House Budget Changes Represent a Huge Win for Big Oil

If there was any question before Tuesday that the House Republican caucus was in the pocket of the oil and gas industry, the newest version of the state budget should put that issue to rest.

The substitute version of the state budget (Sub. H.B. 59) that House leadership put forward yesterday removes almost every substantial policy change in the budget that affected the oil and gas industry.

As introduced, Governor Kasich’s budget included multiple changes that addressed outstanding fiscal and regulatory concerns, including:

  • A very modest increase in the severance rate that drillers pay. In fact, the rate increase was so small that, according to an Ernst & Young report, Ohio’s rate would still be the lowest when compared to comparable states. The increase would have raised an additional $200 million and was to help cover the cost of a 20 percent permanent income tax cut.
  • New regulation of radioactive material that drillers sometimes produce when drilling wells. The changes made clear how drillers and waste facilities were to treat such material;
  • Stricter rules governing the disposal of well brine that can include toxic chemicals, that if not disposed of properly, can create public health concerns;
  • Changes to how frequently developers are required to report production numbers to the state. Ohio’s current rules are uncommon in that it only requires developers to report well production amounts once a year. The changes would have required developers to report once every three months in an effort to increase transparency in the oil and gas market;
  • Provisions that required landowners to be notified whenever any interest of an oil and gas lease that their land is a part of changes hands.

All of these policy changes — and more — were removed by the House yesterday.

Of course, it was no secret that the oil and gas industry was lobbying House members hard to strip these policy changes from the bill. The industry even went so far as to run ads in members’ districts during the spring break that were pro-oil and gas, including dubious claims that the industry had created 40,000 new jobs.

Next week, the full House is expected to vote on the bill prior to consideration by the Senate.