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Rep. Koehler Announces Ohio House Passage of Bill to Reduce State Oil and Gas Regulatory Delays

HB 8 establishes timeline for approval, making government "move at the speed of business"
March 19, 2015
J. Kyle Koehler News

State Representative Kyle Koehler (R-Springfield) has announced that the Ohio House of Representatives passed legislation to strengthen and protect the property rights of individuals wishing to benefit from the oil and gas resources on their land, as well as establishing a timeline for which applications for unitization must be handled by the state. Currently, the Department of Natural Resources has ten unit applications that have been submitted, but have yet to receive an answer from the state.

House Bill 8 seeks to revise provisions in the oil and gas law governing unit operation and to clarify county auditor procedures for ad valorem valuation on minerals. The bill deals heavily with the process of “unitization,” which allows landowners to share in the benefits of oil and gas resources by combining acreage into a “unit.” Those units comply with spacing laws that promote responsible extraction of the resources.

“Moving Ohio forward means we have to make government ‘move at the speed of business’ instead of dragging Ohio’s growing energy sector down,” Koehler said. “House Bill 8 requires government to make the timely decision to help move Ohio to the forefront of energy production in our country.  Once again, Speaker Rosenberger has led the House in an overwhelming show of bipartisanship.”

In addition, HB 8 would establish a timeline for the state to respond to unitization application. Current state law does not require a timeframe in which the Chief of the Division of Oil and Gas Resources Management must render a decision for approving or denying an application.

The absence of a timeline has led to long delays in the approval process, which in turn has created delays in the drilling of new wells. Another cause for delay has been due to the existence of state land cutting through the unitized area, even though sometimes the portion of state land can make up less than 1 percent of a 700-acre unit.

When property owners do not receive an answer from the state on their unitization application, their property becomes at-risk for being “orphaned.” This means that unless the state approves a land-owner application to join with other surrounding landowners for resource development, their property could be left out because it would no longer be economically viable for those resources to be extracted.

Therefore, HB 8 protects landowner rights by requiring the Chief of the Division of Oil and Gas Resources Management to hold a hearing within 45 days of receiving an application. From that point, the Chief must then issue a decision within 30 days of the hearing taking place. Finally, with the exception of state parks, the legislation clarifies that state land can be unitized and that there will be no surface impact to state forest land.

Prior to passing the House with sweeping bipartisan support, HB 8 passed the House Energy & Natural Resources Committee unanimously. The bill now heads to the Senate for further consideration.