American Oil and Gas Reporter - February 2018 - 92

ConventionSection: Ohio Oil & Gas Association
of SB 235, a catch-all bill passed at the
end of the legislature's 2015-16 session,
but Governor Kasich line-item vetoed
that portion of the bill, claiming that it
was an unwarranted expansion of the exemption that would cost the state $264
million (AOGR, February 2017, pg. 86).
However, Hickman says, when OOGA
dug into the tax department's calculations,
it discovered that $201 million of that
supposed revenue loss related to gathering
lines. But the provision in SB 235 as
well as HB 430 draw on the section of
Ohio law dealing with the ODNR's regulatory authority. "Gathering lines are
regulated by the Public Utilities Commission, which is an entirely different
section of law," he declares. "So immediately, you can take $201 million of that
right off the table."
Hickman says HR 430 received a second hearing Jan. 17 before the House
Government Accountability and Oversight
Committee, at which OOGA immediate
past-President David R. Hill, owner of
David R. Hill Inc. in Byesville, Oh., discussed the effects of his company's sales
tax audit.
"David's testimony did a good job of
explaining the real-life effect of these
audits," Hickman characterizes. "It is
having a chilling effect. You hear about
two or three local companies being assessed for these expanded sales taxes and
other companies get scared. We believe
it is limiting investment."
While the committee did not take a
vote on the bill, Hickman says one member "described the Department of Taxation's actions as jackbooted thuggery. I
really think that is how the committee
viewed this."
Affected Mines
OOGA's third legislative priority,
Aslanides continues, is SB 236, which
relates to a coal company's ability to
object to oil and gas drilling near mining
operations. He explains that, as a matter
of miner safety, Ohio law allows a coal
company to object to a drilling permit
that may result in a wellbore penetrating
a coal mine and thereby endangering the
lives of miners. But, he notes, an "affected
mine" never was defined in statute.
As a result, Aslanides says, coal companies have been able to block drilling
even in the absence of a mining permit
or plan. "There have been situations
where a coal miner has held a drilling
permit hostage after the well operator
92 THE AMERICAN OIL & GAS REPORTER

was advised expressly by the coal company
that mining was not economic and that
the coal was not even owned by the mine
in the location of the proposed drilling
permit," he advises.
The problem was compounded by HB
64, the 2015 biennial budget bill, in
which the coal association was able to
add a provision allowing nonowned coal
reserves to be included in a mining
permit, he mentions.
"It's unfair to mineral owners who
can't realize development on their property," Aslanides charges. "State and local
governments also have been impacted
negatively through lost tax revenues."
According to Hickman, the Ohio
Supreme Court created a three-pronged
test for an affected mine in 1996 in Redman v. Ohio Department of Industrial
Relations. Drawing on that, SB 236 proposes to define an affected mine as one
for which:
* A coal mining permit has been issued.
* An application for a permit to drill
an oil or gas well has been filed under
Ohio Revised Code Section 1509.
* The operator of the coal mine has
acquired the right to mine coal at the
proposed well location from 100 percent
of the owners of the coal to be mined.
* Active mining is occurring within
2,500 feet of, and is progressing toward,
the proposed well location.
The second part of SB 236 creates a
new "affected mine commission" to hear
coal company objections. At present,
Hickman says, objections go before the
Ohio Reclamation Commission, the section of ODNR focused on mining laws,
miner safety and abandoned mine land
reclamation. "We think it is only fair,
since it is an oil and gas permit, that we
create a bipartisan commission to hear
objections," he remarks.
He says SB 236 calls for two representatives from the oil and gas industry,
two representatives from the Reclamation
Commission, and a landowner to hear
objections.
As of mid-January, SB 236 was awaiting additional hearings in the Senate Energy and Natural Resources Committee,
Hickman reports.
Regulatory Review
At OOGA's 2017 winter meeting,
Richard Simmers, chief of ODNR's Division of Oil & Gas Resources Management, noted that state law required all

agencies to review their regulations every
five years, which DOGRM would commence in 2018 (AOGR, April 2017, pg.
113). He said he anticipated the division
would begin with Ohio's underground
injection control rules in general, and its
Class II disposal regulations specifically.
Aslanides says OOGA hopes to participate in that process by developing a
"strategic partnership with ODNR so that
(regulators) fully consider the engineering,
technological and commercial aspects of
oil and gas development in the rulemaking process."
"We are going to become more involved in partnering with the ODNR,"
he vows.
Hickman suggests that endeavor is
more a matter of re-establishing historical
lines of communication than creating
something totally new. "We always have
tried to have very open communication"
with ODNR, he clarifies.
But more recently, he acknowledges,
"Either through the severance tax debate
or other administrative reasons, that communication hasn't been as direct. I think
the commitment we are making is to reopen some of those lines of communication
and move forward.
"ODNR is our regulatory agency,"
Hickman goes on. "It behooves everybody
if industry and ODNR understand each
other's perspectives with regard to proposed regulatory changes."
Winter Meeting
OOGA is taking a slightly different approach to its 2018 winter meeting, which
will be held March 7-9 at Columbus' Easton
Hilton, Aslanides and Hickman say.
Hickman describes it as a two-pronged
approach. "We want to have some very
good speakers to provide information to
our members," he says.
In that vein, he announces this year's
keynote luncheon speaker is Brian
Kilmeade, co-host of Fox News' morning
show, Fox & Friends, as well as host of
Fox News Radio's Kilmeade and Friends.
But the second component, Hickman
says, are several breakout sessions "to
look at some different issues, break those
down, and have those discussions."
"It's great to have good speakers,
which we have done in the past," Hickman
expands. "But the discussion internally
was, 'Can we change things a little to
provide our members some additional
benefits? Maybe we can dive deeper into
some of these issues with some breakout



American Oil and Gas Reporter - February 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2018

Contents
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