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By Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program
The Ohio legislature recently enacted a bill expected to enhance Ohio’s efforts to address water quality in Lake Erie. Senate Bill 2, a far reaching environmental bill, contains several revisions to the Ohio Lake Erie Commission (OLEC) and Ohio’s Lake Erie Protection and Restoration Strategy.
The purpose of OLEC is to advise on the development, implementation, and coordination of Lake Erie programs and policies and to oversee the management of the Lake Erie Protection Fund. For Ohio agriculture, the most important of S.B. 2’s revisions to OLEC is the expansion of OLEC’s purpose to include “issues related to nutrient-related water quality.” This change reveals a new focus on nutrient impacts on Lake Erie’s water quality and a resulting charge for OLEC to implement the Ohio EPA’s current plan for reducing phosphorous levels in the Lake by 40% by 2025.
Furthermore, S.B. 2 broadens and strengthens OLEC’s role in coordinating and funding policies, programs and priorities related to Lake Erie. Coordination with the federal government is encouraged, as is consideration of the efforts of Ohio and other Great Lakes states and countries, as well as any agreements between those states and countries and Ohio. OLEC must also publish a Lake Erie Protection and Restoration Strategy that describes the commission’s goals and its planned uses for the Lake Erie Protection Fund. Demonstration projects and cooperative research are now acceptable uses of the fund, in addition to the previously established use of data gathering.
S.B. 2 enhances coordination between OLEC and the Great Lakes Protection Fund (GLPF) board by bringing two members of the GLPF’s board onto OLEC’s board, which currently consists of the directors of Ohio’s EPA, Department of Natural Resources, Department of Health, Department of Agriculture, Department of Transportation and Department of Development, along with five additional members appointed by the governor and approved by the Senate. S.B. 2 requires the Governor to select the two GLPF board members who will serve on the OLEC board.
Changes in S.B. 2 also call for OLEC to develop public education and outreach programs about their work and issues facing Lake Erie and to expand fundraising efforts to support their programs—namely through the promotion of the sale of Lake Erie license plates. A number of provisions regard the disposal of construction and demolition debris and dredging in Lake Erie.
The revisions in S.B. 2 are likely to better equip OLEC to carry out strategies for improving Lake Erie’s water quality. Most notably, the new law will shift some of OLEC’s focus to combating water quality problems associated with nutrient pollution, a change that will surely affect Ohio agriculture.
The United States Department of Agriculture (USDA) wants to hear from you. The agency published its “Identifying Regulatory Reform Initiatives” notice in the Federal Register on July 17 seeking “ideas from the public on how we can provide better customer service and remove unintended barriers to participation in our programs in ways that least interfere with our customers and allow us to accomplish our mission.”
The notice derives from the Regulatory Reform Task Force established by President Trump’s February 24, 2017 Executive Order 13777 on "Enforcing the Regulatory Reform Agenda". order requires the heads of federal agencies to evaluate existing regulations and make recommendations to repeal, replace or modify regulations that create unnecessary burdens.
Specifically, the USDA invites the public to evaluate the agency’s existing regulations. The agency poses several questions and encourages commenters to respond in detail to the questions:
- Are there any regulations that should be repealed, replaced or modified?
- For each regulation identified in question one, identify whether the regulation:
- Results in the elimination of jobs, or inhibits job creation;
- Is outdated, unnecessary, or ineffective;
- Imposes costs that exceed benefits;
- Creates a serious inconsistency or otherwise interferes with regulatory reform initiatives and policies;
- Is inconsistent with requirements that agencies maximize the quality, objectivity, and integrity of the information they disseminate;
- Derives from or implements previous presidential directives that have been rescinded or substantially modified.
The comment process offers the agricultural community an opportunity to draw attention to USDA regulations that create unnecessary or unintended negative impacts on agriculture. Considering the wide range of programs and regulations administered by the USDA in areas such as crop and livestock insurance; Farm Service Agency programs; commodity standards, grading and inspections; animal and plant health; and agricultural exports, it’s likely that agricultural producers will have thoughts to share with the agency. To that end, USDA will accept comments for the next year, but will review the comments in four phases. The deadline for the first review is September 15, 2017.
To read the agency’s notice and instructions for submitting comments on regulatory reform, visit this link.
Noxious weed law questions are common in the midst of the growing season and this year is no different. Below is a sampling of frequently asked questions we've received about noxious weed law. Learn more about the laws in our new law bulletin, Ohio's Noxious Weed Laws, available here.
