Topic: AAPL Governmental Affairs Weekly Report - 3/12/18 

1.  AAPL Governmental Affairs Weekly Report - 3/12/18

Posted 7 days ago
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Following please find highlights from the AAPL Governmental Affairs Weekly Report for the week of March 12, 2018. The full report is attached to this post.

STATE - LEGISLATIVE: Control and Regulation of Operations – Colorado. (Update to 2/19/18 Weekly Report) On March 7, HB18-1071 was postponed indefinitely by the Senate after passing the House last month. Originally introduced by Rep. Joseph Salazar (D) in January, the bill seeks to clarify that the Colorado Oil and Gas Conservation Commission (COGCC) "is required to regulate oil and gas operations in a manner consistent with the protection of public health, safety, and welfare, including the protection of the environment and wildlife resources. The commission must regulate oil and gas operations so as to
prevent and mitigate adverse environmental or public health impacts." The bill sought to codify the decision from the Colorado Court of Appeals in Martinez v. Colo. Oil & Gas Conservation Cmm'n (Case No. 2017 COA 37), which is currently unresolved because it is now on appeal before the Colorado Supreme Court. It was long-predicted that the bill would be killed in the Republican-controlled Senate. This is a victory for the oil and gas industry which has regarded the bill as an attempt to curtail or greatly control resource development in the state. According to Tracee Bentley, executive director of the Colorado Petroleum Council, "the petitioners in this case hope to persuade the COGCC to ban oil and natural gas development in Colorado, in conflict with state law and policy." Bentley added that "Democrats and Republicans in the state Senate were right to reject this destructive bill as it would circumvent our judicial system and erode the checks and balances that underpin our state's democracy." Read more.

STATE - LEGISLATIVE: Cotenancy – West Virginia. (Update to 2/19/18 Weekly Report) On March 9, HB 4268 was signed into law by Gov. Jim Justice (R). In a news radio interview last Wednesday the governor expressed his support for the measure. "There is a lot of very positive benefits in co-tenancy because if, in fact, there's more gas produced and there's more opportunity within West Virginia, we'll get a higher severance tax," said Gov. Justice. The Act will permit the use or development of an oil or natural gas property if an operator or owner makes reasonable efforts to negotiate with all royalty owners in an oil or natural gas mineral property and if royalty owners vested with at least three-fourths of the right
to develop agree to do so. The Act also provides that the non-consenting agent is entitled to receive either a pro rata share of production royalty payments paid on the gross proceeds received at the first point of sale to an unaffiliated third party seller and free post production expenses equal to the highest royalty percentage paid to the other co-tenants; or to participate in the development and receive a pro rata share of the revenue and cost equal to his or her share of the production attributable to the tracts being developed. A non-consenting lease owner has 45 days from the operator's written delivery of its best and final lease offer to make their final decision. The Act will take effect on June 3, 2018. Read more.

STATE - JUDICIAL: Duhig Rule: Deed Reservations – Ohio. In December, the Ohio Seventh District Court of Appeals issued the first reported Ohio appellate decision to accept the Duhig rule as persuasive authority in deciding a case. In Talbot v. Ward (2017-Ohio-9213), the Court applied the well-known 1940 Texas case, Duhig v. Peavey-Moore, which holds that a reservation must fail if both the grant and reservation in a deed cannot be given effect. The Court in Talbot noted how the facts before it required the same result as Duhig. Therefore, even if the ordinary rules of deed construction yielded an interpretation that there was a reservation of a 1/2 interest in the oil and gas royalty, bonuses and rentals in the deed in question, said reservation must fail because the warranty of title was breached due to the earlier reservation by a predecessor. Read more.   

Russell Cohen
AAPL Governmental Affairs