Pub.1 2019-2020 Issue 3

I n these rapidly changing circumstances, the classification of our oil and gas infrastructure as “critical infrastructure” is of paramount impor- tance. The US Government (Cybersecurity & Infrastructure Security Agency – CISA) already recognizes oil refineries as part of the critical US infrastructure and our refining industry is tightly tied to Uintah Basin pro- duction. Our entire supply chain - drilling and completions, pipeline, shipping (trucking), refining, terminals – is a critical component to delivering essential energy reliably. Our industry’s continued operation is necessary to ensure the security, safety and health of the U.S. citizens - not to mention stability of our economy. As we are writing this edition, the state has 8 counties who have issued various forms of stay at home orders, some of which reference the CISA critical infrastructure guidance and some that do not. UPA will continue advo- cating for a standard framework that refers to the CISA guidance and correctly acknowledges and protects all segments of the oil and gas industry as critical infrastructure. We will also continue pursuing regulatory clarity with EPA, DEQ, DOGM, SITLA, BLM and others given the operational changes necessary to prioritize the safety of our employees, partners and community. Utah’s oil and gas industry is committed to doing our part to ensure the energy backbone of our economy is safe and stable while navigating this challenge. As the legislature gears up for an April special session we will continue efforts to ensure the oil and gas industry is properly recognized as critical infrastruc- ture and policies are in place to support ongoing stable operations during these unprecedented times. Legislative Session This year’s session saw a modest 510 bills passed, about 60 bills less than last year’s record breaking number. UPA’s bill tracking list included 89 bills and 2 appropriation requests, both of which were successfully funded. The UPA Legislative Committee took active positions on 47 of those bills. We took a high profile position on 7 – meaning we publicly engaged in testimony and discussions, and were successful on all but one. We took a low profile position on 24 – meaning we otherwise educated lawmakers on our position, and won more than we lost – given the politics at play on some of those bills, we’re considering a passing grade a win! One of our 7 high profile support bills, Senator Okerlund’s SB 148 “Oil and Gas Modifications” was passed in direct response to the November 2020 legislative audit. This bill gives the Division and the Board the ability to administratively levy and collect fines, as is the standard in many of our neighboring states, addressing the most significant issue identified in the audit. It also provides balance to ensure that collecting fines doesn’t turn into a revenue source for the Division. It requires notice of the violation, and a list of actions and timelines necessary to cure the violation before a fine is issued and sets out that one violation should only trigger one fine, multiple fines should not be “stacked” on a single violation. It caps the fines that can be levied by the Division at $200k, which is in line with the New Mexico example raised in the audit. It also creates the Oil and Gas Administrative Penalties Account to accrue the administrative penalties collected by the board or division. Subject to an appropriation by the legislature, the funds in that account can be used to offset risks to the public health, safety, or welfare caused by oil and gas operations for impacts and activities covered by bonding, or ii)for other direct impacts to the general public from oil and gas development as identified by the board and the executive director of the Department of Natural Resources at a public hearing. It requires rulemaking by the Board of Oil, Gas and Mining to establish a detailed fee schedule to be developed for violations, which should limit the amount of discretion/subjectivity, and sets out that the Board shall review bonding rules to determine if the rules provide adequate fiscal security. UPA supports the Division and the Board having the tools necessary to hold bad actors accountable. A regulator that has the resources and enforcement tools necessary to carry out its mission is in our long term best interest and we are aligned in making these improvements in the Division’s operations. As this edition goes to press we are preparing for the governor to call a special session for our lawmakers to address COVID-19 related issues, including tax and budget adjustements. A date is expected in mid to late April and we will keep our members up to speed as details emerge. A few general interest highlights: • Due to economic downturn generated by the COVID-19 virus, state revenue projections used for budgetary planning are likely to change. This could result in a special session in the second half of this year to make changes in the budget. • Education had a big win, with an increase to the Weighted Pupil Unit (WPU) by 6%, one of the largest increases in recent years. At the very end of the session a modest education funding reform proposal was approved to extend income taxes which otherwise support the education fund, to be used for the disabled and children – however this will require voter approval in November. • A compromise with Better Boundaries was found that allows the state to keep its citizen adopted independent redistricting commission, but with fewer controls on the Legislature’s constitutional redistricting authority. • It is no longer a felony penalty for plural marriage among consenting adults, making it an infraction instead. The change was made to encour- age reporting of other crimes (domestic abuse, child abuse, etc) that are believed to be underreported in these communities for fear of plural marriage charges. Polygamy would still be treated as a felony if it were charged in conjunction with other crimes. • Much to the dismay of some, the state did not give any tax cuts, even though we saw $921 million in ongoing and one-time tax surpluses. Rainy day funds were instead topped off, which hindsight is quickly showing to have been the prudent decision • The charged issues of gun control and abortion were addressed, resulting in several gun control efforts failing, including a requirement that all gun sales at a gun show must have a buyer-background check. An anti-abor- tion law passed, resulting in a near ban which won’t go into effect unless the U.S. Supreme Court reverses the 1973 Roe v Wade ruling. Critical Infrastructure and COVID-19 Legislative Recap 8 UP DATE