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Committee advances royalty transparency bill that raises maximum penalty to align with delinquency code
Summary
Lawmakers debated a bill to require itemized royalty-payment deductions and to reference a different code section that raises the maximum civil penalty from $500 to up to $100,000; producers and industry groups warned it could be punitive and invite litigation, while supporters said it is a transparency measure and aligns existing statutes.
Representative Rick Beck, sponsor of the measure, told the committee the bill combines reporting language into a single code section and changes a $500 maximum civil penalty reference so it conforms to the existing delinquency statute that already carries a higher maximum.
“This bill only covers the reporting. Some people call it reporting. We call it the transparency part of it,” said Representative Rick Beck, District 43, explaining that the text from two places in law was consolidated to avoid inconsistent definitions and that the penalty reference was aligned with the code that governs delinquent royalty payments.
Opponents from the oil-and-gas producer community said the bill would increase paperwork and risk excessive penalties despite little history of enforcement. Rodney Baker, executive director of the Arkansas Independent Producers Organization, said he and other producers do not recall routine noncompliance under the current process and worried the change is disproportionate.
Alan Perkins, an oil-and-gas attorney representing industry members, outlined how the current statute already gives royalty owners a stepwise process — certified-letter request, a 45-day response period, an administrative complaint to the Oil and Gas Commission and a hearing — and said the penalty component proposed in Representative Beck’s bill severs the link between financial harm and penalty amount. “You’re talking about the potential for an administrative agency to assess a hundred‑thousand‑dollar penalty because someone failed to answer a question,” Perkins said, adding constitutional concerns about excessive fines and a lack of statutory standards for assessing a large civil penalty.
Rick Paloma, who said he represents royalty owners of the Fayetteville Shale, urged the committee that the change should be viewed as aligning penalty authority rather than as an immediate punitive step. Paloma said the process that leads to the commission is multi-step and that a $100,000 cap appears only where an unpaid or delinquent royalty payment is connected to the harm.
Beck responded that the change simply references the existing delinquency code so the two sections remain aligned and that the Oil and Gas Commission already enforces the underlying obligations and determines appropriate penalties in context.
After debate, Representative Beck closed and asked for a favorable report. The committee voted to advance the bill; a subsequent roll call was taken. The transcript records named members voting both yes and no (see actions).
