Measure limiting oil, gas `takings' sent to Senate
Oklahoma's House of Representatives sent along a proposed law to the Senate this week that could allow mineral rights owners to sue municipalities or other jurisdictions enacting permitting requirements for oil and gas operations when those prevent them from developing their assets.
House Bill 2150, authored by Oklahoma Rep. John Pfeiffer, R-Orlando, was adopted 64 to 32 Monday night largely along party lines, with five representatives excused from voting.
Pfeiffer and the Oklahoma Independent Petroleum Association — Oklahoma Oil and Gas Association, the organization representing the state's oil and natural gas industry, say the measure is needed to give mineral rights owners the opportunity to file court cases to battle over restrictive rules.
The new language would be in addition to an existing statute that already bars municipalities, counties and other local jurisdictions from adopting ordinances, rules or regulations that exceed the Oklahoma Corporation Commission's authority to regulate the oil and gas industry.
While they said they understand that local governmental units have a justifiable interest in ensuring the health and safety of their constituents, law backers said some recent municipal ordinances effectively have stripped mineral rights owners from the ability to harvest oil and gas they own, effectively creating a “government taking” that's barred by Oklahoma's constitution.
Pfeiffer highlights an ordinance Yukon's city council adopted in September as an example.
The ordinance, which Yukon's council approved unanimously, established increased setback requirements for both drilling and producing wells within its city limits. The ordinance bars either drilling a well or constructing booster pumps, tank batteries, compressor stations or above-ground pipeline any nearer than 1,000 feet from a property line, unless the well location has been approved and written permission has been granted by all adjoining property owners. It also bars future development of oil and gas wells in city parks, as well as on “any property which has been platted or property for which there is a current preliminary plat.”
It also bars future development of disposal wells within the city's limits and requires that no wells are drilled within 1,000 feet of the North Canadian River's banks.
The measure also sets limits on well operations by restricting workover and routine service hours, by requiring operators to exclusively use electrical pumps to both service and produce wells, and limits allowable noise levels from a well location to 45 decibels at 500 feet.
“That's less noise than the equivalent of a home computer operating in your house,” Pfeiffer said. “As we are seeing more and more outrageous municipal ordinances, it is important to provide mineral owners a way to protect their property.”
The bill's language states an ordinance could be considered a taking pursuant to Article 2 of the Oklahoma Constitution and relevant statutes if it were to:
• Substantially interfere with the use and enjoyment of a mineral estate.
• Impose or enforce a limitation adversely impacting the use and development of minerals.
• Prohibit access to mineral holdings.
• Substantially increase the costs of oil and gas operations.
• Substantially reduce the fair market value of a mineral estate. Michael McEachern, a councilman and Yukon's mayor, didn't reply to a request fora comment about the pending bill on Tuesday.
Meanwhile, Chad Warmington, OIPA — OKOGA's president, said the industry understands that city councils and boards of county commissioners are concerned about the health, safety and welfare of their constituents, and added companies and the organization always are willing to work with local officials to ensure ongoing operations observe reasonable protections.
He said oil and gas operators and mineral rights owners also are dealing with similar issues in Newcastle, Piedmont, Minco, Amber, Tuttle and Blanchard. “We want local entities to have the ability to protect the health, safety and welfare of their residents,” Warmington said. “House Bill 2150 won't impact that, when they take steps that are reasonable and don't exceed the authority of the Oklahoma Corporation Commission.”
As for the proposed law, Warmington said, “it is an attempt to strengthen existing law that protects the rights of mineral owners to declare that any overly broad or overly burdensome regulations amounts to a governmental taking.
“They ought to have a recourse for that.”