Nearly 2,000 bill drafts have been requested for Montana’s 64th legislative session that begins on Jan. 5, many directly or indirectly related to the state’s oil and gas industry, and Montana Petroleum Association, MPA, Executive Director Dave Galt is gearing up for another biannual, three-month lobbying marathon.
While Galt sees taxes, regulations and infrastructure spending as likely industry-related issues the Montana Legislature will address, “probably the number one issue has to do with sage grouse,” he told Petroleum News Bakken in a look forward at what the session might look like.
MPA along with a number of other trade and agriculture organizations has been working closely with Gov. Steve Bullock over the past two years in developing a sage grouse conservation plan. Bullock formed a 12-member advisory council in 2013 which developed a conservation plan intended to leave management of the species to the state avoiding federal intervention. In September, Bullock signed an executive order outlining requirements and guidelines that were based on the recommendations of that advisory council. The order also formed an oversight group to implement the program. Now the issue is funding.
“We went to the governor along with the Stockgrowers and the Montana Farm Bureau - we were right with Bullock when he got elected. We expressed our concern and he took the bull by the horns and created that council,” Galt told Petroleum News Bakken. “We spent two years on this and the culmination will occur in this Legislature getting the funding and the staff and any other final tweaks that need to be done with the conservation plan.”
The governor’s budget includes $10 million to fund the sage grouse conservation program - $5 million for each year in the biennium - and Galt said MPA will be supporting that funding, which includes $1.2 million for increasing staff.
“We are very concerned about where endangered species issues at the federal level are going and what the sage grouse issue will do to Montana’s agriculture and natural resources development industry,” Galt said. “So sage grouse is a huge deal. It’s in the governor’s budget … and we’ll be supporting that. There’s also money for staff … and we’ll be supporting that as well,” he added, noting that funding for additional state personnel is always a controversial issue in any legislative session regardless of which party is in control. “So there is project staff that need to be dedicated, and that will certainly be an issue.”
The plan is based on a similar one that Wyoming developed and implemented. “The way these conservation plans are set up, and Montana mirrors Wyoming, if you’re a project developer and you want to go into sage grouse areas and if you have impacts to sage grouse habitat, you have to have your project analyzed to see if it’s within the guidelines of the plan,” he said.
Thus far Wyoming’s plan has proven successful and Galt hopes that other states with sage grouse habitat will implement similar plans to avoid the Greater Sage Grouse from being listed as a threatened or endangered species.
“We believe that as demonstrated in the state of Wyoming, the feds recognized the value of that plan in Wyoming and they didn’t impose severe management recommendations for sage grouse habitat like they did in every other state in the sage grouse range because Wyoming had a plan,” he said. “And we’re hoping that as other states get plans together that offer conservation strategies it won’t be necessary to list that bird. There’s a lot of back-and-forth between federal land management agencies and the state and we’re watching that with a very big magnifying glass.”
Infrastructure spending
Another issue Galt will be watching in the upcoming session is infrastructure funding in oil industry-impacted counties.
In the 2013 session the Legislature passed a bill that would have earmarked some $35 million to oil-impacted counties and moved an additional 25 percent of money that the state gets from federal oil and gas royalties to oil-impacted counties; however, the governor vetoed that bill.
In his veto comments, Bullock said the state’s Treasure State Endowment Fund, which is funded from resource-based monies in each legislative session, had allocated $15 million for infrastructure in the oil impacted counties. Bullock also referred to another bill passed by the 2013 Legislature that allocated funding to eastern Montana schools. Furthermore, Bullock wanted to fund the impacted counties through bonding, but the Legislature didn’t pass a corresponding bonding bill.
“They (the impacted counties) didn’t get much of anything last time, only what was in the Treasure State Endowment program and the traditional grants that go for roads and bridges and things like that, which there is some of every session,” Galt said.
However, things could be different in the 2015 session, and Bullock has already put together a relief bill for the oil-impacted counties. “I know the governor has got a broad infrastructure bill and a component of that is $45 million in infrastructure grants to eastern Montana. He’s talked a lot about that and the Republicans have talked a lot about infrastructure development.”
In the end, Galt says, it will all boil down to how much money to send to the counties and the source of that money. “I think the two unknowns are what the total figure is and where it comes from. What I’ve seen in the governor’s budget is he’s looking at almost $300 million in a combination of cash-paid and bonded. Bonded takes a two-thirds vote of both houses to indebt the state of Montana and that’s going to be a difficult hill to climb.”
However, there appears to be broad support for infrastructure spending going into the session. “The leadership of both parties in the House and Senate are also talking about infrastructure at a similar magnitude. The issue is going to be how to fund it - it’s going to be a financial discussion about how much the state needs for an ending fund balance, how much the state needs for other initiatives of the administration, and what the top priorities are of the legislature.”
Taxes
Increasing taxes on industry is a recurring issue in legislative sessions, and Galt doesn’t see that changing in the 2015 session, adding that it’s too early to know exactly what will emerge. “From a tax perspective it’s hard to tell right now, but there’s an awful lot of bill draft requests with one sentence that says ‘generally revise oil and gas taxes.’”
However, one tax issued that Galt does foresee emerging in the session is the property tax that the state imposes on pollution control equipment. MPA backed several bills in the 2013 session that would have phased out the tax that Montana puts on equipment required for pollution control, and while both bills passed, both were vetoed by the governor.
Galt said MPA will again back legislation to eliminate the tax on pollution control equipment. “That’s a big deal for us,” he said. “A lot of our members spend millions of dollars on a variety of air and water pollution control equipment that many states don’t tax but we do. We put that bill on the governor’s desk last year and it was vetoed. There will be a similar bill again this session.”
On other tax issues, Galt said there will likely be a push on the drilling incentive tax that the state provides. “Every session I’ve been involved with at MPA you’ve got bills that would change or eliminate the drilling incentive in Montana, and I expect those to be there again.”
Regulations
Another issue Galt anticipates in the upcoming session is a push for tighter industry and industry-related regulations.
“I see more regulatory efforts possibly including rail regulation with the underpinnings being the concerns about oil transportation and coal transportation,” he said. “I see the environmental movement focusing on issues regarding transportation, so whether it’s pipelines or rail, I certainly expect additional regulatory bills there.”
But Galt said his membership believes the industry is already heavily regulated and will oppose any new regulations. “MPA is going to resist any additional regulatory burdens.”
Other issues
There are several other issues Galt sees emerging in the upcoming session, including issues related to federal lands. “I think you’re going to see a lot of activity this year on federal lands issues,” he said. “Every time you pick up the paper we’re looking at some type of federal lands issue one way or another.”
Galt is also seeing bill drafts dealing with baseline water quality sampling, prohibition of reserve pits, natural gas capture and taxing flared gas, and wellbore setbacks from water bodies and buildings, all of which he will be watching closely.
Other issues coming up in the session include eminent domain and school funding. At this point Galt hasn’t seen the text of any bill drafts on those issues but will be watching for those. And because there is still more than a month during which legislators can introduce bills, Galt will be checking bill drafts on a daily basis.
Who’s who
In Montana, there are 100 seats in the House of Representatives and 50 seats in the Senate and Republicans hold majorities in each. In the House, Republicans hold a 58 to 42 majority, and in the Senate the majority is 29 to 21.
Sen. Debby Barrett of Dillon is the president of the Senate and Sen. Matt Rosendale of Glendive is the majority leader. Sen. Jon Sesso of Butte is the minority leader in the senate.
In the House, Rep. Austin Knudsen of Culbertson is the speaker and Rep. Keith Regier of Kalispell is the majority leader. Rep. Chuck Hunter of Helena is the minority leader.
