Tuesday, December 4, 2018

Shale Law Weekly Review - December 4, 2018


Written by:
Brennan Weintraub - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

GHG Emissions: Report Examines Emissions from Drilling on Public Lands
On November 23, 2018, the United States Geological Survey issued a report finding that 24 percent of greenhouse gas emissions in the nation are caused by drilling on federal lands and offshore areas. The agency found that Wyoming, New Mexico, Louisiana, and Colorado contributed the majority of CO2 emissions on federal lands in 2014. Wyoming emissions alone comprised 57 percent of the total emissions from drilling on federal lands. Additionally, the report found that overall greenhouse gas emissions from oil, gas, and coal mining on these lands dropped between 2005 and 2014.  The researchers collected data from the Office of Natural Resources Revenue, the Mine Safety and Health Administration, the Environmental Protection Agency, and the Energy Information Administration.

Pipelines: Army Corps of Engineers Suspends River-Crossing Permit for Atlantic Coast Pipeline
On November 20, 2018, three district offices of the U.S. Army Corps of Engineers in Pittsburgh, Pennsylvania; Norfolk, Virginia; and Wilmington, North Carolina sent letters to Atlantic Coast Pipeline, LLC informing them of the Corps’ decision to suspend the pipeline’s authorization to cross rivers and streams in those states. This decision follows a November 7 order from the U.S. Court of Appeals for the Fourth Circuit that suspended a water crossing permit in West Virginia.  Another recent court order on November 20 from the U.S. District Court for the Eastern District Court of North Carolina prevented Atlantic Coast from accessing a farm in Nash County.  The pipeline, once completed, will run six hundred miles from West Virginia to North Carolina and will carry natural gas from the Marcellus Shale.

Trespass by Fracture: Pennsylvania Supreme Court Agrees to Consider Whether Rule of Capture Applies to Hydraulic Fracturing
On November 20, 2018, the Pennsylvania Supreme Court issued an order granting a petition for allowance of appeal in order to determine whether the rule of capture applies to oil and gas produced by wells that used hydraulic fracturing  (Briggs v. Southwestern Energy Production Company, No. 443 MAL 2018).  In April 2018, the Pennsylvania Superior Court opined that the rule of capture did not apply to prevent trespass liability from hydraulic fracturing operations.  According to the Superior Court, the rule of capture is “[a] fundamental principle of oil and gas law holding that there is no liability for drainage of oil and gas from under the lands of another so long as there has been no trespass and all relevant statutes and regulations have been observed.” That court held that, because the rule of capture typically applies to oil and gas which is able to migrate within the reservoir and across property lines, it should not apply to the non-migratory oil and gas which is found in shale formations.

International Development: Western Australia Announces New Rules for Hydraulic Fracturing
On November 27, 2018, the government of Western Australia announced that it will lift the hydraulic fracturing moratorium for existing petroleum titles, following the finding of low risk by an independent scientific inquiry.  The practice will continue to be banned in roughly 98% of the state and royalties collected will be used to fund new renewable energy projects.  The government will also allow landowners to make the decision to prohibit oil and gas companies from using hydraulic fracturing on their land.  Additionally, the state has agreed to create two-kilometer buffer zones around sources of public drinking water and residential areas in which no development will take place.

Water Quality: Penn State Study Examines Methane Migration Near Shale Gas Wells
On November 19, 2018, the Proceedings for the National Academy of Science published a study considering new methods of detecting methane contamination in wells located near hydraulic fracturing sites.  The study region focused on a portion of the Marcellus Shale located in Hughesville, Pennsylvania.  The researchers were able to identify chemicals that can indicate whether methane migration resulted from shale gas development or was preexisting.  The study found that methane concentrations were higher in nearby wells after gas development had taken place and that contamination increased at points where the shale formation was relatively shallow and had been highly fractured. It also considered several wells that had previously been cited for leaks and found that, seven years later, methane concentrations are still significantly elevated. The title of the study is Detecting and Explaining Why Aquifers Occasionally Become Degraded Near Hydraulically Fractured Shale Gas Wells. The team of researchers included members of Penn State’s Department of Geosciences.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (November 30, 2018)

