2006 Regular Session
To: Oil, Gas and Other Minerals
By: Representative Reeves
AN ACT TO BRING FORWARD SECTIONS 29-7-1, 29-7-3, 29-7-5, 29-7-7, 29-7-9, 29-7-13, 29-7-17, 29-7-19 AND 29-7-21, MISSISSIPPI CODE OF 1972, WHICH PERTAIN TO MINERAL LEASES OF STATE LANDS, INCLUDING THOSE THAT ARE SUBMERGED AND OFFSHORE, FOR PURPOSES OF AMENDMENT; TO BRING FORWARD SECTION 27-29-35, MISSISSIPPI CODE OF 1972, WHICH REQUIRES COUNTIES AND MUNICIPALITIES TO REDUCE AD VALOREM TAXES IN A CERTAIN AMOUNT IF THEY RECEIVE SEVERANCE TAX REVENUE FROM OFFSHORE DRILLING ON THE MISSISSIPPI GULF COAST, FOR PURPOSES OF AMENDMENT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 29-7-1, Mississippi Code of 1972, is brought forward as follows:
29-7-1. (1) The Mississippi Major Economic Impact Authority shall be the mineral lease commission, and shall exercise the duties and responsibilities of the mineral lease commission under the provisions of Section 29-7-1 et seq.
(2) The words "mineral lease commission," whenever they may appear in the laws of the State of Mississippi, shall be construed to mean the Mississippi Major Economic Impact Authority.
(3) The term "commission" means the Mississippi Major Economic Impact Authority.
SECTION 2. Section 29-7-3, Mississippi Code of 1972, is brought forward as follows:
29-7-3. There shall be no development or extraction of oil, gas, or other minerals from state-owned lands by any private party without first obtaining a mineral lease therefor from the commission. The commission is hereby authorized and empowered, for and on behalf of the state, to lease any and all of the state land now owned (including that submerged or whereover the tide may ebb and flow) or hereafter acquired, to some reputable person, association, or company for oil and/or gas and/or other minerals in and under and which may be produced therefrom, excepting, however, sixteenth section school land, lieu lands, and such forfeited tax land and property the title to which is subject to any lawful redemption, for such consideration and upon such terms and conditions as the commission deems just and proper. No mineral lease of offshore lands shall allow offshore drilling operations north of the coastal barrier islands, except in Blocks 40, 41, 42, 43, 63, 64 and 66 through 98, inclusive. Further, surface offshore drilling operations will not be allowed within one (1) mile of Cat Island. The commission may only offer for lease the state-owned lands in Blocks 40, 41, 42, 43, 63, 64 and 66 through 98, inclusive, as shown on the Mississippi Department of Environmental Quality Bureau of Geology Plat of Lease Blocks (Open File Report 151) on terms and conditions and for a length of time as determined by the commission. The commission may not lease any lands or submerged lands off the Mississippi Gulf Coast that have been leased by the Department on Marine Resources before January 1, 2004, for any public or private oyster reef lease or any lands or submerged lands within one (1) mile of that lease for the purposes of drilling offshore for oil, gas and other minerals.
Consistent with the conservation policies of this state under Section 53-1-1 et seq., the commission may offer for public bid any tracts or blocks of state-owned lands not currently under lease, which have been identified to the commission as having development potential for oil or natural gas, not less than once a year. Upon consultation with the Office of Geology in the Mississippi Department of Environmental Quality, the Secretary of State and any other state agency as the commission deems appropriate, the commission shall promulgate rules and regulations consistent with this chapter governing all aspects of the process of leasing state lands within its jurisdiction for mineral development, including the setting of all terms of the lease form to be used for leasing state-owned lands, any necessary fees, public bidding process, delay rental payments, shut-in royalty payments, and such other provisions as may be required. The Attorney General shall review the lease form adopted by the commission for legal sufficiency.
