Agriculture, Forestry & Economic Development - Senate
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Bills discussed (16)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
|
HB1680
Act 811
· 6 mentions in agenda, chapter, transcript
Matched: “…THE STATE ACTION POULTRY FLOCK DEPOPULATION GRANT PROGRAM. HB1680 Vaught TO PREVENT A FOREIGN-PARTY-CONTROLLED BUSINESS FROM…”
|
TO PREVENT A FOREIGN-PARTY-CONTROLLED BUSINESS FROM LEASING LAND; AND TO PROHIBIT A PROHIBITED FOREIGN PARTY … | Vaught | Notification that HB1680 is now Act 811 |
|
HB1852
· 5 mentions in chapter, agenda, transcript
Matched: “HB1852 Moore TO ESTABLISH A RIGHT TO REPAIR FOR CERTAIN AGRICULTUR…”
|
TO ESTABLISH A RIGHT TO REPAIR FOR CERTAIN AGRICULTURAL EQUIPMENT. | J. Moore | Died in Senate Committee at Sine Die adjournment. |
|
HB1562
Act 941
· 4 mentions in chapter, agenda, transcript
Matched: “HB1562 Gazaway CONCERNING THE TERMINATION OF AN ORAL LEASE OF FARM…”
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CONCERNING THE TERMINATION OF AN ORAL LEASE OF FARMLANDS; AND TO AMEND THE LAW CONCERNING … | Gazaway | Notification that HB1562 is now Act 941 |
|
HB1827
Act 817
· 4 mentions in agenda, chapter, transcript
Matched: “…EAL PROPERTY OR AGRICULTURAL LAND IN CERTAIN CIRCUMSTANCES. HB1827 Wardlaw TO AMEND THE ARKANSAS HUNTING HERITAGE PROTECTION A…”
|
TO AMEND THE ARKANSAS HUNTING HERITAGE PROTECTION ACT. | Wardlaw | Notification that HB1827 is now Act 817 |
|
HB1923
Act 838
· 4 mentions in chapter, transcript, agenda
Matched: “HB1923 Maddox TO AMEND THE ARKANSAS TOURISM DEVELOPMENT ACT; AND T…”
|
TO AMEND THE ARKANSAS TOURISM DEVELOPMENT ACT; AND TO AMEND THE LAW CONCERNING NATURAL STATE … | Maddox | Notification that HB1923 is now Act 838 |
|
HB1928
Act 820
· 4 mentions in chapter, transcript, agenda
Matched: “HB1928 M. Brown TO AMEND THE ARKANSAS SOIL NUTRIENT APPLICATION AN…”
|
TO AMEND THE ARKANSAS SOIL NUTRIENT APPLICATION AND POULTRY LITTER UTILIZATION ACT. | M. Brown | Notification that HB1928 is now Act 820 |
|
HB1656
Act 1024
· 2 mentions in agenda, chapter
Matched: “…Jr Sen. Jamie Scott REGULAR AGENDA Number Sponsor Subtitle HB1656 Beck TO AMEND THE LAW REGARDING OIL AND GAS PRODUCTION AND…”
|
TO AMEND THE LAW REGARDING OIL AND GAS PRODUCTION AND CONSERVATION. | Beck | Notification that HB1656 is now Act 1024 |
|
HB1856
· 2 mentions in transcript
Matched: “Are you in the room? Anyone here to run House Bill 1856. none, uh, House Bill 1923 Representative Maddox. none Mr.…”
|
TO AMEND THE LAW CONCERNING THE STATE BOARD OF EMBALMERS, FUNERAL DIRECTORS, CEMETERIES, AND BURIAL … | Ennett | WITHDRAWN BY AUTHOR |
|
HB1149
· 1 mention in agenda
Matched: “…; AND TO PRESERVE TIMBER AT THE PINE TREE RESEARCH STATION. HB1149 Vaught CONCERNING VEGETABLE GARDEN PROTECTION. Notice: Sile…”
|
CONCERNING VEGETABLE GARDEN PROTECTION. | Vaught | Died in Senate Committee at Sine Die adjournment. |
|
HB1855
Act 818
· 1 mention in chapter
Matched: “HB1855 Ennett TO AMEND THE LAWS CONCERNING THE POWERS AND DUTIES O…”
|
TO AMEND THE LAWS CONCERNING THE POWERS AND DUTIES OF THE DEPARTMENT OF AGRICULTURE AND … | Ennett | Notification that HB1855 is now Act 818 |
|
SB281
· 1 mention in agenda
Matched: “…estrictions designating areas as 'Members and Staff Only'. SB281 Gilmore TO AMEND THE LAW REGARDING AGRICULTURE; TO ESTABLIS…”
|
TO AMEND THE LAW REGARDING AGRICULTURE; TO ESTABLISH THE PRODUCER BILL OF RIGHTS FOR COMMODITY … | Gilmore | Died in Senate Committee at Sine Die adjournment. |
|
SB455
· 1 mention in agenda
Matched: “…IRE CERTAIN ACTIONS RELATED TO COMMODITY CHECKOFF PROGRAMS. SB455 J. Bryant TO ALLOW REGULATION OF HEMP PRODUCTS BY ARKANSAS…”
|
TO ALLOW REGULATION OF HEMP PRODUCTS BY ARKANSAS TOBACCO CONTROL; AND TO AMEND THE UNIFORM … | J. Bryant | Died in Senate Committee at Sine Die adjournment. |
|
SB466
· 1 mention in agenda
Matched: “…EMOVE CERTAIN SUBSTANCES THAT ARE DEFINED AS HEMP PRODUCTS. SB466 J. Dismang TO PLACE A MORATORIUM ON CERTAIN HEIGHTS OF WIND…”
|
TO PLACE A MORATORIUM ON CERTAIN HEIGHTS OF WIND POWER DEVICES; TO REQUIRE THE ARKANSAS … | J. Dismang | Died in Senate Committee at Sine Die adjournment. |
|
SB582
· 1 mention in agenda
Matched: “…NDS; AND TO AMEND THE LAW CONCERNING NOTICE OF TERMINATION. SB582 B. King TO ESTABLISH THE STATE ACTION POULTRY FLOCK DEPOPUL…”
|
TO ESTABLISH THE STATE ACTION POULTRY FLOCK DEPOPULATION GRANT PROGRAM. | B. King | Died in Senate Committee at Sine Die adjournment. |
|
SB84
· 1 mention in agenda
Matched: “…ICULTURAL EQUIPMENT. DEFERRED BILLS Number Sponsor Subtitle SB84 B. Johnson TO PROHIBIT A MORATORIUM ON THE ISSUANCE OF PERM…”
|
TO PROHIBIT A MORATORIUM ON THE ISSUANCE OF PERMITS IN WATERSHEDS AND OTHER BODIES OF … | B. Johnson | Sine Die adjournment |
|
SB85
· 1 mention in agenda
Matched: “…SSUANCE OF PERMITS IN WATERSHEDS AND OTHER BODIES OF WATER. SB85 Caldwell TO PRESERVE PUBLIC PROPERTY; AND TO PRESERVE TIMBE…”
|
TO PRESERVE PUBLIC PROPERTY; AND TO PRESERVE TIMBER AT THE PINE TREE RESEARCH STATION. | Caldwell | Died in Senate Committee at Sine Die adjournment. |
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meeting to order uh the Senate Agra, uh, forestry and economic
development. I did have a quorum and one of them stepped out. I will not do
anything without a quorum. Senator Lading was here and just stepped
out. OK. Representative. We're looking at House Bill 1680. Members, if you'd take that, please. Uh, going to go out of order today, uh, we're, we're behind
in trying to get the bills out for everyone. I'm gonna give those who have
not had a bite at the apple or the opportunity to come present their bill, and then we'll get to, uh, everyone here that's, that's available. So
Representative DeAnn Vaught
Unverified
0:58
Representative Volt, if you would recognize yourself. Represented by Den District 87, so sorry about that,
Mr. Chair. Long, long session, sir. OK. House Bill 1680. Uh, the intent
Representative DeAnn Vaught
Unverified
1:08
of this bill is to safeguard Arkansas's agricultural resources and critical infrastructure from the
prohibited, uh, foreign party controlled business influences to prevent potential espionage, intellectual property theft and other security threats posed by foreign ownership of agricultural land, Arkansas's statutory efforts to combat Chinese ownership of agricultural land reflects a proactive approach to addressing economic and, and, uh, concerns and protect the state's resources. And that's the intent of this
bill. Question from committee seeing none, uh, no one has signed up to speak for or against this bill. Is there anyone in the audience that wishes to speak for or against this bill? Shaunn, you're welcome to close for your bill. I'm closed I'd appreciate a good vote. What's the will of the committee? motion from Senator Scott, 2nd for Senator Stone, all in favor say aye.
All the polls say no. Thank you committee. Thank you,
Speaker 16
2:28
you, darling. Can you at least. OK. Would you like to present your bill? You're
welcome. You're. Yeah, that's I Which House Bill 1827.
Senator Irvin is going to present that on behalf of Representative Wardlaw. or if you would introduce yourself for the record, please,
Senator Missy Irvin
Unverified
3:01
and you're recognized. Yes, uh, Senator Missy Irvin. Um This is an agreed to bill that came through the house, uh, on behalf of the sportsman's Caucus. Um, it just, it's amending our Arkansas hunting Heritage and
Protection Act, um, and again, trying to clarify what commission leased lands are. This is, um, in relationship to, uh, the conservation efforts that we've put forward, uh, uh, as well, and, um, making sure that they, uh, Have some guidelines in the law as it relates to commission-owned lands, um, and commission managed lands, uh, from the, from the Arkansas Game and fish and wildlife.
OK. Committee. Anyone have a question? Circulating. Thank you, Mr. Chair. I
Senator Greg Leding
Unverified
3:57
fully support the bill. I just don't support the House sponsor. Can we amend him off of
Senator Missy Irvin
Unverified
4:04
there? I would, you know If you want to amend it, happy to do so, but he's, he's my co-chair in the
sportsman's coffee representative Wardlaw this just brings up to date. We've added about 50,000 acres of land that needs to be, uh, covered under this protection,
and that's basically all it does. Yes, the proper time. Senator, let me ask, is there anyone here to speak for this bill or against this bill? Are you closed for your bill? I am a motion of do pass. Senator letting has a second. All in favor say aye. All opposed. Congratulations. Thank you. Thank
Speaker 40
4:40
you, Representative Gassway, are you in the
room? Anyone wanting to run, uh, House Bill 1562 on behalf of Representative Gassway. Seeing none, Serge King's not
running. He is. Ward law, uh, representative in it.
Are you in the room? Anyone here to run House Bill 1856. none, uh, House Bill 1923 Representative Maddox. none Mr. Pardon
Hester will be for us. out OK, Ben, would
go. I think you made 18 I did 1855. I, I, I apologize for that. I'm getting old and blind and deaf and Hm Uh House Bill 1928 in Brown. You're on it. Right, see no House Bill 1852 represented Moore. That's Not. Stone.
House Bill 1852. We have an amendment to the bill. Would you like to present your amendment, please?
Senator Matt Stone
Unverified
6:28
I would, um, the amendment removes, uh, irrigation equipment from this bill and also class 1 or class 2 all train vehicles or parts of equipment that's used for irrigation. OK, uh, here a
motion on the, uh, amendment. Oh, I'm sorry. But Did you say it deletes? Yes. It looks like it says
Senator Jimmy Hickey, Jr
Unverified
6:47
delete line 27 and substitute the following. Well, I guess I was looking at page 2 up there
Senator Matt Stone
Unverified
6:55
delete line 2. Let me make sure here, if you
Senator Jimmy Hickey, Jr
Unverified
6:59
don't mind exactly what it is. It puts back in parts or equipment's used for irrigation. So it actually is, I don't think is, I don't, unless I'm reading it wrong. Let's see, agricultural grant does not include motor vehicles. I see what it does. If you go to 23, it's, it's up there. It says does not include So I think that's what it does. It does not include it. Um, thank you. It took me a minute. No worries. It's better to be safe than sorry, Senator. OK. Now,
Senator Matt Stone
Unverified
7:27
do I hear a motion on the amendment?
Motion do pass the 2nd to a motion to adopt the amendment. Stone, would you like a second. are all in favor of the member say aye. All the polls say no. You're recognized to present your bill
Senator Matt Stone
Unverified
7:53
as amended. Thank you, Mr. Chair. Uh, members this bill. Um Is more about this to me is more than
just a right to for someone
a farmer to be able to repair. They're on a, their own equipment. To me, the larger scheme is consolidation. We see it happening across our country and a lot of industries we see it in the oil industry where a few players control our oil and set the price. We see it in Agland being consolidated every time. Um, dad dies, or granddaddy dies, the farm is sold off to pay the taxes and corporate America ends up buying the farm.
Every time our family farmers go out, it makes us more vulnerable to corporate owned ownership. I believe farmers should have the right to work and repair on their own equipment. That's something that's been historically done. And I was just sitting there thinking just in my short life since I've been in the timber industry, something that, and this doesn't this bill does not deal with the timber industry. But just since the 45 years that I've been, I've seen Clark
timberjack tree farmer, auto car Bell husky, log hog, hood, and Franklin to quit becoming these go out of business. Now we're just down to a precious few. Used to, you could. Go and buy parts at the parts store and now you just about have to go to the dealer where you bought the equipment to buy their parts.
To put on that equipment that you want. If you own a car and the check engine light comes on, you can
go to a mechanic, you can go to the dealer, you can go to an auto mechanic, you can even go to a part store and they can plug in and tell you what's wrong with your vehicle, then you can take it and get it repaired. Now if a farmer buys a million dollars combine and it's under warranty, they're going to want the dealer to do the warranty work. But at some point when that machine's out of warranty, they want to be able to do their own repair work or by a specialty
tool that would allow them to do their own repair
work. This bill does not attempt to uh bypass any government standards on emissions for engines, removing the safe safety equipment. Or try to force the dealer or the equipment manufacturer to give up any kind of pro uh proprietary information. This just build your sei allows a farmer to do work on their equipment when they get ready
to, especially older equipment that's not under warranty anymore, you know, I've been a small business owner, uh, July the 1st to be 37 years and you have to make money to stay in business. The farmers have to make money, stay in business. But staying in business is not only what you make, is what you save, and if you have a shop where you can do your own repair work and have the tools to be able to do it, I believe you should be able to do so and with that I'm open to any questions.