Charles Sartain, Texas High Court Invokes the Discovery Rule, Energy and the Law (November 27, 2018)  

John McFarland, Murphy v. Adams - What is an "Offset Well"?, Oil and Gas Lawyer Blog (December 3, 2018)

Dena Adler, Climactic Recent Weeks for International Climate Change Litigation, Climate Law Blog (December 3, 2018)

Pennsylvania Notices
Location Change for Public Hearings regarding: Air Quality Plan Approvals for Proposed Compressor Stations in Delaware, Bucks Counties (December 4, 2018)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

This week we published a new Shale Law in the Spotlight article: PHMSA Amends Regulatory Requirements for Crude Oil Trains

Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.

Check the November Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Wednesday, November 28, 2018

Shale Law in the Spotlight - PHMSA Amends Regulatory Requirements for Crude Oil Trains


Written by Chloe Marie - Research Specialist                

Shale development is dependent upon having a means to transport that oil and gas to market. Using pipelines to transport shale oil and gas is often the most cost-efficient means of doing so. In light of the many impediments to the development of a reliable pipeline infrastructure, the use of trains to transport oil remains a primary means of connecting the oil fields with the refineries and other users. Because of the heavy use of crude oil trains, these trains have been the subject of much regulatory activity within recent years. On September 25, 2018, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published in the Federal Register a Final Rule amending and repealing certain provisions of the Hazardous Materials Regulations relating to the requirement for certain High Hazard Flammable Unit Trains (HHFUT) to operate using electronically controlled pneumatic (ECP) braking systems.

Background

In May 2015, PHMSA issued a Final Rule entitled “Enhanced Tank Car Standard and Operational Controls for High-Hazard Flammable Trains” to regulate speed restrictions, braking systems and routing for trains carrying large quantities of flammable liquids, including crude oil. The drafting of this Final Rule is based on a series of recorded rail accidents in recent years. PHMSA noted that crude oil and ethanol represent approximately 68% of the flammable liquids transported by railroad.
The Final Rule requires HHFUT trains to be equipped with ECP brake systems, as an alternative to conventional air brakes, for the purpose of reducing in-train derailments. ECP brake systems are designed to send an electronic signal to all equipped cars in the train, thus providing the driver with instant control over the entire train and improving speed of car brake operations.

Section 7311 of the Fixing America’s Surface Transportation (FAST) Act - enacted in December 2015 - required the U.S. Department of Transportation (DOT) to conduct tests on ECP brake systems during emergency situations relative to other braking systems. In addition, the Act required DOT to work with the National Academy of Sciences (NAS) to update the original Regulatory Impact Analysis (RIA) of the PHMSA Final Rule regarding the costs and benefits of the applicable ECP brake system requirements.

On October 16, 2017, DOT announced the availability of the updated RIA, which contains “new testing and analysis the National Academy of Sciences (NAS) reviewed, recommendations from two U.S. General Accountability Office (GAO) audits, and updates to the costs and benefits of the provision of the Final Rule based on current economic conditions.” DOT found that the use of ECP braking systems for HHFUT trains is not justified anymore from a cost-benefit perspective based on two major changes that occurred between the 2015 Final Rule and the updated RIA. First, DOT assessed that both safety and business benefits have decreased since 2015 because the number of HHFUT carloads have diminished and also due to the fact that there has been an increased use of dynamic braking on locomotives. Interestingly, DOT suggested that “any future surge in oil prices may have effects on numerous assumptions of this analysis” before adding that “changes in these assumptions would change the number of carloads needed and therefore also affect the estimated safety and business benefits.”

Consequently, DOT announced on December 13, 2017, its intent to repeal the ECP brake requirements contained in PHMSA 2015 Final Rule based on a final determination that the expected benefits of the ECP brake requirements do not exceed the expected costs.

