated at a net loss or net profit which is less than the total gross production tax remitted for such lease during the previous calendar year. So the bill essentially adds a new production cap to the definition.

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.