American Oil and Gas Reporter - June 2016 - 32

passed it," Cross says. "They also have
to deal with the state's school finance
problem. Those issues don't affect the
oil and gas industry directly, but we will
see how legislators address them. They
may return to Topeka in a few weeks for
a special session that focuses on school
finances (see story, page 101)."
Media reports indicate Brownback's
veto of SB 280 is based on a provision that
would have allowed taxpayers to appeal
rulings by the state Board of Tax Appeals
to district courts. The Kansas Department
of Revenue is battling with restaurant owner
Gene Bicknell over a $42 million tax bill

based on his 2006 sale of several hundred
Pizza Hut franchises. Bicknell contested
the assessment, stating he was a Florida
resident at the time of the transaction.
In his veto message, the governor
stated SB 280 would have provided Bicknell with special treatment as he contested
his tax obligations.
The state projects May corporate and
individual income tax collections were
about $70 million below estimates, continuing a string of monthly revenue shortfalls, Cross notes. Looming on the fiscal
horizon are the costs of complying with
the Kansas Supreme Court's order de-

claring state aid to public schools as inequitable, and making up a $42 million
shortfall if Bicknell wins his tax battle.
"The possibility of legislators looking
at oil and gas for more revenues is something
KIOGA will be watching during the special
session," Cross said at the end of the
session. "While it doesn't look like legislators are talking anything right now, KIOGA will be monitoring closely to see if
anyone is targeting oil or gas revenues.
Hopefully, legislators will look past prices
and consider what producers actually are
getting for their products."
❒

Tennessee Session A 'Push' For TOGA
KNOXVILLE, TN.-When the Tennessee General Assembly adjourned its
2016 regular session on April 20, the
Tennessee Oil & Gas Association figures
the state's industry was no better, but no
worse, off than when the session began.
TOGA President Chuck Laine reports
one bill the association supported died, but
so, too, did two bills-including one "sleeper"-that the association opposed. "With
the oil and gas price situation now and the
condition of the industry, that is about as
good as you can expect," he reasons. "I
consider this a successful session."
Probably the biggest disappointment
for TOGA, Laine acknowledges, was the
failure of HB 1881 by Representative
Dennis Powers, R-Jacksboro, to survive
the legislative process. HB 1881's genesis,
he explains, was a request by the Campbell
County, Tn., Commission that the state
increase its severance tax rate on crude
oil and natural gas from 3 to 7 percent.
Pointing out that Tennessee oil and
gas production occurs in some of the
most economically depressed areas of
the state and that "those counties are
looking for money anywhere they can
find it," Laine opines that a bill to raise
the severance tax rate "would have been
pretty easy to kill."
TOGA Research Director Roxanne
Reiley notes that two-thirds of severance
tax collections go to the state's general
fund while one-third is returned to the
county of production.
Consequently, Laine says, TOGA and
Representative Powers concocted the idea
of changing the allocation formula to return all severance tax monies to the counties, which he says is the case already
for coal production.
Since they would have cost the state
about $950,000 in the coming fiscal year,
HB 1881 and a companion House bill
were assigned to the Finance Committee
32 THE AMERICAN OIL & GAS REPORTER

in both chambers, where they were placed
"behind the budget." Laine explains that
after Tennessee lawmakers consider the
governor's budget requests, any legislation
with a fiscal note is prioritized for funding
consideration.
Even though Tennessee anticipates a
$300 million-$400 million surplus for
the coming fiscal year, "I would guess
we had probably almost $1 billion worth
of items behind the budget," he estimates.
"(HB 1881) fell way down the line."
Reiley points out Tennessee is emerging
from two tight budget years when the
governor's requests exceeded projected
revenues. In an election year, she says,
the general assembly's Republican majority opted to cut the state's investment
tax. "They used a lot of that surplus to
cover the lost revenue," she advises.
Laine says whether similar legislation
re-emerges in a future session is up to
local officials. "If there is a lot of local
push, we will jump in and help, but I
don't see TOGA initiating that," he says.
Dead On Arrival
On the positive side of TOGA's ledger,
Laine continues, was the death of SB
1915 by Senator Steven Dickerson, RNashville.
He traces that bill back to August
2015 when anti-oil-and-gas activists convinced the Nashville Metro Council to
pass an ordinance restricting compressor
station sites to industrial zones, even
though the council's attorney advised the
council that it lacked that authority, since
the Federal Energy Regulatory Commission had the final say on siting interstate
pipeline facilities.
Reiley says Kinder Morgan was in
the process of expanding a compressor
station on a transmission line near where
the city planned to build a new park.
SB 1915 would have banned com-

pressor stations within one mile of a
public park, Reiley reports, but it died in
the Senate Energy, Agriculture and Natural
Resources Committee without a hearing.
"The sponsor knew he didn't have the
votes for it," she assesses. "It pretty much
was dead on arrival."
However, she says the bill is indicative
of a trend TOGA has discerned. "Our
environmental opposition has started to
focus on other aspects of the oil and gas
industry such as transportation," she observes, promising TOGA "will stay engaged" regardless where the attacks occur.
The other bill TOGA actively opposed
was a little less obvious, Laine allows.
He says HB 2151 appeared innocuous at
first glance, "but once we really got to
looking at it, we found it had the potential
to cause a lot of problems."
HB 2151 would have created a 13member state energy policy council to
advise the governor and general assembly
on identifying and managing state energy
resources, as well as increasing domestic
energy exploration, development and production "with the goal of promoting economic growth and job creation while ensuring the protection and preservation of
the state's natural resources, cultural heritage, and quality of life," according to a
summary on the Tennessee General Assembly website.
HB 2151 was sponsored by Representative John Ragan, R-Oak Ridge,
whom Laine describes as "a nice guy"
with whom TOGA has worked in the
past. But HB 2151 is "kind of a solution
looking for a problem," he characterizes,
and was opposed by all segments of the
energy chain, and not only upstream oil
and gas.
The bill and its Senate companion
progressed through the Government Operations and Energy, Agriculture and Nat-

American Oil and Gas Reporter - June 2016

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