THE TIPRO TARGET VOLUME 20, NO. 3 Febuay 2, 2017 Texas Independent Poduces and Royalty Ownes Association DONALD TRUMP TAKES OFFICE AS 45 TH PRESIDENT OF THE UNITED STATES, TAKES EXECUTIVE ACTION TO BOOST AMERICAN ENERGY SECTOR Afte taking the oath of office to seve as the 45 th Pesident of the United States of Ameica, on Fiday, Januay 20, 2017, Donald J. Tump assumed contol of the U.S. govenment. In his inaugual addess as Ameica s new Commande in Chief, Tump emphasized his vision of putting Ameica fist and pomised to stop the so-called Ameican canage plaguing the nation. Shotly afte the inauguation of Pesident Tump, the White House announced seveal initiatives of the new administation, including An Ameica Fist Enegy Plan outlined via the White House website. Specifically, the plan pomotes the Tump Administation s commitment to ovehauling policies in suppot of domestic enegy development. Fo too long, we ve been held back by budensome egulations on ou enegy industy. Pesident Tump is committed to eliminating hamful and unnecessay policies such as the Climate Action Plan and the Wates of the U.S. ule. Lifting these estictions will geatly help Ameican wokes, inceasing wages by moe than $30 billion ove the next 7 yeas, eads the official White House website. Sound enegy policy begins with the ecognition that we have vast untapped domestic enegy eseves ight hee in Ameica. The Tump Administation will embace the shale oil and gas evolution to bing jobs and pospeity to millions of Ameicans. We must take advantage of the estimated $50 tillion in untapped shale, oil, and natual gas eseves, especially those on fedeal lands that the Ameican people own. Mee days into his pesidency, Tump aleady has taken executive action on seveal pomises made duing his campaign fo office. Amongst seveal diectives issued in the past two weeks, Pesident Tump has signed a seies of Executive Odes aimed at educing the buden of govenment egulations and expediting high pioity enegy and infastuctue pojects that will ceate jobs and incease national secuity. TIPRO LAUNCHES STUDENT PROGRAM TO CONNECT WITH FUTURE PETROLEUM PROFESSIONALS In an effot to suppot the next geneation of Texas enegy pofessionals, the Texas Independent Poduces & Royalty Ownes Association is poud to announce the launch of a new TIPRO initiative called the Young Leades in Enegy (YLE) Student Pogam. Though the YLE pogam, TIPRO will open membeship to students who ae cuently enolled in qualifying undegaduate and gaduate studies, including Petoleum Engineeing, Geosciences, Land Management and Petoleum Technologies. As the oil and gas industy welcomes new faces fom univesities acoss the county, and these petoleum pofessionals step into positions of leadeship, it is ou goal that these individuals have an established connection with TIPRO that they continue thoughout thei caee. TIPRO s YLE pogam is one way to begin cultivating life-long business elationships with futue leades of ou industy. It will be these people who continue to cay out the mission of TIPRO to peseve the ability to exploe fo and poduce oil and natual gas. YLE includes a numbe of benefits exclusive to students, including egula updates on petinent policy poceedings, a complimentay invitation to attend a TIPRO confeence, and access to posting a listing in the new esume database on TIPRO s website. It is the association s hope that this esouce helps facilitate job pospects between students and potential employes. Student membeship is complimentay and application fom can be found at the following link: www.tipo.og/about-us/tipo-young-leades-student-pogam/. Fo moe details on the association s new YLE Student Pogam, please contact TIPRO at (512) 477-4452. Read moe about Executive Odes issued by Pesident Tump on Page 4...