My neighbor doesn’t keep his fence row clear of noxious weeds. What can I do about it?
First, talk to the neighbor. If your neighbor doesn’t respond favorably, the second step is to provide a written notice to the neighbor stating that he has ten days to clear the fence row of the noxious weeds. Third, if the neighbor still doesn’t take action, provide a written notice of the situation to the township trustees, which will initiate a process that could result in the trustees determining that there is a valid need to clear the fence row and hiring some to do the work. Your neighbor will be legally obligated to pay for the costs on his property tax bill.
I’ve been notified by my township trustees that I have noxious weeds on my property. What should I do?
Be aware that you must respond within five days of the date the trustees notified you about the weeds or the trustees will have the authority to destroy. Your options are to destroy or cut the weeds or to provide information to the township trustees showing that there is no need to take action. For example, such information might include showing that noxious weeds don’t exist on the property or showing that plants were incorrectly identified as noxious weeds.
Do I have to destroy my crop if noxious weeds are on my land?
No, Ohio law states that you must only “cut or destroy the weeds” if you have been notified by the township trustees that noxious weeds are on your property.
Noxious weeds are growing in the road right-of-way. Can I remove them myself and charge the township for my costs?
You may remove the noxious weeds, but you will probably not receive reimbursement for your costs unless the township trustees violated their duty to cut the weeds even after you followed the proper legal process for demanding their action. Ohio law requires the township trustees to cut road right-of-way weeds in early June and August, in early September if necessary, and at other times if public safety is at issue. If they fail to do so, you should formally complain to the township trustees in writing or by speaking at a township meeting. If the trustees still fail to take action, the next step is to file a “writ of mandamus” action that asks the court to order the clearing. Seeking reimbursement for your work prior to following this legal process is not the proper method for enforcing the township’s duty, according to the Second District Court of Appeals in Mezger v. Horton, 2013 Ohio 2964.
How do I know which weeds are “noxious”?
The director of the Ohio Department of Agriculture conducts rulemaking to designate a plant as a prohibited noxious weed. The list of plants that the director has formally designated as noxious weeds is in the Ohio Administrative Code and is available at http://codes.ohio.gov/oac/901:5-37-01.
Written by Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program
Last summer, federal legislation requiring a National Bioengineered Food Disclosure Standard (“the Standard”) was signed into law by President Obama. The law requires the establishment of standard for labeling foods that contain bioengineered substances such as GMOs (genetically modified organisms). It was meant to preempt state GMO labeling laws and instead create a standard that would be applicable nationwide. This summer, the United States Department of Agriculture’s Agricultural Marketing Service (AMS) is moving a step closer toward implementing the law. To this end, AMS released a list on June 28, 2017 of thirty questions for parties interested in the Standard, such as food producers, retailers and manufacturers. The answers will be taken into consideration when USDA begins writing its agency rules to fully implement the Bioengineered Food Disclosure Standard.
Many of the questions concern how certain terms, such as “very small” and “small” packages, “very small” and “small” food manufacturers should be defined under the law. Similarly, the agency asks what terms should be considered synonymous with “bioengineering.” AMS also presents technical questions, such as what kinds of breeding techniques should be thought of as conventional, what genetic modifications should be seen as natural, and what amounts of bioengineered substance in a food should require a disclosure and a number of questions relating to how bioengineering should be disclosed on food products and their packages. Finally, AMS asks quite a few questions involving compliance with the Standard, such as what types of records should be maintained by regulated parties and how AMS will go about investigating noncompliance.
The full list of questions, including an explanation of each, is available here. Producers, retailers, manufacturers, biotechnology companies, consumers and others interested in the rule are encouraged to submit their answers and feedback to GMOlabeling@ams.usda.gov by July 17, 2017.
For more information on the National Bioengineered Food Disclosure Standard legislation, see our previous blog post from July 2016 here.
Written by Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program
On June 19, 2017, the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) and the Cattle Producers of Washington (CPoW) sued the United States Department of Agriculture (USDA) and the Secretary of Agriculture, Sonny Perdue, over the legality of the current country of origin labeling (COOL) regulations. R-CALF USA and CPoW claim that USDA’s current COOL regulations do not require foreign beef and pork products to be labeled as such, and that in fact, the regulations allow the foreign meat to “be passed off as domestic products.” This, they argue, hurts U.S. cattle and hog producers, as well as U.S. consumers. The suit was filed in the U.S. District Court for the Eastern District of Washington, in Spokane. In short, R-CALF USA and CPoW are asking the court to rule that the current COOL regulations are at odds with two federal laws: the Meat Inspection Act and the Tariff Act.
