OKLAHOMA CITY – A study of the impact of the U.S. Supreme Court ruling that indicates potentially one-third or more of Oklahoma remains Indian reservations shows Oklahoma Corporation Commissioners are bracing for possible loss of regulatory enforcement and revenue.
The commission’s “Report of Potential Impact” was forwarded to Gov. Kevin Stitt in accordance with a July 20 executive order.
The biggest potential loss for the Corporation Commission would be $5.5 million to the agency’s Transportation Division.
That unit administers the collection and sharing of fuel tax revenue among the states, the cooperative registration of trucks that operate in more than one state, and the Unified Carrier Registration Program that affects nearly 8,000 for-hire and private carriers.
Its additional duties include audits of overweight commercial vehicles, more than 1.1 million compliance checks of vehicles each year, operation of Oklahoma’s nine ports of entry and weigh stations, and monitoring the safety of at-grade railroad crossings throughout the state.
FINES, ASSESSMENTS OF $5.5M COULD BE LOST; PIPELINE SAFETY COULD BE AT RISK
“In 2019, the dollar amount assessed for motor carrier citations issued in areas subject to treaties was approximately $5.5 million,” and represents an estimate of the division’s revenue loss if the commission’s jurisdiction ended in the eastern half of the state, Transportation Division personnel calculated.
Revenue collected from citations is distributed to the Corporation Commission, the Oklahoma Tax Commission and the Department of Public Safety, officials said. “It could also stand to lose approximately half of its wrecker assessments, in an amount of approximately $70,000,” the report added.
Enforcement activities through the Pipeline Safety Department of the commission’s Transportation Division also could be affected. It regulates safety of more than 40,860 miles of natural gas pipelines and 5,234 miles of hazardous liquid pipelines.
If the Corporation Commission did not have the ability to access and review safety records in a Native American tribe’s geographic area, “it could seriously thwart or prevent the Commission’s ability to enforce safety regulations, assess the need for infrastructure improvements, develop vulnerability assessments, conduct emergency planning, and respond to disasters and acts of terrorism,” the OCC report asserts.
OIL/GAS INSPECTIONS, EARTHQUAKE MITIGATION COULD BE AFFECTED
The report suggested that depending on the outcome of any agreements with tribal governments, there could be a million-dollar impact on the agency’s Oil and Gas Conservation Division, which is responsible for performing 60,000+ oil/gas well and site inspections annually, overseeing testing, well plugging and pollution prevention.
The division’s other duties and oversight include secondary and brine recovery units, gas gathering and transportation, natural-gas seeps, mitigation of induced seismicity, earthquake tracking, monitoring horizontal, vertical and directional wells, and wastewater disposal from oil/gas production.
“Based on data from 2019, fees collected by the OCC for oil and gas activity attributable to the eastern half of the state could potentially be reduced by more than $1 million annually, and collections for fines and penalties could potentially be reduced up to $250,000 annually,” if the agency’s jurisdiction over such lands no longer existed, the report stated.
The report said the commission’s administration of the Mineral Owners Escrow Account, which benefits unknown or unlocated persons entitled to bonuses and royalty payments, could experience a reduction to its 10% administration fee.
If the commission is jurisdictionally barred from certain lands in eastern Oklahoma, “its inspections, oversight, documentation of the location, extent, and type of activity, and its enforcement activities in those areas would cease,” the Oil and Gas Conservation Division declared in the report.
COMMISSION REGULATES UNDERGROUND TANKS, TELECOM COMPANIES
The commission’s Petroleum Storage Tank Division (PSTD) could potentially face a loss of $145,000 in its enforcement and oversight of the Oklahoma Underground Storage Tank Program and Leaking Underground Storage Tank Program, officials said.
“Unless another regulatory entity has the legal authority, capability and resources to step in, the resources and services offered through these state programs would be unavailable outside OCC’s jurisdiction.”
The PSTD regulates tanks that store antifreeze, motor oil, gasoline and other petroleum products. Fuel inspectors check the calibration of gasoline pumps to ensure that customers receive the accurate amount of gasoline they purchase; the inspectors also check octane levels and assist tank owners in proper release detection methods. The Corporation Commission inspects more than 4,300 gas stations each year.
The PSTD also administers the Petroleum Storage Tank Release Indemnity Fund, which the Legislature created in 1989 to help fuel storage tank owners meet a need for environmental liability insurance. The indemnity fund is underwritten by an assessment on motor fuel, and provides funding for corrective action of polluted sites caused by releases of petroleum products from tanks. The indemnity fund staff administers more than $25 million in claims made on the fund in a typical year, the agency reported.
The agency’s Public Utility Division (PUD), according to the report, could potentially lose $2.5 million in its technical support, analysis, research and data in the monitoring of regulated utilities. Those include electric and natural gas companies, some privately owned water utilities.
The PUD also regulates telecommunications companies and administers the $60 million Universal Service Fund, which ensures that reliable telephone service is provided in rural areas that are typically ignored by larger carriers such as AT&T.
“The regulated territory might become smaller, but the amount of labor and costs of regulation are not correlated to customer numbers or the size of the utilities affected,” PUD officials wrote.
OCC COULD CONSIDER COMPACTS WITH TRIBES
The commission staffers who assembled the “Report of Potential Impact” noted that Congress could “comprehensively alter the applicability” of McGirt v. Oklahoma, the landmark Supreme Court decision issued in July.
However, “in the absence of congressional action,” the possibility and feasibility of compacts with Native American tribes “can be researched and explored.” The state and several tribes already have compacts governing various tax issues, for example.
Whatever impact the McGirt decision might have on the Oklahoma Corporation Commission, the agency’s staff concluded, any reductions to the OCC’s jurisdiction “may lead to corresponding reductions in its revenue, budget, [legislative] appropriations, workload, and workforce in some areas and none in others.”
REGULATORY AUTHORITY OBSCURED IN PART BY 2005 FEDERAL ACT
The Corporation Commission’s regulatory authority in “Indian Country” is unclear, not only because of the Supreme Court’s McGirt ruling but also because federal regulators have granted Oklahoma continued authority to regulate key environmental programs across Indian Country.
In a letter that the administrator of the U.S. Environmental Protection Agency sent to Gov. Kevin Stitt on October 1, the EPA endorsed the state’s request to continue providing environmental oversight on Indian Country lands within the historical territories of the Cherokee, Choctaw, Chickasaw, Creek and Seminole nations in eastern and southern Oklahoma.
That authorization was provided for in an amendment that Oklahoma U.S. Sen. Jim Inhofe slipped into the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA) in 2005.
Stitt submitted his request for continuation of state regulatory authority after the Supreme Court issued its 5-4 decision in McGirt that Congress has never dissolved the Muscogee (Creek) Nation’s reservation that was established prior to Oklahoma statehood in 1907.
Although McGirt applied solely to the Creek Nation reservation, state judges have advised the Oklahoma Court of Criminal Appeals that Congress has never disestablished the pre-statehood reservations of the Cherokee, Choctaw, Chickasaw and Seminole nations, either.