Repeal of PHMSA 2015 Final Rule’s ECP Brake Requirements

The Final Rule entitled “Hazardous Materials: Removal of Electronically Controlled Pneumatic Brake System Requirements for High Hazard Flammable Unit Trains” repeals the requirements in section 174.310 to equip HHFUT with ECP brake systems, to obtain approval of the use of alternative brake systems, and to mandate retrofit status reports on ECP brake system readiness and use. In addition, DOT also removed ECP braking capability requirements in section 179.102-10 for DOT-117 specification tank cars, performance standard requirement in section 179.202-12 for DOT-117P tank cars, retrofit standards in section 179.202-13 for existing non-pressure DOT-117 tank cars.
DOT announced that the Final Rule became effective on the day of its publication i.e. September 25, 2018 and explained that “good cause exists to publish this rulemaking without a notice of proposed rulemaking and opportunity for public comment and to make the regulations effective prior to 30 days after publication” DOT further added that “this rule simply implements the determination of the Department … therefore, PHMSA would be unable to adjust the text of the rule to account for any public comment.”



This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

Tuesday, November 27, 2018

Shale Law Weekly Review - November 27, 2018


Written by:
Brennan Weintraub - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Pipelines: Federal Court Stays Atlantic Coast Pipeline Access to North Carolina Farm
On November 13, 2018, the U.S District Court for the Eastern District of North Carolina issued an order staying the Atlantic Coast Pipeline’s action to obtain access to a farm in Nash County (Atlantic Coast Pipeline, LLC, v. 11.57 Acres, More or Less, in Nash County, North Carolina).  In its decision, the court found that construction of the pipeline on the farm would cause significant hardship to the owner, including property value and the destruction of a historic tree.  Additionally, the opinion noted that there are a number of other challenges to the pipeline’s authorization that may obviate the need for an easement on the property at issue.  Earlier this month, on November 7, 2018, the U.S. Appeals Court for the Fourth Circuit issued a stay of a water crossing permit for the pipeline in West Virginia.  When constructed, the pipeline will transport natural gas from West Virginia to Virginia and North Carolina.

Pipelines: Minnesota PUC Declines to Reconsider Enbridge Line 3 Pipeline Approval
On November 19, 2018, the Minnesota Public Utility Commission decided not to reconsider its previous approval of the Enbridge Line 3 natural gas pipeline.  Petitioners, including White Earth Band of Ojibwe, Red Lake Band of Chippewa, and Honor the Earth, argued that the order at issue did not include a crude oil demand forecast or consider other reasonable alternatives to the current construction plan.  The Commission did not find these arguments persuasive and upheld their previous decision.  The project will replace the existing Line 3 pipeline, which runs from Wisconsin to Alberta, and is expected to have a capacity of roughly 760,000 barrels a day.

Methane Emissions: North Dakota Amends “Gas Capture Policy”
On November 20, 2018, the Industrial Commission (Commission) of North Dakota amended the natural gas capture policy for the state.  The Commission stated that the change is intended to support federal policy of streamlining the development of pipeline projects. In addition, the Commission stated that the policy will “increase the volume of captured gas and reduce the percentage of flared gas, in addition to encouraging investment in gas capture infrastructure.”  According to the Dickinson Press, the Commission will now incentivize industry investment, rather than working to reduce the number amount and duration of natural gas flaring.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (November 26, 2018)

John McFarland, Huddleston on Shale Plays in Texas, Oil and Gas Lawyer Blog (November 26, 2018)

Pennsylvania Notices
Public Hearings regarding: Air Quality Plan Approvals for Proposed Compressor Stations in Delaware, Bucks Counties (December 4, 2018)

Upcoming Meeting: Conservation and Natural Resources Advisory Council Meeting (November 28, 2018)

New Policy Announcement - Press Release: PA Dept of Environmental Protection reveals new plan to expand solar energy development. The plan will require utilities to use some solar energy, expand loans for solar ownership, implement a carbon pricing plan, and evaluate possible tax exemptions (November 15, 2018)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.

This week we published two new Shale Law in the Spotlight articles:

Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.

Check the November Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Tuesday, November 20, 2018

Shale Law Weekly Review - November 20, 2018

Written by:
Brennan Weintraub - Research Assistant
Jackie Schweichler - Staff Attorney

The following information is an update of recent local, state, national, and international legal developments relevant to shale gas.