Federal laws relating to Country of Origin Labeling
According to R-CALF USA and CPoW, two laws—the Meat Inspection Act and the Tariff Act—must be taken into account when thinking about COOL. R-CALF USA and CPoW argue that read together, these two laws require imported meat from cattle and hogs to possess country of origin labels.
The Meat Inspection Act, at 21 U.S.C. §620(a), says that imported meat must “be marked and labeled as required by such regulations for imported articles.” “[R]egulations for imported articles” are governed by the Tariff Act. The Tariff Act, in 19 U.S.C. §1304(a), states that “every article of foreign origin (or its container…) imported into the United States shall be marked in a conspicuous place…in such a manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.”
In the lawsuit, the parties argue that historically, USDA pork and beef regulations did not follow their understanding of the Meat Inspection and Tariff Acts, discussed above. In other words, the regulations did not require COOL. The 2002 Farm Bill changed that. The parties say that the 2002 Farm bill had the “primary effect of requiring” COOL on meat products from animals imported into the U.S. and subsequently slaughtered after importation.
Following the Farm Bill’s lead, USDA changed its regulations concerning meat imported into the U.S. from other countries, including meat from hogs and cattle. The regulation, found in 7 C.F.R. § 65.300, was finalized in 2009. It stated that meat “derived from an animal that was slaughtered in another country shall retain [its] origin, as declared to the U.S. Customs and Border Protection at the time the product entered the United States, through retail sale,” or sale to the end consumer. Therefore, COOL was required on meat imported into the U.S. The regulation also allowed for the “origin declaration” on labels to “include more specific location information related to production steps.” This meant that the labels for beef and pork could include where the animals were born, raised, and slaughtered.
World Trade Organization decision and change to regulations
After the new COOL regulations went into place, they were challenged by Canada and Mexico. The World Trade Organization (WTO) ultimately sided with Canada and Mexico. WTO’s reasoning for this decision is outlined in a Congressional Research Service Report on the dispute, and was based on their finding that “COOL treats imported livestock less favorably than U.S. livestock.”
Following the WTO decision, Congress determined that beef and pork—both alive and slaughtered—no longer required COOL. Similarly, USDA removed meat from cattle and hogs from its COOL regulations. These actions, the parties argue, went too far. R-CALF USA and CPoW argue that the WTO decision only involved cattle and hogs that were imported live, as opposed to imported meat.
It is important to note that a number of other foods are still required to have COOL, including lamb, goat, chicken, farm-raised fish and shellfish, fresh and frozen fruits and vegetables, peanuts, pecans, macadamia nuts, and ginseng. More information on COOL can be found here.
R-CALF USA and CPoW’s argument
Ultimately, the parties argue that USDA went too far when they removed all meat from cattle and hogs from their COOL labeling requirements. They argue that the WTO decision focused on live hogs and cattle, as opposed to meat from those animals, and that WTO never “call[ed] into question the marks and labels required by the Tariff Act” for meat. Thus, they argue that USDA regulations should continue to follow the Meat Inspection and Tariff Acts, as they did following the 2002 Farm Bill.
R-CALF and CPoW claim that as a result of USDA’s far-reaching retraction of COOL regulations, “beef and pork from animals in other countries” is permitted to have the “same labels as domestic meat.” They claim that now, “imported beef and pork can even be labeled a ‘Product of the U.S.A.’” As a consequence of this type of labeling, the parties claim that both U.S. consumers and producers are harmed.
R-CALF and CPoW’s lawsuit heavily relies on the authority of the Tariff Act and the Meat Inspection Act. Their argument, in its most basic form, is that the two laws require COOL for beef and pork, and that the WTO decision did not ever call those two laws into question. Therefore, they feel that the change in regulations went further than was necessary to comply with the WTO decision.
The defendants named, USDA and Secretary Sonny Perdue, have not yet filed their response to the lawsuit.
R-CALF USA and CPoW’s lawsuit can be read here.
Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
Governor Kasich signed HB 49 on June 30, 2017, otherwise known as Ohio’s Operating Budget. In addition to setting the budget for various agencies, HB 49 changes how farmland is valued under Ohio’s Current Agricultural Use Value program. HB 49 changes Ohio Revised Code Sec. 5715.01. The overall effect of the changes will likely be a downward trend in property tax valuation for Ohio farmers.
