American Oil and Gas Reporter - June 2015 - 35

understand that the regulatory body should
be the Oklahoma Corporation Commission."
Most local government officials also
were receptive to SB 809, Roller says, point-

ing out the bill allows them to still act to protect the health and welfare of their residents.
"Municipalities are able to set reasonable setbacks, and requirements for fencing and lighting, and those types of

things," he says. "This bill is a good next
step to ensure that we have a long-term,
stable oil and gas environment in Oklahoma, so producers can keep generating oil
and gas for the rest of the country." ❒

Illinois Lawmakers Focus On Pensions

MT. VERNON, IL.-Elected officials in
Illinois have plenty on their plates, and the
state's oil and gas operators should not expect to see any direct impacts coming out
of the legislative session's last weeks, assesses Brad Richards, executive vice president of the Illinois Oil & Gas Association.
"Governor Bruce Rauner has a very ambitious program that he is going after
pretty hard, in particular the public employee unions and the pension crisis," Richards
said in mid-May. "He really is trying to fix
the state's broken workers' compensation
system because Illinois has one of the highest workers' comp rates in the country. This
is being met with some resistance from a
legislature that has a veto-proof Democratic majority in the Senate and House."
According to state estimates, Illinois
faces a $110 billion deficit in its pension
commitments to state workers and retirees,
and already dedicates 22 percent of each
tax dollar it collects toward the pension
fund.
In February, Rauner issued an executive order prohibiting unions from requiring all state workers to pay the equivalent
of union dues, saying the requirement violated the U.S. Constitution's First Amendment.
Richards says the state's political dynamic has changed dramatically, with
Rauner successfully running on a pro-business platform after the liberal-leaning
policies of predecessors Rod Blagojevich and Pat Quinn.
"I have no idea how Illinois is going to
pay its bills," Richards allows. "A couple
years ago, Quinn raised the Illinois income
tax from 3 to 5 percent. Those billions of
dollars did pay a lot of bills, but that money seemed to disappear and certainly didn't solve all the state's ills. That tax is
scheduled for a rollback. As Illinois reduces the tax rate, it is not going to be able
to meet its pension obligations."
Rauner has stated his preference for
spending cuts instead of new taxes,
Richards continues. As of mid-May, he
says, the fiscal uncertainty had stopped any
legislative action, adding the most likely
scenario was a summer session.
IOGA Legislation
Taking confidence from the governor's
pro-business stance, Richards says IOGA

has mounted its most aggressive legislative agenda. "Even with a new administration, we still have challenges legislatively, but we do have some reasons to be optimistic," he offers.
Illinois operators sometimes have issues
with leases containing orphaned wells,
Richards says. In response, legislators are
considering HB 3540, sponsored by Representative Brandon Phelps, D-Harrisburg, and SB 1562, introduced by Senator Bill Brady, R-Bloomington.
He says the bills amend the Illinois Oil
and Gas Act to authorize the Illinois Department of Natural Resources to determine whether leases submitted with permit applications or transfer requests have
been terminated because of no production
or development. The legislation requires
affidavits certifying nonproduction or
nondevelopment from knowledgeable
persons as well as other evidence to create a rebuttable presumption that the leases have been terminated. Current permittees would be granted 30 days to rebut the
presumption.
"These bills are designed to streamline
the process of declaring a well nonproductive, with the intent of getting it back in
production, or at least dealing with it so it
does not encumber other activities,"
Richards says.
He adds that IOGA also continues to
monitor HB 4128, sponsored by Phelps,
and its Senate companion, SB 1377, offered by Senator Gary Forby, D-Benton.
Richards says the bills are a negotiated
compromise under which the oil and gas
industry is accepting strengthened permitting language in exchange for IDNR accepting certification that permittees have
answered applications truthfully.
"One thing that has sometimes caused
unacceptable permitting delays is IDNR
trying to do its own title work by looking
at mineral ownership and title issues,"
Richard relates. "It cannot be done. Illinois
has very complex mineral ownership;
there is no way someone in the state capital can review that."
In exchange for limiting the agency's
review authority, he says IOGA agreed to
accept tougher penalties if someone knowingly submits false information. Richards
adds the idea is to make the permitting
process an administrative function rather

that a review procedure.

Seismic Task Force
On the other side of the ledger, Richards
says IOGA also is working on a couple
anti-industry bills. One he points to is SB
451, sponsored by Senator Dan Kotowski, D-Park Ridge. "This bill seeks to create a seismic investigative task force. It is
just a fancy way of creating another level of bureaucracy that would be staffed by
people who want to stop permits,"
Richards holds. "I am confident it is not
going to become law."
To provide more support in the statehouse, Richards says the association has
hired a retired legislator, Dan Rice.
If the Illinois Legislature does go into
a summer session, Richards predicts there
will be few oil and gas issues on the table.
"The association does not have a lot of influence on pension or budget changes, but
obviously, the oil and gas industry will be
impacted by those issues," he reasons.
"There are concerns about how the state
will pay its bills, but those are things that
happen outside our influence."
❒

Energy Transfer Converts
Southern Illinois Pipeline

DALLAS-Energy Transfer Equity LP
and Energy Transfer Partners LP are
converting more than 500 miles of natural gas pipeline in southern Illinois to flow
crude oil.
According to published reports, the
pipeline runs from Joppa, at the southern
tip of the state, to Johnsonville in Wayne
County, Il. Part of the line also runs
through the Shawnee National Forest. The
conversion is part of a proposed 1,134mile pipeline to transport an initial
450,000 barrels of light, crude oil a day,
Energy Transfer states.
Energy Transfer says the entire line
will run from the Bakken and Three
Forks production areas in North Dakota,
and cross into South Dakota, Iowa and Illinois. The pipeline will not carry tar sands
crude, the partnership emphasizes.
Approvals in each state are pending, and
the partnership continues talks with landowners with property above or near the new
pipeline, Energy Transfer confirms.
❒
JUNE 2015 35

American Oil and Gas Reporter - June 2015

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