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Oil and Gas a Back-Burner Issue in Ohio Governor’s Race

A controversy involving the Ohio Department of Natural Resources (ODNR) and Republican Gov. John Kasich's administration that has been unfolding for much of the last month has shed new light on oil and gas development in the state and its role in the gubernatorial campaign.

Kasich and his Democratic challenger, Ed Fitzgerald, a former FBI agent currently serving as a county executive, haven’t had a lot to say about industry activity in the state.

And in mid-February, a 10-page memo from ODNR that went public stoked questions for both candidates that neither seem willing to answer eight months before the general election. The memo detailed a public relations campaign to promote oil and gas drilling in state parks and forests that would have been spearheaded by ODNR and coordinated with the governor's office.

The plan outlined an effort that called for ODNR -- a regulatory agency charged with, among other things, overseeing burgeoning development in the Utica Shale -- to align with industry supporters to combat opposition from environmentalists and others against drilling in the state.

Kasich signed legislation in 2011 to allow drilling on state-owned land aimed at helping to pay for a $500 million maintenance backlog in state parks. ODNR's plan to market the land, though, was abandoned and never executed, while operators in the state have expressed little interest in drilling in public parks and forests.

On one side of the controversy are those who feel the memo highlights a regulatory agency that is too close with the industry it oversees. On the other, there are those who believe the issue has been blown out of proportion and opened a path for further political theater during an election year.

Kasich spokesman Rob Nichols, who initially said the administration had no knowledge of the plan even though an email was later leaked detailing conversations between top officials and ODNR about it, chalked the controversy up to "politics."

"It was a draft of a plan that was never implemented, talking about a policy that was never implemented," he wrote in an email to NGI's Shale Daily. "There is no horizontal drilling going on in Ohio in our state parks."

To be sure, Kasich supports the industry's role in the state. At stops across Ohio, he has repeatedly touted oil and gas as a means for more economic development. Meanwhile, under his watch, ODNR has expanded its reach to help facilitate the development of horizontal drilling.

Fitzgerald has joined other Ohio Democrats calling for an investigation into the ODNR memo and what part the administration would have played in its implementation.

"Gov. Kasich has yet to answer the very basic question of why his top aides were involved in the planning of an aggressive campaign targeting Democratic legislators and their allies," Fitzgerald said in a statement issued last month. "That's exactly the kind of bullying and backdoor maneuvering we're seeing in governor's offices across the country, and it's exactly the kind of behavior I would have found worthy of investigation as an FBI agent."

Fitzgerald has been short on energy-related policy specifics. His website gives a nod to economic development in the state and mentions the largess of tax breaks for big business, but when asked for his campaign's thoughts about the state's current severance tax, its oil and gas regulatory framework and other related policies he might pursue as governor, a spokeswoman provided little detail.

"Ed Fitzgerald understands Ohio's natural resources are abundant and important to economic growth and energy independence," said spokeswoman Lauren Hitt. "As governor he will strike the right balance between all stakeholders; impacted communities, energy companies, environmental concerns and all Ohioans who understand the value of this resource."

"There was a famous book written about Ohio politics back in the 1950s that covered issueless politics here in Ohio," said Paul Sracic, chairman of the political science department at Youngstown State University. "Politics in this state are really more about personality and political theater than they are about the issues.

"Everything has really sort of laid-low on fracking and this issue of oil and natural gas," he added. "Before Gov. Kasich's recent state-of-the-state address, everyone thought he might talk about increasing the severance tax, but he didn't even touch on that issue. It may come out in his tax plan soon enough, but he's talked little about oil and gas."

The ODNR controversy has come at a time when Republican lawmakers in the state are pushing for a compromise with Democrats on Ohio's oil and gas severance tax. They're calling for a modest increase of up to 2.25%, which differs from a proposal of 4.5% that Kasich put forward last year (see Shale Daily, Feb. 12).

"We're glad to be back at the table, and we will soon be rolling out a biennial budget and the severance tax is likely to be part of it as a means to lower the state income tax," Nichols said. "We didn't say the Republican's proposal is too low, we said 'don't give us something that's too puny.'"

When asked to provide specifics about any oil and gas policies Kasich might pursue if he wins a second term, Nichols referred NGI's Shale Daily to a spokesman for the Ohio Republican Party. He added that the administration was working on some things, but nothing that it will discuss anytime soon.

A poll of 1,370 registered Ohio voters released last month by Quinnipiac University showed the governor's race narrowing, with Kasich leading Fitzgerald 43% to 38%.

Sracic added a caveat by saying that the general election in Ohio doesn't gain traction until Labor Day, when the public begins to engage, which he said could indicate that the candidates are holding back on some of the state's bigger issues.

"For Democrats, fracking is really a two-edged sword. You have environmentalists that are really opposed to it, but that kind of development also means jobs for blue collar people," Sracic said. "A Democratic candidate could lose support by being against it, but they could also lose support for being for it.

"It's not as contentious for a Republican unless you start talking about raising taxes. Anytime you do that, you're bound to attract some negative attention."

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