Legislative and Regulatory News

Post your information regarding legislative and regulatory developments, or discussions about them, here.

Texas - Zaffirini has filed a bill to increase the setback for wells to 1500’ from private schools and day care centers.


West Virginia Senate Energy Committee approve bills raising money to cap wells . WV Metro News.The Senate Energy Committee made quick work Thursday of approving two House bills to raise money to cap orphan oil and gas wells across the state. Committee Chair Randy Smith, R-Tucker, said the two bills reflect the work of industry and the environmental community cooperating for a common goal. “I want to tell all the stakeholders how much we appreciate your work on these bills,” he said. House Bill 2673 will provide an exemption to the 5-percent severance tax for gas wells producing less than 60,000 cubic feet per day and oil wells producing less than 10 barrels per day. Instead of a tax, these wells will be charged a 2.5 percent fee on the value of product sold that will go into an Oil and Gas Abandoned Well Plugging Fund. House Bill 2779 provides a means for royalties due to unknown or unlocatable mineral owners to be transferred to the Oil and Gas Reclamation Fund after seven years.

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Oppose Sacramento’s latest ‘gas tax’ . The Sun. Opinion. SB246 would impose a 10 percent oil and natural gas severance tax, which equates to an almost $900 million tax increase on Californians. It appears those tax dollars would flow directly into the state’s general fund to be used for anything the majority of legislators would like. Besides hitting the taxpayer directly in the wallet, an oil severance tax will cost California billions of dollars in lost jobs and economic growth. SB246 would only punish California business activity, not out-of-state or foreign oil production, which seems to be counterintuitive. Punish California companies while rewarding oil companies elsewhere? With Californians using most if not all oil produced in our state, shouldn’t we want to continue to be oil-independent and not have to rely on other sources? When an oil severance tax increase has been attempted in the past, the nonpartisan Legislative Analyst’s Office warned of unintended consequences. Increasing it would drop property values and local taxes to the tune of “tens of millions of dollars per year” affecting local governments and school districts in the oil-producing areas of California. Oil and natural gas companies already pay tens of billions of dollars in federal, state and local taxes. Any increase is going to be passed down to the end user; that would be the taxpayers of California.

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Question for NARO-Texas members- Should NARO-Texas keep on the sidelines in the fight over eminent domain? We have a lot of landowners in our ranks, but our mission is to protect mineral and royalty owners.


Pennsylvania Governor Tom Wolf Proposes Severance Tax on Natural Gas Production A severance tax on natural gas and oil production in Pennsylvania that would generate an estimated $4.5 billion in the next 20 years could have enough support for legislative enactment, according to Gov. Tom Wolf. Speaking at the Bridgeville Borough Building, Wolf explained that money raised through the tax would go into a fund called “Restore Pennsylvania” to assist communities in addressing issues such as disaster relief and infrastructure improvements. “All across Pennsylvania last year, it seemed like I spent more time touring flood-ravaged areas,” the governor said. “It was the same problem. Lives were really being devastated, property being damaged, homes destroyed. And I felt in many ways like I was at a funeral, because you’d go up and say, ‘I’m really sorry for your loss. But there’s really nothing I can do.’” A major stumbling block, he said, has to do with the amount of damage a geographical area sustains before it qualifies for Federal Emergency Management Agency disaster relief. Wolf has called for a severance tax periodically since taking office in 2015, and his latest attempt is not tied to the 2019-20 budget. “It seems to me — and it seems, I think, to a lot of people on both sides of the aisle in Harrisburg — that this is a really good idea,” Wolf said. In the meantime, Pennsylvania is the only major gas-producing state without a severance tax, which is levied on the extraction of non-renewable natural resources that are intended for consumption in other states. Instead, the state charges an impact fee to all companies.

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Battle lines drawn in Colo. over sweeping drilling reforms . Hundreds of people flooded Colorado’s state Capitol yesterday as legislators took up an omnibus bill that could overhaul the way the state regulates oil and gas drilling. More than 350 people signed up to speak in person and by video feed from locations around the state. And competing rallies drew hundreds of supporters and opponents to the Capitol in Denver. As of 11:30 p.m. Eastern time, testimony was still rolling in and the state Senate’s Transportation and Energy Committee had yet to vote on the bill. Divides surrounding the Democratic proposal were clear, with opponents warning that the language would cripple the state’s oil and gas industry and supporters hailing the bill as a step toward stronger and much-needed oversight to protect the public and the environment. The bill, S.B. 181 , would require the Colorado Oil and Gas Conservation Commission — the state’s main energy regulator — to focus on protecting health and safety. Currently, state law requires the commission to balance health and environmental concerns against the need to foster energy development. The language, sponsored by Senate Majority Leader Stephen Fenberg and House Speaker K.C. Becker, both Democrats, would also clarify that cities and counties can control the location of wells, tanks and other facilities, and regulate surface impacts such as noise and traffic. Other provisions would require pollution monitoring, new bonding requirements for oil and gas wells and changes in the state’s forced pooling system for assembling blocks of mineral rights into drilling units.