Page 2 Febuay 2, 2017 THE TIPRO TARGET CHAIRMAN S MESSAGE TIPRO Membes, One of the most effective weapons fo those that want to kneecap the oil and gas industy is the idea that cabon dioxide is a poison gas that should ightly be egulated. As humans, we beathe in 400 pats pe million and we beathe out 45,000 pats pe million. Talk about oiginal sin! Don t woy. I am not going to be you dunk custy uncle holding foth at Thanksgiving on global waming. We have ALL had too much of that. Rathe I want to pesent the decision tee one needs to make to aive at some conclusion to this issue. The popula conclusion, the one atified in Pais, all wapped up in a bow, is that we should spend tillions of dollas fom taxing cabon dioxide emissions, and tansfe that wealth to vaious govenments, coodinated by the United Nations, fo a esult that even its poponents admit, at most, might epesent a faction of a degee Celsius diffeence by the tun of the 21 st Centuy. In othe wods, we should eode the global economy and adopt a cushingly expensive solution that has no eal climate impact. What could possibly go wong? Allen Gilme Aiving at this conclusion, a myiad of smat people, including Bill Nye the Science Guy, inconvenient Al Goe, and admittedly cool Neil Degasse Tyson, and a whole slew of othes had to have gone though the following pocess: Question 1: Ae we waming o ae we NOT waming? If no, stop hee. If yes, on to the next question. Question 2: Is continued waming a poblem oveall? If no, stop hee. If yes, on to the next question. Question 3: Is human activity the majo contibuto to waming? If no, stop hee. If yes, on to the next question. Question 4: Can we stop o evese waming by cutting that activity? If no, stop hee. If yes, on to the next question. Question 5: Can you ealistically stop the activity that causes waming? If no, stop hee. If yes, on to the next question. Question 6: Is thee a bette way to stop waming? If no, then I guess bueaucatic contol of the wold enegy economy administeed by the United Nations is a eally wondeful idea. I am clealy missing a step somewhee. All of this came to mind because, while diving between Houston and Austin, I chanced upon an inteview with Pesident Tump s EPA tansition chai, Myon Ebell, the diecto of Global Waming and Intenational Envionmental Policy at the Competitive Entepise Institute, by a vey hostile Bitish pess who implied he epesented evil oil inteests. He esponded, vey politely, that the powe and couption lay within the climate industial complex whee gant-gubbing scientists, egulation-hungy, ent-seeking businesses and govenment bueaucats hungy fo moe contol scatch each othe s back and ceate a self-sustaining votex of couption. Wow. When a epote asked Ebell about Elon Musk and the wondeful batteies he says he will build, Ebell esponded with: I wonde how the lagest ecipient of fedeal taxpaye subsidies in the histoy of the wold could be epesented as any kind of ole model. On the Endangeed Species Act (a eal favoite of ou geat industy), the epote actually gasped in shock and disgust when Ebell stated that he wasn t woied about it that he d been tying to efom it fo yeas, because it didn t do much fo endangeed species, but eally and tuly damaged pivate popety and land use ights. I can confidently say until that inteview that I neve gave the emotest possibility that I could develop a man-cush on a Cambidgeeducated middle aged balding guy named Myon. I liteally can t believe thee is someone with eal influence in ou fedeal govenment that clealy undestands how impotant ou economic engine eally is. I cannot emembe a time in my life when I eally felt like those we elect to lead actually undestand o give a damn about those of us that pull eal feight. I woy that I am going to wake up, ala Bobby Ewing, and find out it was meely a deam. As I wite this, ou fome Goveno Rick Pey s oad to become ou next Secetay of Enegy was passed to the full Senate fom the Senate Natual Resouces and Enegy Committee on a poweful 16-7 vote, including fou Democatic senatos. Fome Oklahoma Attoney Geneal Scott Puitt, who joins TIPRO membeship in the Who s Who of folks that have sued the EPA, has had his scheduled vote delayed within the Senate Envionment and Public Woks Committee chaied by Wyoming Republican John Baasso. The committee contains 11 Republicans and 10 Democats. Additionally, U.S. House Republicans ae soon going to intoduce legislation to ovetun the Obama Executive Ode limiting the amount of methane that can be flaed o vented fom dill sites, and evive the Clinton-ea Congessional Review Act, passed in the 1990s to addess this vey thing an outgoing pesident signing lots of little capet bomb odes that wee way to viulent fo thei own administation to cause poblems with the new incoming pesident, such as Bill Clinton s last second egulation to lowe acceptable asenic levels in dinking wate fom 50 pats pe billion to 10 pats pe billion, elying on the pess and envionmental goups to potay the new administation as po-asenic in dinking wate. All in all, this is an unexpected, petty upbeat time. Now watch how the Siea Club and its ilk ty to down this public good with lawsuits. That said, thee hasn t been a moe impotant time to be geat copoate citizens. Ou industy shouldn t take its focus on being excellent envionmental stewads and exhibit the esponsible behavio we ae known fo to the state egulatos whee we poduce. We will be scutinized duing ou time like no othe. Let s show the wold how good we eally ae. Allen Gilme