The budget bill prescribes the method for determining CAUV value for land devoted to agricultural use. The law requires appraisal methods to reflect and consider the following:
- standard and modern appraisal techniques that take into consideration the productivity of the soil under normal management practices;
- typical cropping and land use patterns;
- the average price patterns of the crops and products produced;
- typical production costs to determine the net income potential to be capitalized; and
- other pertinent factors.
Under HB 49, the Tax Commissioner must annually determine and announce the capitalization rate used to compute CAUV values. The bill directs the Tax Commissioner to use standard and modern appraisal techniques in determining the land capitalization rate to be applied to the net income potential from agricultural use. In determining this yearly rate, the Commissioner must use an equity yield rate equal to the greater of the average of the total rates of return on farm equity for the last 25 years (as published by USDA), or the loan interest rate the Commissioner uses for that year to calculate the capitalization rate. The Tax Commissioner is required to assume that the holding period for agricultural land is twenty-five years for computing buildup of equity or appreciation with respect to that land.
HB 49 requires that land used in conservation programs be valued at the lowest soil productivity type. However, if land devoted to a conservation program ceases to be used for conservation purposes within three years of certification, the land will be valued at its actual soil type for all preceding years.
The Tax Commissioner must publish an annual report of CAUV values that can be sorted by county and by school district. The changes to CAUV begin in 2017, starting with counties undergoing reappraisal for the 2017 tax year. The budget bill, as signed by the Governor, is here—see page 2145 of that document for the changes to CAUV.
Written by Ellen Essman, Law Fellow, OSU Agricultural & Resource Law Program
On June 27, 2017, the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) announced their plan to repeal the Obama Administration’s Waters of the United States (WOTUS) Rule. The EPA and the Corps’ proposal involves two steps. First, the agencies propose to “rescind” Obama’s WOTUS rule and “re-codify,” or re-enter, the definition of WOTUS “that existed prior to 2015” into the federal regulations. The pre-2015 rule would serve as a placeholder until the agencies are able to carry out the second part of their plan. The second part of the plan involves developing and proposing a new definition of WOTUS. This announcement comes several months after President Trump called for either a repeal or revision of the WOTUS Rule in his February 28, 2017 Executive Order (EO). The EO was quickly followed by the EPA and other agencies filing a Notice of Intention to Review and Rescind or Revise the Clean Water Rule (Notice). The EO can be found here, and the Notice here.
What was the Obama Administration’s WOTUS Rule?
The WOTUS Rule went into effect on August 28, 2015. The Rule expanded the meaning of “waters of the United States,” or those waters protected under the Clean Water Act (CWA), to include “tributaries to interstate waters, waters adjacent to interstate waters, waters adjacent to tributaries of interstate waters, and other waters that have a significant nexus to interstate waters.” Furthermore, the Rule stated that tributaries are WOTUS when they flow into navigable waters, even if their flow was not constant. The rule also elaborated on the meaning of “adjacent waters.” For more information about the WOTUS Rule, see our blog post from earlier this year. The Rule as it was released in the summer of 2015 can be found here.
How will “Waters of the United States” be defined?
In the short term
Step one of the EPA and the Corps’ plan calls for a repeal of the Obama Administration’s definition of WOTUS, and a reimplementation of the WOTUS rule that existed prior to 2015. In order to do this, the agencies are proposing a rule. The proposed rule calls for the Code of Federal Regulations—in particular, 33 C.F.R. §328.3, to be amended to reflect the previous definition of WOTUS. Notably, this definition does not include the Obama Administration’s expanded descriptions of “tributaries” or “adjacent waters.” Furthermore, there is no mention of “significant nexus.” This interim definition of WOTUS proposed by the EPA and the Corps can be found in the proposed rule, here.
In the long term
The second step of the EPA and the Corps’ plan calls for the agencies to perform a “substantive re-evaluation” of the definition of WOTUS. Any re-evaluation of the definition will likely take Trump’s EO into account, which called for the EPA and other agencies to, in any “[f]uture [r]ulemaking,” “consider interpreting the term ‘navigable waters’” as Justice Scalia did in Rapanos v. U.S. The CWA defines “navigable waters” as “waters of the United States, including territorial seas.” Thus, “navigable waters” and “WOTUS” are one in the same. Scalia’s interpretation rejected the idea that navigable waters and WOTUS could come from channels where water flow was only occasional. Justice Scalia asserted that navigable waters/WOTUS must be, for the most part, permanent bodies of water. Given the language in Trump’s EO, it is likely that the second step of the plan will involve a proposed rule that includes a definition of WOTUS that closely resembles Scalia’s interpretation. More information on Scalia’s interpretation can be found in our earlier blog post.