You your presentation. Yes, sir, I'm open to any questions. All right.
Members of the committee, you have a question for Senator Stone. I'm to let Senator Hickey read, he's reading right now. OK, very good. Very good, uh, saying no questions, we have people sign up to speak forward against this, Senator Stone, so, OK.
Uh, starting at the top of the list and going down, I will try
to take uh Uh, for and against in in alternating orders, the first to sign up is Steve Shepard, uh, signed up to speak against this bill, Miss Shepherd, if you would come to the end of the table. Your microphone is on, if you would, to introduce yourself for the record and you're welcome to make a presentation. And let me do state this, and I will ask the committee again, do y'all want to limit the amount of testimony to 3 minutes. We've
done that all year trying to get shit through. Uh, I'll, uh, Senator, you're shaking your head. Yes, I'll take a motion on that. And second, so I've got a motion 2 deliver testimony, 3 minutes all in favor say aye, and that does not include the time that we ask you questions. You may sit down there for 1520 minutes with, uh, so would you, uh, you're welcome to uh make your
Steve Shepherd
Unverified
12:45
presentation, sir. Thank you very much. My name is Steve Shepherd. I'm senior vice president with Greenaway Equipment. I reside in
Jonesboro. Uh, real quick, Greenway equipment, uh, is a multi-store John Deere dealership. We have 30 locations, 25 of those are in the state of Arkansas. Uh, we have 600 employees in the state of Arkansas, 300 of those employees are in our service department and 200 of the 300 are service technicians. Last year we invested over 8000 hours and $95,000 in direct training cost to those technicians to ensure they're up to speed with the technology, the safety regulations, the emission regulations. It's an ongoing effort every day.
And so as I cut, cut down a little bit what I was gonna talk about today, I want to take you back 20 years real quick. 20 years ago, if you'd walked into a greenway equipment location and before we do that, I want you to think about the technology you had in your vehicle 20 years ago. Technology you had in your hand a 20 years ago. If you'd walked into a greenway equipment location and said I need to be able to diagnose a code on my tractor. I need a special tool. We didn't understand the problem. We didn't know that we didn't have a solution for you, frankly. Let's fast forward 20 years. Think about the technology in
your vehicle, the technology in your cell phone in the palm of your hand. We have evolved as an industry. We've recognized the opportunity our customers have held us to a very high standard today we do have a solution. You can, you can get the diagnostic tool to get the codes for your tractor. It's called Service advisor from John Deere. It's $3100 for the subscription. You can annually renew it for $2500. We have specialty tools available. You can go in the store and buy these, they'll be ordered, or you can do it from
your dining room table to go Greenway or shop deer, either one. We have equipment mobile. Which allows you if you've got your equipment loaded into John Deere Operations Center by serial number. You were able to send software downloads to your equipment has to be somebody in the equipment to accept it because we don't want it not interfering with the operation, but that availability is there today. And so we've got a, we've got to clear the air and make sure we understand what tools are out there, especially tools are available. Second point on this, we have the memorandum of understanding.
American Farm Bureau Federation. It is a directional document, but it was signed by 5 manufacturers, specific language to each manufacturer. It's reviewed every 6 months. The terminology has changed every 6 months to keep up with our changing technology. That memorandum covers 70% of the farm equipment sold in the United States, covers 50 states and it's so good that we took that language and now we're trying to put it in the law. Our point of view is we're legislating a problem that does
not exist. The free market has found a solution. It's available. We probably do more, need to do more on the education lines, but we do have a solution out there. In closing, we have, we have concerns about the bill. The language we have some ambiguity when it comes to fair and reasonable. I know that's in the MOU, but the MOU is a directional document. It's not law and apparently that's used a lot. We heard yesterday in the House, your time is up. Thank you. Thank you. Questions from the committee.
Seeing none, thank you for your testimony. Uh, next we have Scott Walker. point of view. Your microphone is on,
Mr. Walker, if you would introduce yourself for the record. Yes sir.
Scott Waller
Unverified
16:25
My name is Scott Waller. I'm with United Ag and Turf. I live in Texarkana, uh, Regional Service manager for United Ag and Turf, sir.
Um He's speaking against. I'm sorry. No, no one signed up to speak for Senator Hickey. I've got 3. I don't, well, I tried, but, but no one signed up to speak for,
Scott Waller
Unverified
16:51
again, we are, uh, We're signed up to oppose this bill, and we're we're opposing this bill for safety concerns. We are We worry that tampering or of our software or being able to
have that software could cause issues, safety issues. So our concerns on safety issues uh can lead anywhere from safety switches being turned off to emissions being turned off, uh, those type of deals, uh, we want to make sure that uh the Service advisor that we've already got out there has got everything in it that is needed outside of uh Being able to download payloads. I
So, what we're seeing as a dealership currently right now are people are deleting missions, and we see that in big trucks on the highways, and we don't want that. We're also seeing people turn up horsepower on tractors and what we're concerned with that is that it is a safety issue. Plans get out of control. Um The reason I bring those up is because in page 4 of this bill line 2729. It states tools to be provided, and I quote, tools include without limitation
software or mechanisms that calibrate functionality or perform any other function required to operate. We are concerned of that wording right there without limitations. What does that mean? Uh, we don't want that to be able to be changed. We as a dealer have to use uh the software that deer provides us and we have limitations. Uh, also fair and reasonable terms mentioned throughout the bill, uh, we are concerned in who sets those. Uh, as far as pricing.
Our customers are passionate and we provide a, uh, a living for our employees and our uh Customers and neither of us survived without each other, so again, we, uh, at United Aging Turf much like Greenway, we do support the right to repair. We just do not support the right to modify our equipment or our business, uh, on our website, uh, United A and turf, we have the, uh, Linked to do it-yourself repair and right there you can go just
like and find customer service advisor from John Deere. We will help and train customers with that, uh, training and Sorry, I'm just not very much of a public speaker, but, um, you're doing fine. We're just, we were making sure that nothing gets turned off that could eventually kill someone or, uh, later on somebody buys a piece of equipment that has been altered and then it is not up to standards of John Deere. And with that are close.
You hit it 3 minutes and 21 seconds, I think you right on the money. Let me see if, uh, any committee has
questions. stone. If a farmer bought a piece of equipment from
Senator Matt Stone
Unverified
19:57
John Deere. And they modified it in any way with it void the warranty. Yes, well then they're not gonna turn any safety equipment off for emissions in. Is that a reasonable statement? That would be a reasonable statement under warranty, yes, warranty. Thank you. And since
you brought it up, if it's out a warranty and they did that, there's no repercussions against John Deere since they did it in their own private shop, and that would be between them and the federal government or any regular body between them and the federal government, but
Scott Waller
Unverified
20:29
if we were to purchase that as a dealer, we would have to repair that before we could resell it. Well, then you would
Senator Matt Stone
Unverified
20:36
take that into account when you purchased it any upgrades you had to make to put it back into compliance. Yes, it is, so there's no harm to you. Prior to trading. Yeah
Any other questions? Nunn, thank you very much for your testimony.
The last two testify, and again, it will be against, is Eric Lafleur. I testifying against. Mr. Fle, if you would, uh,
Speaker 100
21:19
identify yourself for the record. Eric Lafleur, and I'm here on behalf of Progressive Tractor and implement company.
Speaker 101
21:28
You recognize Mr. Chairman and members, um, A miracle for I've worked for a progressive tractor and implement company. I serve on the board of directors, um, and head up their business development team and have done so for probably the last, I guess, 15 or 20 years. Um, we have PTI started in, uh, 1991 with just two locations in Louisiana and now in our
thirty-fourth year in business, we operate 27 locations and in the next 90 days, 33 locations. The majority of which are going to be in the state of Arkansas. So much so that the company has contemplated moving its headquarters here to Arkansas, um. Although I'm from Louisiana, I have to say that Arkansas has a little bit. More business friendly environment and that's another reason why we might make that move. Uh, we have locations throughout Arkansas. I didn't know Arkansas's geography, and
now I know it very well, and I know towns that. Stuttgart, which is not pronounced Stuttgart, but Pocahontas, England, uh, not across the Channel, but right down the street. Um, I appreciate the opportunity to come talk about 1852 and the right to repair. You know, at all of our locations, we sell parts, uh, we provide service. We give them manuals, tech technical advice, you name it, it's provided. And the reason we do that is not because there's a law that requires us to do it. We do it because if you have any
business sense at all. You're going to do that, and that's probably true for every dealer here. The better the service that they provide, the better we have to provide our service to beat them out of their business. And so at the end of the day, the consumer's going to win. But we're going to win as well because our success is based on our customers' success, and they go hand in hand. To the extent that any manufacturer in the past may not have been so willing to provide additional information. I can
tell you the environment is such that they are more than willing and eager to do so, um, and it comes in large part because their business survives on that, uh, story that, that uh, customers can do that type of work and their success is also based on our customer success. It goes all the way around, um, so I just, I want to make sure that we understand that there's no law that currently requires us to provide the best service that we can. It's our business survival
that forces us and what gives us that desire to make it uh to provide those types of services, um. The bill suggests that maybe we, we are bad actors, and I don't think the record shows that. And if you look at the number of complaints and if you look at the portal that's been set up to ensure that nothing like this happens, you won't find it. And if you find it, uh, I would want to know about it, particularly if it involves our own company, um, but that just hasn't been the case, and I want to make sure that we don't pass a law
that suggests we're bad actors when the record shows otherwise. We want to be good actors because it's in our best interest. and and um That's why we oppose the bill. Your your time is up. questions from the committee. I have warned tell me
about, I'm sorry Shastone attorney Michael. You said you currently have 33 locations. We will in the next 90 days, the
Speaker 63
24:45
majority of which will be in the state of Arkansas when you all
Speaker 101
24:48
started out, how many did you have? 2. Alright, thank you. 2 and we started 2 in
Louisiana and, and now we're going to be in, I think in 4 states, so you
mentioned training. Tell me about your training, how, how does that relate to? So the, the issue about
Speaker 101
25:06
training, um, yeah, it's a, it's been a problem. It's a, and I don't know if it's a problem for my colleagues in the back, but The level of sophistication and the the electronics and equipment today is much more than it's ever, you know, it's, it's very complex. So you have to have higher better trained people and better trained technicians.
In our case, uh, PTI, our company started, we had to start our own school because the local, the, the Louisiana College of Technical System could not produce enough of the technicians that we needed to service our own equipment. So we started our own school. um, when the sim when this same issue came up in Louisiana. Part of the problem was there just weren't enough technicians around for anybody, much less the dealers. So, uh, in that process we were able to get, uh, I say case, I think Kubota. I
know John Deere. I think everyone's involved in it, and so right now in the state, state of Louisiana, they're building a specific technical college to address in large part this concern about the kind and the level of technician that you need to work on that equipment. Part of what these manufactur actors are doing and including some of the dealers as the manufacturers have agreed to provide the instructional materials, the analytics, all of the things that it takes to get a guy to work on a million dollar tractor that's highly sophisticated and highly
computerized and so um they are interested in it. They're, they're self-interested because they're gonna need those techno technicians as well. The state is going to spend about $20 million on that school. I know that's not with John, with, uh, the chairman of the finance committee wants to. Here, but that school is under construction now and they have an educational committee that consists of industry, uh, folks where they have all decided on what the, the instructions of what instruction materials each of them will provide what analytics, whatever it is that they need to ensure that we have
High-end technicians uh to work on this equipment. One of the problems is that a faculty member to teach in a school like that is already making very well in the private sector, so it's going to require the technical schools to, to really pony up the money to, to get the kind of qualified person it will take to instruct. In the case of us, in the case of PTI, we've also agreed to, to, to do an instructor over the instructor, teach the teacher, um, and so, uh, we have not implemented that program because they're not really ready to get started, but when they do, we fully intend to take one of
their instructors, place them in our school, uh, to try to develop a, uh, teach the teacher program, we would like to do the same thing in the state of Arkansas that would be of interest to anyone because I think it's uh I think it would be very helpful, not just to the dealers, not just, it's just for everybody involved in the industry. But Being no Thank you very much for, uh, appreciate your time and.
OK, uh, no one else has signed up, but I always ask, is there anyone else in the room that wished to speak for or against this bill. yeah, get to to the mic, uh, are you speaking for the bill or against the bill? I am against the bill for the record. My name
Layden Pugh
Unverified
28:31
is Leyden Pugh. I grew up in Portland, Arkansas. I'm the president of Agup Equipment. John Deere dealer in Southeast
Speaker 115
28:38
Arkansas. Um, It's been said, we're we're not against the right to repair. We, we do it every day. We, uh, our, our service managers spend time on the phone, walking people through things. We, uh, we're not in the business to upset farmers or any, anytime we lose a farmer, that is not a good thing for our industry. We go to church with these folks. We, uh, our kids are intertwined in events.