Page 3 Febuay 2, 2017 THE TIPRO TARGET TIPRO LEGISLATIVE UPDATE With the legislatue ounding out its thid week of session, TIPRO s govenment affais team continues to actively tack new bills being filed in the Texas House and Senate. In ecent weeks, new pieces of legislation filed on impotance to membes of TIPRO include: Senate Bill 26 Relating to the Texas Emissions Reduction Plan (TERP) and othe elated pogams and measues to educe emissions. This legislation would establish a gant pogam geaed at eplacing state fleets with moe altenative fuel vehicles, and would ceate an option fo local municipalities to do the same, subject to the availability of funds. The legislation would also extend the life of all TERP pogams until such time as the state s ozone non-attainment zones ae deemed in attainment. Futhe, Senate Bill 26 would eliminate the Clean Tanspotation Tiangle pogam and eplace it with a Clean Tanspotation Zone. Unde the bill, new technology pojects also would be eligible fo the New Technology Gant Pogam, including technologies that help educe emissions fom upsteam and midsteam oil and gas opeations though engines o flaing. Senate Bill 568 Relating to the posting by the Raiload Commission of Texas on its Intenet website of cetain enfocement infomation. Specifically, the bill would allow public access to infomation online on the Raiload Commission s enfocement of ules, odes, licenses, pemits and cetificates, including infomation on complaints filed at the agency, inspections conducted, violations found to have occued, and enfocement actions taken by the commission, including penalties assessed and collected. Unde the bill, the Raiload Commission would be equied to offe the infomation online in a seachable fomat, downloadable in bulk, with data oganized by opeato and by well. Senate Bill 611 Relating to appointments by cetain state officials to a legislative agency o an advisoy committee. Senate Bill 611 specifies that a peson appointed by the Lieutenant Goveno o Speake of the House seves at the pleasue of the appointing office and may be emoved o eplaced by the appointing offices o thei successo. The bill applies to the govening body of a legislative agency o committee, a council, commission, task foce, o othe public entity with multiple membes that does not contol o supevise public business o policy and has its pimay function advising a banch of state govenment. Senate Bill 635 Relating to the awad of cout costs and attoney s fees in cetain actions challenging an ode, odinance, o simila measue of a political subdivision o the failue of an office of a political subdivision to pefom. House Bill 1290 Relating to the equied epeal of a state agency ule befoe adoption of a new state agency ule. This bill would pohibit a state agency fom adopting a poposed ule unless on o befoe the effective date of the poposed ule the agency has epealed at least one agency ule. The equiements unde this bill would not extend to ules specifically equied by the legislatue o those necessay to potect the health and safety of esidents of the state unde the Health and Safety Code. The filing deadline fo legislative poposals is on Fiday, Mach 10, 2017. TEXAS GOVERNOR HIGHLIGHTS LEGISLATIVE PRIORITIES DURING STATE OF THE STATE ADDRESS Poclaiming the status of Texas as exceptional, this week Texas Goveno Geg Abbott deliveed his State of the State addess befoe membes of the Texas Legislatue on Tuesday, Januay 31, outlining his top pioities fo the state s 2017 Legislative Session. Duing his addess, Goveno Abbott expessed his optimism fo futue economic pospeity in the Lone Sta State in the days to come, noting the fact that Texas would have the 10 th lagest economy in the wold if it wee its own county. And while Texas has had to deal with a downtun in the oil patch the last couple yeas, Goveno Abbott was poud to update legislatos on the job gowth occuing in the state, with Texas still adding moe than 200,000 new jobs last yea even as oil hit bottom. On Tuesday, the goveno diected lawmakes to pioitize fou emegency issues this session, pompting legislatos to immediately begin wok on: efom of Child Potective Sevices (CPS), banning sanctuay cities in Texas, implementing meaningful ethics efom, and passing a esolution calling fo a Convention of States. The goveno also expessed hope the state legislatue will exploe educing the business fanchise tax this legislative session, as well as adopt efoms to popety taxes in Texas. Coinciding with his State of the State speech, Goveno Abbott also eleased his budget poposal fo the state s 2018-19 biennium. This upcoming biennium will be a time fo addessing essential needs and eliminating the non-essential wants, said Goveno Abbott. That is why my budget poposal ensues that state govenment lives within its means while maintaining funding fo impotant, but limited pioities. Fosteing a climate of fiscal esponsibility, low taxes, easonable egulation, and limited govenment will enable Texas to emain the envy of the nation and encouage pivate secto investment, expansion, and innovation. Included in the budget poposal set foth by Goveno Abbott would be $5 billion in funding fo additional oad constuction acoss the state without new taxes, fees, debt, o tolls. IMMEDIATE HIRING FREEZE IMPOSED ON STATE AGENCIES BY GOVERNOR OF TEXAS An immediate hiing feeze fo state agencies in Texas has been instated by Texas Goveno Geg Abbott, in effots to cut state spending. The goveno made the announcement on Tuesday, Januay 31 st as pat of his State of the State addess befoe membes of the Texas 85 th Legislatue. We must cut spending in ou cuent biennium to ensue we live within ou budget, Goveno Abbott said. To accomplish that, I am today diecting state agencies to impose an immediate hiing feeze though the end of August. This should fee up about $200 million in ou cuent budget. And in the next biennium, I am confident that we can balance the budget without looting the Rainy Day Fund.