There shall not be conducted any seismographic or other mineral exploration or testing activities on any state-owned lands within the mineral leasing jurisdiction of the commission without first obtaining a permit therefor from the commission. Upon consultation with the Office of Geology in the Mississippi Department of Environmental Quality, the Secretary of State and any other state agency as the commission deems appropriate, the commission shall promulgate rules and regulations governing all aspects of seismographic or other mineral exploration activity on state lands within its jurisdiction, including the establishing of fees and issuance of permits for the conduct of such mineral exploration activities. The Attorney General shall review the permit form adopted by the commission for legal sufficiency. Provided, however, that persons obtaining permits from the commission for seismographic or other mineral exploration or testing activities on state-owned wildlife management areas, lakes and fish hatcheries, shall be subject to rules and regulations promulgated therefor by the Mississippi Commission on Wildlife, Fisheries and Parks which shall also receive all permit fees for such testing on said lands. In addition, persons obtaining permits from the commission for seismographic or other mineral exploration or testing activities on state-owned marine waters shall be subject to rules and regulations promulgated therefor by the Mississippi Department on Marine Resources which shall also receive all permit fees for such testing on those waters.
Further, provided that each permit within the Mississippi Sound or tidelands shall be reviewed by the Mississippi Commission on Marine Resources and such special conditions as it may specify will be included in the permit. Information or data obtained in any mineral exploration activity on any and all state lands shall be disclosed to the state through the commission, upon demand. Such information or data shall be treated as confidential for a period of ten (10) years from the date of receipt thereof and shall not be disclosed to the public or to any firm, individual or agency other than officials or authorized employees of this state. Any person who makes unauthorized disclosure of such confidential information or data shall be guilty of a misdemeanor, and upon conviction thereof, be fined not more than Five Thousand Dollars ($5,000.00) or imprisoned in the county jail not more than one (1) year, or both.
Whenever any such land or property is leased for oil and gas and/or other minerals, such lease contract shall provide for a lease royalty to the state of at least three-sixteenths (3/16) of such oil and gas or other minerals, same to be paid in the manner prescribed by the commission. Of the monies received in connection with the execution of such leases, five-tenths of one percent (5/10 of 1%) shall be retained in a special fund to be appropriated by the Legislature, One Hundred Thousand Dollars ($100,000.00) of which amount to be used by the commission for the administration of the leasing and permitting under this section, and the remainder of such amount shall be deposited into the Education Trust Fund, created in Section 206A, Mississippi Constitution of 1890; and two percent (2%) shall be paid into a special fund to be designated as the "Gulf and Wildlife Protection Fund," to be appropriated by the Legislature, one-half (1/2) thereof to be apportioned as follows: an amount which shall not exceed One Million Dollars ($1,000,000.00) shall be used by the Mississippi Department of Wildlife, Fisheries and Parks and the Mississippi Department on Marine Resources solely for the purpose of cleanup, remedial or abatement actions involving pollution as a result of the exploration or production of oil or gas, and any amount in excess of such One Million Dollars ($1,000,000.00) shall be deposited into the Education Trust Fund, created in Section 206A, Mississippi Constitution of 1890. The remaining one-half (1/2) of such Gulf and Wildlife Protection Fund to be apportioned as follows: an amount which shall not exceed One Million Dollars ($1,000,000.00) shall be used by the Mississippi Commission on Wildlife, Fisheries and Parks and the Mississippi Department on Marine Resources for use first in the prudent management, preservation, protection and conservation of existing waters, lands and wildlife of this state and then, provided such purposes are accomplished, for the acquisition of additional waters and lands and any amount in excess of such One Million Dollars ($1,000,000.00) shall be deposited into the Education Trust Fund, created in Section 206A, Mississippi Constitution of 1890. However, in the event that the Legislature is not in session to appropriate funds from the Gulf and Wildlife Protection Fund for the purpose of cleanup, remedial or abatement actions involving pollution as a result of the exploration or production of oil or gas, then the Mississippi Department of Wildlife, Fisheries and Parks and the Mississippi Department on Marine Resources may make expenditures from this special fund account solely for said purpose. The commission may lease the submerged beds for sand and gravel on such a basis as it may deem proper, but where the waters lie between this state and an adjoining state, there must be a cash realization to this state, including taxes paid for such sand and gravel, equal to that being had by such adjoining state, in all cases the requisite consents therefor being lawfully obtained from the United States.
The Department of Environmental Quality is authorized to employ competent engineering personnel to survey the territorial waters of this state in the Mississippi Sound and the Gulf of Mexico and to prepare a map or plat of such territorial waters, divided into blocks of not more than six thousand (6,000) acres each with coordinates and reference points based upon longitude and latitude surveys. The commission is authorized to adopt such survey, plat or map for leasing of such submerged lands for mineral development; and such leases may, after the adoption of such plat or map, be made by reference to the map or plat, which shall be on permanent file with the commission and a copy thereof on file in the Office of the State Oil and Gas Board.
SECTION 3. Section 29-7-5, Mississippi Code of 1972, is brought forward as follows:
29-7-5. When any state land mentioned in this chapter is known to be within a well-defined proven oil and/or gas field, is subject to waste or dissipation, has not been heretofore leased or under contract, is so situated that the production of such oil and/or gas is needed and useful to the state for any of its buildings and/or institutions and can be profitably used because any such state-owned building or institution is situated thereon or in the immediate vicinity thereof, or when the state needs to drill any well or wells to protect its mineral resources, the said commission is authorized and empowered, in its discretion, to make contracts within the limit of appropriations made for such purposes; said contracts to be let, in the manner now provided by law for letting public contracts, for drilling a well or wells on such land or lands mentioned in this section for oil and/or gas, completing the said well or wells as a producer of oil and/or gas, and connecting any such well or wells to any such state-owned property or institution for use of the production therefrom for fuel or other purposes.
The commission is hereby further authorized and empowered in its discretion to proceed to drill under its own direction such well or wells on such state land as it may deem advisable, and to employ such drillers and employees as will be necessary in carrying on such operations; and said commission is further authorized in its discretion to purchase, lease, or hire any machinery, tools, and other equipment necessary for drilling such well or wells, to be paid for by the commission out of any funds appropriated by the Legislature for the purpose of carrying out the provisions of this chapter. The said commission may, in its discretion, sell or contract the sale of any surplus oil and/or gas not needed by any state building or institution produced from any such well or wells, or may exchange or dispose of any of same by reciprocal agreement in order to serve any distant state-owned institution, but any oil, gas and/or other mineral so disposed of shall not be so disposed of at any amount or value less than the market price thereof.
Said commission shall determine in all cases whether it would be to the best interest of the state to dispose of said resources by lease or proceed by contract to drill to the actual exploration and exploitation of said resources by the state itself, and shall be governed entirely by a consideration of the best interest of the state.
SECTION 4. Section 29-7-7, Mississippi Code of 1972, is brought forward as follows:
29-7-7. The state mineral lease commission is authorized and empowered to contract for the construction and/or laying and operation of a suitable state-owned pipeline or lines for the transportation of any state-owned natural gas and/or oil for use by the state-owned buildings and/or institutions as fuel or other purposes, whenever said commission shall determine that the same will be for the best interest of the state and/or any of its buildings or institutions. Said commission shall construct and lay any such state-owned pipeline mentioned in this section where practicable in, under, and along any street, alley, sidewalk, road, or other public property, and where necessary may exercise the right of eminent domain for sufficient right-of-way and/or easement in, under, and along private property in the manner provided by law for the exercise of the right of eminent domain by the state in other cases.
SECTION 5. Section 29-7-9, Mississippi Code of 1972, is brought forward as follows:
29-7-9. The State Mineral Lease Commission shall keep a well-bound book for the purpose of keeping the minutes of all its proceedings, contracts, papers, and records, all of which shall be printed or written therein in full, and shall keep a permanent file in such place and manner containing all original contracts and/or leases as shall be designated by the commission.
SECTION 6. Section 29-7-13, Mississippi Code of 1972, is brought forward as follows:
29-7-13. All sums of money realized and/or received from the sale of any and all oil or gas or other minerals, lease contract, rentals, royalties, or otherwise, contemplated by this chapter, shall be immediately deposited in the General Fund of the State Treasury.
SECTION 7. Section 29-7-17, Mississippi Code of 1972, is brought forward as follows:
29-7-17. (1) Any person found by the commission to be violating any of the provisions of Section 29-7-3, or any rule or regulation or written order of the commission in pursuance thereof, or any condition or limitation of a permit shall be subject to a civil penalty of not more than Ten Thousand Dollars ($10,000.00) for each violation, such penalty to be assessed and levied by the commission after a hearing as hereinafter provided. Each day upon which a violation occurs shall be deemed a separate and additional violation. Appeals from the imposition of a civil penalty may be taken to the appropriate chancery court in the same manner as appeals from the orders of the commission. If the appellant desires to stay the execution of a civil penalty assessed by the commission, he shall give bond with sufficient resident sureties of one or more guaranty or surety companies authorized to do business in this state, payable to the State of Mississippi, in an amount equal to double the amount of any civil penalty assessed by the commission, as to which the stay of execution is desired, on the condition that if the judgment shall be affirmed the appellant shall pay all costs of the assessment entered against him.
(2) In lieu of, or in addition to, the penalty provided in subsection (1) of this section, the commission shall have power to institute and maintain in the name of the state any and all proceedings necessary or appropriate to enforce the provisions of Section 29-7-3, rules and regulations promulgated, and orders and permits made and issued thereunder, in the appropriate circuit, chancery, county or justice court of the county in which venue may lie. The commission may obtain mandatory or prohibitory injunctive relief, either temporary or permanent, and it shall not be necessary in such cases that the state plead or prove: (i) that irreparable damage would result if the injunction did not issue; (ii) that there is no adequate remedy at law; or (iii) that a written complaint or commission order has first been issued for the alleged violation.
(3) Any person who violates any of the provisions of, or fails to perform any duty imposed by, Section 29-7-3 or any rule or regulation issued hereunder, or who violates any order or determination of the commission promulgated pursuant to such section, and causes the death of fish, shellfish, or other wildlife shall be liable, in addition to the penalties provided in subsections (1), (2), (4) and (5) of this section, to pay to the state an additional amount equal to the sum of money reasonably necessary to restock such waters or replenish such wildlife as determined by the commission after consultation with the Mississippi Commission on Wildlife, Fisheries and Parks and the Mississippi Department on Marine Resources. Such amount may be recovered by the commission on behalf of the state in a civil action brought in the appropriate county or circuit court of the county in which venue may lie.
(4) Any person who, through misadventure, happenstance or otherwise causes damage to or destruction of state-owned lands or structures or other property thereon necessitating remedial or cleanup action shall be liable for the cost of such remedial or cleanup action and the commission may recover the cost of same by a civil action brought in the circuit court of the county in which venue may lie. This penalty may be recovered in lieu of or in addition to the penalties provided in subsections (1), (2), (3) and (5) of this section.
(5) It shall be unlawful for any person to conduct unauthorized mineral exploration, development, or extraction activity or to violate the provisions of Section 29-7-3 or the rules and regulations of the commission which relate to mineral exploration, development, or extraction activity and, upon conviction thereof, such person shall be guilty of a misdemeanor, and fined not less than Five Hundred Dollars ($500.00) nor more than Five Thousand Dollars ($5,000.00) for each offense. Each day on which such violation occurs or continues shall constitute a separate offense.
(6) In lieu of or in addition to the penalties prescribed hereinabove, any person convicted by a court of law or found guilty by the commission of unlawful mineral extraction activity on state-owned lands shall repay to the state the fair market value of the minerals unlawfully extracted.
(7) Proceedings before the commission on civil violations prescribed hereinabove shall be conducted in the manner set forth in this chapter.
SECTION 8. Section 29-7-19, Mississippi Code of 1972, is brought forward as follows:
29-7-19. (1) The hearings, as provided under Section 29-7-21(1), may be conducted by the commission itself at a regular or special meeting of the commission, or the commission may designate a hearing officer, who may conduct such hearings in the name of the commission at any time and place as conditions and circumstances may warrant. The hearing officer shall have the record prepared of any hearing that he has conducted for the commission. The record shall be submitted to the commission along with that hearing officer's findings of fact and recommended decision. Upon receipt and review of the record of the hearing and the hearing officer's findings of fact and recommended decision, the commission shall render its decision in the matter. The decision shall become final after it is entered on the minutes and shall be considered the final administrative agency decision on the matter. The decision may be appealed under Section 29-7-21(2).
(2) All hearings before the commission shall be recorded either by a court reporter, tape or mechanical recorders and subject to transcription upon order of the commission or any interestedparty, but if the request for transcription originates with an interested party, that party shall pay the cost thereof.
SECTION 9. Section 29-7-21, Mississippi Code of 1972, is brought forward as follows:
29-7-21. (1) Any person or interested party aggrieved by any final rule, regulation, permit or order of the commission may file a petition with the commission within thirty (30) days after the final rule, regulation, permit or order is entered on the minutes. The petition shall set forth the grounds and reasons for the complaint and request a hearing of the matter involved. However, there shall be no hearing on the same subject matter that has previously been held before the commission or its designated hearing officer. The commission shall fix the time and place of the hearing and notify the petitioners thereof. In pending matters, the commission shall have the same powers as to subpoenaing witnesses, administering oaths, examining witnesses under oath and conducting the hearing, as is now vested by law in the Mississippi Public Service Commission, as to hearings before it, with the additional power that the executive director may issue all subpoenas, both at the instance of the petitioner and of the commission. At the hearings the petitioner, and any other interested party, may offer exhibits, present witnesses, and otherwise submit evidence, as the commission deems appropriate. After the hearing, the commission's decision shall be deemed the final administrative agency decision on the matter.
(2) Any interested person aggrieved by any final rule, regulation, permit or order of the commission issued under this section, regardless of the amount involved, may appeal to the Chancery Court of the First Judicial District of Hinds County, Mississippi, which shall be taken and perfected as hereinafter provided, within thirty (30) days from the date that the final rule, regulation or order is filed for record in the office of the commission. The chancery court may affirm the rule, regulation, permit, or order, or reverse the same for further proceedings as the court may require. All appeals shall be on the record, taken and perfected, heard and determined either in termtime or in vacation, including a transcript of pleadings and testimony, both oral and documentary, filed and heard before the commission, and the appeal shall be heard and disposed of promptly by the court as a preference cause. In perfecting any appeal provided by this section, the provisions of law respecting notice to the reporter and the allowance of bills of exception, now or hereafter in force respecting appeals from the chancery court to the Supreme Court, shall be applicable. However, the reporter shall transcribe his notes and file the transcript of the record with the board within thirty (30) days after approval of the appeal bond.
(3) Upon the filing with the commission of a petition for appeal to the Hinds County Chancery Court, it shall be the duty of the commission, as promptly as possible and within sixty (60) days after approval of the appeal bond, if required, to file with the clerk of the chancery court to which the appeal is taken, a copy of the petition for appeal and of the rule, regulation, permit or order appealed from, and the original and one (1) copy of the transcript of the record of proceedings in evidence before the commission. After the filing of the petition, the appeal shall be perfected by the filing with the clerk of the chancery court to which the appeal is taken of bond in the sum of Five Hundred Dollars ($500.00) with two (2) sureties or with a surety company qualified to do business in Mississippi as the surety, conditioned to pay the cost of the appeal; the bond to be approved by any member of the commission, or by the clerk of the court to which the appeal is taken. The perfection of an appeal shall not stay or suspend the operation of any rule, regulation, permit or order of the board, but the judge of the chancery court to which the appeal is taken may award a writ of supersedeas to any rule, regulation, permit or order of the commission after five (5) days' notice to the commission and after hearing. Any order or judgment staying the operation of any rule, regulation, permit or order of the commission shall contain a specific finding, based upon evidence submitted to the chancery judge and identified by reference thereto, that great or irreparable damage would result to the appellant if he is denied relief, and the stay shall not become effective until a supersedeas bond shall have been executed and filed with and approved by the clerk of the court or the chancery judge, payable to the state. The supersedeas bond shall be in an amount fixed by the chancery judge to protect the lessee or permittee from loss or damage from the stay and conditioned as the chancery judge may direct in the order granting the supersedeas. If the appeal is of a commission order concerning the lease of state lands for minerals, that appeal shall be given priority over other matters pending in the chancery court. If the appeal is of a commission permit, that appeal shall be given priority over other matters pending in chancery court.
SECTION 10. Section 27-29-35, Mississippi Code of 1972, is brought forward as follows:
27-29-35. From and after July 1, 2004, the board of supervisors of a county shall reduce the ad valorem taxes levied by the county in an amount equal to one-half (1/2) of the county's share of the revenue derived from the oil and gas severance tax under Sections 27-25-505 and 27-25-705 as a result of offshore drilling on the Mississippi Gulf Coast. From and after July 1, 2004, the governing authorities of a municipality shall reduce the ad valorem taxes levied by the municipality in an amount equal to one-half (1/2) of the municipality's share of the revenue derived from the oil and gas severance tax under Sections 27-25-505 and 27-25-705 as a result of offshore drilling on the Mississippi Gulf Coast.
SECTION 11. This act shall take effect and be in force from and after July 1, 2006.