Home > Legal Updates > Ohio Statehouse Update: Week in Review — March 30, 2012

Ohio Statehouse Update: Week in Review — March 30, 2012

 

1. Senate committee hears Energy MBR bill

The Senate Energy and Public Utilities Committee heard sponsor testimony from the Public Utilities Commission of Ohio (PUCO) and the Ohio Department of Natural Resources (ODNR) on Senate Bill 315, the energy bill included in Governor Kasich’s Mid-Biennium Review (MBR) on March 28, 2012.

PUCO Chairman Todd Snitchler spoke to the provisions in the bill concerning PUCO pipeline safety standards. Noting that some standards in S.B. 315 would exceed federal U.S. Department of Transportation regulations, the chairman said the bill would:

  • Give the PUCO pipeline safety jurisdiction over all pipelines between the “well facility,” which is the furthest downstream point from a wellhead where wet gas, condensate and water are separated, all throughout the process to the intrastate or interstate transmission pipeline.
  • Establish pipeline safety requirements on all pipelines in Class 1 locations, which are very rural locations that have scarce human habitation levels and extremely low population densities.
  • Impose additional construction requirements, such as warning tape, automated shutdown valves and minimum setback distances on all high pressure gathering lines.
  • Require all low pressure lines to be subject to the same leak inspection requirements as high pressure gathering lines.
  • Raise the aggregate fee threshold that PUCO can assess for violations and non-compliance by operators from $500,000 to $1 million, which brings the state into alignment with the federal standard.

Chairman Snitchler also spoke to the expansion of oversight by the Ohio Power Siting Board (OPSB), which is responsible for siting all major utility facilities within the state. The chairman said the administration decided to raise the standards pertaining to natural gas transmission lines in an effort to provide adequate oversight to the numerous new lines that will be needed as a result of the shale gas play. The bill defines all natural gas transmission lines greater than nine inches in outside diameter and capable of transporting 125 psi; and natural gas transmission lines capable of transporting gas at pressures in excess of 300 psi, as “major utility facilities,” making them subject to OPSB jurisdiction.

Additionally, the chairman addressed proposed statutory changes regarding cogeneration, which includes all forms of waste heat and waste energy recovery systems. The bill would allow cogeneration to count toward an electric distribution utility’s (EDU) energy efficiency standards, unless the waste energy recovery system has been included in an energy efficiency program of an EDU. The chairman said that while the administration wants the technology to be an allowable advanced energy resource and to count toward energy efficiency requirements, he wants to ensure that it is not “double-counted” for both. The same is true for the inclusion of cogeneration under the definition of “renewable energy resource.” The bill states that the technology may not be “double-counted” toward both renewable energy and energy efficiency requirements.

Chairman Snitchler also spoke to a provision of the bill requiring PUCO to analyze and assess the state’s transmission and distribution infrastructure. This will require the commission to consult with each EDU in the state, as well as the regional transmission organization and any other entities that own or control transmission facilities to review the State of Ohio’s transmission and distribution infrastructure. Upon completion, the commission must order any necessary upgrades, additions or improvements to ensure safe, adequate, reliable service to Ohio’s electric consumers and identify any need for new electric generation and industry in the state.

ODNR Director James Zehringer provided testimony on provisions of the bill relating to drilling and injection. According to his testimony, there are currently 47 horizontal wells drilled in Ohio — the department estimates that number will reach 250 by the year’s end. By the end of 2015, those estimates soar to 2,250 wells drilled in the state. The director said this enormous potential growth in drilling activity highlights the need for additional regulatory safeguards and staffing that will bolster citizen confidence and environmental protection.

The director said the administration believes government agencies should not regulate by “agency policy,” but through clearly codified regulations providing the industry and public with a predictable path forward. He said input was sought from states such as North Dakota, Pennsylvania, West Virginia, Arkansas, Texas, and Colorado, which have already experienced the impact of horizontal drilling.

The following regulatory changes included in S.B. 315 were discussed in his testimony:

  • Requires operators to report volume and chemical descriptions for every fluid used in every step of the drilling process, from the initial construction until the well is ultimately plugged. ODNR is developing a searchable database where the public can view the chemicals used in Ohio.
  • Requires well operators to disclose where the water comes from that they will be using in the fracturing process.
  • Encourages horizontal well operators to enter into a Road Use Maintenance Agreement with the respective local government where they wish to drill a well.
  • Redirects 10 percent of the oil and gas funds collected through injection fees to the geological mapping fund. (The bill increases from 5 cents to 10 cents per barrel of each substance delivered to a well to be injected in the well when the substance is produced within the division of oil and gas resources management regulatory district or within an adjoining district. The bill increases the fee from 20 cents to $1 per barrel delivered to a well when the substance is not produced within the district or within an adjoining district.)

2. Education, workforce development considered

The Senate Education Committee heard sponsor testimony on Senate Bill 316, the Education and Workforce Development bill included in the Governor’s MBR, from Richard Ross, director of the Governor’s Office of 21st Century Education, John Martin, director of the Department of Developmental Disabilities (DODD) and Rich Frederick, executive director of the Governor’s Office of Workforce Transformation.

Director Ross said the better that Ohio students are prepared for the current and future workforce challenges, the more opportunities they have and the more attractive Ohio becomes to job creators. He said Ohio suffers from a system that can’t accurately show how well the state is preparing students, which the administration attempts to address in this bill.

