Oklahoma Administrative Code Title 432 - Commission on Marginally Producing Oil and Gas Wells
Oklahoma Administrative Code Title 432 — Commission on Marginally Producing Oil and Gas Wells
Overview
Title 432 of the Oklahoma Administrative Code regulates the Commission on Marginally Producing Oil and Gas Wells (CMPOGW), a specialized state commission created to address issues relating to oil and gas wells in Oklahoma that are producing at marginal (low) levels.
The primary mission of the Commission is to oversee, regulate, and create policies that support the operation, economic viability, and regulatory compliance of these low-producing wells. This regulatory framework encourages continued production from wells that might otherwise be shut-in or abandoned due to economic infeasibility under standard rules.
Purpose and Authority
The Commission on Marginally Producing Oil and Gas Wells operates under the statutory authority of the Oklahoma Legislature, primarily under 52 O.S. §§ 286.1 through 286.14, which establish its powers, duties, and funding mechanisms.
The Commission’s goals include:
Prevent premature abandonment of wells that are still economically viable at marginal production.
Establish fair and reasonable rules governing the operation and plugging of these wells.
Protect the interests of operators, royalty owners, and the public by ensuring continued production and environmental safeguards.
Address the unique challenges faced by marginal wells, such as fluctuating oil prices and rising operating costs.
Key Provisions of Title 432
Definitions and Scope
The Code defines what constitutes a “marginally producing well” — typically wells producing below a certain threshold of barrels of oil or cubic feet of gas per day, but which still generate some revenue.
Eligibility for Commission Programs
Operators may apply for assistance or regulatory relief under Commission programs if their wells meet marginal production criteria. This can include special permits, reduced fees, or deferred plugging requirements.
Reporting and Compliance Requirements
Operators must maintain accurate production reports, comply with environmental standards, and follow any additional reporting as required by the Commission.
Fees and Assessments
The Commission may impose fees or assessments on operators of marginal wells to fund its operations and programs. These fees are often lower or structured differently than those for regular wells to reflect the wells' limited production.
Incentives and Support
The rules may provide for technical assistance, economic incentives, or special regulatory treatment designed to keep marginal wells producing as long as economically feasible.
Plugging and Abandonment
Special provisions govern the plugging and abandonment of marginal wells, allowing for deferred plugging or cost-sharing mechanisms to encourage operators to maintain wells longer than they otherwise might.
Hearings and Dispute Resolution
The Commission can hold hearings on disputes related to eligibility, fees, or compliance and issue binding decisions.
Relevant Case Law and Legal Principles
While specific cases directly interpreting Title 432 are somewhat limited, the following legal principles and Oklahoma case law related to oil and gas regulation and administrative agency authority apply:
1. Commission’s Statutory Authority
Williams Production RMT Co. v. State ex rel. Oklahoma Corp. Comm’n, 2003 OK CIV APP 57
This case affirmed that the Oklahoma Corporation Commission and related agencies, including commissions like the CMPOGW, have broad statutory authority to regulate oil and gas production to protect the public interest and ensure resource conservation.
2. Economic Viability and Regulatory Relief
Courts generally defer to the Commission’s expertise when granting regulatory relief or waivers for marginal wells, recognizing that economic realities necessitate flexible regulation.
The Commission’s decisions on eligibility and fee structures are upheld unless shown to be arbitrary or outside the scope of statutory authority.
3. Environmental and Public Interest Balancing
Barrett v. Oklahoma Corp. Comm’n, 1984 OK 99
This case underscored that regulatory bodies must balance economic development with environmental protection. The CMPOGW’s rules regarding plugging and abandonment aim to protect the environment while considering operators’ economic challenges.
4. Due Process and Administrative Hearings
Operators facing penalties, fee assessments, or compliance orders under Title 432 are entitled to due process, including notice and opportunity for a hearing. The Oklahoma Administrative Procedures Act (75 O.S. §§ 250-326) governs such proceedings.
Public Service Company of Oklahoma v. Oklahoma Corp. Comm’n, 1986 OK 56
Affirmed that administrative agency decisions must be supported by substantial evidence and follow fair procedures.
Practical Implications
For Operators:
Marginal well operators benefit from a regulatory framework that recognizes the financial strain of low production and provides avenues to maintain operations with reduced regulatory burdens or fees.
For the Public and Environment:
The Commission ensures that marginal wells do not become environmental hazards through deferred plugging programs or enforcement.
For Disputes:
The administrative structure allows operators to challenge Commission decisions through hearings and judicial review.
Summary
Oklahoma Administrative Code Title 432 provides a specialized regulatory regime for marginally producing oil and gas wells, balancing the need to support economic production of smaller wells with environmental and public safety concerns. The Commission is empowered to grant relief, impose fees, and oversee plugging and abandonment, all subject to statutory authority and judicial review to ensure fairness.
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