Pipelines: Montana Federal Judge Orders Construction Halt for Keystone XL Pipeline
On November 8, 2018, the U.S. District Court for the District of Montana issued an order temporarily halting further construction and operation of the Keystone XL pipeline (Indigenous Environmental Network v. United States Department of State, CV-17-29-GF-BMM). In the opinion, the court found that the federal government did not satisfy its obligations under the National Environmental Policy Act in approving construction of the Keystone XL pipeline . Specifically, the court found that the Department of State’s environmental analysis fell short of the “hard look” required by the statute. The court ordered the Department to supplement its analysis by looking at several other issues, including the effect of oil prices on the pipeline, cultural resources that may be affected by construction, and the potential for oil spills.

Municipal Regulation: Pennsylvania Appeals Court Upholds Penn Township Hydraulic Fracturing Exceptions
On November 8, 2018, the Pennsylvania Commonwealth Court affirmed a trial court decision in Westmoreland County upholding the grant of permits to several shale gas wells in Penn Township (Protect PT v. Penn Township Zoning Hearing Board and Apex Energy (PA), LLC, No. 39-42 C.D. 2018). Opponents of the permits argued that local water and air quality would be threatened and that the proposals did not adequately address the issue of wastewater generated by the wells. The Commonwealth Court found that the exceptions granted by the Penn Township Zoning Hearing Board complied with the applicable zoning ordinances, and that there was not sufficient evidence that the community would suffer adverse impacts.

Electricity Generation: West Virginia Supreme Court Affirms Grant of Permit for Natural Gas Power Plant
On November 1, 2018, the West Virginia Supreme Court of Appeals issued an opinion affirming the siting certificate for ESC Brooke County Power (Ohio Valley Jobs Alliance, Inc., et al. v. The Public Service Commission of West Virginia, et al., No. 18-0249).  Petitioners alleged that the Public Service Commission of West Virginia, which granted the siting permit, should have required a hypothetical tax estimate for the project and a finding that the plant would have a substantial positive impact on the state and local economies.  While the court agreed that a tax estimate should have been required, it found that the weight of the evidence was in favor of the permit, and therefore, affirmed the granting of the permit.  The plant, which claims that it will produce up to 830 megawatts of power and $440.5 million in total economic impact, will be powered by the significant natural gas reserves found across the state of West Virginia as part of the Marcellus Shale.

Wastewater Treatment/Disposal: New Mexico Releases Draft White Paper for Reuse of Oil and Gas Wastewater
On November 9, 2018, the state of New Mexico, in collaboration with the U.S. Environmental Protection Agency (EPA), released a draft white paper on potential changes to regulations for treatment and reuse of oil and gas wastewater. New Mexico, one of the most arid states in the nation, generates roughly 38 billion gallons of wastewater from oil and gas field in the Permian Basin, which covers much of the southeastern portion of the state.  In the draft white paper, EPA and New Mexico identified regulatory opportunities, such as incentivizing the re-use of produced water and researching the treatment of produced water for potable uses.  (Oil and Natural Gas Produced Water Governance in the State of New Mexico - Draft White Paper)

Pipelines: Louisiana Landowners Sue Bayou Bridge Pipeline for Trespass and Property Damage
On November 9, 2018, a group of landowners from Louisiana’s Atchafalaya Basin filed a pre-trial memorandum in their case against the Bayou Bridge Pipeline, LLC. (Bayou Bridge Pipeline LLC v. 38.00 Acres, More or Less, et al., No. 87011-E).  The plaintiffs are suing Bayou Bridge for trespass and property damage, alleging a lack of legal authority to build on their land. The plaintiffs allege that pipeline construction has resulted in the felling of a number of trees and destruction of their land.  The pipeline, according to the plaintiffs, was in the process of expropriating the land under the state’s eminent domain laws, but it began construction on their property before the process was completed. When completed, the pipeline will run 163 miles, from East Texas to southwest Louisiana, and carry up to 480,000 barrels of oil per day.

