The year is still fairly new, and 2020 has brought with it some newly-introduced legislation in the Ohio General Assembly. That being said, in 2020 the General Assembly also continues to consider legislation first introduced in 2019. From tax exemptions to CAUV changes, to watershed programs and local referendums on wind turbines, here is some notable ag-related legislation making its way through the state house.
- House Bill 400 “To authorize a nonrefundable income tax credit for the retail sale of high-ethanol blend motor fuel”
HB 400 was introduced after our last legislative update in November, so while it was first introduced in 2019, it still technically qualifies as “new” to us. Since its introduction, the bill has been discussed in two hearings in the House Ways & Means Committee. The bill would give owners and operators of gas stations a tax rebate of five cents per gallon for sales of ethanol. To apply, the fuel would have to be between 15% and 85% ethanol (E15). If passed, the tax credit would be available for four years. The bill is meant to encourage gas station owners in Ohio to sell E15, which is much more readily available in other states. The bill is available here.
- House Bill 485 “To remove a requirement that owners of farmland enrolled in the CAUV program must file a renewal application each year in order to remain in the program”
Introduced on January 29, 2020, HB 485 would make it easier for farmers to stay enrolled in the Current Agricultural Use Valuation (CAUV) program. CAUV allows agricultural land to be taxed at a much lower rate than other types of land. If HB 485 were to pass, the initial application for CAUV on land more than 10 acres would automatically renew each year but the landowner must notify the auditor if the land ceases to be devoted exclusively for agricultural use. Owners of agricultural land less than 10 acres in size, who can qualify for CAUV if gross income from the land exceeds $2,500, would have to submit documentation on the annual gross income of the land to the county auditor each year rather than filing the renewal application. The CAUV bill can be found here.
Legislation from 2019 still being considered
- House Bill 24 “Revise Humane Society law”
In November, we reported that HB 24 passed the House unanimously and was subsequently referred to the Senate Committee on Agriculture & Natural Resources. Since that time, the committee has held two hearings on the bill. The hearings included testimony from the bill’s House sponsors, who touted how the bill would improve humane societies’ public accountability. The bill would revise procedures for humane society operations, require humane society agents to successfully complete training in order to serve, and would establish procedures for seizing and impounding animals. It would also remove humane societies’ current jurisdiction over child abuse cases and make agents subject to bribery laws. Importantly, HB 24 would allow law enforcement officers to seize and impound any animal the officer has probable cause to believe is the subject of an animal cruelty offense. Currently, the ability to seize and impound only applies to companion animals such as dogs and cats. You can read HB 24 here.
- House Bill 109 “To authorize a property tax exemption for land used for commercial maple sap extraction”
HB 109 was first introduced in February of 2019, but has recently seen some action in the House Ways & Means Committee, where it was discussed in a hearing on January 28, 2020. The bill would give owners of “maple forest land” a property tax exemption if they: (1) Drill an average of 30 taps during the tax year into at least 15 maple trees per acre; (2) use sap in commercially sold maple products; and (3) manage the land under a plan that complies with the standards of reasonable care in the protection and maintenance of forest land. In addition, the land must be 10 contiguous acres. Maple forest land that does not meet that acreage threshold can still receive a tax exemption if the sap produces an average yearly gross income of $2,500 or more in the three preceding years, or if evidence shows that the gross income during the current tax year will be at least $2,500. You can find the text of the proposed bill here.
- House Bill 160 “Revise alcoholic ice cream law”
Have you ever thought, “Gee, this ice cream is great, but what could make it even better?” Well this is the bill for you! At present, those wishing to sell ice cream containing alcohol in Ohio must obtain an A-5 liquor permit and can only sell the ice cream at the site of manufacture, and that site must be in an election precinct that allows for on- and off-premises consumption of alcohol. This bill would allow the ice cream maker to sell to consumers for off-premises enjoyment and to retailers who are authorized to sell alcohol. HB 160 passed the House last year and is currently in Agriculture & Natural Resources Committee in the Senate. Since our last legislative update, the committee has had three hearings on the bill. In the hearings, proponents testified in support of the bill, arguing that it would allow their businesses to grow and compete with out of state businesses. Senators asked questions about how the ice cream would be kept away from children, how the bill would help business, and about other states with similar laws. To read the bill, click here.
