American Oil and Gas Reporter - June 2018 - 34

Tennessee Session Quiet For Industry
KNOXVILLE, TN.-The Tennessee
Oil & Gas Association entered the 2018
Tennessee General Assembly with hopes
for a session in which the state's oil and
gas producers could avoid any measures
likely to harm the industry. TOGA got
that wish, relates President Chuck Laine.
On the other hand, he allows, the fact
that lawmakers' attention was focused
elsewhere also prevented them from passing a bill that TOGA backed.
According to Laine, the top item on
the association's legislative agenda was
HB 1187, which sought to redirect all
Tennessee oil and gas severance tax revenues-except a small portion for administrative costs-back to the counties from
which the production originated.
"Only one-third of severance tax revenues
stay in the producing county," Laine observes.
"The rest goes into the state's general fund.
With production dropping because of the
downturn, our members tell us their counties
can really use the help."
According to TOGA staffer Roxanne
Reiley, the bill was introduced this session
as a trial balloon to gauge lawmakers'
reaction. "Anytime you ask legislators to

give up general fund revenue, you have
to expect a lack of enthusiasm," she acknowledges.
The bill advanced through several
committees, she recounts, but ultimately
landed "behind the budget," with approximately 250 other bills that sought to
direct revenue away from the general
fund. "Only about 60 of these bills actually
got funded," she points out.
Part of the issue, Reiley suggests, is
that legislators anticipate 2018's stronger
prices will yield more severance tax revenue.
"Higher prices are a double-edged sword,"
she acknowledges. "Our members and
their communities like the higher prices,
but it makes it harder to convince the state
to give up the increased tax revenue."
Although HB 1187's limited support
was no surprise, Reiley concludes, TOGA
will make another run at the severance
tax issue in 2019. The next bill also may
include a three-year phase-in to help lawmakers better accommodate its fiscal
note. "The next session will see a new
governor and administration and many
new legislators," Reiley forecasts. "Our
job will be to educate them on the issue

and involve our communities. When the
locals talk about the inequality of severance
tax allocation, it makes a difference."
Early Bird
Although legislative attention on upstream matters was relatively scant, Laine
and Reiley observe, what started as a quiet
session for the midstream segment turned
boisterous during the final 10 days in April.
"It is the reason we always try to move
our bills early in the session rather waiting
to the last few days," Reiley relates.
Controversy arose with a seemingly
innocuous bill to allow municipal natural
gas utilities to fund local chambers of
commerce, she indicates, which became
the subject of a late-session tug-of-war.
SB 1894 and its companion, HB 1941,
moved quietly through various committees
until the session's final week, when a
full floor debate on SB 1894 saw several
amendments added and subtracted before
it finally passed both chambers late on
the session's final day.
"Some utilities wanted to encourage
chambers to help recruit more local businesses," Reiley explains. "This bill flew

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American Oil and Gas Reporter - June 2018

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