Wednesday, November 26, 2014

Administration Wants Tougher Regulations

The state's chief oil and gas regulator asked the Senate Tuesday to restore the Kasich Administration's plan to crack down on the industry after the House revised several provisions in the mid-biennium review bill dealing primarily with environmental issues.  Ohio Department of Natural Resources Director Jim Zehringer also asked the Senate Agriculture Committee to delete House-added proposals to allow state lands to be forcibly included in drilling units and to further deregulate the telephone industry.  Meanwhile, Department of Agriculture Director David Daniels and Ohio Environmental Protection Agency Director Craig Butler applauded MBR provisions that the House added to address the toxic algae problem in Lake Erie.
Sen. Cliff Hite, chairman of the Agriculture Committee, said he plans to hold a vote Dec. 9 on a substitute version of the bill, which could include some of the administration's requested changes. He asked members to submit potential amendments by Dec. 5.  The chairman told reporters after the hearing that he believed a number of contentious issues could be resolved in time to pass the bill before the end of lame duck session.  For example, the oil and gas industry and the administration reached agreement on a dozen points of contention during a recent stakeholder meeting, he said. The parties are also "very close" to compromising on how much drillers would have to disclose about previous violations, he added.  Sen. Hite said another provision about which Director Zehringer expressed concern - changes to the unitization process - "will be probably contentious before we get done."  A substitute version of the bill adopted in the House would authorize the agency to issue an order for unitization or mandatory pooling for state-owned lands other than parks, according to the Legislative Service Commission's comparison document. The proposal also sets certain deadlines for the state to rule on applications to authorize drilling near unwilling landowners' property.

Director Zehringer said the contentious subject requires more time for deliberation than lame duck session can allow.  As for the administration's proposal to require oil and gas permit applicants to disclose felony convictions, the director said House revisions that limit the look back period to three years are insufficient to make a reasonable assessment of the operator's compliance with the law.  Under the current version, Ben Lupo, who was sentenced to 28 months for dumping fracking waste into a Mahoning River tributary, would only have to wait eight months to register with the agency to avoid disclosing the felony, he said. Other changes that exempt subsidiaries from disclosure would allow such individuals to skirt the law by simply registering under a different company name, he added. "With so many companies who are not in operation in Ohio, for which we have a limited comprehension of their operating history throughout the U.S., we should have the ability to know their specific felony history in other states and take it into consideration before allowing them to do business here," he said.  Director Zehringer also asked senators to revise an amendment requiring oil and gas waste handlers to have a surety bond of $250,000 and liability insurance limited to $4 million, saying the caps "are far too low to be considered effective."  He voiced concern that the bill would allow oil and gas producers and waste handlers to insure themselves at practically any amount. If a company had an accident and went bankrupt, the state "would be left with the bill" to remediate environmental damage, he said.

Director Zehringer also asked the committee to:
·         Scrap changes to the House's changes to civil and criminal penalties for oil and gas operators; Restore a proposal to allow the ODNR director to approve certain property transactions under $1 million that currently require gubernatorial approval;  Remove provisions that reduce funding for the Mine Safety Program and limit related training and inspections;  and, eliminate language that would allow anyone to raise white-tailed deer for personal use.

Director Butler said the administration hopes to address concerns that the current law allowing only the chief of the Division of Oil and Gas to obtain confidential information about fracking chemicals could hamper access to local fire departments and other agencies.  The OEPA director said the administration would also like to ensure that public drinking water systems can obtain confidential information in case of another well pad fire, where toxic chemicals can get washed down into waterways. Early access to the data could allow municipalities to monitor and shut down their systems until the pollution flows past the intakes, he explained.  During his testimony, Mr. Butler touted new algae-related provisions in the bill that would require large publicly owned wastewater plants to monitor phosphorus levels in their discharge and allow the state to restrict the disposal of dredging material in Lake Erie, while using it for other purposes.

Director Daniels touted the House's move to prohibit the application of fertilizer and livestock manure to frozen and saturated farm fields in the Western Lake Erie Basin, which he called "a necessary step in our battle to restore the health of our great lake."

A House-added proposal to define "adverse impacts" under the multi-state agreement on water usage has drawn great attention from environmental groups, but Director Zehringer said he hasn't yet reviewed the provision.  Environmentalists say the language closely resembles a bill that Gov. Kasich previously vetoed (HB231, 129th General Assembly) that would have allowed industrial operations to withdraw huge amounts of water from environmentally sensitive tributaries of Lake Erie in violation of the compact.

However, Mike Bailey, ODNR's chief of the Division of Soil and Water Resources, indicated that the administration had a different interpretation of the provision.  "We do believe it is compliant with the Great Lakes Compact," he told reporters after the hearing.

Sen. Hite said he believed the Great Lakes Compact proposal was problematic.  "When we did the Great Lakes Compact, we went through that whole process. And there was a veto and then we corrected the language to avoid a veto. Now the language is partly what was vetoed. Well, then we have to have that discussion," he said.

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