Page 4 Febuay 2, 2017 THE TIPRO TARGET AS ENERGY SECTOR SEES SIGNS OF RECOVERY, RRC PREPARES FOR EXPANDING REGULATORY NEEDS While the Texas Raiload Commission woks on its budget fo the next biennium, this week Chaiman Chisti Caddick met with top economists at the Fedeal Reseve Bank of Dallas (Dallas Fed) to discuss this yea s outlook fo the Texas oil and gas industy and gathe insight on what the state s oil and gas egulatoy agency can expect with egads to dilling activity in Texas fo the yea to come. Accoding to the Dallas Fed, E&P activities in Texas ae pojected to incease thoughout the yea. Oil and gas poduction today makes up moe than 30 pecent of ou state s oveall economy, Chaiman Caddick said. It is citical fo the industy s continued success and fo the public s safety that the Raiload Commission has as much infomation as possible about the industy s nea-tem futue as we detemine stategic plans fo the agency. With the legislative session now undeway, the Raiload Commission is cuently in the pocess of pesenting its 2018-19 biennium budget equest to legislatos. And with hopes of a ebound fo the Texas enegy secto this yea, the Raiload Commission is making pepaations fo expanding needs of egulatoy ovesight. We know fom pevious downtuns that when the oil and gas industy amps up, it amps up quickly. We must be fully staffed and pepaed fo an uptick in industy activity, said Chaiman Caddick. I am optimistic about oil and gas poduction gowth in Texas this yea, but look fowad to seeing a continued ise in pemitting and new dilling epots befoe we expect a significant shift within the industy. Until then, we will continue to move esouces planned fo pemitting to othe aeas of the agency as needed. TEXAS JOINS COALITION ASKING TRUMP TO REPEAL USFWS, NMFS POLICY In a lette sent Januay 19 th to U.S. Pesident Donald J. Tump, 14 state attoneys geneal, including Texas Attoney Geneal Ken Paxton, asked the new administation to immediately epeal two new fedeal ules that boadly expanded the definition of citical habitat fo endangeed species, pomulgated last yea by the U.S. Fish & Wildlife Sevice (USFWS) and the National Maine Fisheies Sevice (NMFS). The coalition of state attoneys ague in the lette to the new U.S. pesident that the new ules pushed by the fedeal agencies unlawfully and vastly expand the authoity of the Sevices to designate aeas as citical habitats. Futhemoe, accoding to the attoneys geneal, the ules violate the [Endangeed Species Act] because they expand the egulatoy definition of a citical habitat beyond its naow statutoy definition. The attoneys geneal also noted that the ules expand the definition of advese modification of citical habitat beyond what is legally pemitted. DAYS INTO TAKING OFFICE, PRESIDENT TRUMP TAKES EXECUTIVE ACTION TO EASE REGULATION Duing the fist two weeks of his pesidency, Donald Tump took swift action to pae egulatoy wok by the fedeal govenment. In late Januay, the pesident issued seveal diectives establishing immediate limitations fo fedeal egulatoy agencies, including: Implementation of Regulatoy Feeze: Leades of executive depatments and U.S. agencies wee odeed by the White House to tempoaily postpone the effective dates of cetain egulations that had been published in the Fedeal Registe but had not yet taken effect, delaying the fedeal ules fom taking effect until Mach 21, 2017. The feeze was established to allow new incoming officials seving unde the Tump administation to have adequate time to eview policies and conside questions suounding the egulations pio to implementation. Executive Ode to Reduce Regulation and Contol Regulatoy Costs: As mandated by Pesident Tump, fo evey one new egulation issued, fedeal agencies will now have to identify fo elimination at least two pio govenment egulations. Moeove, egulatoy entities will face a budget cap though the emainde of Fiscal Yea 2017. Feeze on the hiing of fedeal employees: The pesident has instated a feeze on the hiing of fedeal civilian employees, to be applied acoss the boad in the executive banch. As pat of the hiing feeze, no vacant positions existing as of noon on Januay 22, 2017, may be filled and no new positions may be ceated, except in limited cicumstances. This ode does not include o apply to militay pesonnel. Pesident Tump also has diected the diecto of the Office of Management and Budget (OMB), in consultation with the diecto of Office of Pesonnel Management, to ecommend within 90 days a long-tem plan to educe the oveall size of the fedeal govenment s wokfoce though attition. TIPRO S 71 ST ANNUAL CONVENTION JUST WEEKS AWAY! Membes who have not yet signed up fo TIPRO s 2017 Annual Convention ae encouaged to egiste to attend the association s upcoming meeting in Austin. TIPRO s annual meeting will take place Febuay 27-28 at the Sheaton Austin Hotel by the Capitol -- see the event agenda and egistation fom on the pages that follow. Online egistation is also available though TIPRO s website at www.tipo.og. Still need a hotel oom fo the TIPRO Convention? Please contact Joanne Reynolds in the TIPRO office at (512) 477-4452.
