Meeting Aug. 31, one day prior to the annual meeting of Montana Petroleum Association, Crowley Fleck PLLP held a seven-hour seminar focused on areas relating to oil, gas and mining law.
Uriah Price, an Energy, Environment and Natural Resources Department associate, provided the more than 135 attendees with updates on case law from Montana and North Dakota pertaining to mineral and surface ownership, including pooling interests, royalties and probate. He serves on the Rocky Mountain Mineral Law Foundation's Young Professionals Committee, and works in the Billings office, where his practice encompasses multiple areas of energy and natural resources law.
Price delved into river issues related to navigable and non-navigable waterways, providing legal background and explanations on state and federal classification of waterways, particularly, the Yellowstone River. He also gave an update on the latest changes to flaring regulations passed by the North Dakota Industrial Commission (NDIC) aimed at dramatically curbing flared gas from oil wells in the Bakken.
In July 2014, the NDIC released a statement underlying the objectives of the new flaring policy, "The Commission’s goals are to reduce flaring to 26% by fourth quarter 2014; 23% by first quarter 2015; 15% by first quarter 2016 and 10% with the potential for 5% by fourth quarter 2020."
Next, Josh Cook, Energy, Environment and Natural Resources Department associate, Billings, gave an overview of mining law dating back to the 1872 General Mining Law which opened the west to mineral exploration by authorizing mining for economic minerals such as gold, platinum and silver, on federal public lands. During the 45-minute session, Cook explained the process of staking mineral claims, and touched on the complicated regulatory environment and permitting process covered later in the seminar by Victoria (Vicki) Marquis and Christopher Stoneback.
Cook is a member of the American Exploration and Mining Association, as well as the Montana Mining Association.
Stoneback, Litigation and Energy, Environment and Natural Resources Departments partner, and Montana Law Review editor, opened the section of the seminar on Natural Resource Permitting Process and pitfalls, which largely covered the permitting process for oil, gas and mining as it relates to water quality, and the Montana constitutional requirement for a clean and healthful environment, one of the few state requirements of its kind. He addressed the 310-stream crossing permit issued by the state's local conservation districts, as well as the 404 Federal "dredge and fill" permit governing waters of the U.S. under the Clean Water Act and talked briefly about how the recent injunction of the expanded WOTUS rule applies to future development and permitting in Montana. Just this week, a North Dakota federal judge, ruled that the 13 states that filed a lawsuit to block the rule for the expanded definition of protected waters, including Montana, would be exempt from implementation of the rule.
Vicki Marquis, Energy, Environment and Natural Resources Department associate, covered water discharge permits, including effluent limitations and the variance process added to the numeric standards set by the Board of Environmental Review; another regulation which is unique to Montana, and limits the nutrient levels of waters discharged into surface water from source point (discreet) locations such as mining operations. Water discharged from non-point sources, including non-anthropogenic (or sources over which humans have no control) as well as agricultural sources of water discharge, do not fall under the same requirement for numeric standards. Marquis also discussed Montana's stringent non-degradation policy for water quality, which is broader than protections provided in the Clean Water Act, and includes all surface water.
Stoneback concluded the session by discussing the arduous permitting process, including environmental assessments, environmental impact statements and meeting MEPA/NEPA provisions prior to obtaining a mine operating permit. He also addressed potential legal challenges, urging attendees to utilize property rights sections of the Montana Constitution, as well the comment period following the Department of Environmental Quality's Decision of Record, to refute claims made by those opposing permit applications.
Attorney General Tim Fox was the keynote speaker during the luncheon, and recognized Crowley Fleck as a law firm that's long been committed to providing information and educational resources to the public. He also discussed the latest ruling on the WOTUS injunction, after having signed onto the lawsuit to block the expansive rule in Montana.
The afternoon session covered recent tax developments and creditors' rights in the context of natural resource development, led by Jared Le Fevre, Crowley Fleck's Tax Practice Group partner and Ben Hursh, Missoula Commercial Department partner. Hursh is also the current Creditor's Rights and Bankruptcy Practice Group chair, at Crowley Fleck. Montana's tax climate is unique in terms of oil and gas. Producers are afforded a 12-18 month "tax holiday", in which production tax rates fall below 1% on vertical wells (24 months) and horizontal wells (18 months). This period, referred to by industry as a drilling incentive, has increased production and tax revenue to the state by large margins since its passage in the late nineties; from approximately $25 million dollars annually to more than $260 million. While geology largely drives development, operators in Montana, as well as the Montana Petroleum Association, have fought against legislation to eliminate the incentive.
Another large driver in development is commodity price. Lower prices have slowed development, and increased fears about bankruptcies within the energy industry, which Ben Hursh addressed during his presentation on creditors' rights.
Wrapping up the session was Aimee Grmoljez and Greg Dorrington, who provided a Montana legislative update. Dorrington is a Litigation and Energy, Environment and Natural Resources Departments associate. Grmoljez is a Partner in Crowley Fleck's Government Affairs and Litigation Departments partner, Helena. She is a member of the Supreme Court's Access to Justice Task Force, the Governor's Women's Equal Pay Task Force, and was named a Rising Start in the Mountain State's edition of Super Lawyers in 2012.
Highlighting the success of industry during the legislative session, Dorrington and Grmoljez discussed the passage of the Sage Grouse Stewardship Act; a bill to exempt certain pollution control equipment from taxation for a period of ten years; legislation to lessen the tax burden on Montana's smallest producing oil and gas wells; resolutions to support coal development and the Keystone XL pipelines; and several water quality standard bills, to name a few.
Additionally, the presentation covered a slew of proposals to increase regulations on oil and gas development, all opposed by MPA and killed in committee. "The grassroots still matters," said Grmoljez, who closed the seminar by encouraging attendees to know their legislators, and to talk to candidates and elected officials about the importance of the energy industry and development. "I can tell you that I do work for several companies in oil, gas, coal, pipelines and others, but nothing I say will be as powerful or influential to a legislator as hearing from one of their own constituents."
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