It is important to keep in mind that even if the EPA and the Corps successfully repeal and replace the previous administration’s definition of WOTUS, it is still very likely that opponents will challenge any new definition. Furthermore, both the short term and long term parts of the plan have to go through the rulemaking process, including a comment and review period, before they can become effective. As a result, the debate over the meaning of WOTUS is likely far from finished.
Congress has enacted legislation to address security threats to the country’s food and agricultural systems. The “Securing our Agriculture and Food Act” enrolled on June 22, 2017, authorizes the government to coordinate efforts to defend U.S. food, agriculture, and veterinary systems against terrorism and other high-consequence events to create risks to homeland security. The bill has been forwarded to President Trump for approval.
The bi-partisan bill, sponsored by Rep. Young (R-Iowa) with co-sponsors Rep. Payne (D-NJ) and Rep. Donovan (R-NY), amends the Homeland Security Act of 2002. House Bill 1238 requires the Assistant Secretary for Health Affairs in the Department of Homeland Security (DHS) to coordinate an agriculture and food security program with federal departments and agencies that includes:
- Managing DHS responsibilities established by President George W. Bush in his 2004 Presidential Directive 9, which created a national policy for defending food and agricultural systems against terrorist attacks, major disasters, and other emergencies.
- Overseeing and integrating DHS activities related to veterinary public health, food dense, and agricultural security.
- Leading policy initiatives relating to domestic preparedness for and response to agricultural terrorism.
- Coordinating activities on food and agriculture security and screening procedures for domestic and imported products with other departments, including U.S. Customs and Border Protection.
Rep. Young drafted the bill following Iowa’s 2015 avian influenza outbreak, which resulted in the loss of millions of chickens and turkeys in his home state. According to Rep. Young, the event raised concerns about the federal government’s ability to quickly react to animal disease outbreaks and whether the nation would be able to respond capably to agro-terrorism threats.
“We don’t always think of a terrorist attack as a deliberate, mass food contamination, or the danger a major disease outbreak could pose,” stated Sen. McCaskill (D-MO), when the bill was introduced in the Senate Agriculture Committee. “Congress needs to think forward about the wide array of threats we face and take action before there’s a tragedy, not afterwards.”
The “Securing our Agriculture and Food Act,” H.B. 1238, is available here.
Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
Two separate bills concerning CAUV continue to be debated in the Ohio Legislature: Senate Bill 36 and House Bill 49. Ohioans may see changes to the CAUV program, if either bill passes the Legislature. Both bills aim to address rising CAUV rates for Ohio farmers. SB 36 changes the CAUV formula, making alterations to the capitalization rate and addressing the rate used for conservation land values. SB 36 passed in the Senate and is under consideration by the House Ways and Means Committee. The other bill that would address CAUV values—HB 49, is Ohio’s bi-annual budget bill. HB 49 similarly addresses Ohio’s rising CAUV values through proposed changes to the CAUV capitalization rate.
The difference between the two bills is that the budget bill will undoubtedly pass. That being said, the budget bill’s CAUV provisions may be cut from the final version. On the other hand, there is no guarantee that the House will pass SB 36. There are several scenarios that may occur regarding the two CAUV bills in the Ohio Legislature.
Scenario #1: HB 49 (the Budget Bill) Passes with CAUV Provisions Included
In an earlier post, we explained HB 49’s proposed changes to the CAUV program. HB 49 proposes changes to the CAUV program similar to those proposed in the standalone CAUV bill, SB 36. Although HB 49 currently contains amendments to the CAUV program, it is subject to change.
Passing a budget bill is a long and complex process. Budget bills must start in the Ohio House of Representatives. The main purpose of a budget bill is to set the state’s operating budget, but such a bill may also include changes to Ohio laws. After the House passes a budget bill, the bill goes to the Ohio Senate. The Senate can pass the bill as written by the House, or the Senate may amend the bill and send their amended version back to the House.
The Senate passed their amended version of HB 49 on June 21. However, the House did not agree with the amendments. Therefore, the Senate and the House will soon hold a conference committee where both houses will meet and settle the differences between the two bills. Ohio’s budget is based on a fiscal year which ends on June 30. If passed, a new budget will go into effect July 1, 2017. Ohioans may soon learn if the state’s budget bill will enact changes to the CAUV program.
