Oil, gas industry backs bill to boost Oklahoma Corporation Commission funds
Legislators on Tuesday advanced a measure that would provide the Oklahoma Corporation Commission’s Oil and Gas Conservation Division more dollars.
If it were to become law, Senate Bill 519 would redirect apportioned revenues collected through an excise tax on produced oil from the state’s general fund into the division’s revolving fund.
It also would cap that amount at $9 million annually.
The bill, co-authored by State Sen. Kim David, R-Porter, and State Rep. Terry O’Donnell, R-Catoosa, cleared the Oklahoma House of Representatives’ Energy Committee 18-0.
However, before sending the measure to the full House, the committee struck its enacting clause, which must be restored before it can become law.
Only about 17% of the Oklahoma Corporation Commission’s $62.7 million budget comes from Oklahoma’s general revenue fund.
About half of the agency’s total budget is from fees, assessments, fines and citations, with the remainder provided through apportioned revenues, some federal dollars and cash from the agency’s revolving funds.
The measure to boost funding to the oil and gas division is backed by the Oklahoma Independent Petroleum Association — Oklahoma Oil and Gas Association.
Chad Warmington, president of the organization, said industry officials have long been concerned about past diversions of oil and gas excise tax revenues to the state’s general fund.
“We support increased funds, provided they would be used to help make technology upgrades specifically dealing with permitting,” Warmington stated in an email.
“We are working collaboratively with Chairman (Todd) Hiett to explore how we can help the division quickly and effectively implement these much desired and needed improvements."
Hiett said Tuesday he appreciated legislators’ consideration of the issue, noting those dollars would help the agency both improve its technology infrastructure and to add essential staff.
“Addressing these needs is paramount in assuring our ability to foster economic growth through continued environmentally responsible development of Oklahoma’s oil and gas resources while providing timely, essential services,” he said.
The new dollars the state law change would send to the agency would be in addition to new revenues the agency began collecting in October after either establishing new fees or enacting increases to others that are related to its licensing, permitting and regulatory activities involving petroleum storage tanks, commercial transportation and oil and gas operations.
As for oil and gas oversight, the fee increases helped pay for the work the division does to process permits filed by oil and gas operators to drill producing and disposal wells, to dispose of drilling fluids through soil farming or recycling facilities, to flare production, to conduct seismic operations, and to undertake other activities.
The package also created annual well operating fees to help defer the division's expenses to inspect operating well sites at least once every five years (40,000 inspections are conducted annually), to respond to citizen complaints, to witness well pluggings and to monitor and address ongoing earthquake issues.
Initially, the agency's staff had sought millions in additional revenues through those changes, but while commissioners ultimately approved a package of fee increases and sent it to Oklahoma’s Legislature and then-Gov. Mary Fallin for review, the total amount had been cut substantially.
Hiett voted against recommending the final proposed increases, saying the proposal wouldn’t even support the agency in maintaining its current responsibilities because it had been trimmed so much. Fallin signed off on the increases later that year.