State Net Capitol Journal Legislative Updates: Natural Gas Fracking in Ohio and New York

KASICH SIGNS OH FRACKING BILL: Ohio Gov. John Kasich (R) signed sweeping energy legislation last week (SB 315) that among many provisions establishes new rules regulating natural gas drilling procedures in the Buckeye State. But some Republican lawmakers are already planning to challenge the governor on his proposal to raise severance taxes on high-producing oil and gas wells tapped using high-pressure hydraulic fracturing, or fracking.

Fracking is a controversial procedure that involves shooting millions of gallons of chemically charged water deep into the ground to help break up shale formations and release natural gas, oil and other liquids, such as propane. Opponents have blamed the process for causing earthquakes and poisoning drinking supplies in other states.

The bill's opponents made several unsuccessful attempts to change the measure, saying it doesn't do enough to safeguard the public or the environment or to ensure profits from the anticipated economic boon from oil and gas production benefit the broader public. Democrats in the House proposed 25 separate amendments to the bill, but the GOP-dominated Legislature ultimately passed it almost intact.

Kasich, meanwhile, lauded the legislation, saying it provided the state with "the most aggressive, clearest, fairest and strongest fracking regulations that you can find anywhere in the country."

Those rules include increased disclosure of the chemicals used in the fracking process, although they also allow drillers to hide some chemicals as trade secrets. Companies will also have to reveal their total water usage, conduct water well sampling within 1,500 feet of proposed horizontal wells and maintain so-called "cradle-to-grave" documentation and tracking of oil and gas wells from the time they are started until they are capped.

The bill, however, did not contain the governor's proposed severance tax, the proceeds of which would provide Ohioans with statewide income-tax cuts within two to three years. Kasich wants to offer drillers a grace period in collections to give them time to recoup their startup costs. Although polling shows that voters support the proposed tax hike, a spokesman for Ohio House Speaker Bill Batchelder said a bill to impose the tax is not expected before the November elections.

That legislation will likely not come without some significant debate. Ohio Oil and Gas Association executive vice president Tom Stewart said he thinks the proposed hike, which would raise the levy to 4 percent, unfairly singles out larger operations over smaller ones.

"John Kasich is trying to do his best for the welfare of Ohio, I know that," Stewart told reporters last week. "He wants good things to happen for Ohio. But I don't think he has a good handle on oil and gas right now. What we're seeing is a lot of caution out there in the oil field."

Kasich spokesperson Rob Nichols defended the governor's proposal, saying the industry has continued to grow even after the tax proposal was made public.

"At the end of the day, Ohio remains a very high tax state and this is about driving down the income tax to make us more competitive to put Ohioans back to work," he said.

The measure also includes provisions for conservation at state buildings and an alternative fuel transportation program.  (LANCASTER EAGLE GAZETTE, ASSOCIATED PRESS, BUSINESS FIRST [COLUMBUS], RECORDPUB.COM).

CUOMO CONSIDERING LIMITED FRACKING PLAN: New York Gov. Andrew Cuomo (D) may also be leaning toward legalizing fracking. The New York Times reported last week that his administration may soon offer its support to legalizing the drilling procedure in the Empire State, but only in a handful of economically depressed counties along the border with Pennsylvania and only if those communities agreed to it. Fracking would also be barred in sensitive watersheds that supply unfiltered drinking water to New York City and Syracuse. Cuomo offered no official comment on the situation, saying through a spokesperson only that "no decision will be made until the scientific review is complete and we have all the facts."

The possibility drew an immediate harsh response from some lawmakers, 76 of whom signed a letter to Cuomo asking him to ban wastewater recycling before allowing any hydraulic drilling in the state. It also drew both praise and condemnation from local officials in the areas under consideration for the drilling. Many lauded the possible shot in the arm for their struggling economies, but others questioned how the state is going about the proposal, something they say is likely to incite bitter battles in their communities.

"I think it's going to be a real war," said Binghamton Mayor Matthew Ryan, who opposes fracking. "Nobody ever thought an important decision like this would be passed down to local governments." (NEW YORK TIMES, WALL STREET JOURNAL, BLOOMBERG BUSINESSWEEK)

ENVIRONMENT: The NEW HAMPSHIRE Legislature approves HB 1490, a bill that allows the Granite State to pull out of the Regional Greenhouse Gas Initiative, the cap-and-trade agreement under which New England states have been working to reduce greenhouse gas emissions, provided two other states remove themselves first. The measure will now go to Gov. John Lynch (D) for consideration (STATELINE.ORG). • VERMONT Gov. Pete Shumlin signs HB 485, which phases in mandatory statewide recycling and composting in the Green Mountain State by 2020. The measure takes effect incrementally, beginning in 2014 for large scale food generators. Households would be required to recycle products like paper and plastic by 2015 and yard waste by 2016, with all organic matter eligible for being recycled by 2020 (BURLINGTON FREE PRESS). • The U.S. Environmental Protection Agency approves an $880 million plan by FLORIDA officials intended to dramatically reduce the flow of farm and suburban pollution into the Everglades. The plan must still be approved by a federal court before it can be implemented (MIAMI HERALD).

- Compiled by RICH EHISEN

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