Pennsylvania Natural Gas Production Tops 6 Tcf in 2018. Unconventional natural gas production in Pennsylvania increased 14.2% in 2018 year/year, exceeding 6 Tcf for the first time and notching the largest annual increase since 2014, according to the state’s Independent Fiscal Office (IFO). Based on data collected by the Pennsylvania Department of Environmental Protection, unconventional operators produced 6.1 Tcf last year. IFO said from 2011-2018, production volumes increased at an average rate of 28.6%. In the fourth quarter, statewide production was 1.651 Tcf, up 17.7% from the year-ago period and 5% higher than in 3Q2018, when production rose sharply as the second half of the year got underway. IFO said all of the production growth from the quarter was from wells spud in 2017. Wells spud in 2016 and 2017 accounted for more than one-third of all unconventional production during the fourth quarter, or 39.5%. The bulk of production came from horizontal wells, which comprised 1.649 Tcf in the period. Vertical wells drilled to unconventional formations accounted for the remaining output.

The Fight for the Atlantic Coast & Mountain Valley Pipelines. Two proposed long-haul natural gas transportation projects—the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP)—are now in peril. That’s the result of a decision by the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia in late February. The court didn’t just reject U.S. Forest Service permits for the ACP to cross the Appalachian Trail. They ruled the Forest Service lacks the authority to permit any pipeline crossing the A.T., without an act of Congress. If that stands, it invites a fresh challenge to the MVP project, which is also attempting to transport gas from Appalachia to the Southeast US. The ACP’s lead developer and 48 percent owner Dominion Energy (D) will file an appeal with the US Supreme Court “in the next 90 days.” If that fails, management will have to decide whether to seek an unlikely exemption from Congress, substantially re-route the pipeline or cancel the project entirely.

Contentious oil and gas bill passes second legislative committee. [Denver Post] A bill that would overhaul Colorado’s oil and gas regulations withstood moves to postpone action on it and let voters decide as it passed its second committee vote Thursday, continuing its quick advance through the legislature. The Senate Finance Committee voted 4-3 to move Senate Bill 19-181 to the Appropriations Committee, which will consider it Friday. As with the Senate Transportation and Energy Committee, which voted on the bill Wednesday, all the Democrats voted for the bill, while the Republicans voted against it.

Colorado’s Forced Pooling Laws May Get A Major Overhaul. Here’s What Might Change. A bill making its way through the state Legislature is challenging several long-standing practices within Colorado’s oil and gas industry, including “forced” or “statutory” pooling. That’s when companies can drill in a certain area without consent from all associated mineral right owners. The practice has been around for decades, but is facing fresh criticism as Colorado’s population balloons and oil and gas development creeps closer to neighborhoods north of Denver. Here’s the Colorado Oil and Gas Conservation Commission’s definition: Pooling is the joining together of various mineral interests into one large “drilling and spacing unit” in order to drill a single well to drain a large area of oil and gas, with each person who owns a mineral interest in the unit receiving a share of the proceeds. Simply put, Senate Bill 181 proposes raising the threshold a company needs before it can pool an entire group of mineral owners. The bill would require at least 50 percent of owners within a “drilling unit” to lease their rights in order do that. Right now, that number is far less — just one willing mineral owner is needed to start the pooling process. SB 181 also proposes raising a nonconsenting owner’s initial royalty rate from 12.5 percent to 15 percent. Homeowners are split on the issue. Some don’t mind leasing their mineral rights.

West Virginia lawmakers pass bills to expedite natural gas output, transport. West Virginia lawmakers passed in their recently concluded legislative session is expected to encourage the construction of distribution pipeline systems in underserved areas of the state, as well as to give a tax break to production from low-producing gas wells. Among the bills passed during the session, which closed Saturday, was House Bill 2661, which allows natural gas utilities to provide incentivizes for gas drilling “where dependable, lower-priced supplies of natural gas are not readily available.” The legislation, which awaits the signature of Governor Jim Justice, will help encourage the utilities to build new gas gathering systems in areas of the state “where there haven’t been wells drilled in the last several years,” Charlie Burd, executive director of the Independent Oil & Gas Association of West Virginia, said Monday in an interview. HB 2661 was just one of several pieces of legislation that the lawmakers passed, which are expected to help increase the state’s output of gas, Burd said. Gas production in the state has increased rapidly since the middle part of the current decade as producers began to tap into the deep liquids-rich Utica Shale formation, as well as the shallower Marcellus. Production grew from about 2.24 Bcf/d as of January 1, 2014, to about 4.54 Bcf/d currently, according to S&P Global Platts Analytics data.

NARO-Texas has pushed for and gotten filed, HB 3838 to try to stop the royalty lease scams going on in Texas. A link to the bill is below, and we will be notifying NARO members, and posting here, on developments.