AGENDA TIPRO s 71 st Annual Convention Austin, Texas Monday, Febuay 27 th 1:00 P.M. Welcome Addess TIPRO Chaiman Allen Gilme 1:30 P.M. Texas Raiload Commissione Wayne Chistian 2:15 P.M. Enegy Maket Update Vikas Dwivedi, Economist fo Macquaie Capital (USA) 3:00 P.M. Beak 3:15 P.M. Executive Panel: Stategies & Oppotunities fo Texas Top Shale Plays T.M. "Mitch" Little, EVP of Opeations fo Maathon Oil -- Eagle Fod Shale Thomas Meneley, CEO & Chaiman of Plantation Petoleum -- Pemian Basin Jud Walke, Pesident & CEO of EneVest Opeating Company -- Banett Shale/Austin Chalk/Anadako Basin 4:15 P.M. Keynote Pesentation Fome United States Vice Pesident Dick Cheney 5:30 P.M. TIPRO Legislative Reception Tuesday, Febuay 28 th 8:00 A.M. Membeship Beakfast Kimbely Coley, Raiload Commission Executive Diecto 9:00 A.M. Oil & Gas Regulatoy Update Suzanne Muay, Patne of Haynes and Boone, LLP 10:00 A.M. Texas Political Outlook Panel Havey Konbeg, Quoum Repot Scott Baddock, Quoum Repot 10:45 A.M. Beak 11:00 A.M. Infomation Session on TIPRO Capitol Call-Up Meetings Noon BBQ Luncheon at Saengeunde Hall 2:00 P.M. TIPRO Capitol Call-Up Meetings 6:00 P.M. Chaiman s Reception & Dinne Pesentation of Tip of the Hat Awad to fome Raiload Commissione David Pote Wednesday, Mach 1 st 9:00 A.M. TIPRO Audit Committee Meeting 10:00 A.M. TIPRO Boad Meeting
TIPRO S 71 ST ANNUAL CONVENTION REGISTRATION FORM MEMBER REGISTRATION FEES: INCLUDES ALL AGENDA EVENTS & MEALS NON-MEMBER REGISTRATION FEES: INCLUDES ALL AGENDA EVENTS & MEALS MEMBER - FULL REGISTRATION: $495 SPOUSE - FULL REGISTRATION: $325 NON-MEMBER - FULL REGISTRATION: $695 (REGISTRATION INCLUDES 1 YEAR REGULAR TIPRO MEMBERSHIP) NON-MEMBER SPOUSE - FULL REGISTRATION: $475 EVENT-SPECIFIC TICKETS: TUESDAY-ONLY BADGE: $395 EVENT-SPECIFIC, NON-MEMBER TICKETS: TUESDAY-ONLY BADGE: $595 Have special dietay needs o othe consideations? Please contact TIPRO staff at (512) 477-4452. ATTENDEE INFORMATION Name of Attendee: Company: Addess: City/State/Zip Code: Phone: E-mail: Registeed Spouse: Fax: ONLINE REGISTRATION IS ALSO AVAILABLE AT WWW.TIPRO.ORG! PAYMENT INFORMATION Total: Payment Method: VISA MASTERCARD AMEX CHECK NO: Pint Name: Company: Billing Addess: Cedit Cad No.: Exp. Date: Signatue: CID: CANCELLATION POLICY In ode to eceive a efund, TIPRO must be notified of you cancellation no late than Fiday, Febuay 17, 2017. Retun egistation fom to TIPRO at: 919 Congess Avenue, Suite 1000, Austin, Texas 78701 o fax to (512) 476-8070. Registation foms must be accompanied by payment.
Page 7 Febuay 2, 2017 THE TIPRO TARGET SENATE CONFIRMATIONS OF TRUMP CABINET APPOINTEES SLOWLY ADVANCE Confimations of leades nominated to seve in Pesident Donald Tump s cabinet have been slow to pogess in ecent weeks in the U.S. Senate. The Senate Envionment and Public Woks Committee had scheduled to take a vote on Wednesday, Febuay 1, ove Scott Puitt s nomination to become the next head egulato of the U.S. Envionmental Potection Agency (EPA), but the committee s planned vote was deailed afte Democats seving on the committee decided to boycott the panel s meeting. When Democatic Senatos boycotted the confimation vote a second day in a ow, the committee suspended fomal ules on Thusday, Febuay 2, and poceeded with appoving Puitt to be the next chief egulato of the EPA, without the Democatic senatos pesent. Puitt has seved as the attoney geneal of Oklahoma since 2011. Duing his tenue as Oklahoma s top attoney, established Oklahoma s fist fedealism unit to combat unwaanted egulation and oveeach by the fedeal govenment and was a leading advocate against the EPA s egulatoy agenda. U.S. Senato John Baasso (R-Wyoming), who is chaiman of the Senate Committee on Envionment and Public Woks, this week assued citics that Puitt will be the stong leade the EPA needs. The EPA has become a bloated egulatoy behemoth that has lost sight of the needs of the Ameican people and the envionment. The agency s bueaucats have been moe peoccupied with pushing punishing new egulations. This ed tape killed thousands of jobs in enegy-poducing and manufactuing states such as West Viginia, Pennsylvania, Kentucky, Indiana, Noth Dakota and my state of Wyoming... Oklahoma