American Oil and Gas Reporter - September 2019 - 94

KIOGA Federal and State Tax Committee
Chairman Andrea Krauss, controller for
John O. Farmer Inc. in Russell, Ks., advises association members on an apparent attempt by the Kansas Board of
Tax Appeals to change the effective date
of ad valorem tax exemptions during
KIOGA's general membership meeting.

rendition in the spring of 2019 would be
effective on Jan. 1, 2018, and the operator
could seek a refund for taxes paid the
previous year.
But the language on BOTA orders for
applications filed this year granted exemptions "commencing with the ad valorem personal property taxes assessed
on the 2018 oil production," seemingly
eliminating the opportunity to file for a
refund, Krauss said.
"We believe the language was changed

because of pressure from country treasurers
wanting BOTA to take an activist position
(to prevent refund requests)," she stated.
There are a couple problems with this,
Krauss asserted. First, ad valorem taxes
are assessed on reserves, not prior year
production. And second, the effective
date of the low-production exemption is
set by statute.
"BOTA's only function is to confirm
that the lease does, in fact, qualify for the
exemption," she insisted. "By attempting
to adjudicate the issue of tax refunds,
BOTA is stepping outside its authority.
"We need to act collectively to get
this turned around," Krauss continued,
revealing that John O. Farmer Inc. had
filed a request for reconsideration, asking
BOTA to change the language of its exemption order, which was denied.
She said John O. Farmer Inc. would appeal BOTA's denial and encouraged other
companies to do likewise. "The more operators we have involved in this the better
our odds for success," Krauss evaluated.
Emission And Water Well Fees
Turning to another state agency, Cross
reported the Kansas Department of Health
and Environment's Bureau of Air Quality
in July proposed a 71 percent increase
in fees it charged regulated industries.
Specifically, Cross indicated, the bureau
is proposing:
· A new emissions fee of $150 a ton
on Class I (large) emitters of hazardous
air pollutants;

· Raising fees on Class I sources
from $48 to $53 a ton; and
· Requiring Class II (smaller) sources
to begin paying fees of $53 a ton.
"Emissions have gone down in Kansas
to the point that revenues to the Air
Quality Fee Fund are projected to not
cover the Bureau of Air Quality's expenses
by next year," Cross related, adding that
while the proposed fee increases primarily
would impact utilities and pipelines, regulated ethylene glycol dehydrators also
could be affected.
Cross said he told KDHE Deputy Secretary Leo Henning that it hardly seemed
fair to punish people for lowering emissions, but that Henning responded it was
important for the state's program to maintain a solid financial footing to retain
Clean Air Act primacy from the U.S. Environmental Protection Agency. Cross
said he countered by suggesting that since
all Kansans benefited from cleaner air,
the agency might seek general fund
support from the legislature.
Also during his meeting with Henning,
Cross continued, he said he was told the
KDHE was not going to intervene at this
time in an attempt by the Northwest
Local Environmental Protection Group
(NWLEPG) to impose a $500 fee on
permits to drill water supply wells for oil
and gas operations in 13 Northwest Kansas
counties.
NWLEPG has since tabled its proposed
permit, which Cross said Henning told
him was prompted by 95-100 old oil

LEFT: Kansas Independent Oil & Gas Association President Ed Cross (right) awards the President's Leadership Award to Tim Hellman,
president of Lotus Operating Company LLC of Wichita, Ks., during the association's annual convention in August. Cross said Hellman
"unselfishly volunteers many hours and days of time, effort, insights and leadership addressing many critical oil and gas issues, often
behind the scenes." RIGHT: Cross presents KIOGA's E.B. Shawver Award to A. Scott Ritchie (left), chairman of Ritchie Exploration Inc.
Named after KIOGA's first elected president, the E.B. Shawver Award recognizes individuals for dedication, participation and commitment
to the Kansas industry over an extended time. Cross said Ritchie's "accomplishments and character represent the highest ideals of the
Kansas oil and gas industry." Ritchie served as KIOGA chairman in 1985-87. KIOGA also presented its 2019 Outstanding Service Award
to Joe Schremmer, formerly of the law firm Depew, Gillen, Rathbun & McInteer LC of Wichita. Schremmer, who previously served as
KIOGA's legislative chairman, prepared an amicus brief on behalf of KIOGA that Cross says helped lead the Kansas Supreme Court in
August to decline to apply the rule against perpetuities to void the future interest of a grantee following a grantor's reservation of a
defeasible term mineral interest, which would have invalidated the common form of mineral ownership in the state.

94 THE AMERICAN OIL & GAS REPORTER



American Oil and Gas Reporter - September 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2019

Contents
American Oil and Gas Reporter - September 2019 - Intro
American Oil and Gas Reporter - September 2019 - 1
American Oil and Gas Reporter - September 2019 - 2
American Oil and Gas Reporter - September 2019 - 3
American Oil and Gas Reporter - September 2019 - 4
American Oil and Gas Reporter - September 2019 - Contents
American Oil and Gas Reporter - September 2019 - 6
American Oil and Gas Reporter - September 2019 - 7
American Oil and Gas Reporter - September 2019 - 8
American Oil and Gas Reporter - September 2019 - 9
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