Senate Bill 316 would require the development of a reading intervention and monitoring plan for students who are not proficient in reading in kindergarten through second grade. For students that have participated in an intervention plan for two years, the bill requires their retention if they are not proficient in reading at the end of third grade.

Additionally, the bill integrates a new formula that assigns A-F grades to all public and career technical schools — which the director feels will provide a better understanding for parents on how their child’s school is performing.

In his testimony, Director Martin said Employment First represents the department’s signature initiative included in the bill, to improve job opportunities for people with developmental disabilities. Provisions in the bill will make community employment the preferred option and ensure that the Individualized Education Program for developmentally disabled students, beginning at age 14, establishes post-secondary goals related to community employment.

Director Frederick’s testimony discussed workforce development measures in the bill, including Ohio Learn to Earn, which will allow those currently collecting unemployment to train with an employer while still receiving unemployment. Currently, taking advantage of on the job training opportunities could lead to individuals losing unemployment compensation — creating a disincentive to enhance their skills and get a job.

Additionally, he highlighted the office’s efforts to train and identify employment opportunities for Ohio veterans. The office will work with veterans to match their special skill sets and training to the most in demand jobs.

3. House MBR hearings continue

The House continued hearings on House Bill 487, the general MBR bill this week. The full Finance Committee heard public testimony from various stakeholders on March 29, 2012. Chairman Ron Amstutz (R- Wooster) said the committee would not meet during the next two weeks due to Easter break. During that time committee members will discuss amendments to the bill.

According to the chair, provisions currently in the MBR could follow one of three paths. First, a provision may be removed from the bill and introduced in a separate bill to allow for additional discussion on the measure — in this instance the bill could move on the same timeline as the general MBR, which may be enacted by the end of May. Second, a provision may be similarly pulled from the MBR and introduced in a separate bill but receive consideration in a less timely manner. Finally, the chair said some provisions will simply disappear from the bill.

This process will result in an undetermined amount of additional bills. The chair said a substitute version of H.B. 487 will be accepted when the committee reconvenes the week of April 16, 2012. Additional changes could be made that week to the bill before the full House takes it up for consideration.

4. Legislation approved this week

The Ohio Senate met on March 27 and 28, and approved the following bills:

Senate Bill 238: Sponsored by Senator Peggy Lehner (R- Kettering), the bill would require persons who are elected or appointed to, or who are candidates for, an office of a township with a population of 5,000 or more to file statements under the Ethics Law.

Senate Bill 297: Sponsored by Senator Tom Patton (R- Strongsville), the bill would specify requirements for obtaining and renewing a clinical research faculty certificate and declare an emergency.

House Bill 18: Sponsored by Representative Nan Baker (R- Westlake), the bill would authorize grants to an employer that moves operations into a previously vacant facility and increases payroll by hiring and employing employees at the facility.

House Bill 482: Sponsored by Representative Ron Amstutz (R- Wooster), the bill makes capital appropriations and makes changes related to the laws governing capital projects.

Senate Bill 109: Sponsored by Senator Joe Schiavoni (D- Canfield), the bill provides that a person is not criminally or civilly liable for trespassing on certain abandoned land or blighted parcels, if the person enters or remains on the land or parcel to remediate it and knows or has reasonable cause to believe that the land or parcel is in one of those categories.

Senate Bill 295: Sponsored by Senator Coley (R- Middletown), the bill repeals the provisions of Am. Sub. H.B. 194 of the 129th General Assembly, which has not taken effect because it is pending a referendum vote on November 6, 2012. Specifies that it is the intent of the General Assembly to continue in operation the provisions of the Revised Code currently in effect, including the provisions of Election Law affected by that act.

The Ohio House met on March 27 and 28, and approved the following bills:

Senate Bill 289: Sponsored by Senators Bill Coley and Joe Schiavoni, the bill includes cogeneration technology using waste or byproduct gas from an air contaminant source as a renewable energy resource.

Senate Bill 312: Sponsored by Senator Chris Widener (R- Springfield), the bill revises the law for new STEM school proposals, makes capital reappropriations for the biennium ending June 30, 2014.

House Bill 265: Sponsored by Representatives Lynn Slaby (R- Copley Township) and Sean O’Brien (D- Brookfield), the bill authorizes prosecuting attorneys to demand a jury trial in a felony case, notwithstanding a defendant’s waiver of trial by jury and over a defendant’s objection.

House Bill 322: Sponsored by Representative Andy Brenner (R- Powell), the bill permits Ohio banks, savings and loan associations, savings banks, and credit unions to charge the same interest rate and other charges that out-of-state banks may charge Ohio customers.

House Bill 436: Sponsored by Representatives Cheryl Grossman (R- Grove City) and Marlene Anielski (R- Walton Hills), the bill creates the SiteOhio certification program within the Department of Development to certify and market eligible commercial, industrial and manufacturing sites and facilities.

For more information, please contact:

Michael Caputo
(non-attorney professional)
216.348.5770
mcaputo@mcdonaldhopkins.com

Rebecca M. Kuhns
(non-attorney professional)
614.458.0043
rkuhns@mcdonaldhopkins.com

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© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.