- Senate Bill 2 “Create watershed planning structure”
In 2019, SB 2 passed the Senate and moved on to the House Energy and Natural Resources Committee. If passed, this bill would do four main things. First, it would create the Statewide Watershed Planning and Management Program, which would be tasked with improving and protecting the watersheds in the state, and would be administered by the ODA director. Under this program, the director of ODA would have to categorize watersheds in Ohio and appoint watershed planning and management coordinators in each watershed region. The coordinators would work with soil and water conservation districts to identify water quality impairment, and to gather information on conservation practices. Second, the bill states the General Assembly’s intent to work with agricultural, conservation, and environmental organizations and universities to create a certification program for farmers, where the farmers would use practices meant to minimize negative water quality impacts. Third, SB 2 charges ODA, with help from the Lake Erie Commission and the Ohio Soil and Water Conservation Commission, to start a watershed pilot program that would help farmers, agricultural retailers, and soil and water conservation districts in reducing phosphorus. Finally, the bill would allow regional water and sewer districts to make loans and grants and to enter into cooperative agreements with any person or corporation, and would allow districts to offer discounted rentals or charges to people with low or moderate incomes, as well as to people who qualify for the homestead exemption.
Since SB 2 moved on to the lower chamber, the House Energy and Natural Resources Committee has held multiple hearings on the bill, and has consented to two amendments. The first amendment would keep information about individual nutrient management plans out of the public record. Similarly, the second amendment would keep information about farmers’ agricultural operations and conservation practices out of the public record. The text of SB 2 is available here.
- Senate Bill 234 “Regards regulation of wind farms and wind turbine setbacks”
SB 234 was introduced on November 6, 2019. Since that time, the bill was assigned to the Senate Energy & Public Utilities Committee, and three hearings have been held. The bill would give voters in the unincorporated areas of townships the power to have a referendum vote on certificates or amendments to economically significant and large wind farms issued by the Ohio Power and Siting Board. The voters could approve or reject the certificate for a new wind farm or an amendment to an existing certificate by majority vote. The bill would also change how minimum setback distances for wind farms might be measured. The committee hearings have included testimony from numerous proponents of the bill. SB 234 is available here. A companion bill was also introduced in the House. HB 401 can be found here.
If you’ve been keeping up with the ag news lately, chances are you’ve heard a lot about the Renewable Fuel Standard (RFS). As a refresher, the RFS program “requires a certain volume of renewable fuel to replace the quantity of petroleum-based transportation fuel.” Renewable fuels include biofuels made from crops such as corn and soybeans. Lately, you may have heard discussion about a controversial new rule regarding the volumes of biofuels that are required to be mixed with oil. While all that talk has been going on, there has also been a lawsuit against the EPA for RFS exemptions given to certain oil refineries. Congress has been examining the exemptions as well. Having trouble keeping all of this RFS information straight? We’ll help you sort it out.
EPA proposes new RFS rule
As we explained in our last Ag Law Harvest post, available here, the Environmental Protection Agency (EPA) recently released a notice of proposed rulemaking, asking for more public comment on the proposed volumes of biofuels to be required under the RFS program in 2020 and 2021. Agricultural and biofuels groups are not pleased with the proposed blending rules, arguing that the way EPA proposes to calculate biofuel volumes would result in much lower volumes than they were originally promised by President Trump. (The original promise was made in part to make up for waivers the Trump EPA had given to oil refineries.) Conversely, EPA and the Trump administration contend that the proposed rule does meet the previously agreed upon biofuel volumes. A hearing on the proposed rule was held on October 30, where many agriculture and biofuels groups expressed their concerns. The oil industry was also represented at the hearing. Members of the oil industry feel that the cost of mixing in biofuels is too high. It is unlikely any deal was struck at the hearing, but there is still an opportunity to comment on the proposed rule if you wish. Comments are due on November 29, 2019. You can click here for commenting instructions, as well as for a link to submit your comment online.
