Pub. 5 2024 Issue 1

2024 Legislative Session Summary

As of 11:55 p.m. on March 1, the 2024 legislative session is in the books!

Every session has its own themes and peculiarities, and this year we saw a hybrid of libertarian and conservative sentiment with significant pushback against federal overreach (e.g., SB57, HB409, HB470), contrasted against a clear desire from the legislature to provide more direction to our state agencies (HB373, HB357, HB230). Water continued to be a major focal point, as was a more assertive stance on energy planning with a particular emphasis on ensuring dispatchable, low-cost power. Last year’s record-breaking stats were also put to shame with 1,487 bills requested, 934 numbered and 591 passed, setting new records (those of us who have to read all and track many of these hope that number is not eclipsed next year, but are not holding our breath).

Through our cooperation with the Utah Manufacturers Association and Utah Mining Association, UPA held weekly legislative committee meetings where we tracked 182 bills, engaging on many. Not that we are necessarily judging the success of this session based on these stats, but of the 48 bills we took a position of support on, 38 passed (with most of the 10 that didn’t get past the finish line succeeding through both committees but failing to get funding in this tight fiscal year). Of the 10 bills that we were opposed to, eight failed. If you are wondering why we support so many more bills than we oppose, as much as I’m sure our legislative friends would like us to say, it’s because all of their bills are fantastic. The reality is we work hard to educate, advocate and cooperatively improve bills. Our goal is always to try to address the policy challenges so that we can move a bill from oppose to neutral or support. To that end, we provided language for substitutes or amendments that were incorporated in 10 bills.

We also worked as a coalition to support appropriation requests to provide DAQ with resources to hire a third-party modeling expert to demonstrate the role of international ozone-forming emissions to the Wasatch Front. UPA also supported the agency funding request for an additional SIP coordinator, as well as added funding for the Endangered Species Mitigation Fund (ESMF), which has a proven track record of downlisting, delisting and avoiding new listings on the endangered species list. Despite this being a “socks and underwear Christmas” as the executive appropriations chair likes to say, we were able to secure all of these budget requests.

A few key passed bills that UPA supported to be aware of:

  • HB295 Produced Water Amendments (Representative Lund) — This was a bill UPA had been working on since the summer of 2023 when the State Engineers Office started questioning how our industry handles produced water and if we have (or in fact, need) water rights for this water. After consulting with colleagues in several neighboring and large oil and gas producing states, taking the State Engineer and the Department of Natural Resources on a field tour and, with your support, hiring Gage Zobell from Dorsey and Whitney, we drafted this bill and went through many iterations and revisions to ensure the state of Utah, the legal water community and industry could align on a solution that protects operators and saves freshwater resources for the state. We have seen the adage “whiskey is for drinking and water is for fighting” play out often over the many water bills debated in recent years. HB295 passed through the House and Senate Committees and full house and senate floor votes with very rare unanimous support.
  • HB373 Environmental Quality Amendments (Representative Snider) — This bill is a two-fer and was also quite the roller coaster getting to the finish line! As UPA has discussed in the past, our upstream members have not been able to take advantage of an existing sales tax incentive for pollution control equipment due to a very narrow interpretation of the statute by DAQ. After a few different iterations (and a problematic fiscal note), this bill gives the Division of Oil, Gas and Mining authority to “certify” pollution control equipment for those properties already under DOGM jurisdiction. This should be a significant benefit to the many pollution control purchases ahead. It also requires DAQ to meet regularly with the legislative Federalism Commission. We welcome a forum to bring DAQ, legislators and impacted industries together and hope that this results in improved resources for the agency and coordinated direction and leadership in tackling these challenging issues.
  • HB142 Railroad Drone Amendments (Representative Wilcox) — This bill provided an opportunity to improve the safety and security of our assets and other critical infrastructure facilities. We were able to include language noting that an individual may not operate an unmanned aircraft over any surface critical infrastructure facility (as defined in Section 76-6-106.3), unless the operator has prior authorization from the facility, is a first responder or is a state or federal agency with regulatory authority over the relevant critical infrastructure facility.
  • HB124 Energy Infrastructure Amendments (Representative Albrecht) — This modification to the high-cost infrastructure development tax credit now allows emissions reduction projects, water purification projects and others that require an investment of $25M in rural counties and $50M in our largest counties, as well as locomotive engine conversion projects (to Tier 4 switcher engines) to qualify for the tax credit.
  • HB496 Public Land Use Amendments (Representative Albrecht) — For those of you who have followed the NAC SEC rulemaking (recently withdrawn), this bill protects continued development opportunities on Utah’s state lands by not allowing a natural asset company to purchase or lease state public lands, own or manage a conservation lease or purchase or lease ecosystem services on those lands.
  • SB69 Income Tax Amendments (Senator Wilson) — It wouldn’t be a Utah legislative session if it didn’t come with a tax cut! Utah continues to chip away and lower the individual and corporate income tax rate from 4.65% to 4.55%.

One bill that we opposed and anticipate will result in increased power costs is SB224 Energy Independence Amendments (Senator Sandall). This bill does two things — it creates a presumption that an affected electrical utility’s recovery of costs associated with proven dispatchable generation is prudent (and thereby allows the state to extend the life of existing coal plants), which flips the burden of proof for reasonable costs; and it creates a Utah Fire Fund and sets guidelines on when and how it can be used. UPA and industry allies worked to incorporate guardrails, including notice to the legislature prior to rate cases anticipated to result in rate hikes and an ability for the legislature to bring a third party to intervene in a rate case, a cap on the rate increase resulting from the fire fund, and limitations on the utility being able to use the fire fund in the case of negligent, reckless, or intentional conduct. There are many, many other bills that we could highlight. If you have questions about whether a bill passed or what its impact may be, please reach out.

As we look ahead to interim meetings starting in the spring, a few items coming out of this legislative session that UPA will be engaging closely on include:

  • HB 317 Energy Storage Amendments (Representative Musselman) — This bill directs the Office of Energy Development (OED) to conduct a study analyzing Utah’s energy fuels infrastructure and supply chain, including for transportation fuels, and present it to the Public Utilities, Energy, and Technology Interim Committee by Nov. 30, 2024. While we understand the state’s interest in resiliency and emergency management, we remain concerned about the state engaging in the free market.
  • SB 132 Property Tax Appeals Amendments (Senator Owens) and SB 253 Property Assessment Amendments (Senator McCay) — SB 132 sets out changes to the centrally assessed property process (which includes the vast majority of our industry’s property), including the appeals process. While this bill was initially broader than the version that passed, there was agreement from the parties to evaluate some of the concepts from the original bill over the interim. Similarly, SB 253 planned to direct the counties to complete a study evaluating the volatility in centrally assessed values and resulting challenges to the counties. Together with the Utah Taxpayers Association, we worked with the sponsor to pause the bill and study the issue over the interim. UPA will be engaging in these centrally assessed conversations, together with the Utah Taxpayers Association and Utah Association of Counties, over the next several months.

All things considered, this was another extremely successful legislative session for UPA in progressing our key priorities and fending off what could have been bad policies. The resounding theme of the legislature wanting more direct engagement with our key regulatory agencies, particularly DAQ, also provides a good opportunity for education on our challenges along the Wasatch Front and in the Uinta Basin — something we intend to take advantage of during the “off-season” better known as the interim.

Now looking onward and upward, happy spring and soon-to-be summer!

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