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.


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.


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.


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 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

No comments:

Post a Comment