Methane Emissions: EPA Holds Public Hearing on Methane Rule Changes
On November 14, 2018, the Environmental Protection Agency (EPA) held a public hearing on the proposed rule, Oil and Natural Gas Sector Emission Standards for New, Reconstructed, and Modified Sources Reconsideration.  The proposed rule was published on October 15, 2018, and would reduce the frequency of inspections for oil and gas drilling sites and would alter or eliminate requirements for pneumatic pumps at well sites and certification from a professional engineer. EPA estimates that these changes will save the oil and gas industry up to $75 million a year.  According to the Denver Post, the hearing invited support from some industry leaders, but opposition from many private citizens.  Comments on the proposed rule will be accepted until December 17, 2018.

Municipal Regulation: Oklahoma Supreme Court Rules Against County Restricting Oil and Gas Operations
On November 13, 2018, the Oklahoma Supreme Court issued an order finding Kingfisher County’s local ordinances to be contrary to state law (Oklahoma Oil & Gas Association, v. The Kingfisher County Commissioners, No. 117,303).  The Kingfisher County ordinances banned temporary oil and gas lines from carrying produced water within county road easements.  The court found that the Oklahoma Corporation Commission, not local authorities, has the authority to regulate the transportation and disposal of produced water from oil and gas operations. Further, the court held that the Oklahoma Corporation Commission has the authority to determine the validity of similar local ordinances regarding restrictions on energy development.

From the National Oil & Gas Law Experts:
George Bibikos, At the Well Weekly, (November 19, 2018)

Charles Sartain, Local Zoning Board Okays Drilling-Friendly Ordinance, Gray Reed (November 14, 2018)

Michael Burger, Sabin Center Briefs Court in Exxon Lawsuit Appeal, Climate Law Blog (November 16, 2018)

Pennsylvania Notices
Public Hearings regarding: Air Quality Plan Approvals for Proposed Compressor Stations in Delaware, Bucks Counties (December 4, 2018)

Upcoming Meeting: Conservation and Natural Resources Advisory Council Meeting (November 28, 2018)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive ShaleLaw HotLinks:

Connect with us on Facebook! Every week we will post the CASL Ledger which details all our publications and activities from the week.


Want to get updates, but prefer to listen? Check out the Shale Law Podcast! We can always be found on our Libsyn page, iTunes, Spotify, or Stitcher.

Check the November Agricultural Law Brief! Each month we compile the biggest legal developments in agriculture. If you’d like to receive this update via email, check out our website and subscribe!

Friday, November 16, 2018

Shale Law in the Spotlight - U.S. Forest Service Proposes New Rulemaking for Oil and Gas Development on National Forest Lands

Written by Chloe Marie - Research Specialist


On September 13, 2018, the U.S. Forest Service (USFS) proposed an update for existing regulations and procedures codified at 36 CFR 228, Subpart E, relating to oil and gas resources on national forest lands. The current rules are described as “outdated and inefficient.” Existing regulations were first promulgated in 1990 and slightly amended in 2007. USFS declared in a News Release that the proposed reforms would “ensure the Forest Service and stakeholders have an efficient process to support local economies and protect and conserve valuable environmental resources.” Consequently, USFS published in the Federal Register an Advance Notice of Proposed Rulemaking seeking public comment.

Existing regulations and procedures set forth in 36 CFR 228, Subpart E govern the statutory responsibilities of USFS for the issuance of federal oil and gas leases as well as the management of subsequent oil and gas operations on national forest lands.

The proposed rulemaking is driven by the need to streamline processes and reduce administrative burdens and costs for energy-related projects, as required by the Trump administration. As stated in the Advance Notice, “the intent of these potential changes would be to decrease permitting times by removing regulatory burdens that unnecessarily encumber energy production.” Specifically, USFS states that the proposed revisions include “eliminating language that is redundant with the NEPA process, removing confusing options, and ensuring better alignment with the BLM regulations.”
As a primary matter, USFS will focus on reforming its internal process for identifying National Forest System lands; reviewing the regulatory provisions relating to lease stipulation waivers, exceptions and modifications; improving the procedures for review and approval of surface use plans of operations; clarifying operators’ responsibility in protecting natural resources and the environment; improving language regarding inspections and compliance; and developing procedures addressing geophysical/seismic operations associated with oil and gas operations that will be line with BLM regulations.