Attoney Geneal Scott Puitt, Pesident Tump s nominee to lead the EPA, is committed to potecting the envionment ensuing clean ai, wate and land while allowing the Ameican economy to gow, said Senato Baasso. Meanwhile, on Tuesday, Januay 31, the Senate Committee on Enegy and Natual Resouces appoved Pesident Tump s nominees fo U.S. Secetay of the Inteio, U.S. Repesentative Ryan Zinke (R-Montana), as well as U.S. Secetay of Enegy, fome Texas Goveno Rick Pey. Repesentative Zinke was epoted favoably by a panel vote of 16 6, and Pey was epoted favoably by a vote of 16-7. Puitt, Pey and Zinke s nominations now go to the full U.S. Senate fo final appoval. Accoding to media epots, the full, Republican-contolled Senate is likely to appove the Tump cabinet nominees next week. U.S. PRESIDENT ORDERS CONSTRUCTION OF KEYSTONE, DAKOTA ACCESS PIPELINES In keeping with his pomise to expedite high-pioity enegy and infastuctue pojects, one of the fist actions by Pesident Tump upon taking office was to initiate the appoval of the Keystone XL Pipeline. Pesident Tump also diected the elevant fedeal agencies (including the Amy Cops of Enginees) to expedite eviews and appovals fo the emaining potions of the Dakota Access Pipeline, a contovesial poject that has seen months of potests by envionmental activists hoping to pevent constuction of the infastuctue. Tump s executive action evesed path on the multi-billion dolla infastuctue pojects, afte the Obama Administation had fomely shot down plans fo the pipelines. TansCanada announced only days late on Januay 26 th that it has e-submitted a Pesidential Pemit application to the U.S. Depatment of State fo appoval of the Keystone XL Pipeline. Russ Giling, TansCanada's pesident and chief executive office, said in a statement, This pivately funded infastuctue poject will help meet Ameica's gowing enegy needs as well as ceate tens of thousands of well-paying jobs and geneate substantial economic benefit thoughout the U.S. and Canada. Meanwhile, following Pesident Tump s Executive Ode, the Dakota Access Pipeline is also now moving close to constuction, accoding to officials. Afte speaking with Vice Pesident Mike Pence and Acting Secetay of the Amy Robet Spee, U.S. Senato John Hoeven (R-Noth Dakota) announced on Januay 31 st that the Amy Cops has been odeed to appove company plans fo the $3.8 billion poject. Senato Hoeven said in a statement: The Acting Secetay of the Amy Robet Spee infomed us that he has diected the Amy Cops of Enginees to poceed with the easement needed to complete the Dakota Access Pipeline. This will enable the company to complete the poject, which can and will be built with the necessay safety featues to potect the Standing Rock Sioux Tibe and othes downsteam. Building new enegy infastuctue with the latest safeguads and technology is the safest and most envionmentally sound way to move enegy fom whee it is poduced to whee people need it... this has been a difficult issue fo all involved, paticulaly those who live and wok in the aea of the potest site, and we need to bing it to a peaceful esolution. With his Pesidential Memoandum, Pesident Tump also diected that pipeline infastuctue unde development in the United States be constucted with Ameican-made mateials and supplies. The U.S. Secetay of Commece, in consultation with all elevant executive depatments and agencies, has been instucted to develop a plan unde which all new pipelines, as well as etofitted, epaied, o expanded pipelines, including potions of pipelines, use mateials and equipment poduced in the United States, to the maximum extent possible. The secetay is to submit the poposed plan to the pesident within 180 days. FEBRUARY 8, 2017 HOUSTON IPAA/TIPRO Leades in Industy Luncheon, 11:30 a.m. Houston Petoleum Club. Fo info, call: (202) 857-4733. TIPRO Calenda of Events FEBRUARY 15-17, 2017 HOUSTON Annual NAPE Summit, Geoge R. Bown Convention Cente. Fo info, call: (817) 847-7700. FEBRUARY 27-28, 2017 AUSTIN TIPRO s 71 st Annual Convention, Sheaton Hotel by the Capitol. Fo info, call: (512) 477-4452. MARCH 15, 2017 HOUSTON IPAA/TIPRO Leades in Industy Luncheon, 11:30 a.m. Houston Petoleum Club. Fo info, call: (202) 857-4733.
