American Oil and Gas Reporter - April 2016 - 105

ConventionCoverage: Illinois Oil & Gas Association

Illinois Operators Seeking
Sales Tax Exemption
By Bill Campbell
EVANSVILLE, IN.-Lobbying to reinstate a sales and use tax exemption for
oil field equipment is the Illinois Oil &
Gas Association's chief state legislative
priority for 2016, association leaders reported during IOGA's 2016 annual convention, March 3-4 at the Old National
Events Plaza in Evansville.
But that effort could be moot without
successful pushback against a federal
regulatory onslaught that shows signs of
having moved from protecting health and
safety to stopping oil and gas production
altogether, they warned during IOGA's
membership meeting.
HB 5702, and a companion bill, SB
2794, would reinstate sales and use tax
exemptions for oil field exploration,
drilling and production equipment for
five years, effective July 1, IOGA lobbyist
Dan Reitz advised members. The exemptions were repealed in 2003.
If ever there was a time for Illinois independents to seek some government assistance, this is it, opined IOGA President
Bryan Dicus, owner of BJ Dicus & Associates LLC in Carmi, Il.
"Two years ago, we weren't going to
get a sales tax exemption," agreed Executive Vice President Brad Richards.
"We may not get it now, but at least
we have a legitimate story to tell," he
continued, remarking: "It is a tall order.
No one is saying it will be easy."
Thus far, Reitz told IOGA, the 2016
legislative session has been dominated
by a budget stalemate. Last year, he recalled, Republican Governor Bruce Rauner
vetoed a budget presented to him by the
Democratic majority after lawmakers rejected the governor's proposal, which
contained a number of economic and
government reforms. Consequently, Reitz
noted, "The state now is in its eighth
month without a budget."
In his annual budget address, delivered
Feb. 17, Reitz said Rauner offered the
legislature a choice between giving him
authority to cut spending and live within
the state's revenues, or agreeing to his
reform package.

Opining that "it doesn't look too promising for a budget agreement in the near
future," Reitz said the good news for
IOGA was that several business tax incentives championed by the Illinois Chamber of Commerce and manufacturers association were part of the budget debate.
If HB 5702 fails to move as a stand-alone
measure, "hopefully, it will become part
of that (budget) package," he expressed.
On other legislative matters, Reitz pointed to a couple bills IOGA was opposing:
* HB 5781 would subject "the owner
or operator of any facility, vessel or
pipeline from which oil or a hazardous
substance is discharged" to civil penalties
of up to $25,000 a day or $1,000 per
barrel of oil spilled.
* HB 6165 requires "each person
who engages in the transportation of gas
or who owns or operates pipeline facilities"
to maintain $100 million in general
liability insurance and $25 million in en-

If legislation exempting oil field equipment from the Illinois' sales and use tax
fails as a stand-alone measure, it still
could become part of the state's budget
negotiations, lobbyist Dan Reitz advises
members of the Illinois Oil & Gas Association during their annual meeting,
March 3-4 in Evansville, In.

vironmental impairment insurance.
Fracturing, UIC Rules
On the regulatory front, Reitz moved
on, the Illinois Department of Natural Resources has submitted to the legislature's
Joint Committee on Administrative Rules
a package to implement the high-volume
hydraulic fracturing law approved by the
general assembly in 2013. "Hopefully, it
will be ready to adopt in its entirety around
June or July," Reitz stated. "We have a
very good package. It will be good for the
industry if JCAR sees fit to adopt those."
On another issue, Richards noted that
a work group had been formed to assist
the IDNR's Office of Oil and Gas Resource
Management in its review of the state's
underground injection control program.
Director Michael Mankowski told
IOGA the goal of the yearlong review
requested by IDNR was not only to ensure
the state's UIC program met all federal
requirements, but also to identify problems
and streamline UIC permitting.
Dicus said a UIC working group had
been reviewing procedures and requirements in areas such a mechanical integrity
testing and annular control to clear up
ambiguities. "We don't want the U.S.
Environmental Protection Agency handling
our UIC program," he reflected. "So it is
to our advantage to work with Mike and
his staff to clear up these issues."
Leave It In The Ground
On another sort of federal regulation,
Richards and Dicus said they had returned
the day before from the Independent Petroleum Association of America's annual
Washington call-up, where the news was
less than encouraging. As President Obama
strives to put the finishing touches on his
environmental legacy, Dicus said the
theme beginning to resonate throughout
his initiatives was the so-called leave-itin-the-ground idea.
Clarified Richards, "When we say
leave it in the ground, let us be clear: that
means put you guys out of business."
Regardless how fantastic or impossible
the concept may appear, he insisted, "I
am telling you, it is real."
APRIL 2016 105

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