HB 3838

A bill amending the forced pooling statute in Texas (MIPA) has been filed. Currently MIPA is very limited and generally not applicable in Texas. The bill is limited to expanding the length of time a MIPA permit is good for from one year to two years or the later of surface operations starting. The big concern of course, is letting the genie out of the bottle with a bill, where some floor amendment comes out of left field and broadens MIPA in ways NARO would not support. NARO has traditionally been unalterably opposed to forced pooling in Texas, as a general proposition.

HB 3226

Oklahoma’s House of Representatives sent along a proposed law to the Senate this week that could allow mineral rights owners to sue municipalities or other jurisdictions enacting permitting requirements for oil and gas operations when those prevent them from developing their assets. House Bill 2150, authored by Oklahoma Rep. John Pfeiffer, R-Orlando, was adopted 64 to 32 Monday night largely along party lines, with five representatives excused from voting. Pfeiffer and the Oklahoma Independent Petroleum Association — Oklahoma Oil and Gas Association, the organization representing the state’s oil and natural gas industry, say the measure is needed to give mineral rights owners the opportunity to file court cases to battle over-restrictive rules. The new language would be in addition to an existing statute that already bars municipalities, counties and other local jurisdictions from adopting ordinances, rules or regulations that exceed the Oklahoma Corporation Commission’s authority to regulate the oil and gas industry.

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SB 817, which would require BTUs to be added to check stubs, has been filed.

SB 817

Chesapeake still at odds with Pennsylvania’s Attorney General in royalty fight

Oklahoma City’s Chesapeake Energy won’t escape a lawsuit filed by Pennsylvania Attorney General Josh Shapiro in a fight over natural gas drilling leases.

The Commonwealth Court ruled the Attorney General can move ahead with Unfair Trade Practices Act cases against Chesapeake and Anadarko Petroleum Corp. The court ruled the natural gas leases in “trade” and “commerce” covered by the state’s Unfair Trade Practices and Consumer Protection Act.

But the court rules against the AG’s contention the two companies made an unlawful market sharing agreement to not lease properties for drilling in areas where one or the other company was operating.

However, with respect a separate count argued by the Attorney General that the companies allegedly disingenuous and misleading behavior constitutes unfair methods of competition and unfair or deceptive acts or practices under the Unfair Trade Practices Act, the Court sided with the Attorney General.

The Court remanded to the Bradford County trial court for further action on the counts upheld by Commonwealth Court.

“Today’s Commonwealth Court ruling is a victory that upholds our lawsuit against Chesapeake Energy Corporation and Anadarko Petroleum Corporation,” said Attorney General Shapiro. “The court’s decision allows our action to move forward and address the misconduct by these companies against landowners in oil and gas leases under the Unfair Trade Practices and Consumer Protection Law. I’m fighting for landowners who we charge have been ripped off, and my Office will continue to pursue this case on behalf of Northeast Pennsylvanians.

Chesapeake Energy had reached a $30 million settlement agreement with Pennsylvania landowners in separate private class-action cases based on allegations of improper or inflated deductions from gas royalty payments.

Chesapeake attorneys told a federal judge the company reserved the right to pull out of those proposed settlements covering all 14,000 of its Pennsylvania gas-producing leases if it could not resolve the attorney general’s case.

The attorney general’s office alleges Chesapeake violated the state’s unfair trade practices law by inflating prices for shipping gas from wells to pipelines and then passing the costs on to Marcellus Shale royalty owners, whose monthly checks sometimes diminished to zero.

SB 817, which would require BTU info to be added to check stubs, is set for hearing TOMORROW, March 20 at 9.a.m.

NARO-Texas supports this bill. Please contact the Senators on Natural Resources to let them know you support the bill. Natural gas prices are based on BTU factor, so it is very difficult to find out if you are being paid correctly unless this info is on the check.

The link for the committee and links for all members is below.

Natural Resources Committee


Link to HB 3372

NM Legislative session ends, proves ‘difficult’ for lawmakers defending oil and gas. For lawmakers from the southeast corner of New Mexico – an area known for conservative ideals and heavy support of industry – the now-concluded, two-month legislative session was mostly spent defending the needs and values of their constituents. It was not an easy conversation, said State Sen. Gay Kernan (R-42) of Hobbs. “I would describe the session as difficult and challenging,” she said. “We played defense most of the time for oil and gas. We were able to stop some of the things that were not good, but we also failed to stop some legislation.” For State Rep. Cathrynn Brown (R-55) of Carlsbad, the Democrats who assumed control of the Legislature and Governor’s Office after January’s election were too eager to spend the more than $2 billion surplus she said came from the oil and gas industry and the rural communities that support it. And House Minority Leader State Rep. Jim Townsend (R-54) of Artesia said many lawmakers from metropolitan areas simply don’t comprehend the needs or mentalities of less populated, far-flung regions of the state.