Page 8 Febuay 2, 2017 THE TIPRO TARGET EPA DELAYS 30 REGULATIONS FROM TAKING EFFECT In accodance with a Pesidential Diective issued on Januay 20, 2017, the U.S. Envionmental Potection Agency (EPA) is tempoaily delaying the effective date of 30 fedeal envionmental egulations. The egulations, which had aleady been posted to the Fedeal Registe fo implementation by the EPA, now will not take effect until Mach 21, 2017. A memoandum sent in late Januay fom the assistant to the Pesident and Chief of Staff Reince Piebus on behalf of Pesident Tump, entitled Regulatoy Feeze Pending Review, diected the heads of executive depatments and U.S. agencies to tempoaily postpone the effective dates of all egulations, which had been published in the Fedeal Registe but had not yet taken effect, fo 60 days fom the date of the memoandum. The delay is intended to give incoming agency officials and new leadeship unde the Tump Administation the oppotunity to futhe eview and conside questions of fact, law, and policy that may be aised upon evaluation of the ules. Amongst those EPA ules that have now been postponed, evisions will be delayed to the Texas State Implementation Plan (SIP) submitted by the state of Texas to the EPA petaining to paticulate matte and outdoo buning egulations. This would have taken effect on Febuay 10, 2017. CONGRESSIONAL REPUBLICANS SEEK TO OVERTURN BLM S METHANE RULE ON FLARING New legislation intoduced in Congess this week looks to stike down industy egulations limiting the amount of methane that can be vented and flaed fom oil and gas dilling sites on fedeal lands. U.S. Senato John Baasso (R-WY), chaiman of the Senate Committee on Envionment and Public Woks, and U.S. Repesentative Rob Bishop (R-UT), chaiman of the House Committee on Natual Resouces, intoduced S. J. Res 11 and H. J. Res. 36, fomal disappoval of the Bueau of Land Management s (BLM) final ule issued last yea on methane emissions fom oil and gas opeations on fedeal and Indian land. This ule is one of the most egegious abuses of powe fom the Obama administation designed to shut down esponsible enegy development on ou fedeal lands. When unelected bueaucats and ideological aims supesede congessional intent and esponsible egulation as was the case with this ule Congess has an obligation act, Congessman Bishop stated. This is the fist of many steps we will take to cut ed tape that is focing job losses in communities acoss the county and undecutting ou domestic enegy esouce potential. Citing a conflict with statutoy authoity, Senato Baasso explained it is the job of the U.S. Envionmental Potection Agency (EPA) and the states -- not the BLM -- to egulate ai quality. Instead of enfocing a duplicative egulation, BLM should use its limited esouces to pemit natual gas pipelines on fedeal lands in a timely manne. Pipelines will help poduces captue additional gas and get that gas to maket. These pojects will also ceate jobs and povide enegy fo Ameicans, said Senato Baasso. The esolution set foth by the Republican Congessmen invokes a law signed in the 1990s known as the Congessional Review Act, which authoizes Congess to ovetun any egulation within 60 days of publication as a measue designed to keep any outgoing pesidential administation s fom tacking on egulations on thei way out of the White House. U.S. HOUSE SCIENCE COMMITTEE TO HOST HEARING TO REVIEW MAKING THE EPA GREAT AGAIN The full U.S. House Committee on Science, Space and Technology will meet next Tuesday, Febuay 7, to examine the Envionmental Potection Agency s (EPA) pocess fo evaluating and using science duing its egulatoy decision making activities. The heaing, titled Making EPA Geat Again pulls on the famous tag line used by Pesident Donald Tump duing his campaign, Make Ameica Geat Again. Witnesses at next Tuesday s committee heaing will testify befoe the committee on ways the EPA can pusue envionmental potection and potect public health by elying on sound science. LANDMEN AS INDEPENDENT CONTRACTORS: IS THE GOVERNMENT S VOLUNTARY SETTLEMENT PROGRAM TOO GOOD TO PASS UP? BY MICHAEL KELSHEIMER AND CHARLES SARTAIN, GRAY REED & MCGRAW The fedeal govenment has begun to view landmen woking fo bokeages as employees, athe than independent contactos. Why should I cae? Because the govenment caes. Independent contactos who do not epot all of thei income on thei tax etuns depive the govenment of evenue fom income, FICA and FUTA taxes. The Intenal Revenue Sevice and Depatment of Labo (DOL) ae looking to squeeze tax dollas fom any place they can find money. To that end, they have focused on the misclassification of independent contactos. New investigatos have been hied. Fines ae up. The IRS uses sophisticated softwae to seach fo misclassifications. Among othe factos ae businesses with numeous IRS Fom 1099-type payments to individuals ove theshold amounts. And govenment agencies have stated shaing data on potential violatos, making them easie to catch. This means that the IRS is looking fo fims that teat landmen as contactos when they should be employees. This means that landmen who should be teated as an employees may have a claim against the bokeage. Continued on Page 9...