Ag and biofuels groups sue the EPA
In the midst of the argument over how the volumes of biodiesel under the RFS will be calculated, another related quarrel has emerged. At the center of this dispute are exemptions EPA has given to “small refineries” in the oil industry. The number of exemptions given has increased drastically under the Trump administration, which in turn has lessened the demand for biofuels made from crops like corn and soybeans. On October 23, 2019, agriculture and biofuel groups filed a petition against the EPA in the U.S. Court of Appeals for the D.C. Circuit. In the petition, the groups ask the court to review a decision made in August 2019 which retroactively exempted over 31 small refineries from meeting their 2018 biofuels requirements. The petitioning groups include Renewable Fuels Association, American Coalition for Ethanol, Growth Energy, National Biodiesel Board, National Corn Growers Association, and National Farmers Union.
How does the small refinery exemption work?
Typically, an oil refinery would have to mix a set volume of renewable fuels, like biofuels, into their gasoline or diesel fuel. The volumes are set annually. Small refineries, which are defined as refineries where “the average aggregate daily crude oil throughput does not exceed 75,000 barrels,” can petition the EPA for an exemption from meeting their renewable fuel obligations. Exemptions are typically given temporarily if the refinery can show they would suffer economic hardship if they were made to blend their fuel with biofuel. A refinery seeking an exemption has to include a number of records showing their economic hardship in their petition, such as tax filings and financial statements. EPA’s website explaining the small refinery exemption is available here.
Why are ag and biofuel groups asking for judicial review?
Why are the groups we mentioned above upset about this particular set of small refinery exemptions? Well, first of all, the groups point to the brevity of the EPA’s decision. (The decision document can be found in the link to the petition, listed above.) The EPA’s decision document uses only two pages to explain their decision on 36 small refinery petitions. Because the decision was so short, the groups feel that EPA did not include the analysis of economic hardship for each refinery that they believe is required by the Clean Air Act and RFS regulations. Essentially, the groups argue that the EPA has not provided enough evidence or explanation for awarding the exemptions. You can read the groups’ press release explaining their reasoning here.
Underlying all of this is the fact that more small refinery exemptions means lower demand for biofuels. In fact, the ag and biofuel groups claim that due to the 31 exemptions made in August alone, 1.5 billion gallons of renewable fuel were not used. In addition, the 31 exemptions are just a few of many awarded by Trump’s EPA. By all accounts, since Trump took office, there has been a sharp increase in exemptions granted. EPA has data on the number of exemptions available here. The first year the Trump administration made exemptions is 2016.
Congress gets in on the action
It seems as though the House Subcommittee on Environment and Climate Change (part of the Committee on Energy and Commerce) is also worried about EPA’s exemptions, or waivers, for small oil refineries. On October 29, 2019, the Subcommittee held an oversight hearing entitled “Protecting the RFS: The Trump Administration’s Abuse of Secret Waivers.” In fact, in their memo about the hearing, the Subcommittee cited some of the same issues in the lawsuit we discussed above; namely the increase in waivers and the consequent effect on biofuel demand. Testimony was heard from both ag/biofuels and oil representatives.
In the hearing, the Subcommittee also considered the proposed “Renewable Fuel Standard Integrity Act of 2019.” The text of the bill is available here. The bill would require small refineries to submit petitions for exemptions from RFS requirements annually by June 1. Additionally, it would require information in the waiver petitions to be available to the American public. For information and documents related to the hearing, as well as a video stream of the hearing, click here.
What happens next?
As you can see, we’re playing a waiting game on three separate fronts. For the RFS rule, we’ll have to wait and see what kind of comments are submitted, and whether or not the EPA takes those comments into account when it writes the final rule. As for the lawsuit, all eyes are on the Court of Appeals for the D.C. Circuit. The court could determine that the law does indeed require EPA to include more information and analysis to explain their reasons for exemption. On the other hand, the court could find that EPA’s decision document is sufficient under the law. In Congress, we’ll have to wait and see whether the proposed bill gets out of the Committee on Energy and Commerce and onto the House floor. We will be keeping track of the RFS developments on all fronts and keep you updated on what happens!