Production and development of oil and gas resources is crucial to the economic well being of the state and the nation.  Therefore, individual states have framed laws for proper utilization of its natural resources.  Missouri oil and gas laws are provided under § 259.010 R.S.Mo. through § 259.230 R.S.Mo.

State Oil and Gas Council

§ 259.010 R.S.Mo. establishes a State Oil and Gas Council (“Council”).  The Council will be composed of the division of geological survey and water resources, division of commerce and industrial development, Missouri Public Service Commission, Clean Water Commission, University of Missouri, and two other persons appointed by the governor, with the advice and consent of the senate, who are residents of Missouri and who shall have an interest in and knowledge of the oil and gas industry[i].

Powers and Duties of the Council

Pursuant to § 259.070 R.S.Mo., the Council has the duty of administering the oil and gas laws. It is responsible for making investigations as it deems proper to determine whether waste exists or is imminent or whether other facts exist which justify action.  Additionally, the Council acting through the office of the state has some important powers.  Some of them are[ii]:

• To limit and to allocate the production of oil and gas from any field, pool, or area.
• To classify wells as oil or gas wells for purposes of interpreting provisions of the oil and gas laws.
• To require identification of ownership of oil or gas wells, producing leases, tanks, plants, structures, and facilities for the refining or intrastate transportation of oil and gas.
• To require the making and filing of all mechanical well logs and the filing of directional surveys.
• To require the drilling, casing, operation, and plugging of wells in such manner as to prevent the escape of oil or gas out of one stratum into another, and also to prevent water pollution.
• To require the operation of wells with efficient gas-oil and water-oil ratios, and to fix these ratios.
• To mandate every person who produces, sells, purchases, acquires, stores, transports, refines, or processes native and indigenous Missouri-produced crude oil or gas in the state to keep and maintain within the state complete and accurate records of the quantities.
• Regulate the drilling, producing, and plugging of wells, and all other operations for the production of oil or gas, the shooting and chemical treatment of wells, the spacing of wells, operations to increase ultimate recovery such as cycling of gas, the maintenance of pressure, and the introduction of gas, water, or other substances into producing formations, and disposal of highly mineralized water and oil field wastes.
• To circulate and enforce rules, regulations, and orders to achieve the purposes and the intent of the oil and gas laws.
• To make rules, regulations, or orders for the classification of wells.

Regulation of Production

Pursuant to § 259.080 R.S.Mo., it is unlawful to commence operations for the drilling of a well for oil or gas, or to commence operations to deepen any well to a different geological formation, without first giving the state geologist notice of intention to drill and first obtaining a permit from the state geologist under such rules and regulations as may be prescribed by the Council.

Pursuant to § 259.090 R.S.Mo., the Council has the duty to determine market demand for each marketing district and regulate the amount of production by:

• Limiting the production of oil and gas within each marketing district to that amount which can be produced without waste, and which does not exceed the reasonable market demand.
• Allocating or distributing the allowable production among the pools in the state or marketing district.  The allocation is done on a reasonable basis.

In allocating allowables to pools, the Council can consider nominations of purchasers to purchase from particular fields, pools, or portions.  However, allocation of the total allowable for the state must be in a manner to prevent undue discrimination between marketing districts, fields, pools, or portions thereof resulting from selective buying or nomination by purchasers[iii].

Pursuant to § 259.060 R.S.Mo., waste of oil and gas is prohibited in the interest of conservation of natural resources.

Council Hearings

Pursuant to § 259.140 R.S.Mo, the Council has the authority to prescribe rules and regulations governing the practice and procedure before it.  However, no order or amendment will be made by the Council without a public hearing upon at least ten days’ notice.  Public hearings will be held at the time and place prescribed by the Council.  Interested parties may attend the hearings.

The notice requirement is not mandatory in case of an emergency.  When an emergency requiring immediate action is found to exist, the Council is authorized to issue an emergency order without notice of hearing.  Such notice shall be effective upon promulgation. However, an emergency order shall not remain effective for more than fifteen days[iv].

The orders issued by the Council will be in writing and recorded in full and indexed in books to be kept by the state geologist.  Such orders are public records and are open for inspection at all times during reasonable office hours[v].

The Council may act either upon its own motion or upon the petition of any interested person. On the filing of a petition concerning any matter within the jurisdiction of the Council, the Council shall promptly fix a date for a hearing.  The hearing will be held without undue delay after the filing of the petition. The Council enters its order within thirty days after the hearing [vi].

Pursuant to § 259.160 R.S.Mo., any person adversely affected by any order of the Council may within thirty days after its effective date apply to the Council in writing for a rehearing. The application for rehearing shall be acted upon within fifteen days after its filing.  If rehearing is granted, it will be held without undue delay.

Appeals

Pursuant to § 259.170 R.S.Mo., any person adversely affected by an order entered by the Council may appeal from such order to the circuit court of Cole County or to the circuit court of any county in which the property affected or some portion of the property is located.

The notice of appeal must be filled within the permitted time limit.  The notice must be filed with the Council within thirty days after the entry of the order complained of, or within thirty days after the entry of the order overruling a motion for rehearing, or within thirty days after sustaining the original order in the event a rehearing has been held[vii].

Within ninety days after the filing of the notice of appeal, the appellant must file in the circuit court the transcript of the proceedings before the Council.  A petition for review which includes the grounds for the appeal must also be submitted[viii].

After reviewing the proceedings before the Council as disclosed by the transcript, the circuit court will enter its judgment affirming or reversing the order appealed[ix].

Penalties

Pursuant to § 259.200 R.S.Mo, any person who violates the oil and gas laws, regulations or order of the Council is entitled to a penalty of not more than one thousand dollars for each act of violation and for each day that such violation continues[x].

Any person who gives false information or makes false entries in any report or record required to be submitted by the oil and gas laws or any rules, regulations or orders of the Council is guilty of a misdemeanor.  Upon conviction, such person will be punished as provided by law.  The penalty also extends to people who willfully refrain from furnishing the required details.  Any person who knowingly aids or abets any other person in the violation of any oil and gas provisions are also subject to the same penalty as the actual offender.

Leases

Pursuant to § 259.230 R.S.Mo , the state, counties, cities and towns and other political subdivisions are authorized to lease publicly owned lands under their respective jurisdictions for the purpose of oil or gas exploration and production.  However, such lease shall not be entered into until it has been approved by the general assembly on behalf of the state; on behalf of counties by the county commission; on behalf of cities and towns by the Council thereof and on behalf of other political subdivisions by the governing body thereof.

Such leases shall be upon such terms and conditions as may be agreed upon. Revenue from the leasing of state owned lands will be paid into the general fund of the state. And revenue derived from the leasing of other public lands will be paid into the general fund of the respective lessor political subdivision.

[i] § 259.010 R.S.Mo., § 259.020 R.S.Mo.

[ii] § 259.070 R.S.Mo.

[iii] § 259.090 R.S.Mo.

[iv] § 259.140 R.S.Mo.

[v] § 259.140 R.S.Mo.

[vi] § 259.140 R.S.Mo.

[vii] § 259.170 R.S.Mo.

[viii] § 259.170 R.S.Mo.

[ix] § 259.170 R.S.Mo.

[x] § 259.200 R.S.Mo.