Scenario #2: SB 36 Passes and Changes the CAUV Program
Ohioans will soon find out if changes to the CAUV formula will be passed as part of HB 49. However, the CAUV provisions of HB 49 could still be removed before the bill passes. If CAUV changes are not passed via the budget bill, the CAUV formula could still be altered via SB 36.
SB 36 recently passed the Ohio Senate and is currently under consideration by the Ohio House Ways and Means Committee. The bill would make changes to Ohio’s CAUV formula, including the capitalization rate calculation and the rate used for calculating the value of conservation lands. For more information on SB 36, see our earlier blog post here.
The Ohio House can consider SB 36 until the end of the legislative session. The current legislative session ends on December 31, 2018. The House Ways and Means Committee may vote on SB 36 before the end of the session, or the bill could expire if it does not leave the committee before the end of the session.
The Legislature will soon meet in a conference committee to try and reach a consensus on the budget bill. HB 49 could pass as written or in an amended form that does not include any changes to CAUV. SB 36 may pass as written or amended as well. Conversely, it is plausible that neither bill could pass.
Written by: Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
The Ohio House of Representatives is considering a bill that would affect farmers and rural landowners by requiring the Ohio Department of Natural Resources Division of Oil and Gas Resources Management (ODNR) to plug abandoned oil and gas wells within 60 days, under certain circumstances. Introduced by Rep. Andy Thompson (R-Marietta), House Bill 225 would permit a landowner to report an idle or abandoned well to ODNR, who then must inspect the well and plug it if it’s deemed “distressed-high priority.”
Inspection of Idle or Abandoned Wells
Under HB 225, ODNR would be required to inspect an idle or abandoned well within 30 days after a landowner reports the existence of such a well on their property. No later than 60 days after the inspection, ODNR would be required to provide the landowner with a report concerning the idle or abandoned well that categorizes the well as one of the following:
- Distressed-high priority;
- Moderate-medium priority; and
- Maintenance-low priority.
HB 225 would require ODNR to adopt rules to define these three categories. In adopting these rules, ODNR must include a description of the criteria for an idle or abandoned well to fit within a particular category.
Plugging an Idle or Abandoned Well
If a well is categorized as distressed-high priority, it must be plugged by ODNR within six months after the report. Perhaps most interesting for Ohio landowners, HB 225 could increase the amount of funding available for landowners who choose to plug a well on their property themselves. Currently, landowners may arrange to have the well plugged by a third party. Under current Ohio Revised Code 1509.071(D), a landowner may be reimbursed for plugging costs; however, wells are plugged on a priority basis until the funds for the program are depleted. ODNR administers this law, otherwise known as the Orphan Well Program. More information on the current program is here.
Under HB 225, landowners would be permitted to take an income tax deduction for compensation paid by ODNR to reimburse landowners’ costs to plug an abandoned or improperly plugged oil or gas well. Current law requires ODNR to approve an application for reimbursement by a landowner. A landowner’s application must comply with oil and gas plugging laws and regulations for safety and environmental reasons.
Proposed Increase in Funding Under the Oil and Gas Well Fund
HB 225 would likely increase the funds available to Ohio landowners for plugging idle or abandoned wells. Ohio law currently requires that 14% of the current Oil and Gas Well Fund be dedicated to plugging idle and abandoned wells. HB 225 would require ODNR to dedicate 45% of the fund to plug idle and abandoned wells. ODNR would also be required to issue quarterly reports regarding expenditures associated with plugging wells. ODNR may therefore offer more funding to landowners to plug wells, because of the increase in funding and the requirement to show expenditures on the plugging of wells.
However, the proposed increase in funding may lead to an increase in ODNR’s expenditures on plugging wells. The proposed increase could also drive the number of wells that the state plugs. Under the strict timeline requirements that HB 225 proposes, ODNR may subsequently plug more wells after a landowner notifies ODNR of abandoned wells on their property.
The Future of HB 225
At a committee hearing earlier this month, witnesses testified that there are likely hundreds of wells that haven’t been discovered because they’ve been farmed over and covered by urban development. According to Rep. Thompson, most of the orphan wells that have been identified emit methane gas in addition to often contributing to the runoff of oil and brine into the soil. Rep. Thompson also noted that it is estimated that the current program for plugging abandoned wells in Ohio would take 20 years or more to plug the more than 600 known orphan wells in the state. Members of the Ohio Oil and Gas Association voiced support for HB 225, noting that the taxes levied on oil and gas production should be used to correct problems that have arisen from the early days of the industry.