American Oil and Gas Reporter - April 2017 - 30

State Legislative Reports

Wyoming Passes Sage Grouse Bill
By Dan Larson
Special Correspondent
CHEYENNE, WY.-Wyoming's legislature has approved a local tax option
that eventually may increase producers'
operating costs in some jurisdictions and
also has passed a new approach to managing greater sage grouse populations in
its biennial general session this year, reports the head of the state's oil and natural
gas association.
Wyoming's 40-day session saw 219
bills pass, press accounts indicate. According to Petroleum Association of
Wyoming President Bruce Hinchey, none
of the bills seem directly adverse to the
state's oil and gas industry.
Governor Matt Mead vetoed two bills
this year and signed 150 others into law,
published reports say. Several others passed
into law without needing the governor's
signature, including HB 271, the "Game
Bird Farms Greater Sage Grouse" bill.
Media reports note that the greater
sage-grouse, a chicken-sized grounddwelling bird that inhabits several western
states, has been the subject of Wyoming
legislation for more than a decade, thanks
to its occasional candidacy for a listing
under the Endangered Species Act. In
this session, Wyoming lawmakers voted
to allow state-certified breeders to collect
as many as 1,000 eggs in the wild to
hatch, raise in captivity and release, press
accounts indicate. The Senate voted 24-6
to approve HB 271 and returned it to the
House where, according to published reports, it was approved 47-13 on March 1.
"We have to consider all options for
managing impacts on the sage-grouse,"
Hinchey assesses. "In the core habitat
areas, we are limited in what we can do.
There are the extensive reclamation requirements and the offsets that oblige
operators to buy four acres of land in exchange for every acre they disturb."
According to statements by Senator
Charlie Scott, R-Casper, periods in which
sage-grouse habitat is abundant and populations are good is the right time for
captive breeding programs. Opponents
of the bill say results of captive breeding
efforts have proven underwhelming. Removing sage grouse eggs from the wild,
"reduces the success of the wild," according to published comments attributed
to Senator Cale Case, R-Lander.
The bill passed not long after federal
30 THE AMERICAN OIL & GAS REPORTER

regulators released a draft federal environmental impact statement that proposed
to close millions of acres to hard rock
mining claims in what the Bureau of
Land Management refers to "as sagebrush
focal areas." Of the five alternatives considered in the BLM's EIS, media reports
most often cite one that would withdraw
mineral claim filings from approximately
10 million acres in Idaho, Montana, Nevada, Oregon, Utah and Wyoming, though
existing mining claims would remain.
The Wyoming acreage falls in the
drainages for the Green and Bear rivers.
"If BLM can close off that much
public land to mining, there is nothing to
stop it from taking the same approach to
oil and gas," Hinchey warns. "Let's hope
new leadership at the Department of Interior takes a more reasonable approach."
Local Option
Hinchey indicates PAW is less enthusiastic about the passage of HB 82, a bill
allowing local taxing districts to impose
or increase sales and use taxes if they receive voter approval.
"This issue has been considered several
times before but never has survived,"
Hinchey recounts. "Our concern is that it
could increase the tax burden on an operator in one county and put that operator
at a competitive disadvantage to someone
in another county."
Wyoming's state sales and use tax is
4 percent. Depending on the county, local
sales and use taxes add 1-2 percent to the
final rate, a Department of Revenue report
indicates.
According to the legislative services
office, the bill was approved in late February. Hinchey points out that passing a
local option tax bill arguably relieves
state legislators of the task of finding
new revenue sources for county and municipal governments.
Even so, he assesses, it appears unlikely
any local government will place a tax increase proposal before its electorate in
the near future. "The slowdown in oil
and gas and the coal industry has meant
layoffs and lost jobs," Hinchey describes.
"So far, we have not heard of interest in
this from any county."
County taxes also are the subject of
HB 242, an unsuccessful bill that sought
to expand liens on delinquent taxpayers
to include mineral interests. PAW opposed
the bill, Hinchey notes.

The bill would have allowed county
tax departments to place a lien on any
production the delinquent taxpayer held
in a mineral interest, effectively "moving
the county to the head of the line" in priority of collectors, Hinchey describes.
"The banks and other lenders were
opposed, and operators were concerned
it would prevent them from getting new
loans," Hinchey explains.
After a referral from the House Revenue
Committee, the bill failed to get an introduction to the full House and was considered dead by the end of the session, according to a note in the legislative index.
Budget Matters
A revenue forecast in January provided
a basis for this year's budget bill. The
report was produced by the Consensus
Revenue Estimating Group, made up of
leaders from five state departments, including the head of the Oil and Gas
Commission and two academics, and
was co-chaired by representatives of the
Legislative Service Office and the Economic Analysis Division of the Department of Administration and Information.
Among the report's projections is an
$18.8 million decline in state investment
yields for fiscal year 2017-2018. It attributes
those dips to lower balances in the State
Agency Pool fund. The state revenue group
also projects an $8.1 million FY 2017 decline in sales and use tax revenue, primarily
because employment in the mineral resource
industries has been slow to recover.
Some projections are rosier, however.
The forecast anticipates an increase of
$17.4 million in severance tax revenue
from coal production increases and what
the report refers to as "updated assessed
valuation as a percentage of gross value
of natural gas."
The report notes that a new 1 Percent
Severance Tax Account, created in the
2016 legislative budget session, will see
an additional $4.8 million in revenue over
an October forecast thanks to increased
coal production and gas valuations.
The report projects the state's combined
general fund, budget reserves and severance tax set-aside at $2.8 billion for the
coming fiscal year, a $900,000 increase
from October's estimate.
Another revenue-related initiative during the 2017 session sought to direct the
state to review benefits and impacts from
a change to discounted cash flow valuation

American Oil and Gas Reporter - April 2017

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