With exploration and production (E&P) activity heating up along the eastern border of Montana as an extension of the North Dakota oil and natural gas boom, state lawmakers in the Big Sky state have proposed about a half-dozen new laws to deal with the impact on the local communities in the region.
Ultimately, the state legislature is considering providing up to $50 million during the next few years to address the immediate E&P impact and later oil/gas development. There is also some push back by some legislators wanting to get more revenue from the oil/gas operators to help fund the response to the impacts on local communities.
So far, the issues of housing, schools, water, sewer and other infrastructure and environmental impacts are being viewed as bipartisan concerns needing mitigation. One state senator told local news media there is a need for action, but it can also be a “wise investment” longer term for Montana.
A primary bill among the proposals (HB 452) by Rep. Rob Cook would establish a $15 million fund for cities and perhaps other local governments to provide grants to help support local infrastructure projects necessitated by the E&P development.
Based on reports from the state legislature, the idea behind the bill would be to provide a quick source of funding. Initial grants could be available this summer. The fund will be administered by one of two agencies still to be determined: the Department of Commerce or the Board of Oil/Gas Conservation.
The initial focus will be on water and sewer infrastructure. Lawmakers are concerned about having the foundation in place for the development of badly needed housing and new business development in the areas in the state’s oil/gas fields.
Funding for schools will be addressed in other bills now being considered.
State Sen. Christine Kaufmann introduced a bill earlier in February (SB 295) that would eliminate the state’s “tax holiday” given to new oil/gas wells. Kaufmann argues that the extra revenue could be used for the impact projects dealing with housing, schools and infrastructure.
She told local news media recently that the oil/gas industry is “making a killing” at the expense of local communities. “We can start to recapture the hundreds of millions of dollars we have given away.”
New wells in Montana pay a greatly reduced production tax of less than 1% (0.76%) of the production’s gross value for a year, but after that it goes up to 9.26%. Legislators have told local news media that Kaufmann has very little support for her bill.
For now, the focus is providing up to $50 million over the next four years to finance impacts in the current development areas, and in other areas westerly where the development is anticipated to spread by state officials.
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