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House Bill 301

House Bill 301

Phil Haunschild
March 22, 2017

Bill Description: This bill would change oil and gas regulations for producers, landowners, and distributors.

Rating: +2

Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market? 

This bill would reduce the  regulation that all units must be of a uniform size and shape, unless this is impossible due to natural or geological features. This bill would change it so that “an operator may request a change in size, shape or location of a drilling unit”  (Page 14, Line 3). The department would only have to “find that such change would assist in preventing the waste of oil and gas, avoid drilling of unnecessary wells, or protective correlative rights” (Page 14, Lines 12-14). Abolishing the uniform size regulation would allow each producer to decide what is most effective and allow for more flexibility in determining these spacing units. (+1)

Section 47-332 of this bill requires a gas or oil producer to provide 11 pieces of information in a specific format with every payment to anyone holding a royalty interest in production. The legislation sets specific measures for calculating royalty payments, to the eighth decimal, measured by specific meters, and including only certain expenses and revenues. (-1)

Also, under this legislation, “operators shall file reports and logs with the department of lands” to include a monthly oil and gas production report, a monthly sales report, a monthly oil and gas disposition report, reports of transferred oil, a monthly summary report of gas processing plant operations, a monthly report of gas processing plant product allocations, well tests and well logs (Idaho Code 47-324). All this reporting will cause undue strain upon these companies and, if they fail to comply, their wells and facilities could be shut-in. (-1)

Does it violate the principle of equal protection under the law? Examples include laws which discriminate or differentiate based on age, gender, or religion or which apply laws, regulations, rules, or penalties differently based on such characteristics. Conversely, does it restore or protect the principle of equal protection under the law? 

The bill protects landowners and other private citizens. “Oil and gas wells, tank batteries and gas processing facilities shall not be constructed within three hundred (300) feet of an existing occupied structure, domestic water well, canal, ditch or the natural or ordinary high-water mark of surface waters” unless they have written permission from their owners, in which case they may be constructed up to 100 feet from these facilities (Page 16, Lines 4-8). The bill would prevent oil producers from strong-arming private citizens and landowners, or putting them in undue danger by installing these facilities in close proximity to a private structure. (+1)

Currently, a producer and those with interest in the production must require proof that they have leased 55 percent of the land. This bill would raise the minimum to 67 percent, raising the threshold for a producer to obtain an integration order from an owner of the mineral interests. This would help protect owners with smaller land tracts who do not wish to be involved in production. However, HB 301 would allow for an exception to this, so that if “an operator who has not been able to obtain consent from sixty-seven percent (67%) of the mineral interest acres in the spacing unit may nevertheless apply for an integration order under this section” if the operator has at least 55% of the mineral interest acres, has negotiated in good faith for at least 120 days, and the uncommitted owners receive equally favorable terms and conditions (Page 19, Lines 13-16). (+1)

A new Section 47-334 would protect landowners from whose land oil and gas are produced. Subsection (3) would have an owner or operator “mitigate the effects of accessing the surface landowner’s surface land; minimize the interference with the surface landowner’s use of the surface landowner’s property; and compensate a surface landowner for unreasonable; loss of a surface landowner’s crops on the surface land; loss of value to existing improvements owned by a surface landowner on the surface land; and permanent damage to the surface land” (Page 36, Lines 1-9). This would protect landowners, still allowing producers to use land “to the extent reasonably necessary to conduct oil or gas operations.” (+1)

Does it in any way restrict public access to information related to government activity or otherwise compromise government transparency or accountability? Conversely, does it increase public access to information related to government activity or increase government transparency or accountability? 

This bill would define what information is subject to public records law and set specific guidelines for information that is not. Ensuring the public has access to this information holds the commission and the department accountable. (+1)

However, this bill leaves little room for the industry to define what is a trade secret, making available online all monthly production reports, gathering facility reports, gas processing plant reports, all well plats, and all state required permits. Producers would receive confidential status on individual wells for the first 6 months of operation if they mark such at the time of their application. The department would be able to extend this status for another 6 months. (-1)

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