Overhaul of Idaho oil and gas laws includes new commission
April 28, 2017
BOISE, Idaho (AP) — A revamped commission overseeing Idaho's natural gas and oil industry and a beefed-up state agency to aid that effort emerged from this year's legislative session along with more detailed reporting requirements for oil companies.
The new laws and rules are a major course change for Idaho as expected windfalls of oil and gas money to state coffers and landowners have failed to happen despite several years of production. Severance taxes on reported production have never matched Idaho's cost to regulate the relatively new industry.
The new Oil and Gas Conservation Commission that starts work this summer replaces mostly citizen commissioners with three industry experts, a county commissioner and the director of the Idaho Department of Lands.
Lawmakers also enacted statutes for the industry that will require Texas-based Alta Mesa, the state's lone producer, to reveal more information about its wells and business operations, including information on royalty payments to mineral rights owners.
Key to the massive changes is Republican Rep. Judy Boyle of Midvale, whose district is in the midst of Alta Mesa's production area. In previous years, she sponsored legislation backed by the company expecting her district to benefit with good-paying jobs and royalty payments to mineral rights owners.
"I gave them fair warning," Boyle said about her first meetings with the company several years ago, including with CEO Harlan Chappelle. "The first time I find out you're not being fair with my constituents, I'm done with you."
Last year, she said, she concluded Alta Mesa wasn't making the full royalty payments promised in leases to her constituents. She said she confronted the company but didn't get the results she wanted.
So in March, she introduced a sweeping, 42-page bill called the "Landowner Bill of Rights" that rewrote many existing oil and gas regulations and that Alta Mesa opposed.
She said that after her bill was introduced, the company tried to portray her as a radical environmentalist to other lawmakers, and falsely said her bill would transfer federal lands to the state.
Chappelle, in a Jan. 24 letter to Gov. C.L. "Butch" Otter before Boyle's bill was introduced, wrote that "anti-industry activists" were making "unfounded accusations that we have somehow behaved inappropriately."
Boyle's bill went through some amendments, but lawmakers in the House and Senate ultimately approved it 68-0 and 35-0 respectively, and Otter signed it into law.
John Foster, a lobbyist and spokesman for Alta Mesa, said the company had no comment about this year's legislative session.
Idaho has a long history of oil and gas exploration starting in the early 1900s, but it was Alta Mesa using new technologies that made Idaho an oil and gas producing state. The company has spent more than $160 million finding reserves to tap and building infrastructure. But questions about what they've been pulling from those reserves have bubbled up.
As a result, increased transparency of the industry was mandated, which lawmakers hope will bring in additional companies to compete for Idaho's natural gas and oil. Lawmakers also approved clarifying information on Idaho Tax Commission forms for natural gas and oil severance taxes and requiring monthly reporting. The Tax Commission is also now authorized to conduct audits at least every three years.
The new laws also create an Oil and Gas Division in the Idaho Department of Lands that includes three new full-time staff members dedicated to oil and gas.
Boyle said lawmakers made a mistake not forming an oil and gas commission with more industry experts from the start and not bolstering the Lands Department with oil and gas experience. She said lawmakers wrongly believed the state's timber and grazing management knowledge could be applied to the oil industry and Alta Mesa.
"We were speaking one plus one, and they were speaking calculus," she said.
Tom Schultz, director of the Lands Department, said the three new workers should be hired by August. "Having more of that technical training and advanced degrees will definitely help the agency," he said.
The new laws are "a step forward," said Jim Classen, an exploration geologist and member of the current Idaho Oil and Gas Conservation Commission, which has no more meetings scheduled. "We're getting things better organized with time as the industry develops."
Classen, who raised concerns about Alta Mesa on the previous commission, meets industry expert requirements for the new commission and said he has applied for one of the four-year terms. The commission is expected to be in place by July.