Page 9 Febuay 2, 2017 THE TIPRO TARGET LANDMEN AS INDEPENDENT CONTRACTORS...CONTINUED FROM PAGE 8 How bad could it be? In an audit, the employe could be assessed half of back payoll taxes, penalties, inteest and possibly the contacto s half of back payoll taxes, and the amount that contacto should have withheld fo income tax puposes. In some cases, this numbe appoaches 40 pecent of the amount paid to each contacto ove the last thee yeas. It pobably won t end with the IRS. Because the agencies ae shaing infomation, the IRS may hand you off to the DOL. The DOL will then ask fo the timesheets fo those contactos who ae now employees. Because you teated them as contactos, you won t have any timesheets, so DOL will inteview the landmen and ask how many hous of ovetime they woked in the last thee yeas. With a fee pass to answe and no time ecods to dispute, the landmen can tell the DOL just about anything and the DOL, in tun, will assess you fo that ovetime. But it doesn t end thee, the Texas Wokfoce Commission (TWC) may then audit fo unemployment benefits fo teminated contactos who should have been teated as employees. And, once bitten by the IRS and DOL themselves, you competitos could tun in eveybody else using the same appoach. Fo this, they will eceive up to 15 pecent of the ecovey. What is the test to detemine whethe someone should be teated as an employee? The answe is complicated. The agencies each have thei own test. Thankfully, the geneal ideas ae simila. The following questions should tell you whethe this could be a poblem fo you: 1. Do you povide taining? 2. Ae thee set woking hous? 3. Do they wok in you offices? 4. Have you eliminated pe diem payments? 5. Do you povide office supplies and\o computes? 6. Do you povide access to title infomation though a company system? 7. Do you pay based on hous woked o a ate pe day? 8. Do you not chage back if you client ejects the wok o equies it to be edone? 9. Do they get paid fo all thei time on a poject athe than having to complete a poject in a cetain time fo a cetain pice? 10. Do you not have a witten contact descibing out the elationship? 11. Do you not equie landmen to wok though an entity that they own? 12. Do they wok fo you ove a long peiod of time, o fo yeas? 13. They do not wok fo othe companies o handle sevices fo othe clients? 14. Do you povide health insuance o othe benefits? If you answeed yes o coect to any of these questions, you could be a candidate fo investigation. No cetain numbe of positive answes ceates isk, but the moe yesses, the moe isk of an audit and eclassification. If you answeed yes enough to become concened, what should you do? You have two options: (1) educe o eliminate the yes answes and hold on to the Section 530 Safe Habo defense; and (2) take advantage of the favoable settlement pogam now offeed by the govenment to educe you liability and e-chaacteize the contactos as employees. How the factos ae minimized will be diffeent fo evey business, but stat with these thoughts: 1. Have a witten contact that maximizes suppot fo independent contacto status. 2. Requie landmen to fom entities that then contact with you business. 3. Povide no taining. 4. Switch to a poject- and invoice-based pay schedule. 5. Ceate isk of loss fo the landmen in each poject.. 6. Make them esponsible fo thei own place to wok and thei own supplies. It makes sense and might save money to wok with employment law counsel to help with this pocess to ensue less isk moving fowad. What is the Section 530 Safe Habo defense? Some fims ae holding on to the idea that they can defeat the IRS misclassification agument using the defense based on Section 530 of the Revenue Act of 1978. The idea is that if eveyone is doing the same thing, the IRS cannot declae a misclassification. While this may be tue, it only has the potential to be successful. Claiming Section 530 befoe the DOL o the TWC will fall on deaf eas because they ae not subject to it. What is the settlement pogam and why is it such a good deal? Even with moe investigatos, the govenment can t catch all the violatos. With that in mind, the IRS has offeed a settlement to bing violatos into the fold so that the govenment gets that tax evenue going fowad. To qualify, an employe must: agee to teat contactos as employees going fowad; have timely filed all 1099s in yeas past; be in compliance with all past audits; and not be unde audit pesently. We do not know how long this pogam will be offeed. It could be withdawn without waning, so thee is isk associated with waiting to ente the pogam.
Unconventional Pespective EOG Resouces is a leade in finding and developing unconventional cude oil and natual gas esouces to meet Ameica s enegy supply needs. At the same time, EOG stengthens local economies by poviding jobs, puchasing goods and sevices, making oyalty payments to mineal ownes and bolsteing tax bases in the communities whee it opeates. The company opeates with a commitment to safety and envionmental stewadship. And its dynamic, hadwoking employees conside themselves an impotant pat of the fabic that helps Texas communities thive. EOG IS PROUD TO SPONSOR TIPRO S 71 ST ANNUAL CONVENTION EOG Resouces, Inc. 1111 Bagby Sky Lobby 2 Houston, TX 77002 713-651-7000 www.eogesouces.com THE TIPRO TARGET THE TIPRO TARGET Texas Independent Poduces & Royalty Ownes Association With moe than 3,000 membes, TIPRO is the nation s lagest statewide association epesenting both independent poduces and oyalty ownes. Ou membes include small family-owned companies, the lagest publicly taded independents and lage and small mineal estates and tusts. 919 Congess Avenue, Suite 1000 Austin, Texas 78701 Phone: (512) 477-4452 Fax: (512) 476-8070 www.tipo.og