The American Petroleum Institute (API) released its comments on the proposed rulemaking and declared “strong support” for the current efforts on the part of the Trump administration to reduce administrative burdens and create an expedited environmental review process for energy-related projects. Among its recommendations, API suggested that USFS and BLM work hand in hand regarding the lease parcel review process. Furthermore, API stated that “USFS field offices shall have the discretion to participate in a BLM Interdisciplinary Parcel Review (IDPR) Team of resource specialists to review lease sale parcels as part of compliance with NEPA and other legal and policy requirements for adequate review of parcels.”

The public comment period on the proposed rule closed on October 15, 2018. Stay tuned for further legal developments!



This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture

Wednesday, November 14, 2018

Shale Law in the Spotlight – Overview of Statewide Ballot Initiatives Relevant to Oil and Gas Development


Written by Chloe Marie – Research Specialist

This article will provide an overview of several statewide ballot initiatives that were voted upon during the recent November 6 general election.

Colorado

Initiative 97 – Setback Requirement for Oil and Gas Development

Result: Initiative 97 failed to pass with 42% of Colorado voters voting yes.

On August 29, 2018, Colorado Secretary of State Wayne Williams announced in a News Release that a ballot initiative – identified as Initiative 97 – had received enough signatures to be placed on the November ballot.  The initiative sought to restrict the location of new oil and gas operations in Colorado by imposing increased buffer zones between oil and gas wells and certain types of buildings and land uses.  The petition proposing this initiative was submitted to the Colorado Department of State on August 6, 2018, by Designated Representatives Anne Lee Foster and Suzanne Spiegel from the environmental group Colorado Rising.  Advocates for the initiative collected a total of 172,834 signatures in support of the petition.  When placed upon the November ballot, it was referenced as Proposition 112.

Initiative 97 proposed new setback requirements that would have increased the mandated setback distances and also would have expanded the range of land uses and geographical features from which oil and gas operations would need to be set back.  Under the requirements of Initiative 97, new oil and gas wells would have needed to be operated with a minimum setback distance of 2,500 feet from occupied buildings, such as homes, schools and hospitals, as well as “vulnerable” areas, including playgrounds, permanent sport fields, amphitheaters, public parks, public open space, drinking water sources, irrigation canals, reservoirs, lakes, rivers, perennial or intermittent streams, and creeks. These proposed setback requirements would not have applied to oil and gas development located on federal lands.

Amendment 74 – Just Compensation for Reduction in Fair Market Value by Government Law or Regulation

Result: Amendment 74 failed to pass with 47% of Colorado voters voting yes.

Under proposed amendment 74, Colorado landowners who suffered a loss in the fair value of their private property due to “government law or regulation” would have received just compensation. The proposed amendment provided that such compensation would be determined by a board of at least commissioners or by a jury.

Despite not being directly linked to oil and gas development, proposed amendment 74 may have had a potential impact upon development if passed.  Where governmental restrictions prevented oil and gas operations from occurring on land, Amendment 74 may have required compensation.  Indeed, if the setback requirements contemplated in Initiative 97 had been instituted, landowners affected by these setbacks may have been owed compensation if the fair market value of their property declined as a result of the new setback requirements.

Oklahoma

State Question 800 – Oil and Gas Development Tax Revenue Investment Fund Amendment

Result: State Question 800 failed to pass with 43% of Oklahoma voters voting yes.

State Question 800 – also known as the Oil and Gas Development Tax Revenue Investment Amendment – appeared on the November 6 Oklahoma general election ballot and represented a further attempt by the Oklahoma legislature to amend the state Constitution. More specifically, State Question 800 reproduced the wording of Senate Joint Resolution (SJR) No. 35, which initially proposed to establish a third budget reserve fund – called the Oklahoma Vision Fund – and introduced a new tax on oil and gas production that would have been deposited into the Fund. SJR 35 passed both the House and Senate on May 3, 2018 but was later vetoed by Governor Mary Fallin.

State Question 800 would have created new section 44 to Article X regarding Oklahoma Revenue and Taxation and, in addition to creating the Oklahoma Vision Fund, would have introduced a 5% gross production tax on all oil and natural gas as of July 1, 2020 and for each fiscal year thereafter. After that fiscal year, it was specified that the tax rate would be increased by two-tenths percentage points each year thereafter. The revenue collected from the tax would have been remitted directly into the Oklahoma Vision Fund.

