American Oil and Gas Reporter - October 2015 - 104

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its range in Oklahoma, and have been
told anecdotally that the bird's population
in the state looks very good," he says.
"We hope findings from the study's
second year show the same trend to give
us additional data to provide USFWS
and maybe turn this thing around."
ESA listings that classify the American
burying beetle as endangered and the
lesser prairie chicken as threatened already
have proven costly for OIPA members,
McDougall says. The economic drag will
get heavier as USFWS promises to decide
the fates of all backlogged listing candidate
species by 2018, he adds, creating additional uncertainty for producers and adding
millions of dollars in costs that otherwise
could go toward finding and producing
energy.
"That means a continual stream of
possible ESA listings blanketing Oklahoma and the rest of the country with the
potential to at least slow, if not stop, oil
and gas activity across the nation," McDougall insists. "The time is right for
Congress to consider changing the ESA
to head off abuses. It is clear the ESA is
being abused in an effort to stop oil and
gas development."
Osage County Freeze
Other federal matters add to the uncertainty, Terry indicates. The Bureau of
Indian Affairs in May issued final revisions
to mineral development regulations for
the Osage minerals estate. The new rules
include additional reporting and inspection
requirements, more specific obligations
for lessees, and adjustments in royalty
rate calculations and bonding amounts,
according to a BIA summary.
But Terry says the rules have contributed substantially to a drilling shutdown
on Osage tribal lands in Osage County
in northeastern Oklahoma and may affect
tribal lands elsewhere. "No one is drilling
in Osage County," Terry reports. "It represents typical federal overreach. We are
very concerned, because if it can be done
to Osage lands, it can happen on other
Indian lands in Oklahoma."
While that rule is being challenged in
court, Terry says OIPA applauds another
positive courtroom development for the
industry, which comes with a federal
judge's decision in Wyoming to grant a
stay that halts the Bureau of Land Management's hydraulic fracturing regulations
(see story pg. 18).
Judicial decisions to put federal rules
on hold, which include an August ruling
to stay the Environmental Protection
Agency's definition of "waters of the
United States," may intensify, Ferate
says. He points to an example in which
the U.S. Supreme Court, in a decision to
set aside EPA imposed limits on mercury

104 THE AMERICAN OIL & GAS REPORTER

at power plants, castigates a federal district
court judge for not placing a stay on the
rule, which the high court says EPA lacks
jurisdiction to adopt.
The BLM stay comes as the public
gains a greater understanding of the safety
and advantages of hydraulic fracturing,
Terry says. "People are beginning to understand that much of the issue with hydraulic fracturing has been pure sensationalism by environmental activists,"
Terry assesses.
The evidence he cites includes EPA
analysis that finds no link between the
completion technique and widespread
water contamination, a conclusion the
agency reached in June after an extensive
study that originated with a 2010 congressional order (See "Agency Finds Scant
Impact To Water," AOGR, July 2015).

Tax Code Concerns
In other federal matters, OIPA continues to monitor federal tax reform efforts
in Congress, Terry says. Several presidential candidates have spoken with OIPA
members this year, he says, and continue
to mention the issue.
McDougall recounts his testimony
about the likely fallout that ending the
percentage depletion allowance and the
ability to expense intangible drilling
costs would have on independent producers. "While OIPA has fended off
similar attacks, the continued drive from
both sides of the aisle to raise revenue
or overhaul the tax system has put longstanding and effective tax provisions in
peril," he says. "Percentage depletion
is at great risk. The nation's largest energy companies and the trade organizations representing them already have
shown a willingness to sacrifice percentage depletion to save provisions
that benefit large employers only. It is
imperative that OIPA and other associations continue to educate lawmakers
on the importance of percentage depletion to the independent oil and gas producers who remain the backbone of this
nation's energy industry."
OIPA and its allies must continue to
remind lawmakers that independent producers are critical to the U.S. economy
and that poor public policies will harm
them, McDougall says. "Some do not
get it," he muses. "They seem to believe
the industry should be punished, even
after carrying the nation through the most
recent recession. And to punish it, they
incorrectly and unfairly label effective
and common-sense tax provisions as government subsidies."
Fall Conference
OIPA's fall conference will include
speakers on public policy, regulatory af-

American Oil and Gas Reporter - October 2015

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