Legislative and Regulatory News

NARO
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Update on bills of note in Texas-

HB 3838 – ROYALTY LEASE SCAM

This bill is set for hearing this Monday, March 25 at 2:00 p.m. in Energy Resources. We need help with:

Calling committee members and express support for the bill – link is Texas Legislature Online - Committee Membership

Please especially call if you or a relative got taken in by this scam.

HB 3226, to amend MIPA (the forced pooling statute) to allow drilling permits to be good for 2 years instead of one, had a hearing. Due to potential for mischief here, we are keeping a close eye, but the sponsor and committee members have pledged not to allow any floors amendments that would open up the door for broader forced pooling.

SB 817, to require BTU values to be added to royalty stubs. We will support also. Hearing was yesterday. Have not heard yet how it went.

HB 3372 is a very dangerous bill. Craddick is the sponsor, which is puzzling, but it prohibits breach of contract actions against payors when money is withheld due to a title dispute. Apparently they think they are protecting Sunoco and the other gatherers who are payors but not the operator from being drug into a suit, but very concerned it will be interpreted to give carte blanche to withhold money for flimsy title dispute reasons and be insulated from getting the lease terminated.

SB 1156 increases setbacks to 1500’ around private schools and child care facilities. No movement yet.

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IMPORTANT UPDATE ON HB 3838 - ROYALTY LEASE SCAM BILL

The Texas House Energy resources Committee had a hearing on the bill yesterday, and it went well. Committee members seemed sympathetic to stopping this scam, and there were no witnesses that spoke against the bill. NARO and TIPRO spoke in favor of the bill, and TLMA registered support.

Of course, it is not the public speakers we have to worry about, it is the people going through back channels. We need to get this bill out of committee and on the House Floor ASAP, so we can also get it through the Senate.

The major issue at this point is that TexOGA has a competing version of the bill they want to push which has some unacceptable limitations, which made the old law, Sec. 5.151 of the Texas Property Code, ineffective.

We are asking EVERY Texas NARO member to call, email, write, or visit the members of the Energy Resources Committee and urge them to:

  1. Support the current version of HB 3838 supported by NARO and the others, and not TexOGAs version;
  2. Vote HB 3838 out of committee.

Below are links to: a) the current committee substitute bill HB 3838; b) the members of the Energy Resources Committee with contact information; and c) talking points about why this bill is necessary. We need to get this practice stopped!

The TexOGA version is too restrictive because: a) a 2 year statute of limitations is too short; b) limiting liability to the initial purchaser allows the sellers to wash liability by running it through a shell company; and c) it keeps the ridiculous limit that the law does not apply as long as they send the offer and the lease in two different envelopes.

Proposed Committee Substitute (NARO backed version) 86R CSHB 3838 as of 3.25.pdf (50.1 KB)

Members of Energy Resources - Link

Talking Points - TAB 3.pdf (70.9 KB)

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Pueblo council, commissioners urge Polis to block gas bill. Arguing that a major employer is at risk, most Pueblo County commissioners and City Council members are asking Gov. Jared Polis to block legislation that would change state oil and gas development regulations. It’s a political longshot: Earlier this year, Polis helped unveil Senate Bill 181, which overhauls the Colorado Oil & Gas Conservation Commission and gives local governments more control over development in their areas. It’s a bill supported by majority Democrats in the Legislature, and it has passed through the Senate earlier this month and two House committees since then. It is awaiting action by the House Appropriations Committee before coming to the full House for consideration. The oil and gas industry has rallied the support of many business groups around the state in opposing the bill, which includes the Pueblo Economic Development Corp. and Greater Pueblo Chamber of Commerce. In a March 21 letter to Polis, six Pueblo council members and two county commissioners urge him to stop the legislation, saying it could damage EVRAZ Rocky Mountain Steel and its tube and pipe sales to the state’s gas industry.

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House Republicans target oil and gas measure with filibuster. State House Republicans appear to have few options for preventing an overhaul of Colorado’s oil and gas industry backed by majority Democrats, so on Tuesday they stalled. GOP lawmakers also fought unsuccessfully to have a clause added to the oil and gas bill that would allow opponents to try to block it through a voter petition drive. Senate Bill 181 would hand local governments control over industry development and operations, increase emission monitoring and direct the Colorado Oil and Gas Conservation Commission to prioritize public health and the environment over fostering the industry. The House Finance Committee approved the measure Monday evening, passing it to the Appropriations Committee. That party-line vote has been the story of the measure since it was introduced last month. Democrats have pushed the measure through the legislature with Republicans in vehement opposition.

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Wade, So are people getting unsolicited offers to purchase, thinking they are leases, but they are actually sales? I’ve probably had some of those, but not interested in selling, so trash them.

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Is called a “Royalty Lease” and looks like an oil and gas lease, but you are actually selling 75% of your royalty stream for the life of the lease. Is really a term royalty deed disguised as a lease.

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Thank you sir. I have not seen that I think, but don’t always have time to read the stuff before it goes in the shredder. Thanks for going to bat for the people that may not understand.

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Proposal to drill for shale gas at U.S. Steel site near Pittsburgh prompts contentious hearing . [State Impact Pennsylvania] At hearing Wednesday night on a proposal to drill for natural gas at a U.S. Steel facility in the eastern Pittsburgh suburbs, dozens of residents and environmentalists lined up to speak out against the plan, as well as grill state officials and company representatives with questions. New Mexico-based Merrion Oil and Gas wants to drill at the Edgar Thomson plant next year to supply natural gas to the steelmaking facility. It has already secured some approvals from municipalities in the path of drilling, and now it’s seeking several permits from the Pennsylvania Department of Environmental Protection. In addition to building a wellpad and drilling in the Marcellus Shale, the company also plans to build access roads and two pipelines, including one for gas and one for water.

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Natural gas industry has generated $45.8 million in taxes in eastern Ohio . Over the past nine years, the oil and gas industry has brought jobs, better roads and increased tax revenues to counties and school districts throughout eastern Ohio. That was the message that Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, brought to members of the New Philadelphia Rotary on Tuesday. Between 2010 and 2015, the industry has paid $45.8 million in taxes in six Ohio counties — Belmont, Carroll, Guernsey, Harrison Monroe and Noble, he said. During that time, it paid $14 million in property taxes in Carroll County and $11 million in Harrison County. In addition, the industry has spent $302.6 million to improve 639 miles of highway in eastern Ohio. That includes $44.7 million in Carroll County for 99.33 miles of roads and $31.4 million in Harrison County for 54.75 miles of roads. Energy companies have invested $8.1 billion on five pipeline projects. Kinder Morgan spent $500 million to build the 215-mile-long Utopia Pipeline and Energy Transfer spent $4.3 billion to build the 570-mile-long Rover Pipeline. Both pipelines run through Harrison, Carroll and Tuscarawas counties. Tax dollars generated by the industry have benefited local school districts.

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Tribes urge US to put off oil, gas leases near sacred sites . Tribal leaders are calling on U.S. land managers to put off an upcoming oil and gas lease sale, the latest in an ongoing battle over energy development in a region that’s home to a national park and other sites of cultural and historical significance. The tribes say the federal government is obligated to follow environmental and historic preservation laws when considering whether to allow for oil and gas exploration in northwestern New Mexico. They’re concerned about more than two dozen parcels that will be up for bid Thursday. In asking the Bureau of Land Management to defer the lease sale, the All Pueblo Council of Governors renewed its call for formal protections to be included in a plan being drafted by that agency that will govern future development throughout the San Juan Basin.

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Oil and gas bill advances to Colorado House amid warnings about impacts on the industry A bill that would change oil and gas regulations by prioritizing public health and safety and clarifying communities’ role in overseeing development was sent to the full Colorado House on Wednesday after it cleared the last committee. Oil and gas trade groups and some business organizations and local elected officials have called on lawmakers to slow down the bill and give people more time to weigh in. They warn that if the bill becomes law, it will endanger a multi-billion-dollar industry that supports tens of thousands of jobs and generates hundreds of millions of dollars in tax revenue for schools and local governments.

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Proposed Colorado ballot measure designed to repeal expected oil, gas reform bill . Officials in two of Colorado’s largest oil and natural gas producing counties are pushing a ballot measure that would repeal reform legislation on the fast track to the governor’s desk. The proposed ballot item, initially titled the Oil and Gas Independent Regulatory Act, could be on this November’s ballot. Supporters face a deadline of April 5 to submit the measure title and final language to the Secretary of State’s Office. Supporters would also need to secure more than 124,000 valid voter signatures by Aug. 5 to make the ballot. The proposal is designed to nullify state Senate Bill (SB) 181

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House gives preliminary OK to oil and gas bill that has roiled Colorado General Assembly. A bill assailed by critics as a threat to Colorado’s multibillion-dollar oil and gas industry and hailed by proponents as necessary to ensure public health, safety and local control cleared its first hurdle in the House late Thursday night. After nearly six hours of debate, the House gave preliminary approval to Senate Bill 19-181. It still must pass a final hearing in the chamber. The legislation would revamp the state’s oil and gas regulations by changing the mission of the Colorado Oil and Gas Conservation Commission and putting public health and safety front and center when development is considered. It would also clarify that local governments have the authority under their planning and land-use powers to regulate oil and gas as they do other types of activities.The oil and gas industry, several business organizations and elected officials from energy-producing areas contend cities and counties might try to ban drilling or slow development, reducing the millions of dollars in tax revenue for schools and local governments and jeopardizing tens of thousands of jobs.

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ALERT! Operators are going to try to push HB 3372 and SB 1988 out of committee. This bill will take away your ability to sue for breach of contract if an operator puts payments in suspense, even for flimsy or fake title issues. There is no reason you should not be able to put in your lease, and enforce, a provision that restricts when an operator can put you in suspense. Call the members of the Civil Jurisprudence Committee and the members of the Senate Natural Resources Committee and tell them you are opposed!

House committee

Senate Committee

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HB 3838, the bill to stop the royalty lease scam, has been voted out of committee and now goes to the House floor for a vote. Please call your State representatives and ask them to vote for this bill!

Where to find contact info for your representative

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The Texas RRC has revised their rules on commingling applications. Since these applications are becoming commonplace, as operators try to consolidate production facilities, being familiar with the rules is important, because large numbers of horizontal wells, involving multiple leases, are being commingled, and your royalties can be greatly affected. NARO Texas had a presentation at its Dallas Town Hall event by the former GLO person who handled all commingling applications, and is now a private consultant. NARO Texas also filed comments on the rule changes.

Link to revised rules and forms

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ALERT- HB 3372 is in Calendars Committee, and you need to contact your House Members, especially those on Calendars, and ask them to vote against scheduling this for a floor vote. This is the bill that takes away your ability to require only good faith title disputes can be put your royalties in suspense, by preventing you from putting safeguards in your lease.

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HB 3838, the royalty lease scam bill, was approved by the House on its second reading, and now goes to third reading and passage soon, perhaps today. NARO worked out a compromise bill with TexOGA and no opposition (visible) has surfaced. A sponsor in the Senate has been secured.

Please continue to contact your state representatives and ask them to vote for HB 3838 and I will update when it gets over to the Senate for hearing.

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A brief update on what is happening:

LEGISLATIVE

HB 3838 (royalty scam bill) – Passed the House and has been referred to the Senate. Zaffirini is going to carry the bill there and sits on Natural Resources. No hearing date yet.

SB 533 (severance tax abatement stripper wells) – Signed by Governor.

SB 421 (eminent domain bill) – Passed senate. Still pending in committee in House.

HB 2773 (increased setbacks) – Still pending in committee in House and Senate.

HB 3226 (forced pooling amendments) – Sent to governor to sign. All it does is extend drilling permits from one to two years.

HB 3246 (gives ownership of produced water to operators) – Passed House and Senate.

HB 3372 (Craddick’s contract pre-emption bill on the division order statute) – Still stuck in Calendars in the House.

SB 817 (adding BTUs to check stubs) – Still stuck in committee.

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ALERT!

TexOGA has backed out on the deal we made on HB 3838 and is now trying to amend the bill by tacking on HB 3372, Craddick’s division order statute bill. Below is the email I am sending to the Senate Committee. PLEASE CALL AND WRITE TODAY THE COMMITTEE MEMBERS TO STOP THIS. IT WILL LIKELY KILL HB 3838 IF WE DON’T GET THE AMENDMENT STOPPED. LINK IS BELOW.

https://capitol.texas.gov/Committees/Membership.aspx

Dear Committee Members:

As President of NARO-Texas, the National Association of Royalty Owners, we strenuously object and ask you to reject TexOGA’s attempt to resurrect HB 3372, the division order bill, by amending HB 3838.

The two issues are completely unrelated. HB 3838 is to stop a terrible fraud being committed on mineral and royalty owners known as a “royalty lease”. The other bill is an attempt to overwrite lease contracts that have been negotiated which place limits on when an operator can put an owners royalties in suspense over a title issue. They could not be any more different.

The attempts to amend HB 3838 are especially galling given our extended discussions AND AGREEMENT with TexOGA on a compromise on HB 3838 that passed out the House. We agreed to take out important additional protections, such as an explicit four year statute of limitations, and an explicit ability to recover punitive damages in the event statutory fraud was proven. TexOGA has, in extreme bad faith, now abandoned that agreement to try to resurrect an unrelated bill.

We hope you would see this for what it is - an attempt to kill a bill with great merit and benefit, out of spite for another bill being stalled that TexOGA wanted. It is hard to fathom why TexOGA feels this is justified, right, or fair.

Your time and consideration is appreciated.

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