Washington

Advisory Question No. 19 on Oil Spill Taxes

Result: Advisory Question No. 19 received a favorable vote with 53% of Washington voters voting in favor of the oil spill response and administration taxes.

On November 6, 2018, registered voters in Washington state voted on Advisory Question No. 19 deciding whether oil spill response and administration taxes to crude oil or petroleum products received through pipelines – imposed by the state legislature in June 2018 – should be repealed or maintained. Advisory questions do not create any legal, valid or binding obligations upon the state legislature and merely provide Washington voters with the opportunity to express their views on a specific topic.

As a bit of background, Washington Governor Jay Inslee signed into law Senate Bill No. 6269 on March 23, 2018, which was introduced to the state Senate in January 2018. SB 6269 became effective on June 7, 2018 and requires additional tax payments on transportation of crude oil and petroleum products to the state. More precisely, the legislation states that “while oil transported into the state by rail and tank vessels is taxed to fund the oil spill program’s oil spill prevention and preparedness activities, a third method of transport, pipelines, currently is not taxed, despite it generating a sizeable oil spill risk;” thus the legislature decided to request payment of two additional taxes on crude oil and petroleum products received from either interstate or intrastate pipelines.

According to the law, any pipeline terminal operator is now subject to the payment of the oil spill response tax at a rate of 1 cent per barrel of crude oil or petroleum products received from pipelines as well as the oil spill administration tax at a rate of 4 cents per barrel of crude oil or petroleum products received from pipelines. All revenue collected from the oil spill response tax must be deposited into the Washington state oil spill response account while revenue generated from the oil spill administration tax is remitted to the oil spill prevention account.

Initiative 1631 Reducing Pollution

Result: Initiative 1631 failed to pass with 44% of Washington voters voting yes.

State Secretary Kim Wyman approved the placement upon the November general election ballot of Initiative 1631 – known as An Act Relating to reducing pollution by investing in clean air, clean energy, clean water, healthy forests, and healthy communities by imposing a fee on large emitters based on their pollution. This initiative would have created a pollution fee on large emitters of fossil fuels at a rate of $15 per metric ton of carbon content as of January 1, 2020. The pollution fee rate would have increased by $2 per metric ton each year thereafter until the state of Washington met its greenhouse gas reduction targets for 2035 and was on target to meet its reduction goals for 2050. All revenue collected from this pollution fee would been deposited into the Clean Up Pollution Fund.

Florida

Florida Amendment 9 – Ban Offshore Drilling

Result: Amendment 9 passed with 68% of Florida voters voting yes.

On April 16, 2018, the Constitution Revision Commission of Florida approved the placement of Proposal 6004 (P 6004) – prohibiting offshore oil and gas drilling in specified coastal waters – on the general election ballot. P 6004 would amend Section 7 of Article II of the State Constitution and specifically provides that drilling for exploration or extraction of oil or natural gas is prohibited in state coastal waters that lie between the mean high-water line and the outermost boundaries of the territorial seas of Florida. P 6004 clarifies that this prohibition would not apply to the transportation of oil and gas products outside of such waters. In addition, the Proposal states that such measure is aimed at protecting the people of Florida from the degradation of their environment.

Section 377.242 of the Florida Statutes currently prohibits issuing permits for oil and gas exploration and production in state coastal waters; however, the enactment of P 6004 would permanently ban oil and gas drilling along the Florida coastline.

This proposal comes in response to the U.S. Interior Department’s draft version of the National Outer Continental Shelf Oil and Gas Leasing Program (National OCS Program) for 2019-2024 released in January 2018. The draft National OCS Program would make available for oil and gas leasing approximately 90% of the total OCS acreage in Federal offshore areas and proposes one sale in the Straits of Florida. Interestingly, Interior Secretary Ryan Zinke announced in a tweet dated January 9, 2018, that the U.S. Interior Department is “removing Florida from consideration for any new oil and gas platforms;” however, no formal declaration has yet been made.

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture