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Ohio Governor Expected to Sign Frack Rules Bill After House Passage

The Ohio House of Representatives overwhelmingly voted in favor of an energy bill that also creates new rules for hydraulic fracturing (fracking) in the state. The bill is to be sent to Gov. John Kasich for his signature.

After a lengthy debate, the Republican-controlled chamber voted 73-19 in favor of Substitute SB 315.

"This is a bill that's designed to move the state forward and benefit from our natural resources in a safe and responsible manner," Rep. Peter Stautberg (R-Anderson Township), chairman of the House Public Utilities Committee, said before the vote. "We were given a bill more than 200 pages long and about a little over one week to work with it. I thank the members from both sides of the aisles for a very good, civil discourse and meaningful conversation on these very important issues."

Kasich, a proponent of natural gas development in Ohio's portions of the Marcellus and Utica shales, praised legislators for passing the bill.

"I'm so excited about what this legislation accomplishes and what it means for Ohio's future," the Republican governor said Friday. "Because we were able to come together and look at energy consumption and production from every angle -- from shale gas to waste heat to workforce training to alternative fuels and renewables -- we've accomplished something truly unprecedented.

"I applaud Sen. [Shannon] Jones, Rep. Stautberg and the entire General Assembly for reaching across the aisle to make this energy policy a priority. We'll be better stewards of our environment because of it, and our kids and grandkids will thank us for it."

The issuing of permits for the Utica and Marcellus shales has exploded within Ohio over the last year, according to Ohio Department of Natural Resources data. As of May 2011, the state had issued only 8 Utica permits and 10 Marcellus permits. One year later, the state has issued a total of 222 Utica permits and 14 Marcellus permits (see chart).

Kasich spokesman Rob Nichols told NGI's Shale Daily the governor will probably sign the bill near the end of the month.

Despite the bipartisan sentiment, some Democrats railed against the bill.

"Senate Bill 315 lays out a welcome mat to the oil and natural gas industry in Ohio, while at the same time it pulls the rug out from under the landowners of this state, the very people who have elected to put you in your seats," Rep. Mark Okey (D-Carrollton) said during an unsuccessful attempt to have an amendment attached to the bill. Okey's amendment and eight others were ultimately tabled.

The Environmental Defense Fund (EDF) said the bill "breaks new ground" with requiring the disclosure of the chemicals used in hydraulic fracturing, and called the bill "smart policy" when Kasich first proposed it. The group also said it liked provisions in the bill designed to protect landowners in court.

"We're disappointed, though, by changes the House made to the trade secret provisions in the bill," Matt Watson, senior energy policy specialist for the EDF, said Friday. "In the original version, companies would have been required to report trade secret information to the [Ohio] Department of Natural Resources [ODNR]...Under industry pressure, the Assembly caved on that language, and companies will now be allowed to withhold trade secret information from the regulators."

The bill passed the muster of the Republican-controlled state Senate on May 15 by a 27-6 vote and the House Public Utilities Committee on May 23, 14-8 (see Shale Daily, May 24; May 17).

Under Substitute SB 315, operators would be required to identify every water source they could potentially use during their operations and provide an estimate of the rate and volume of water withdrawals. If the operators elect to use recycled water, they must submit an estimate of how much recycled water they will use.

Operators would also be required to sample water wells within 300 feet of proposed drilling operations in urban areas and within 1,500 feet of new horizontal wells. Applicants for horizontal well permits must also carry at least $5 million in liability insurance coverage and must enter into road maintenance and use agreements with the appropriate county, township or municipality.

The bill would require operators to identify each additive used and provide a list of the chemicals intentionally used in fracking, but operators would not be required to disclose their precise formulation or list any chemicals that occur incidentally or in trace amounts. In the event of an emergency, medical personnel could receive the formulation information if necessary for treatment but would be required to keep the information confidential.

Substitute SB 315 would also allow the chief of the ODNR's Oil and Gas Division to enter into cooperative agreements with other state agencies for advice and consultation on oil and gas issues. The bill also sets a maximum of 60 days for any time extension request for reports, test results, fees or other documents.

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