Louisiana House Bill HB1124

Louisiana 2016 Regular Session

• Introduced: 4/5/16
• Refer: 4/6/16

Caption

Provide for the Oilfield Site Restoration Law (OR SEE FISC NOTE SD RV)

Impact

The implications of HB1124 are significant for both the oil and gas industry and for environmental management in Louisiana. By basing fees on market prices, the bill creates an economically responsive framework that potentially enhances the Oilfield Site Restoration Fund, ensuring that funds are more closely aligned with industry profitability. The approach supports a sustainable funding model for the restoration of oilfield sites, which is crucial for environmental protection and the restoration of ecosystems affected by oil and gas extraction. This legislative modification may incentivize industry players to engage in responsible production practices, knowing that their fees will reflect market conditions.

Summary

House Bill 1124 aims to amend the Oilfield Site Restoration Law by modifying the fee structure related to oil and gas production in Louisiana. This legislation introduces a variable fee schedule based on the market prices of oil and natural gas, which is a departure from the fixed-rate fees previously in place. Specifically, the bill sets fees that increase as the price of oil and gas rises, establishing thresholds that correspond to price ranges. For crude oil prices up to $60 per barrel, the fee remains at one and one-half cents, but it escalates to three cents at prices above $60 and up to $90, and to four and one-half cents at prices exceeding $90. Similarly, corresponding fees for natural gas are linked to prices in terms of dollars per million BTUs, starting at three-tenths of one cent and moving up based on specified price brackets.

Sentiment

The sentiment surrounding HB1124 appears to be largely positive among industry stakeholders who welcome the flexibility offered by a market-driven fee structure. Supporters argue that this change promotes fairness and reflects real-world economic conditions, making it easier for companies to manage their costs depending on fluctuating oil and gas prices. However, there may also be concerns from environmental advocates about ensuring that increased funding from these fees will lead to effective and timely restoration efforts. The debate reflects ongoing tensions between profitable resource extraction and environmental stewardship.

Contention

Notable points of contention may emerge from the specifics of implementation, particularly regarding how these fees will be collected and utilized. While HB1124 is designed to enhance the Oilfield Site Restoration Fund, there may be questions about adequacy in restoring areas impacted by extraction activities. Critics may also highlight the importance of ensuring that funding derived from these fees translates into meaningful environmental protections, thereby preventing any potential decline in restoration efforts due to the volatility of oil and gas markets.