Uh, to be painted in some corner where we're against agriculture or the or the uh The ability for somebody to make a living is, is not accurate. We, uh My family's been in You know, finance, banking, Cattle Cotton ginning, fertilizer, granary, John Deere, General Store. We, we've been in business since 1947, by the way. I'm, I'm third generation. So we, we've seen a lot of A different times, trying times,
agriculture is not perfect. Every day is a new day as far as Your equipment, the weather, employees. Things are not simple. We get that, but neither is our equipment. Our equipment nowadays requires a lot of uh precision. You hear the word precision agriculture a lot. That is very accurate. Things have to be precise guidance, GPS signals. Uh
In a, inner workings within an engine as far as You know, EPA guidelines of um Of, uh, anyway, the fuel issues. But uh The the The biggest challenge we have With a right to modify his safety. We see uh some of my colleagues here will speak on how, how a tractor can be turned into a
It is not functional again. But uh, Actors that decide to change things, well. All customers are not equal as far as their abilities, uh, ability to work on things. Uh This is, it's a very challenging side of the business, the, uh, The technology piece. The engines The um Insurance, I know I'm said I
referred to Cotton ginning. We got one in one insurance company in the whole country they will write a cotton gin. If we end up with machines that are, who knows what. And whatever happens, Uh, whatever event, uh, you know, insurance is not going to look favorably towards that as far as covering machines in there, uh, liability piece as well, not only the The hardware. Pugh, your time is
up, sir. OK, well I appreciate your time. Thank you. Appreciate you coming. Anyone else in the audience wish to speak for against this bill. If not, Senator Stone, would you like to close your bill? Yes. I'm sorry. Better raise your hand. We, I didn't see you. Or are you speaking for or against the bill? I'm
Speaker 118
32:05
speaking against the bill and your name? My name is Hei Hensley. I'm from Monticello, and I am currently the used equipment manager for
Speaker 120
32:12
Ag up equipment. You. Thank you. Um, I would like to speak from the side of the used equipment business where most of our deals with sales involve um used equipment trades, um, in today's world, that's a very, very, uh, tough industry as it is without complicating it with issues that can be unseen as a dealer, um, when these modifications, alterations, or anything that has been done to
this equipment. It is. not recognizable by the eye, it is not recognizable by a lot of things from diagnostics even. We run into issues where this corrupted software can be entered into this equipment and it can be days, it could be months, it can be an extended period of time before the problem that this creates ever arises. This not only creates the issue for a dealership, but it could in effect, affect another customer because the machine
could pass through our inventory undetected of this, and then once we've sold it to another uh individual, then that problem arises and we have no way of knowing that, diagnosing that or anything and the customer looks to us for guidance on repairing this issue and we have no, um, we have not done anything to the machine. It could have been the previous owner that did these things. And so, um, it's more to it than just meets the eye.
With this subject of, um, of, of customer repairs. I, I, I've been in this industry my whole life, starting from farming to managing the farm to a John Deere technician now as, um, a, a used equipment manager. And so I've seen the times come from when we worked on 12 volt systems that you could take a hot wire and make anything run. We're past all of that today. Um, that doesn't happen. Um, we have voltage drops, we have certain things like that. that, um, like I said, a corruptive software into
something can cause problems two years from now or 10 years from now. We don't know when that date is. And so, um, it's, it's not trying to keep someone from repairing their equipment. It is trying to make sure that they are properly, um, trained, know what they're dealing with, and also, um, you know, these guys that, that, um, put this bootleg software in there. They, they don't know what the John Deere operating systems are or whatever other, um, manufactured this is, um, it's,
it's, I, I kind of use the analogy of um a computer hacker. I mean, that's what they're doing is hacking into systems and, you know, um, we see that all the time in, in, in all other aspects of our daily lives that these things happen. And, um, we'd appreciate, um, a no vote. 5 seconds left, so you did
a good job. Questions from the committee. See no, thank you for your testimony. OK, I'll ask again. Anyone else?
This time seeing nuns here in stone, you recognize the clothes for your
Senator Matt Stone
Unverified
35:39
bill. Don't you recognize? Thank you, Mr. Chair. You know, I just want to comment on, on the people, or two of the people that spoke
against the bill. And I also want to make note that no one came here to speak for the bill today.
Cause you know who's gonna speak for the bill is going to be the farmer, but you know what they're doing today? They're on a tractor putting the crops in. They don't have time to come up here. Farmers are in a strain right now and they're in a struggle and it's been that way for a long time. Now, to the last gentleman that just spoke, he talked about Some farmers have modified equipment. But they have done that under the memorandum of understanding that they have right now.
All we're doing is taking the memorandum of understanding that's already there. And putting it in statute. So things should be no better or no worse when it goes to statute. The 3rd gentleman that spoke. Made the comment. That, they act like we're bad actors. I don't think that you're bad actors. I believe you in good faith stepped up and did. The memorandum of understanding. But here's what I know about
history. I talked about consolidation. It was said that they went from 2 stores in to Louisiana to 33 locations. In 4 states we're back to consolidation. And is more dealers become stronger and a few more equipment dealers go out at some point, history has always proven right when you get down to a monopoly or an oligopoly. That's when the bad actors show up. This is to reduce the statute.
What's already agreed upon memorandum. So the farmers don't ever get put in that position. With that, I'm closed
for the bill and I'll make a motion as amended, uh, do pass a motion passed, I
hear a second. Have a second In a discussion on
the motion? See none, all in favor say aye. All the poll say no. Bill fails. Thank you, Mr. Chair. Thank you. We'll go to the next bill.
OK. All representative Bennett come in. Leave Senator Crow,
Speaker 126
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did you have a bill you're going to present? What that
represented War laws bill. 1928. You're recognized
House Bill 1928. I'm sorry, 1928. I Crow, your microphone is on.
Speaker 130
38:52
If you would introduce yourself for the record,
Senator Steve Crowell
Unverified
38:55
Senator Kroll District 3. Uh, this bill provides protections for farmers who, whose land applied poultry, uh, litter as long as they follow the state approved plan known as
the nutrient management plan, the NMP. Uh, especially for family farmers who comply with these, with the state and how they manage the person properly. If they follow the rules, they ought to be protected from frivolous lawsuits. Only those who follow their They're NMPs received protection, meaning bad actors can still be enforced against. The bill actually defends the state's regulatory authority. Uh, we lose farmers every year
with few fewer people going into the business. This is one way to help this, um, this would include raw crop farmers who need supplemental. Uh, nutrition for their soils, cattle farmers who use poultry and litter in their fields to aid the growth of grass for cattle and consumption and other farmers and ranchers whose soil would benefit from lawful application of the nutrients. Uh, liter or commercial farmers use croply is a very valuable tool to growing hay and other crops. OK
Many members you have questions, Senator Crow. Seeing none, we have several people
signed up to speak on this bill. OK I'm sure Aunt Brandon with Farm Bureau can't read.
Speaker 135
40:47
You, if you would introduce yourself for the record, sir. Uh, Brandon Martin, I'm a poultry producer from Northern. You recognize, uh, I'm for this bill. Just gives the added protection to uh producers like me. It's a state required to get this, uh, NMP and nuclear management plan. And if you follow all the guidelines, I think that you should have some, some sort of protection. I think that, that will help, uh, people follow the guidelines if, uh, if you follow
the guidelines and, and are up for, uh, litigation against you, you know, it, uh, there's no sense in following the, the plan to begin with. So I think it'll be more compliance, uh, It's a comprehensive plan. It has, uh, guidelines of buffer zones and watersheds and what you should and should not do. It's very comprehensive, uh, you know, farming's hard enough if you're doing everything right, you should have some, some protection, uh. to keep
Speaker 138
41:45
keep litigation against you from a third party.
Speaker 62
41:56
He's reading right now. You have a question in committee? I'm gonna give
him a second to. Finished reading the bill. Any other community
members have a question? And to take you through, you're good. OK, thank you, thank you very much. Crow. That's it.
Senator Steve Crowell
Unverified
42:32
Farm Bureau and the poultry Federation are leading the on behalf of the industry, but wanted to echo the support that we believe
that common sense and personal property rights bill, and, uh, we did a lot of due diligence. That's why it's coming at the end. We apologize, it's at the end of the race. questions. We're done
with that, I make a motion to pass Senator Scott. Discussion on the motion. Seeing none, all in favor, say
aye, all the polls say no. Congratulations bill passes. Senator Hester, were you gonna run a bill? If I will, I'll
Senator Bart Hester
Unverified
43:15
just, uh, it's, uh, House Bill 1923. I'll just hand it off to Miss Andrews to present. Yeah, you're here. I've tried twice,
Speaker 146
43:22
I was running. Which one? Good morning, Katherine Andrews, director of the
Speaker 149
43:27
Arkansas Office of Outdoor Rec. Senator Hirsch, would you introduce yourself for the
Senator Bart Hester
Unverified
43:32
record, please? State Senator Bart Hester, District 33 House Bill 1923. Thank you. You recognize me. Thank you. 2
Speaker 149
43:44
years ago in 2023, uh, Senate Bill 464 passed
Speaker 153
43:47
unanimously in both chambers. It's the Natural State initiative Opportunity zones, um, this created 4 opport opportunity zones, not the federal. These are state natural state opportunities zones. So 4 of these zones around 4 state
parks. Pinnacle Mountain, Queen Wilhelmina, Delta Heritage Trail, and Petty Jean State Parks, and this included 1/8 of a mile around the state park and including the state park. And what we wanted to do with this was encourage businesses, specifically in outdoor recreation to locate in one of those zones to help enhance the visitor experience at those state parks. And if you did that, you would be able to qualify for an income tax credit and or a sales and use tax credit, um, to this point today,
we have received uh no applications for those zones. And so we've heard lots and lots of feedback from businesses across the state who want to take advantage of these incentive programs, but they've said the barrier, especially financially, is very high. And so what we're doing is decreasing the minimum investment threshold and increasing the amount of the zone to make it easier for those businesses to invest in those areas.
Senator Jimmy Hickey, Jr
Unverified
45:08
Questions? Senator Hickey. Did, did, did, since we're changing these numbers, and I don't know that it would, but, uh, Did
it cause a fiscal impact on the state? Did, did we, do we, we look at that or do we have DFNA to look
Speaker 153
45:25
at it or anything. It does not, um, because it's just an income and a sales and use tax credit, and we've received none so far. So income, would
Speaker 158
45:32
you say it's a, it's a sales and use and what an income tax credit. OK it's
income I live income against that company only they can't sell the credit. Thank you. OK. Any other
questions? All right, no one signed up to speak for or against. Is
anyone in the audience wish to speak for or against this bill? Seeing non, Senator Hester, would you like to close for your bill? Clothes is just part of, part of
Senator Bart Hester
Unverified
46:05
the package to continue to help with, uh, outdoor recreation. Appreciate a good vote. I have a
motion of uh. And segment center Hickey all in favor say aye, all opposed. Congratulations. Representative Benon. House Bill 1855. Um, 1855. Good morning, Senate Agriculture Committee. I am State
Representative Denise Jones Ennett
Unverified
46:40
Representative Denise Innnett, District 80 parts of downtown Little Rock and Plasky County. Um, in front of you, I have house Bill 1855. And can I call my witness up, please? Can I call my witness? Yes, please do. Um, this is, um, Plasky County Attorney Adam Fogerman. He's also,
Speaker 166
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sir. Introduce yourself. I'm Adam
Fogelman, Pulaski County Attorney. Representative continue.
Representative Denise Jones Ennett
Unverified
47:14
Yes. So, um, Mr. Fogelman bought this um to my attention about a year ago, um, this bill is simply addressing the Oprah, the overlapping boundaries that we have in the state of Arkansas, um, it authorized the Department of Agriculture too. Recommend adjustments for fire protection districts with overlapping boundaries, ensuring clear jurisdictional jurisdictional lines and
reducing service duplication. And I'm open to any questions if we have any. Do you want to add something?
Speaker 166
47:52
Yeah From time to time, um, the, the county gets requests from fire districts, uh, to give
Speaker 167
47:57
attention to no man's lands, areas that may be on the boundary of a municipality, but that a fire district isn't assigned coverage for and, uh, one of the things that this bill does in addition
to addressing overlapping areas is to ensure that there's proper authority and a process in place to address those no man's lands so that fire protection may be provided. Senator Hickey a moment to read.
No. OK. Questions from the committee. Ding none. Oh I have no, uh no one signed up to
speak for or against this bill. Is there anyone in the audience wish to speak for
or against this bill? Seeing no one, representative in it, would you like to close your bill? Yes. Thank
Representative Denise Jones Ennett
Unverified
49:27
you committee. Um, by streamlining this process, we
can ensure optimal coverage reducing redundancies and improving emergency response time for our communities and I'm closed. OK motion to pass by Senator Scott, seconded by
Senator Leding in discussion on the motion. Cigna and all in favor say aye, all opposed. Thank you. OK, we've got one
more bill. We're gonna take a, uh, uh, 5-minute uh recess so I can try to get rid of this cough. We'll be back in at 11:05. That's a 10 minute,
we'll be back at 11:05. I'm good, honey.
Speaker 184
50:33
are you? You're looking good, man. You losing weight. How you doing? Good. How are you? Good to see you as well.
Speaker 189
56:31
Text me before we start because I know
Speaker 227
58:33
OK, OK, I'll have to come back by. Yeah.
OK, we'll go back in after the short recess. around the corral. We will be hearing you're on House
Bill 1656. I use that chair and when he comes back, we'll. To grab one.
Senator Davis, uh, if you would turn your mic on, please. And You're here to present uh Senate House Bill 1656. Is that correct? Introduce yourself for the record, your guest introduced himself and you're recognized. All right, thank you, Mr. Chair. Brianne Davis, state Senate District 25. And I'm
Senator Breanne Davis
Unverified
1:00:31
a Mark Robinette. Thank you. I just know that we have debated this bill a bit, so I just want to update a couple of things. We've made amendments
to it, um, first of all, I know there was concern about this bill changing leases, but I just want to clarify that this does not change leases, this does not change contracts. There were also concerns that it would impact South Arkansas, um, and on page 3, section F, it clearly states that this does not touch uh oil. This does not mess with South Arkansas, um, and learning, modifying the paydex, what we amended was removing all the reporting and transparency language, so that would not
conflict with paydex at all. Um, and just one real last point is that there's been, you know, 5 or 6 federal cases where there's been no ruling either way, and the federal courts are looking back at state law, which makes our state court case really predominant in this. There's been multiple, um, court rulings and appeals, um, that have told Flywheel to go back to May of 2019 and pay, um, the integrated wells as well as interest. So all courts,
In some way have cited vagueness and ambiguity in Arkansas law. And they've said, that is what we're looking at. That's what we need to understand, but it's too vague for us to make a ruling, and that's why we need House Bill 1656. Um, that's exactly we need to specify exactly the way that these leases need to be treated, um, many lawyers and experts have said this is the only way, that the only way to fix this is to clarify the law. Um, so that's what we're trying to do here is simply clarify the law, and um I've, you know,
brought someone with me that I think can talk about this from a different point of view than we've heard, um, and I'll let him talk a little bit about himself and um what he can explain about the spill and take your questions. Thank you. Uh, chairman and
Mark Robinette
Unverified
1:02:36
members of the committee, I appreciate the opportunity to be here today. My name's Mark Robinette. I've been an oil and gas
Speaker 251
1:02:43
lawyer here in Arkansas for almost 2 decades. I've served as adjunct professor of oil and gas law at the Bowen School here in Little Rock since 2019.
And over the years I've done various other roles in the industry, including President of the Central Arkansas Landman Association, chair of the Bar Association's Natural Resources section. I've offered many, many CLE materials, more than I can count. Many law review articles on oil and gas law. And I'm also a royalty owner. I own royalties in 3 states, 9 different counties, and 1 Louisiana parish. So I've spent my career in the trenches of oil and gas.
So, uh, I don't know if you've been, uh, beat to death with what the issue is, but I'm just going to quickly recapitulate it. We have a statute 1572305 that utilizes a term, net proceeds. Now, net proceeds has no statutory definition. So this is opened the door to some inconsistency, some confusion, and costly litigation between gas well operators and they're royalty owners. This recently came to a head in the case of flywheel production
Company versus Arkansas Oil and Gas Commission. Where the Court of Appeals acknowledged that that term net proceed is susceptible to multiple interpretations, so it is ambiguous. And when you leave something that important, open to interpretation, you get a pretty predictable result. You're going to have inconsistent practices, confusion for royalty owners, confusion for gas well operators and court battles over whether those post-production expenses on that 1st 1/8 of blended royalty.
Can be subject to deduction, even when the privately negotiated lease that was bargained for says that they cannot. So HB 1656. The idea is that we're going to put a definition on net proceeds. We're in a defined net proceeds relates to two classes of leases. One, the integration leases. And what the statute will do is it will echo the flywheel decision saying that essentially if you're integrated, net
proceeds means you take the gross proceeds, you subtract taxes, assessments, and true third party costs. Or any costs specifically allowed by the oil and gas commission lease form. So really it, it continues to leave the integration leases under the authority of the Oil and Gas Commission. Now for least interests, this is where it's going to clear up a lot of confusion and stop a lot of future litigation. Net proceeds is going to be gross proceeds, meaning all the gas sold.
Minus the deductions permitted by the lease. So in other words, we're gonna return this back to the private contract that was negotiated and bargained for between landowner and gas company. So it's a clear, simple, easy solution to this. So I want to tell you about what this bill does and does not do. Be very clear, this does not purport to be retroactive. It does not purport to reach back and undo what is already done. It is not here to rewrite
private contracts. It doesn't rewrite leases or override language. Or any single out any party. It just clarifies an ambiguous statutory term going forward, so everybody understands and plays by the same rules. This is clarity that benefits everyone, royalty owners and producers alike. Now, You're going to have opponents of this bill. And you've probably heard this all before. That somehow this is going to impair existing contractual obligations.
I think that is A great misunderstanding of this state's police power, its power. To continue to regulate a regulated industry and how the contract clause doesn't really affect that in this instance. This isn't retroactively changing in the contracts. It's not impairing any truly vested rights. It clarifies a statutory term that courts have already found to be ambiguous. I'll tell you, the US Supreme Court.
has repeatedly held the authority of the state legislators to act in regulated industries where a law serves a legitimate public purpose and does not arbitrarily impair private agreements. To give you an example that's pretty on point. You can look at the 1983 case before the Supreme Court of the US, Exxon Corporation versus Egerton. Their Alabama passed a statute regarding severance taxes. And so the severance tax statute. For this, there was going to be an increase and the increase in
tax, the law prevented producers from passing the increase on the royalty owners. Even though this would change the way the producers perform their contracts and what they had come to expect under their contracts. So the producers challenged that law as a violation of the contract clause. US Supreme Court upheld the law affirming the state's authority to regulate the public interest, even when it touches on private contracts. And so the bill here today follows that same model. It's clear, generally applicable rule. It serves a legitimate public interest. It reinforces lease terms rather than overriding
them. And I'll tell you that Arkansas precedent supports this. You can look back to 1962. Reserve vault versus Jones, where our own Supreme Court approved legislation that opposed new requirements on existing contracts regarding burial vault service. And what is interesting about this is that our court quoted the United States Supreme Court case of building loan versus, uh, Blaisdale, and this is a great quote because I think this, this goes to the heart of
everything we're talking about here. It is true. Not only are existing laws read into contracts to fix obligations, but also the reservation of central attributes of sovereign power is read into contracts. The policy of protecting contracts presupposes the maintenance of the government by virtue of which contractual rations are worthwhile. So, in other words, you reserve the power to modify and clarify laws, clarity in laws is what
makes contracts meaningful, makes them enforceable, makes our our commerce go. In the legislature retains that power to provide clarity when it is needed. You also may be hear about a lot of these federal district court cases where things went the way of the producer. Well, I'm here to tell you that the federal court has just adopting one of two or more possible interpretations of this ambiguous term. And nothing the federal district court does is
binding on the state of Arkansas, you know, the Arkansas Supreme Court has not ruled on this. Only the court of appeals. Um, so, Again, it's just an interpretation of an ambiguous statute. Uh, doesn't create a permit constitutionally vested rights. You don't have any vested rights into a particular interpretation of, of a, uh. Uh, of an ambiguous law. It's in no way limits your power to clarify your own laws going forward. Um, as noted, the bill just
applies to gas units, oil wells, and oil wells that incidentally produce gas are not on the table here. Does it reach beyond its purpose? It's the target and careful and constitutional. Uh, means this is a necessary and timely piece of legislation. We're going to clarify a key term that's been undefined for far too long since 1985. We're going to reduce litigation and uncertainty. We're going to protect royalty owners and good faith operators. We're going to uphold contracts rather than undermine them. This is not a partisan issue.
It's not a power grab. It's a measured and responsible correction to a legal gap that's frustrated everybody involved for years. So You know, in an industry where clarity and relying on contracts is critical. Trust matters. And so HB 1656, in my opinion, is going to bring both. It says to mineral owners, your contract that you sat down on your front porch and negotiated with the company Landman. It matters. It means something. You get the benefit of your
bargain. Maybe you gave up. $100 an acre for a gross royalty clause. Maybe you took 3/16 royalty instead of a 5th royalty for a gross royalty clause. You bargained for that. You should get the benefit of your bargain. So that's what we're saying to minerals here, and it says the operators, If you follow the lease that you signed the deal you made. We've got your back. You do what you're supposed to do. We're gonna give you clarity. We've got your back, and it says to the courts, here's what we mean.
We get rid of the ambiguity. So this is going to protect the public interest. This is going to uphold the rule of law, and it's going to ensure that the contracts are honored as written. And this is the kind of legislative clarity that is going to help Arkansas continue to grow and prosper. And I thank you for your attention and your service to the great state and the great people of Arkansas. Thank you, Mr.
Robinette, Senator Disma, you have a question? Yes, sir. Thank
Senator Jonathan Dismang
Unverified
1:12:09
you, Mr. Chairman. Is anything in this law out of line with with what was understood and had been
understood about this act for the last 2 years up until flywheel. Became a player in Arkansas. It
Speaker 251
1:12:25
was the industry practice from the word go. That you follow what the lease says. It was not until that flywheel Energy showed up and began to wholesale, reinterpret. The understanding of the law that this all became an issue. Not to say that there might not have been others along the years, but that has been the big thing. That's the acute pain that we're experiencing right
now that the legislature needs to step in and, and, and, and take care of.
Senator Jonathan Dismang
Unverified
1:12:51
I can find no other player in the Fayetteville Shell, which I would be familiar with that has ever had an interpretation that is similar to flywheels. Um, so just as you were talking about other players, I think that would be some clarification there because I don't think it's ever happened. Um, but with the Language being pulled out that relates back to, you know, the detailing of the billing and that sort of thing. Is there anything in this bill that is out of line with what was understood.
To be the definition by everyone, both royalty owners, those signing the lease, and producers that would be out of line for how the, uh, the words net proceeds were interpreted.
Speaker 255
1:13:30
absolutely not, Senator. This is 100%
Speaker 251
1:13:33
the way they understood it, you know, long ago I represented Southwestern Energy, and that's the way South Western Energy did it. And doing that, hey, they were able to drill up, you know, 1000 or more gas units successfully developed them. them You know that's
Always been the way business was done. So, again, I just,
Senator Jonathan Dismang
Unverified
1:13:55
just for the committee. This brings everything back in line for what was always been done in leases until fly will provided for a different interpretation and required the realty owners to sue were required to orders to go through that litigation process, got it remanded to the federal courts. Uh, who said that they didn't want to interpret that then went back down the Supreme Court who said they didn't want to interpret and then that allowed the federal court to opine and
here's where we sit. That fair, and this is going to just pretty much restate what we've always done. That's, that's absolutely fair and
Speaker 251
1:14:29
accurate characterization of what we're trying to do here. Any other questions? Uh, Senator, I, I
Senator Jimmy Hickey, Jr
Unverified
1:14:34
just need clarification from Senator Davis. You, you mentioned something about page 3
in your opening statement about there being language there, and I want to make sure I have the correct, the the last. OK, so the, the, the last one
that we have is this, uh, 1141, 49 CRH 145 at the bottom. Hang on, let me find it OK, I just want to make sure that I have the correct copy since. Because there is a page
Speaker 105
1:15:06
3, but there's no language. Yeah. What's the at the bottom, Senator Davis, what's the Yeah,
Speaker 266
1:15:16
yeah, yeah, I'm sorry, it's E 3 E. I wrote down 3.
Senator Jimmy Hickey, Jr
Unverified
1:15:24
Page 2 page 2, OK. No, no problem. I just wanted to make sure I had the correct copy. Thank you. Any other questions?
If not, we have several people signed up to speak for and against. First, we have Mike Norman to speak for. Kind of wild. You're good.
Mr. Norman is with other witnesses, we allow 3 minutes and then we'll have uh time for questions. If you would, your mic is on. Introduce yourself for the record, sir. OK, I'm Mike Norman speaking for the
Speaker 272
1:16:08
bill, uh, Grew up in the rice fields of Easter, Arkansas, but we ended up with land and property up outside of Morton, Arkansas, uh, and when all of this stuff started, I basically grew up in Eastern Arkansas, went to school at Arkansas State, worked in the corporate world for 30 something
years. And so, oil and gas became a new, new. Something else to learn for, for me and my family and I basically represented or took my family since about 2005. In this, and I have, uh, represented, uh, like I say, my families, my siblings, my parents, and everything else on this. And in doing that, I, uh, tried to educate myself. I talked to the Arkansas oil and gas commission. I talked to the equivalent of that in Oklahoma. I talked to the equivalent of the Arkansas Oil and Gas Commission in Texas. I talked to
a friend of mine's brother who was a oil and gas attorney in Texas, and then I talked to, or I went to a seminar, uh, put on by, uh, Mr. Charles Morgan, attorney from Texarkana, who basically was the boss hog of the oil and gas industry, and I guess may still be here is a big player in that or at least his firm is. And I went to hear him speak one night at a seminar, and when you boiled it all down, uh, all of them would say, get you a zero
expense lease. Or you'll never know what you're gonna, you're paying for or anything else, and get you, get, and, and then you negotiate for whatever else you can get. And I ended up at my family ended up with a lease that was 20%. Now, that lease, I didn't write it. I didn't hire an attorney to write it. The gas company wrote the attorney, the gas company wrote the lease. I signed the gas company lease. I told them what I wanted, and they said, not a problem. We'll put that in there. And that's what I've had
since it started producing back. around, uh, 2010. OK. And, uh, so that's, that's what my family has gotten. And, uh, uh, It's, it's, it's gone on from there. If there was a problem, And they, and, and there were an issue from time to time. I would provide them a copy of my lease. They would send them to their attorneys. Their attorneys would review it and they would rectify the problems. They would pay me back funds that they owed me,
and they would pick it up and pay me on going correctly. I did that with Chesapeake. I did that with BHP. I did that with Merritt I did that with Southwest Energy. I did that with XTO and I have provi uh Razor, British Petroleum, are provided My leases to every one of those companies. They send them to their lawyers. They reviewed them. They sent them back, says, well, you're right, you got a good lease. And there was, there was never a problem after that. You know. So I've been through
Speaker 273
1:19:00
that with all those different, all those different gas companies, every one, Like, say, Mr. Morgan was normal, your time is up. Uh, let me, uh, let me see if
there's any questions. From the committee. Sig Nunn, thank you, sir, very
much. OK, to go to against Alan Perkins.
If you would, Mr. Berk, your mic is on, uh, introduce yourself again, please, sir,
Alan Perkins
Unverified
1:19:42
and you're recognized. Thank you, Mr. Chairman. My name is Alan Perkins. I work at PPGMR here in Little Rock. I'm an oil and gas attorney for about the last 30 years. I'm here representing A pro, uh, our firm also represents Flywheel and a number of other producers, both in the gas fields and in South Arkansas. I won't, uh, I've been here before. Uh, we've had this discussion before I won't rehash
it all, uh, but just need to remind you of a few things. You know, this, uh, uh, the statutory language that now exists in 1572, 305 that we're, we're here about today, uh, that the proponents of the bill want to change was passed by the legislature 40 years ago, um, and that law changed the way that, uh, that gas royalties would be paid. Uh, it was mandatory, done by statute.
And since that time, um, it has had that impact on every oil and gas lease that was signed after, uh, March of 1985. And I, I've, I have to disagree with, uh, Mr. Robinette, um, about the, uh, the fact that that that statute does not create an obligation in contracts. I'm going to quote to you from two cases, one from the Arkansas Supreme Court, one from the court of appeals that say the law in effect at the time a
contract is made forms a part of the contract as if it had been expressed in the contract. That's from our Supreme Court in Woodland. versus Southland Racing Corp, uh, in 1999 case. And another example from the court of appeals, says a statutory provision relating to the subject matter of a contract by operation of laws enters into and becomes part of the contract. So any way you slice it, um, this Act, which actually changed
the way royalties would be paid, became an obligation of those contracts. This is not a severance tax. This isn't something that's ancillary to the contracts. It was actually intentionally made to change the way royalties were paid under a contract. It's, it's unlike the cases that Mr. Robinette cited where, um, this is part of the state's police power. Once that became an obligation of those contracts. Then it can't be changed for
those existing contracts. If you want to change it for every future lease that's entered into after this date, that's fine, but that won't affect the Fayetteville shale contracts that are already in place, uh, which came after the passage of this law in 1985. The the statute that that is proposed here, the statutory language that's proposed will absolutely change that. It will change the obligations of those contracts, and it'll be unconstitution. institutional. So even if you do it, um, it's not going to hold
up, and it's a, it's a poor practice for the legislature to intentionally
your time is up, sir.
Senator Jonathan Dismang
Unverified
1:22:54
Anyone have a questioner dismay. I think I understand what you're saying, but has anyone besides Flywheel interpreted net proceeds. And applied it to contracts the way that flywheel
Alan Perkins
Unverified
1:23:04
has. Yes, Senator, that they have XTO did, um, the first lawsuit against XTO for this practice was in 2016/2 years before
flywheel ever came to Arkansas. It was whiz and Hunt versus ExxonMobil Corp and XTO. What was the outcome of that? The operator prevailed. XTL prevailed in that case, and the, the, the court agreed with the interpretation of the statute that has since been upheld in 5 more federal cases. Um, and those cases were not just against flywheel, they were against flywheel, ExxonMobil, XTO, Merritt Energy, BHP Billiton Petroleum, MMGJ
Arkansas upstream, which is a part of Merritt and Riverbend Oil and gas. In each one of those cases, um, the interpretation that those were obligations of the contract and that net means net in the statute was upheld by the Federal court. That was, uh, they sent that, that, uh, potential. decision to the Arkansas Supreme Court to ask if the Supreme Court wanted to interpret that, and he told them what he was going to decide and the Supreme Court declined. So you're saying
Senator Jonathan Dismang
Unverified
1:24:17
Is that just on the integrated leases or is that on all leases private leases. The integrated leases, um,
Alan Perkins
Unverified
1:24:24
are on a special lease form that was created by the oil and gas commission and the Court of Appeals decided that in that particular application where, uh, private parties were forced integrated into a unit that the commission's interpretation would prevail only as to those integrated parties. And so when we stand in a group and we're all discussing and we say that flywheels is the only
Senator Jonathan Dismang
Unverified
1:24:47
one applying it that way. That's just someone else isn't being honest. That's correct. Because you've been standing in that
group with me having that conversation. I sure have. That's incredibly odd. OK. Any other question? It Just not the whole statute. Can
Senator Jimmy Hickey, Jr
Unverified
1:25:06
you read the language that's in question. Do you have that right in front of you as far as the net proceeds. I wanna, I wanna hear that specifically myself.
I know you said that the courts have already interpreted that net means net. I just wanna,
Speaker 288
1:25:23
I wanna hear the way that reads, if you have it. I have it if you give me one second, I find it in
Alan Perkins
Unverified
1:25:36
the statute. That's OK with you, Mr. Chair. Yes, sir. Um, Senator Hickey, it's, this is Arkansas code annotated 1572305. It is section A3. It says 1/8 of all gas sold on or after the
first day of the calendar month next ensuing after March 6, 1985 from any such unit shall be considered royalty gas and the net proceeds received from the sale thereof shall be distributed to the owners of the marketable title and and into the leasehold royalty and royalty is defined under 1572304D. And it goes on, but that's, that's where Ned is mentioned. There is a, um, another portion and I, and I, I, I don't want to
belabor it. It's a complicated process, so which I've talked about before. So the other working interest donors who are not the operator who sell their own gas and pay over those proceeds to the operator for distributing the blended royalty. There's another part of that same statute that tells them what they can do. And if you'll give me one second, I'll read it to you because then it's all blended together and paid out.
Alan Perkins
Unverified
1:27:00
to get my sections right. I think it's Little A big B, little I commencing no later than 6 months after the date of the first sale and they're after no later than the earlier 30 days after first payment is received. I'm gonna skip through some of that. Not important. Each working interest owner or marketing party who has sold gas shall remit or cause to be remitted to
the operator, 1/8 of the revenue realized or royalty monies from gas sales computed at the mouth of the well. Less all lawful deductions, including but not limited to all federal and state taxes levied upon the production of or proceeds and shall indemnify and hold the other working interest owner free from any liability, therefore. So that um in addition to saying, um, less all awful deductions, it uses the term of art at the well and in oil and gas, um,
Law in every state that I'm aware of when it's, when it sets the place where royalty is set at the well. deductions that come after that are allowed to be deducted from the proceeds because the, the, the sale doesn't actually occur at the well. It occurs downstream in order to determine the price at the well, you have to deduct the costs between point A and point B. So there are actually two parts of the statute, um, that. to that Thank you, sir.
Any other committee members? Sunn, thank you very much for
testify Mr. Chair. Next is, uh, Rick Malone.
Rick Paloma
Unverified
1:28:51
Thank you. Committee. My name is Rick Paloma. And I'm
a retired air traffic controller, commercial real estate owner, mental owner. I'm
a registered professional landman with the American Association of Professional landman. I'm a former vice president of Central Arkansas Landman Association, and I'm a current vice president of the Fort Smith Landman Association. A couple of weeks ago, I received an email from John Allison from Firethorn Petroleum LLC. In Houston. We wanted to know if I would lease or sell my minerals. We had a phone call discussion afterwards and he said he had some investors wanting to invest
$60 million in the fables shell, and that he had sat down with flywheel trying to work out a farm out. So they were real receptive at first, and here lately they've gone dark on him. And he followed it up with another phone call last Friday and wanted to know if I would do some leasing for him in about 20 sections. And I told him that I'd never leased for anybody. The reason I became a landman was I was buying minerals and I was trying to learn all I could about the, the, uh,
The industry. And uh I said, but I couldn't advise anybody today to sign a lease with anybody. Because of what's going on right now. I said they're not honoring their leases. And he said, well, if we signed a gross lease, we would honor it. And I said, I understand, but if you sold that lease, the next person that bought it might not honor it. And I said, until we get this statute fixed, I wouldn't advise anybody to sign a lease anywhere in the state of Arkansas. So he then told me,
That flywheel had just sold part of their company to gun board. And he told me he had read an article on Bloomberg, so I got on the internet, I looked it up and said effective last June of 2024 that flywell had sold 42% of their company to gun board. And I got to doing a little research on this gun board group. And they have been a bad actor. They have been fined. Uh, by the US Justice Department. They've been fined by Switzerland.
And then last Friday, I received another phone call. And I was told that all the founders of Flywheel had stepped down effective Monday. And that their initial investor in their property equity group was also gone. So this is changing really, really fast. And I did a little research and it said that USpar in March of 2024, the US DOJ. Uh, Gunvor had pled guilty and
the USDOJ fined them $661 million to resolve an investigation by the USDOJ into violations of foreign corrupt Practice Act. On the same day, the Office of Attorney General of Switzerland announced a parallel resolution of its own investigation into gunbo's misconduct that involved payment of approx. Your time is up. Thank you. Questions from the committee. Can you finish what you were
Senator Steve Crowell
Unverified
1:32:03
just saying, please, for me, I, I, because I have a question on what just the last little bit you were trying to say. OK, it's
Rick Paloma
Unverified
1:32:12
own investigation into gun boys misconduct. It involved payment of approximately $98 million by gunvo to Swiss authorities. This was reported that it's going, it's been going on for over a decade. Turn this man, you
Senator Jonathan Dismang
Unverified
1:32:25
have a question. Who is gunboard known to be associated with? So gunvo
Rick Paloma
Unverified
1:32:30
was founded by a gentleman from Switzerland and a Russian oligarch. That was good friends with Vladimir Putin, and in 14, because of sanctions, they were oil traders in Russia and
because of sanctions in 14, the Russian oligarch sold his interest to the Switzerland. Gentlemen, Alright. can't approach the table. All right, and uh, so I've got
Senator Jonathan Dismang
Unverified
1:32:58
a question you were talking about the value of leases. And so, I mean these are marketable things. I mean you, you can sell your royalties and they have a value and typically that value is based on what's in the lease and in a gross lease carries a lot more value than a non-gross lease. Um, and that's
been the way. Just the way it works. The way that it's always been until now. Yes, and now there's an interpretation by an entity that's gone through some legal process, um. And by the way, there have been federal interpretations that are under nondisclosures that have well gone different directions, but what would this, what does this do to the value, not just the royalty payments they received, because I can demonstrate and show you what's going to happen with that when I have a chance to testify. But what does this do to the
Rick Paloma
Unverified
1:33:45
marketable value of those leases. It, it drastically reduces the value of them because They're based on how much money that you're drawing.
Senator Jonathan Dismang
Unverified
1:33:58
From those leases. So 10 years ago you had a gross lease, and let's just say all things are constant, royalty incomes constant. And it's interpreted by everyone that's in the business that it's a gross lease and this 1/8 does not come into play. No one contemplates that to be a decision when they're working through it.
And now we go to today. When this interpretation is out there and it's not being reconciled by us providing clarification. I mean To me, it appears on paper, it's about half of the total net income to a royalty owner, would it be reasonable to think that those royalty interests or those royalty uh values are cut by virtually the same amount overnight. Yes. Any other questions from the committee? I got another question.
Would banks loan on royalty interest in West Texas
Rick Paloma
Unverified
1:34:53
they do. And I, I don't know of anybody in Arkansas does. The only reason I know in West Texas is we bought some
Speaker 306
1:34:59
minerals in the bank had a, a lean against
Senator Jonathan Dismang
Unverified
1:35:02
them. And so if a bank hadn't known, and I you can because I'm familiar in Arkansas that they do too, but the bank values a royalty interest at a certain amount. Based on the understanding that everyone has and what no net proceeds are and what gross leases are. What happens? I mean, what, what happens to those borrowed, you
know, those leveraged royalty interest now because, I mean, again, they're worth half of what they would have been under a well-known interpretation.
I'm sure the bank would probably call the note. I think we probably need to figure that out. Any other questions? OK. Thank you very much for your testimony. Thank you. Jim Rankin.
Uh, Mr. Rankin is speaking against the bill, if you would introduce yourself for the record. My
Jim Rankin
Unverified
1:36:01
name's Jim Rankin. I'm an oil and gas attorney. My partner's Alan Perkins. Uh, we work PPGMR. London Uh, over the weekend, I became aware of these internet posts, uh, that were discussing some foreign involvement and uh Mr. Paloma just sat here and told you all about it. Uh, what I wanted to come up here and address on behalf of Flywheel was
It it it's well timed. Earlier today you heard testimony, uh, about foreign ownership of agricultural properties. And I think that that strategy was here to capitalize on the anti-foreign ownership, uh, uh, ideas that you heard earlier, but what I want to remind the committee. Since we're talking about websites, um, I've got a website on my phone. From the Whitehouse.gov that President Donald Trump, Donald Trump, encourages foreign investment while protecting
national security. Nothing that has been discussed in the postings online, and certainly by Mr. Paloma or anybody else suggests that there's a national security issue with flywheel getting. Some foreign investment which is allowing it to move forward with its development of more drilling, more production. That's all going to benefit the royalty owners. It's gonna benefit the counties. And the state with more tax basis. It's also going to benefit the entire state of Arkansas. Um, but what I was able to determine with just a minimal
amount of research online about this oligarch founder was that over 10 years ago, he was ousted from Gunbar when it became clear that he was going to be the source of possible sanctions. His partners ousted him from the company, and now that company is Swiss owned. It is not Russian owned. Um, the bribery allegations that were set out in that article. Those were all pre-fly wheel involvement, some of them going back to 2012, 2014, and in no place does someone suggest that there was an attempted bribery
of a US official. That all happened in Ecuador. It happened in Africa, and that article references, uh, former consultants, former employees, so no one associated with it now that I could find online. Has been involved in that type of activity. It all happened years ago and in most cases over 10 years ago. The investment by this minority investor of about 42% of the ownership position. It gives Flywheel the ability To move forward with its drilling programs that have been
part of the news cycle lately, uh, and, and kick back off the drilling that had gone dormant and stagnant for so long. Flywheel management is still in control of flywheel. That is American-based, and those people are in control of the company. Mr. Paloma also mentioned an exit of the, of the organizers and buyers. What I can tell you is that a handful. Of the flywheel executives. have decided to move on to other things. I think it's absolutely
coincidence that it comes up today when this investment, tell you your time is up. I'm like Senator Crow on a previous
witness, I'd like for you to finish your thought process on what you're doing. The leadership leaving is not in any way
Jim Rankin
Unverified
1:39:15
related to uh the investment by a minority investor. Um, that's all I can tell you about that, and, you know, With that, I, I would conclude my remarks. Question, Hickey. Just, just one, and again, I mean,
Senator Jimmy Hickey, Jr
Unverified
1:39:29
I heard this has been brought up. I don't know.
How it relates back to the What we're trying to do with this net proceeds and whether or not that you know, is defined specifically enough, you know, within these cases, but I guess this is my thing though to ask since it's been brought up, are all of these, uh, all these leases I guess are negotiable instru instruments. Are they all written
that way so that they can be bought and sold out in the open market. Anyway, I mean that, but I can
Jim Rankin
Unverified
1:39:58
tell you there's a uniformity to them and the companies, whoever that company is out there leasing
will typically use the same lease. OK. I mean, I guess specifically
Senator Jimmy Hickey, Jr
Unverified
1:40:06
if somebody wanted to negotiate that, uh, you know, this lease would not be sold or anything and would be maintained by that corporation, maybe they could do it. I don't know. I mean, anything can be negotiated and put in a
Jim Rankin
Unverified
1:40:19
contract. I'll tell you that almost all of these, uh, leases have assignment provisions that they can be assigned. That was my question, I guess, about them
Senator Jimmy Hickey, Jr
Unverified
1:40:26
being, you know, if they're negotiable instruments, then they can be assigned to other companies that you would want them to be assignable so that the
Jim Rankin
Unverified
1:40:35
next producer could operate under them. Sure, I understand. Thank you. Any
Speaker 280
1:40:38
other questions or just any evidence? Singh, thank you very much. next, um, Nathan Morgan. Would you
hold on a second? Yes, you're here, Dima. Would it be possible to have the oil and gas commission or
Senator Jonathan Dismang
Unverified
1:41:06
representative from the Oil and Gas commission. for questions at some point. I think it'd be important to know from the oil and gas commission. out in the hall. Would you like to step out there and see if
Speaker 301
1:41:20
we're there. Doesn't have to do this at some point. That's fine. We'll, we'll. OK. Well
You know wait on, we'll go ahead, Mr. Morgan, introduce yourself for the record. Nathan Morgan, I'm an
Speaker 319
1:41:45
oil and gas attorney in Clinton, Arkansas. I represent the, uh, royalty owners of the Fayetteville Shell. I've already testified before the committee in the prior meeting and so I don't want to, I don't want to belay some of those points. One clarification I wanted to clear up as far as Mr. Perkins' testimony in regard to our all producers doing that? They are not. Um, he named a lot of parties who were named in the
Federal lawsuit flywheel energy was the operator of all of those, uh, of all of those wells, they were the, the different. Working interest owners were named in that lawsuit because they had to be as they were, they were the contract holders in that unit. They were not the ones, uh, sending out the royalty that was actually flywheel energy. Um, so I wanted to clarify that. Uh, secondly, um, as Mr. Robinette said, the purpose of this bill is to
define net proceeds, um, in, uh, 1572, 305 A3. It's a very limited part of this bill. Does not affect oil. We made sure of that, um, that liquid hydrocarbons were not included in the bill. When All of these leases were signed, um, There was a, there was a treatise out there and it was actually linked in the Arkansas Oil and Gas Commission website. When you go to the Arkansas Oil and Gas Commission website. It,
it has a link for royalty owners so they can become educated on how to lease their minerals. Some of them go to an attorney, some of them handle it themselves. Um, the treatise was actually written by Chuck Morgan, uh, who's an attorney out of, of Texar County. He has since, and, and well respected in the industry, he, he has since passed away, um, the actual treat is is still on as of today, still on the Arkansas Oil and Gas Commission website. And in the treatise, um, Mr. Morgan, and, and I have it right here. It's Arkansas Leasing manual. This is
what everybody uses in the industry, um, when they're negotiating leases. Nowhere in this manual does it say that you can't lease 8, 8/88 of your minerals. And essentially, flywheel's interpretation of the statute is saying a landowner in Arkansas doesn't have the right to lease 8/8 of their minerals. They only have the right to lease 7/8 of their minerals. That is their interpretation of this statute. Um, as you've heard, there's a lot of federal court cases and
there is a line of state court cases. So essentially, 3 Arkansas Court of Appeals judges have looked at this statute, and they have interpreted net proceeds as it is defined in Arkansas 1572305 A3 as ambiguous. And so we're asking the, all we're asking the legislature to do is to define net proceeds.
And what is in the bill defines net proceeds, essentially for integrated owners as the Arkansas oil and gas lease for your time is up, sir. Do you have a question from the committee. Signon,
thank you for your. Thank you for your testimony. I don't have anyone else signed up against. I have Jimmy Hart.
charge your microphone is on, if you would recognize
Speaker 322
1:45:21
yourself. Thank you, Mr. Chairman. My name is Jimmy Hart, Conway County Judge. Uh, in my 25th year. I
Speaker 323
1:45:28
want to take you back just a little bit because somebody mentioned that a while ago and, uh, About the Fayetteville Shell and the start of it in Southwest Energy, uh, you know, but I do want to hit on one thing, you know, we're here today to discuss something because there's this some large vagueness within this statute. Uh,
because what they basically say is you, the legislatures want that controls that 1st 1/8. My real problem is this is. What is that 1/8? Who does really determine that? Everybody's got an opinion. We've seen that today, but we get right down to it, it comes down to us all working together to figure out what's going on. Primarily we've got to take and work really hard to figure out what this is all about and number one, I've always been
this way, I'm still this way. I'm gonna look out for your Arkansass. People have take and elect us all to elected office is 40,000 roy owners out here, folks. And not all of them are Arkansans, but a whole bunch of them are. And not all of them, they're, it's not just confined to the Fayetteville Shell. There's royalty owners, I bet you if you go back to your counties in every county in this state that's got a piece of the Fayetteville Shell intact. Uh We've always got to take and look out for the interests of
those folks. We've got to figure out what we need to do for that, but we always come back to square one. We've got to look out for people that we represent, and that is the people of the state of Arkansas. Uh I've seen this thing all these years. It's just, it's, it's just tumbled and changed, but I go back to this property rights and contracts, property rights are in a place for a reason. The property rights. These minerals are property right. These contracts, most time my daddy always taught me, better be
careful when you sign a contract, because when you sign it, you own it, you live up to it. And that's what I'd like to say today. We need to make sure that's in, that's, that's enforced. You want to have a
Senator Jimmy Hickey, Jr
Unverified
1:47:33
question? And, and I apologize, you may, maybe I should have asked one of these other attorneys. It's just come to my head. I guess what I'm, I'm looking at is if we pass this today, and, and I wouldn't mind getting them back up here. This is so important, but what are we expecting to happen? Because I'm sitting here and I've already heard testimony that
This isn't going to be retroactive. So you're correct. All right. So we're gonna have a, we're gonna have a new statute that's on the books. Everything that The old statute was when the, when the
contracts were signed, is going to be covered under that old statute. I think we've seen that time and time and time again. And I agree with this gentleman over here
about, you know, the Constitutionality of that, and that's where, where I'm at with this. So, Are, are we trying to force
A another lawsuit? Is that what we're, what are we trying to do here planning for the future, sir. Planning for the future, so let me ask this then. So are you saying then, because this isn't the way I'm interpreted in here, is that all of those leases that are currently in place. are going to be under this, it sounds like this interpretation that the, the courts have already had, and then any new leases that are going to go forward from the date the governor signs this are going to
be under this new proceeds. Is that what you're trying to
Speaker 323
1:48:55
say? What we're trying to say is clarification of 1/8 because technically right now with the 1A, sir, basically it's not a 18 when you do the deductions on this thing. These royalty owners are getting
Speaker 329
1:49:06
somewhere between 5.5% and 5.75% of perceived. 12.5% lease, OK? But we already heard that these
Senator Jimmy Hickey, Jr
Unverified
1:49:14
courts, they've already either heard it or refusing to hear it because of the ambiguity of the law that's in place and we're sitting here
and we have heard this time and time again. Senator this 99, we may make a tax cut retroactive, but I don't think that makes any difference because, uh, uh, you know, it's, it's the money of the state and it's going back to the citizens of the state. But we've seen this with uh, uh, We've seen this with some criminal stuff that we've done where, you know, we've Maybe been a little or passed legislatures have put in penalties and those people are in jail now and there's other people that are, have committed the same crime, and they're
getting out quicker. So I don't understand. I guess I'm at a, at a, at a waltz. As to what this is truly going to accomplish because We're, I'm, I'm hearing basically from both sides that this is not retroactive. I don't know how it's going to change. So if we are going to put it in place today, or excuse me, when the governor signs it, if we pass this out of here, pass this out of the Senate. All of these leases here do,
are, are, are these leases that are, are down here, do they have a clause in them that says
they're good for 3 years or 5 years, or they, are they from now
Speaker 323
1:50:34
on, Senator, it comes down. I'm going to say it one more time to the interpretation. That's a pro. everybody's got different opinion of the interpretation, but it's clear to me and and I'm gonna take even further back to 20016, 2017, 18. We talk about litigation with the oil and gas commission that basically took on flywheel. There's also another a lawsuit, nobody wants to talk about and that's the one in the Southwest Energy part Southwest
Energy selling it out to flywheel energy to settle an $8 million lawsuit because basically they didn't do anything wrong, but they paid out not hardly 8, but like $7.965 million because we didn't do anything wrong. Well, and there was a settlement or whatever that's a, a settlement,
Senator Jimmy Hickey, Jr
Unverified
1:51:10
and that was what was agreed on, and I don't know if there's some confidentiality agreements in that or not, so I'm not, not looking
to go there, so 4 ft thick. Fair enough. Hickey, and I don't mind if you want an
Senator Breanne Davis
Unverified
1:51:23
attorney to come back up and answer the question in more
legalese, but it's not retroactive in the sense. I, I, I would, but
Speaker 335
1:51:31
I'd like for both sides because I, I mean, and again, I
Senator Jimmy Hickey, Jr
Unverified
1:51:35
know they're gonna have two different opinions, but I don't, I don't think that this legislature, I mean, we've seen this with this retroactivity stuff. I'm just trying to do, do what I feel is according to the
contract. I understand why these people are upset. Can I say one thing? Yes, sir. Let me say this in 20, I've got a, he's a CPA
Speaker 323
1:51:58
and I wish he was here today when this thing started in earnest in 20 2005, the, the, everything has changed because what used to they take 14% deductions and today they take 44% to 50% in deductions, depends on who you are and where you're at. I mean, the problem with it is the royalty owners. signed an honest, hard-binding contracts on file in every courthouse in the Fayetteville Shell and other places too, and the problem we're at, it's something, and I'm gonna say something, I'm glad the oil and
gas commission's here today because we sit down in a 3 hour meeting with DFA where this started with me was on severance tax because I sat and watched in 2022, a severance tax go from, sir, let's stay on this
Speaker 329
1:52:41
bill. I'll thanks I'm gonna say it, things have changed. Thanks for answering my question. Thank you, sir. You have questions
here. Yes, sir, you're still signing. Uh, I assume you want to go last since you put down the bottom. It doesn't matter. I, I mean,
I'd let you go first if you'd requested it, but.
Speaker 341
1:53:07
Do, do, let me ask you this, Senator Caldwell as chairman, could, could, could
Senator Jimmy Hickey, Jr
Unverified
1:53:11
we get both the sides of the attorneys who represent them. I, I'd like for them to to answer my question, what we're trying to force here, we're gonna time out. We're going up against
time frame. I allow them to come back for approximately 3. I don't want to get into it 15 minute discussion. I understand. We're going to run it, we've got going in session at one o'clock. So
this man wants to, wants to testify. OK. Uh, Senator Davis, you call your attorney back up, please. Which one, Senator Hickey, are you want to come up, you seem like you are
Senator Jimmy Hickey, Jr
Unverified
1:53:40
Mr. Roet whoever I mean it's Mr. Robinette. I don't. Mr. Robinet came at first. We'll,
we'll, if that's who you want to, we'll call
Speaker 176
1:53:49
him back up if that's OK. I just, uh, they seem like to me. Just start, just I, I want, I want to give,
uh, a fair hearing, so, but there again, we're, we're going up
against, uh, uh, time stop and, and so we're gonna turn the timer on. I'm not gonna be hard, make a hard stop on both sides, uh, a fair, uh, rebuttal. So, Mr. Robinette, if you would come to the table, Senator T ask a question. that. Let me ask my question before. I want to
Senator Jimmy Hickey, Jr
Unverified
1:54:17
make sure he understands what I'm trying to say. Yes, Mark Robeddette oil and gas attorney, and, and I
understand that you attorneys are about as bad as those politicians that want to give these long answers, but this is, this is what
What I'm looking for you all. And if you disagree with what I've said, I want to know, so we're going to put a statute in place that's going to start. Upon the signature of the governor, it's got an emergency clause. No, it doesn't have an emergency clause. It's going to start. Whatever that dedicated time is,
and that will then become the statute at that specific point in time. What, what are you all thinking that whenever that happens, that you're going to accomplish
with these, with these leases that are under. The statute that you are saying is ambiguous. What, what do you believe is going to happen at that point or what y'all's intentions. What if the company says, nope, we were under the old. We were under the old law. That's when that was signed. What are you anticipating? OK. So, Senator Hickey.
Speaker 251
1:55:26
First of all, this doesn't change any ways. It just affirms all the laces. So
What we're changing here is accounting. We're changing a general rule of conduct. This is what you're supposed to do. With these monies before you pay them out. OK, so anything that's already been done, the time this goes into effect, that's in the past. OK, there could still be lawsuits under the old law, fighting about whether something was owed, you know, this is what we thought it meant at the time. Are we liable or not? Sure.
But everything going forward, we've changed the conduct of the operator in the unit. To where now they're going to pay upon the underlying leases terms, and that is the way it goes forward from there. OK, so let me ask, let
Senator Jimmy Hickey, Jr
Unverified
1:56:20
me ask this, and I understand you gave me more time. And I want to be respectful of that. So I assume you're going to disagree with this other guy over here that the courts have already ruled that whether or not that was in the contract or was not in the contract. Because we've passed a statute down here.
That that's going to hold true, and that's going to
be a part of it. So, do you disagree with what his testimony is on that. I,
Speaker 251
1:56:50
I disagree. That The uh That the laws at the time of the contract being signed somehow become a vested and permanent right in the contract insofar as it deals with the party's conduct, their general rules of conduct here. These are not
We're not rewriting any contracts. So remember, you as the state. You Indeed, your laws are read into the contracts, yes, at the time they're made, but those laws can change. That's why you have police power. That's why you're able to change laws. If we couldn't do this, we couldn't have even had the 1985 Act because, you know, Senator, there were oil and gas leases filed of record then they were working on a certain system then
the state came in and totally changed that. And in fact, you know, really changed all the conduct under those leases. You have the power as the state to change the rules. You're not impairing any contracts. Uh, a classic contract impairment would be something like having some bonds. And the bonds pledge very specific revenues. Let's say you had a toll road, and the toll road revenues go to the bonds. People buy the bonds. Which are negotiable instrument,
uh, oil and gas leases aren't oil and gas leases are just merely reference. They're merely memorandums of interest and property, OK? Um, so, Uh, you have these bonds and say we have a stream of revenue pledged to it. Well, the state can't later come back and say, OK, I understand that. So that's an impairment of contract, 100% because Uh, you're changing, you know, everything that everybody relied upon, um.
In making that deal. So, uh, remember, you're acting under your police power. You're not, you're not trying to rewrite a bunch of uh uh contracts here. You're just changing the party's conduct and no different than an insurance regulation. I mean, his
Speaker 259
1:58:52
opinion. I appreciate it and I, and I appreciate it. Yeah, no problem. Thank
you, Mr. Perkins, would you come back to the table, please? OK Thank you, Mr. Chairman, uh, Alan Perkins.
Speaker 358
1:59:11
Do you, do you need me to restate that or do you
Alan Perkins
Unverified
1:59:16
do? OK. Um, so there, there is confusion about what retroactivity means here. They think it means, um, it, it won't be retroactive, so it won't affect payments that happened before the bill becomes effective, but they do intend for it to be retroactive in terms of applying to to leases that existed before the bill passed. And that's what makes it unconstitutional.
Alan Perkins
Unverified
1:59:45
that, right? So those Fayetteville shale leases are in existence today. I understand the statute since 1985 and Ford, and I, I frankly don't think there's any question that the statute creates an obligation in those contracts. That's what you can't change. That would be a retroactive application to a contract that pre-existed the statute. All right. And, and that's where I'm at. Now I wanna
Senator Jimmy Hickey, Jr
Unverified
2:00:07
ask you another question to make sure I'm not
confused, if that's OK. All right. Did you tell me? Or, or has
there been a court case? That's been decided and by who? That that 18 that we have in
there is allowed, is allowed to be taken. Yes, there have been 6 decisions in Federal court to
Alan Perkins
Unverified
2:00:28
that extent, yes, for private leases, not integrated ones. Well, we're not, we're not talking about the integrated, are we're talking about the
Senator Jimmy Hickey, Jr
Unverified
2:00:43
non-integrated anyway. So not integrated is a private lease, correct? OK. And, and all of those have said that that there is a 18 that's allowed to come out. Yes, sir. OK. That's where I'm, I think I've got.
My question answered at this point.
Alan Perkins
Unverified
2:01:01
I would just add, you know, the Arkansas Bar Association voted, uh, to oppose this bill formally. They sent a letter to, um, Chairman Caldwell on March 19th, um, for this very reason that it's unconstitutional.
Speaker 281
2:01:14
July. All right, thank you. Uh, question, yes, my, my question is,
Senator Jonathan Dismang
Unverified
2:01:22
And I guess it's really just more of the the nuance of how this works. So a court decision changed the way that these payments have been made. Historically, correct? I mean, or is it allowing one entity to have a different interpretation than everyone else that entered into those agreements prior to.
Alan Perkins
Unverified
2:01:46
The the court decisions construed the meaning of the statute and said that the operators who are taking, uh, who are paying the 1st 1/8 based on net proceeds is correct. So everything though, but, so, but
Senator Jonathan Dismang
Unverified
2:01:59
now they can't take that court decision and the company and go back and Chesapeake can't go collect
all it's underpayment that it had or overpayment that it had in relation to royalties, right? Well, Chesapeake's been gone for far too you understand the
question, I believe. Can a prior company That was overpaying per your interpretation now royaliners go back and collect all that overpaid royalty. They would have to sue their, their, uh,
Alan Perkins
Unverified
2:02:30
their less oars to to go back in time for the statutory, uh, the statute of limitations period of, of 5 years. This goes back to the point on the contract
Senator Jonathan Dismang
Unverified
2:02:41
in time and that kind of setting the rules of that contract. So thank you.
No, it's no different than what anyone else have a question? If not, thank you very much. Thank you, Mr. Chairman. Uh, Steve
Speaker 99
2:02:58
Smith. No. Thank you very much. My name is I'll
Speaker 374
2:03:07
be very brief. My name is Steve Smith. I'm president of the royalty Owners Association, uh, for the Fayetteville Shale. Uh, just a couple of items I want rehash the whole thing.
We've heard a lot about it, but with regard to other operators within the shale. Uh, Mr. Perkins mentioned XTO, uh, XTO did hold out expenses from gross royalty owners when they were confronted on that, they repaid the royalty owners. The the fees that they had deducted because they had changed their pay deck and somehow started charging against gross leases and XTO went back and fixed it. There's people sitting behind me that got checks.
Right now. OK. Number 2, their business model is this. Nobody ever took this, this is a novel interpretation of that law. They got lucky that one federal judge chose to override the decision about state law that our court of appeals decided. Our Arkansas law was decided by the Court of Appeals and a federal judge because it was a class action suit. And here's why it has to be a class action suit. They've
got a ton of money and we got a bunch of little royalty owners that can't afford to pursue them in state court and win. And the only way to do it is a class action. They got lucky and got a judge that ruled incorrectly. And so our royalty owners don't have the option of going to a class action suit, which would solve it. They don't have that option because they got one judge, whereas the Court of Appeals Interpreting Arkansas law ruled correctly. And so we could go, I, I could, we could go sue them in in the state court, but we can't afford to. So their business model is, we're gonna do what we want, and the little
guy can't do anything about it because he can't afford to. It's a truly a David and Goliath situation, and I just would urge you to support, uh, the royalty owners on our state. Uh, they've got millions and each of these royalty owners are too small to sue and get their money back. Thank you
Senator Jimmy Hickey, Jr
Unverified
2:05:11
very much. Right. Just so, so you're telling me that I understand they don't
want to, but that each of these individual leaseholders that they couldn't combine and be a party to this law to a lawsuit
Speaker 374
2:05:23
against them? No, because it reverts. I'll let the attorneys answer this, but I believe it reverts to federal court when it becomes a class action. Is that correct? I don't think I can testify. Oh, OK Is that because they're out of state? I think it might be because it's I, I'm not a lawyer so I'm not quite familiar, but I
Senator Jimmy Hickey, Jr
Unverified
2:05:44
do because there's more parties and then it's uh be interstate or whatever or to rule according to state law and
Speaker 374
2:05:48
that federal judge decided he, he knew more about it than the Arkansas Court
of Appeals what the Supreme Court would do if they heard
it. Thank you. Any other questions? Being none, thank you, Ser Dima. We have handout from Senator Dismay.
And is before you start, I want take a one-minute break. OK. I have a copy? hospital Yeah. Um
Unknown speaker
2:06:58
It's. Yeah I'm sure that'll be. OK
3 I believe. Right I
I. I know. I. yes. tomorrow. I used to be.
Speaker 217
2:08:48
we're doing 3 minutes. Yeah, that. OK, we're back
in order, Senator Dismay, uh, turn your mic on, please, uh, introduce yourself for the record, Senator Jonathan dismaying District 18. You
Senator Jonathan Dismang
Unverified
2:09:00
all right, thank you, members. One of the things that
I really wanted to see from the last meeting that we had was really for you to see what's happened. So you're going to see in front of you SWN Swins got their COs
got their, uh, pay sheet here for the exact same royalty owner. All right, this, this check is dated 2018. The total royalty at the time, uh, to be paid was 295. It's very small, $295 and the total payout was $287. This is a gross lease. OK. Let's fast forward. Look at the other
sheet. You said, I think it's important for you to see what's happening to the people in my district. All right, so the total payout on this was actually the royalty
was $386. The net back to that same royalty under and uh with the same exact lease just happens to be a different company is $178. That is the impact our inaction will have on my constituents. The one thing that I can promise you. is that when my royalty owners, the people in my district received those checks. Guess where they reinvested back into their ground, back into their homes, back into their livelihood, back into their businesses. What we've been able to do because of the
Fayettevillehill I think it's incredibly important. And what we've been able to churn in our economy has been tremendous. And we're essentially cutting that in half. I mentioned earlier that royalties are something you can borrow against. It's, it's property that you own. Overnight That valuation was cut in half based on the decision of Flywheel to take it to a different level. Jimmy, Senator Hickey, you can only imagine what that'd be like
to a banker to take a look at that. We valued something at X based on the income that was derived off of that property and overnight, someone took a lease that's been interpreted and understood for a decade. And decided they're going to interpret it differently. I, I just hope, and, and I think I would love for the oil and gas commission to come because they think what they would testify to is what's in this bill just brings us back to the status quo that was understood prior to this federal ruling. And that's all I'm asking you to
do. I'm not asking that we give royalty owners some upper hand that they don't deserve. I'm asking you to get what, just let them have what they had, what they agreed to in the lease. I thought it was funny. I hadn't heard Charles Morgan's name in a long time. But I remember coming and him helping draft these leases in White County and really all over the state as a person that was an expert that we relied on. And he said here today he'd tell you that these leases. Where are the leases. And a gross lease is a gross lease and whatever mealy mouth
law your eyes, whatever we want to say. At the end of the day, That that doesn't do right by the people in my district that own these properties. Thank you. Well,
good job Thank you. OK, Senator Dima, we have questions for Senator Dismay. Nan, thank you very much
for, OK. So Senator, just, let me just ask
Senator Jimmy Hickey, Jr
Unverified
2:12:19
you, uh, you're, you don't think that this would make anything retroactive though, do you?
Senator Jonathan Dismang
Unverified
2:12:27
I don't think it makes anything any more retroactive than the court ruling. You'd have to go back and try to sue to be able to collect those additional dollars. This would
be allowing for an interpretation, which is our job. We do this all the time. We provide interpretations. I can go back in the fracking, we can go, we can talk about the Fayetteville Shell, and it's back when the state of Arkansas decided they were going to charge sales tax on the sand that we put in the ground. This body decided that we were going to go ahead and clarify that sand was not subject to sales tax. We have the right to provide interpretation. No,
Senator Jimmy Hickey, Jr
Unverified
2:12:59
not to mislead you. You and I both know that when things get in court, it's legislative intent. So when all the live streamed in here, and I want to know, and that's the reason I'm asking, you wanted to testify is that if we pass this, because I'm not pass. I,
I'm, I, I haven't made up my decision on this. I am literally trying to do what I feel is the correct thing according to what the statute was. But I won't, I want us to say in here because I'm gonna say that my
legislative intent is that anything that whenever we do this, it's not going to make anything retroactive, and as you as a member of this committee,
Speaker 391
2:13:35
I think that's what you just said too, correct? I would not prohibit them from someone going and trying to collect those additional monies from the past. They are, they All have the right to, to go to, to go to court is what you're saying. OK, yeah, I think
Senator Jimmy Hickey, Jr
Unverified
2:13:48
we're all, all agree to that. I'm just wanting to Be specific that whatever we're doing today is going to be a statute that's going to go forward. And if some court, if somebody wants to go back and do that, that's up to them. And
that was my question to those other guys. What are we trying to do right now? I'm sympathetic to a little bit to what's going on right here. It's not about that. It's just about the, uh, the legal part of it for me. Well, you know, because, and now I keep hearing you say the bank. Yeah, I mean, it's, uh, if, if I was there and thought that, but then I also remember from the first comment, You know, just because that there is a contract. And somebody holds it, they may not be.
Fully utilizing everything within it. But that doesn't mean once it's assigned or sold or whatever it's done, that the next person cannot utilize and do that. I mean, if so, we used a late fee with the mortgage before. So if somebody is uh be a percent normally, but if somebody says, well, they're gonna be a $100 a month late fee, but the holder of that Mortgage says, well, I'm only gonna charge them 50, and then they sell it off and the other one goes by the contract, they're allowed to do that and take it to 100.
I mean, just because, just because something has happened, and I, and believe me, this is, doesn't look good and I understand that, but it's, you know, when it gets emotional for these folks, and, you know, and us too. But If, if it's found, That, that they were under that old contract and the 8th could be taken out. That's just gonna be the way it will be. Any new leases, I agree that once we pass this, is that they would be under this new statute. So if there's a final decision
Senator Jonathan Dismang
Unverified
2:15:34
by a court. And, and, and we've gone through all the appeal process both on Fed and state level. Then fine But, but what all I'm trying to do is there was an understood definition that was accepted by all parties for net proceeds. That one entity has used the courts to redefine. Uh, and I don't, you don't need me to, again, give you some jargon about it. Just look at the sheets. Do you think
Sio would have been paying. For monies that they shouldn't pay out if they didn't have to. Absolutely not. But it was understood by everyone, the attorneys on both sides when those contracts were written up. That gross meant gross. No, I'm not. Anyway, I'm good. I'm good with that. I, I, I do think that
Senator Jimmy Hickey, Jr
Unverified
2:16:27
Senator Dimay had a good thing. I would like to hear from the oil and gas commission. So I would, uh, if we need a motion
for that or if we can
request it or whatever, I want to do that. I've got the authority, not they here. You're moving down there was so
Speaker 94
2:16:53
much enthusiasm. You would please, sir, turn your microphone on
and Introduce yourself and I'm gonna let Senator Hickey ask a question. So just make it as quick either one.
Speaker 396
2:17:10
Pull it, just pull the base to you. Right. Shane Corey, I'm the secretary for the Arkansas Department of Energy and Environment, which includes, among other entities,
Senator Jonathan Dismang
Unverified
2:17:21
the Arkansas Oil and Gas Commission. So and we, we've had some conversations and I've had conversations with producers and whoever else, because it is not my goal that we rewrite something and create some new process that wasn't followed 10 years ago. And so my, my question is, the way that this is written.
Does it get out of line to the generally accepted. The way that we define that proceeds historically when we were creating contracts and how they were to be paid. I would
Speaker 397
2:17:51
try not to give a legalese answer, but I am an attorney, so generally speaking, I believe that this is written in a way with the intent to restore payments to the way they were processed and paid prior to 2019. I mean, I can go into history. I had the I guess the responsibility of defending the Oil and gas
commission in an action that was brought before the action between or for the integrated parties which are separate and apart from the privatized lease party so I can talk with a lot more knowledge and substance about the integrated parties and the Arkansas court ruling and how those differ from the federal cases, but I was involved specifically on the integrated party side. I don't think there's any dispute. Everybody in this room, including Flywell will tell you that there was a change in 2019. Based on and their interpretation and that's the same thing that came out and why
we brought the oil and gas commission action is they made a change to the way they paid royalty payments based on their review of the statute and some other federal cases that had happened, and they made a decision to make a decis make a change in the way payments have been processed, so they didn't do it to just privatize parties, that same change also affected the integrated parties. We had told people in the oil and gas commission side for years that if you're integrated, they're only allowed to deduct taxes, assessments, and true third party costs.
Um, so a similar thing happened when they made a change that they were able to deduct additional post-production expenses at that point in time. We brought that action before the commission. The commission upheld staff's interpretation that was upheld by a circuit court and eventually the Arkansas Court of Appeals that as to integrated parties. Um, they could only deduct taxes, assessments, and true third party charges. That's one line of cases. Flywheel and uh the other parties on the private side went
through and you've heard all about this and I don't claim to be an expert, nor do I want to rehash what happened in those federal cases, but the federal cases have interpreted the law at this point in time to say that those additional post-production expenses in their opinion, are authorized under the current, uh. Version of the law But I don't think anybody disputes that we all knew what it was, we all had that same in 2019, a new company came in, um, I understand they did their due diligence, they did investigations, they looked at
the current status, and they made a different opinion, a different opinion, and as to integrated parties. That was not allowed as to privatize parties or leases with private parties, um, the federal courts have allowed that just did, were you, were you in here whenever you heard some of the testimony that about the at
Senator Jimmy Hickey, Jr
Unverified
2:20:33
the well and those type of expenses and things like that, the way that those leases were done. I've tried not to be in here, but you know what, you know what I'm talking about though, and I don't, I don't blame you for dodging it, but
But That's what you sit there for. So, I, I did not hear that testimony, but I'm familiar
Speaker 397
2:20:53
with and at the well process OK. So you know what the issue is with that.
Speaker 392
2:20:58
You can expand on it. I know you're knowledgeable enough to do that.
Senator Jimmy Hickey, Jr
Unverified
2:21:05
So What's, what's, maybe if you ask me the specific question, maybe that I I don't
Speaker 399
2:21:11
know what we're looking for. So if, if it's at the will,
Senator Jimmy Hickey, Jr
Unverified
2:21:17
is the way that it was written. And then you've got
the statute in place, which says the 1/8, how do we decipher between that? I don't know that
Speaker 397
2:21:32
You have to decipher between that to give a policy decision where you are, I know that, but we're I think the 18,
Speaker 400
2:21:41
so part of that decision when they made a decision to change paying what had been recognized as gross leases.
Prior to 2019, they were paying Southwestern was paying a gross lease piece. In 2019, when they made that decision, they then started deducting additional costs from what had historically been recognized as a grossly, so
Speaker 397
2:22:04
from the current version of the statute of 1985. I wasn't with the commission there, but I was in the early 2000s until 2019, if you had a gross lease, you received. More of your royalty because they weren't allowed to take post-production expenses.
In 2019, they recognized and made the decision that under their version of the law, not saying it's right or wrong, but under their interpretation that they could take out additional expenses because the 18 net. Basically superseded or trumped the 18 in the lease and that's what the federal courts. I mean, this is me summarizing, but that's what they have recognized and allowed as permissively. Um, I think Senator Hickey, that I've, I've been in here long enough to hear your questions and I don't know if this helps or hurts.
If you understand, I think what the intent is, the intent is when we're talking about retroactivity, I think the question really comes down to not whether the leases were taken. Before this decision or after this decision in this committee, but how royalty payments under existing leases will be paid moving forward. And I think that's ultimately, I've heard Mr. Perkins, I know he believes that's unconstitutional, but that's also something that will be sorted out by the court system, but I think what the intent of this bill is, it's the
same thing that we ultimately did with the oil and gas commission, uh, and that is we, we had a definitive decision that Leases and royalties must be paid in a certain way, and I think that's what the intent of this bill is here today is to clarify that. Now, whether or not there are lawsuits or challenges, I think that's. That's yet to be seen and I've heard Mr. Perkins talk about the unconstitutionality of that, but I don't think it's really, I don't want you to think that this decision only applies to leases taken after this point in
time. I think it really is intended and I think the lawsuit will be about whether or not this decision can apply to existing leases with payments moving forward after this bill if it were to become a law becomes a law, you were very observant about
Senator Jimmy Hickey, Jr
Unverified
2:24:09
what my next question was going to be because I was going to ask
you, do you think this, this bill makes this retro retroact retroactive. I, I, my answer is no in the sense of payments because
Speaker 397
2:24:19
I think it would only apply to payments moving forward, but that's different than whether it
Speaker 400
2:24:25
applies to a new lease or an old lease. It's the payments under existing leases. Let
Senator Jimmy Hickey, Jr
Unverified
2:24:30
me ask you another one, since you are the ones that are over this. All right, so we passed this, and the company says, nope. We're still, we still believe that, uh, Uh, we have the right under the way that The old statue was done. I'm just going to say it that way. This legislature has went in and now changed it to something different, which is fine. And they say, well, we're not going to, we're not going to
send, we're going to continue to pay under the old, what are you, do you all at that point, Uh, have an obligation or or what are you all planning to do? Does that make sense? Sure, the truthful answer
Speaker 400
2:25:10
is there is statutory authority of the Oil and gas commission has to
Speaker 397
2:25:14
enforce royalty payments. However, it has always been our practice if the if the issue is under litigation, we will not take that, um, up until the litigation is settled. So if someone filed a royalty on complaint and there was no
active lawsuit, we would start the investigation, start the process. If there is an appeal, and a suit filed, then we would wait until a decision of the appropriate court has been issued. That's fair. Thank you, sir. Really.
Speaker 31
2:25:41
Any other members have a. question Mr. Greer, I appreciate you
coming up here. I bet you walk away more enthusiastically than what you walked up to the top. It seems to be the
Speaker 400
2:25:52
sentiment of the last couple of days. OK, no other witnesses, uh,
Senator Davis, you recognize closedre bill. All right. Thank
Senator Breanne Davis
Unverified
2:26:02
you, Mr. Chair. So, just in closing, um, I just want to restate that we are clarifying the law. That's what we're shooting to do here. That's what we do every single day down here. It is our job. It is our actual job to clarify the law. It's not our job to mess with contracts and renegotiate contracts, but to provide clarity in the law where there is no clarity to ensure that
contracts are being executed correctly. We've worked on this bill specifically for the last 3 sessions, and every session we narrow it down more and more, tailor it based on feedback, um, based on complex legal conversations and court decisions, and that's what I think this makes this a good bill. Um, we've been working on it for so long to ensure that it is so specific, um, to where it is just providing clarity and not messing with contracts or anybody else that does not have anything to do with this
situation. It's never in fact made it out of house ag and here we are today, it flew out of the house ag and flew out of um off the house floor with 81 votes. And I know that doesn't necessarily mean anything, um, in another chamber, um, but I think that just speaks to the work that we've done over the years to narrow this down to ensure that we are adequately, um, representing these mineral rights owners and making sure that their contracts are executed the way that they should be. So I think my ask just of the committee.
today, um, because you have spent so many hours on this, is that if you're on the fence, um, Please vote yes. Vot it out. Let's decide this on the Senate floor. Um, I, I really think that um people that live in these counties that have been impacted by this company and the way that they interpret the way the contract's written, um, deserve a shot to have this heard on the Senate floor. So if you're on the fence, I just ask that you let us debate it out later this week. Um, I think the
arguments are clearly valid and show that there is no clarity in the law, and we need to provide it, um, and that it's not to be retroactive. But to be moving forward to ensure they're being paid correctly. But that I'm closed, thank you.
Speaker 14
2:28:14
Thank you. Uh, do we have a motion what
will the committee? Ocean do pass. Second from Senator Scott, all in favor say, well, I'm sorry to discussion on motion. So And I heard, I heard what you
Senator Jimmy Hickey, Jr
Unverified
2:28:31
said. You kept saying clarity, clarity, clarity. And I'm not for clarity, really. I mean, I, I want it from this front forward. But I also heard you at the very
end, you said not to be retroactive. And I know I'm not supposed to be talking with her, but that's, that's what I heard. I don't, I know you're not supposed to be in this discussion, it's supposed to be between us, but So, and that's where I'm at, because I, we all know that whatever legislative intent was, I cannot tell you what the legislative intent was back
whenever these other legislators that are no longer around what they did. But as far as From this point forward. It's the way I'm looking at it whenever we vote on this bill. And I'm going to vote yes on this bill because of that point. So Now, I think at that point, some of these arguments that these folks have made in here, I think, I think you're gonna wind right back up in court and that's fine. We'll let them see what what they decide, because I'm gonna tell you some of you all have confused me a little on
purpose, I'm sure, you know, about what court cases, what, where we're at in that process, uh, whether or not, uh, flywheel was represented to ExxonMobil or ExxonMobil was their self. I mean, there's all types of questions that's outside of what this body's supposed to do with that, but That's for a court to decide. So I'm gonna be very clear. That Jimmy Hickey's legislative intent is that we're just passing a statute. It's gonna Clarify but not be retroactive.
Thank you. Any other discussion? No. so Just for clarity, I think
Senator Matt Stone
Unverified
2:30:15
legislative intent was to pay the 1st 1/8 on that proceeds. I think there were contracts that were entered into that went past that. So I don't think they're asking for any back pay, but I think from this day forward if this bill passes, they want to be paid the way they used to be paid.
So, and I see people nodding their head, and I think that's gonna let a contract override state law, so I'll be a no. OK.
We have a motion and a do pass. Motion in second on due pass. All in favor say aye. All the polls say no. Bill passes.
Agenda
Call to Order
HB1656 Beck TO AMEND THE LAW REGARDING OIL AND GAS PRODUCTION AND CONSERVATION.
HB1562 Gazaway CONCERNING THE TERMINATION OF AN ORAL LEASE OF FARMLANDS; AND TO AMEND THE LAW CONCERNING NOTICE OF TERMINATION.
HB1680 Vaught TO PREVENT A FOREIGN-PARTY-CONTROLLED BUSINESS FROM LEASING LAND; AND TO PROHIBIT A PROHIBITED FOREIGN PARTY FROM HOLDING AN INTEREST IN REAL PROPERTY OR AGRICULTURAL LAND IN CERTAIN CIRCUMSTANCES.
HB1827 Wardlaw TO AMEND THE ARKANSAS HUNTING HERITAGE PROTECTION ACT.
HB1855 Ennett TO AMEND THE LAWS CONCERNING THE POWERS AND DUTIES OF THE DEPARTMENT OF AGRICULTURE AND THE ARKANSAS FORESTRY COMMISSION; AND TO AMEND THE LAWS RELATING TO FIRE PROTECTION DISTRICT BOUNDARIES.
Recess
Reconvene
HB1923 Maddox TO AMEND THE ARKANSAS TOURISM DEVELOPMENT ACT; AND TO AMEND THE LAW CONCERNING NATURAL STATE INITIATIVE OPPORTUNITY ZONES.
HB1928 M. Brown TO AMEND THE ARKANSAS SOIL NUTRIENT APPLICATION AND POULTRY LITTER UTILIZATION ACT.
HB1852 Moore TO ESTABLISH A RIGHT TO REPAIR FOR CERTAIN AGRICULTURAL EQUIPMENT.
Adjourn
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — AGRICULTURE, FORESTRY & ECONOMIC DEVELOPMENT - SENATE, Apr 8, 2025 | Agenda | 2 | Official source ↗ |
Speakers
Senator Ronald Caldwell Chair
Unverified
Representative DeAnn Vaught
Unverified
Speaker 15
Speaker 16
Senator Missy Irvin
Unverified
Senator Greg Leding
Unverified
Speaker 40
Speaker 42
Senator Matt Stone
Unverified
Senator Jimmy Hickey, Jr
Unverified
Steve Shepherd
Unverified
Scott Waller
Unverified
Speaker 100
Speaker 101
Speaker 63
Layden Pugh
Unverified
Speaker 115
Speaker 118
Speaker 120
Speaker 126
Speaker 130
Senator Steve Crowell
Unverified
Speaker 135
Speaker 138
Speaker 62
Senator Bart Hester
Unverified
Speaker 146
Speaker 149
Speaker 153
Speaker 158
Representative Denise Jones Ennett
Unverified
Speaker 166
Speaker 167
Speaker 179
Speaker 184
Speaker 198
Speaker 200
Speaker 201
Speaker 205
Speaker 221
Speaker 189
Speaker 223
Speaker 212
Speaker 234
Speaker 227
Senator Breanne Davis
Unverified
Mark Robinette
Unverified
Speaker 251
Senator Jonathan Dismang
Unverified
Speaker 255
Speaker 105
Speaker 266
Speaker 272
Speaker 273
Alan Perkins
Unverified
Speaker 288
Speaker 290
Rick Paloma
Unverified
Speaker 306
Jim Rankin
Unverified
Speaker 280
Speaker 301
Speaker 319
Speaker 322
Speaker 323
Speaker 329
Speaker 335
Speaker 341
Speaker 176
Speaker 259
Speaker 358
Speaker 360
Speaker 281
Speaker 99
Speaker 374
Speaker 217
Speaker 391
Speaker 94
Speaker 396
Speaker 397
Speaker 392
Speaker 399
Speaker 400
Speaker 31
Speaker 14