American Oil and Gas Reporter - August 2017 - 36

IOGA Concludes Successful Session

MT. VERNON, IL.-For the first time
in three years, the state of Illinois has a
budget. Illinois lawmakers voted July 6
to override Governor Bruce Rauner's
veto of budget, revenue and budget-implementation bills to wrap-up an extended
session that the Illinois Oil & Gas Association deems a success for the oil and
gas industry.
"Overall, I think it was a good session,"
assesses IOGA lobbyist Dan Reitz, who
points out that the association's two main
initiatives passed and IOGA was able to
block anti-industry bills.
After failing to adopt a budget the
past two years, Reitz says lawmakers
were able this year to pass SB 6 over the
governor's veto, which sets Illinois' fiscal
2018 spending at $36.2 billion. The legislature also undid most of an income
tax cut enacted a year ago, he notes, by
passing SB 9, which raises the state's
personal income tax rate from 3.75 to
4.95 percent effective July 1, and increases
the corporate income tax rate from 5.25
to 7.0 percent.
In order to reach a balanced budget,
Reitz mentions, lawmakers also included
language in SB 42, the Budget Implementation Act, that authorizes the state
to transfer $292.8 million in various dedicated funds to the General Revenue
Fund. Included in that, he says, is $1.2
million in the Plugging and Restoration
Fund and $700,000 in the Underground
Resources Fund, which are sourced from
fees and fines assessed on the oil and gas
industry to support the Illinois Department
of Natural Resources.
It wasn't an unprecedented action in
that the last several budgets approved by
the state included similar authority. "Historically, it doesn't mean they will sweep
all this money, but they have the ability
to transfer those funds in order to balance
the budget," he relates. "We do have language that, hopefully, they will replenish
those funds if we need them."
IOGA Priorities
IOGA achieved two of its major goals
for the 2017 session, states Executive
Vice President Sam Barbee: Both SB
730, which reauthorizes the Illinois Petroleum Resources Board for another 10
years, and HB 1542, dealing with the oil
and gas proceeds paid to nontrust estates,
passed and were sent to Governor Rauner.
SB 730 extends the sunset date for
the Illinois Petroleum Education and Marketing Act from Jan. 1, 2018, to Jan. 1,
2028. Barbee notes that an amendment
to the bill authorizes IPRB to enter vol-

36 THE AMERICAN OIL & GAS REPORTER

untary agreements with DNR to support
oil field environmental remediation and
restoration activities, a shortcoming in
the original law that he says was discovered during a DNR audit.
He says HB 1542 amends the state's
Principal and Income Act to provide that
oil and gas-including oil and gas from
noncoal formations-proceeds such as royalties, working interests and lease bonuses
paid to nontrust life estates/remainder interests shall be considered as income and
shall not be allocated between income
and principal.
According to Barbee, the Illinois Mineral Law Section identified the problem
and IOGA championed the legislative
fix. "The amendment addresses the expectancy of parties creating oil and gas
term interests, life estates, etc., that all
proceeds from the sale of oil as to those
interests will be considered income and
not divided between income and principal," he adds.
Stop Negative Bills
Noting, "As it has been the last few
years, (the session) is mostly about defense," Barbee also places the failure of
several anti-oil-and-gas bills in IOGA's
win column.
Chief among those was HB 1438,
which he describes as "a big push by the
environmental community" to freeze standards under the Illinois EPA Act to their
status as of Jan. 1, 2017, as a response to
the Trump administration's attempts roll
back various U.S. Environmental Protection Agency rules adopted during the
Obama years. HB 1438 also would have
established a public interest enforcement
process that would have allowed any person to bring an action in circuit court.
"Dan Reitz was able to kill that in the
Environment Committee," Barbee reveals.
Also bottled up in committee, he continues, were a pair of bills targeting oil
and gas infrastructure. HR 123 would
have required any company wishing to
expand a pipeline used to transport fossil
fuels to have an environmental impact
study conducted by "a third-party scientific
organization with no ties to the industry"
that included "the long-term impact of
burning fossil fuels on the looming climate
crisis," Barbee recounts.
He says HB 2835 would have raised
the amount of liability insurance crude
oil pipelines were required to carry "by
an exorbitant amount."
Two other anti-industry bills that Barbee
says died in committee were HB 775,
which would have required most state

pension funds to develop "climate change
risk minimization" policies, and SB 974,
which would have prohibited the DNR
from issuing new permits for "surface
extraction activities on lands owned by
DNR or the federal government."
IOGA President Craig Hedin, vice
president of Gesell's Pump Sales & Service in Whittington, Il., says the association
"really did expect more" in the way of
anti-oil-and-gas legislation, and anticipates
it could come next year since DNR is
considering an application for a permit
to drill a well that will employ a highvolume hydraulic fracture treatment under
regulations originating in legislation
passed in 2013. "Unfortunately, I think
that may awaken the environmental community," he theorizes.
On the loss side of IOGA's ledger,
Barbee acknowledges, were the failure
of HB 3635 and SB 2024, companion
bills to reinstate a sales tax exemption
for exploration equipment that was taken
away in 2003. Similar bills also died in
2016, he recalls.
"It never is a good time to try to reinstate tax exemptions, but especially this
year when (lawmakers) were looking for
money to supplement the budget," he
reasons. "We knew that was going to be
an uphill battle."
Other Legislation
Among several bills of interest to the
oil and gas industry that did pass, Hedin
says, was HB 3033, which lowers from
$500 to $100 the maximum consultation
fee DNR may assess under the Civil Administrative Code of Illinois. "That was
an initiative of the department that IOGA
supported," he observes. "Most of those
will not affect the Office of Oil and Gas
Resource Management as much as they
will other divisions within the DNR."
Two other bills of interest that Hedin
says passed the legislature:
* SB 611 creates the Mahomet
Aquifer Protection Task Force to assist
in maintaining clean drinking water in
the Mahomet Aquifer.
* SB 1821 repeals state licensing requirements for various industries after it
was amended to remove the Professional
Geologist Licensing Act.
One bill supported by IOGA that did
not pass, Hedin mentions, was HB 393,
which would have authorized municipalities and fire protection districts to collect
"reasonable fees" for emergency response
activities. It would have limited charges
to $250 an hour and $70 an hour per firefighter.
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