It’s officially state budget bill season. Language pertaining to Governor John Kasich’s executive budget proposal has been released in the form of House Bill 64 and several provisions impact our membership.
Several regulatory provisions are included in the budget bill. Most proposals were discussed last year during House Bill 490 (Governor Kasich’s Energy “MBR” bill) deliberations. The bill includes regulatory changes which, if enacted, would require companies applying for a registration to operate in Ohio to disclose any felony convictions or pleas pertaining to state or federal Clean Water Act violations for the officers of the company. As proposed, this disclosure would be for 25 years from the date of application. After this background check, the Chief would have the ability to deny the company’s registration.
Additionally, chemical disclosure requirements are expanded in times of an emergency to public and private water supplies. ODNR is permitted to share chemical information to another state agency or emergency responder in the time of an emergency or investigation. Once shared, chemicals designated as a “trade secret” are not public records and restrictions on disclosing trade secret information carry to whomever receives the information.
Criminal penalties and civil penalties and their associated fines are increased in the bill. A majority of those increases would make violations of oil and gas law felonies. Certain violations of oil and gas law would permit a fine for each day of each violation.
Other regulatory provisions included in House Bill 64 involve a re-write of current law pertaining to unitization, clarification of how the state handles information under the Emergency Planning and Community Right-to-Know Act (EPCRA), and providing the ODNR notice when an oilfield emergency takes place, amongst others.
It wouldn’t be a budget bill if oil and gas taxation wasn’t being changed. Under the bill, oil and natural gas severed from a horizontal well will be taxed at 6.5% of total volume multiplied by the quarterly spot price. Natural gas that is processed into natural gas liquids or condensate will be taxed at 4.5% of total volume multiplied by the quarterly spot price. The spot price will be defined by the Ohio Tax Commissioner from a source of their choosing. The purpose of this increase is to first fund the state oil and gas regulatory program. The next 20% of the funds collected are for counties experiencing the shale activity. The remainder will go towards a reduction in the personal income tax.
Additional tax changes included in the budget are an increase in the CAT (Commercial Activities Tax) from 0.026% to 0.032 on every commercial transaction and an increase in the state sales tax (from 5.75% to 6.25%). Those tax changes will have an impact on the industry as well.
The OOGA will continue to promote, protect, and foster our member’s interests before the state legislature and update our membership on the budget bill and our actions accordingly.
More information on House Bill 64 can be found via the Ohio House of Representatives website, located at: https://www.legislature.ohio.gov/legislation/legislation-summary?id=GA131-HB-64