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Bill to revise Ohio’s clean energy law stalls in committee

Efforts to pass Senate Bill 58, controversial legislation to alter Ohio’s energy efficiency and renewable portfolio standards out of the Senate Public Utilities Committee, was delayed for a second time this week. Senator Bill Seitz (R-Cincinnati), the bill’s sponsor and chair of the committee considering the bill, had scheduled acceptance of a substitute bill and a vote on the measure prior to announcing cancellation of the committee.

The committee has heard lengthy testimony for several months on the measure. Proponents of the bill, including the Ohio Chamber of Commerce, argue the legislation is needed to prevent future hikes in electricity costs for businesses and consumers. Opponents claim the bill will effectively gut the current clean energy law and result in a hand out for utilities—the bill allows utilities to retain a greater percentage of savings resulting from energy efficiency programs than current practice permits.

In a statement announcing postponement of the hearing and vote on the bill, Seitz said the delay would permit additional changes to be included in the substitute bill. He said it is more important to him that the complex issue be done right than done quickly.

Moving forward, Seitz announced his plan to pursue a three prong strategy to reform the portfolio standards. The first strategy includes continued work with parties he deems to have acted honestly and in good faith to find a compromise that will facilitate passage of Senate Bill 58.

Clearly frustrated with attempts to pass the legislation, a second path Seitz will pursue is scheduling extensive hearings on Senate Bill 34, legislation to repeal the mandates entirely. “Given the inordinate difficulty that I have had in negotiating an orderly transition from the current central government planning model to free markets, I have decided to explore an alternative urged on me by my many friends in the Ohio House that a better alternative is to simply end the mandates now.”

Finally, Seitz plans to convene meetings of interested parties to map a legal strategy seeking judicial invalidation of what he considers the unconstitutional mandate that utilities purchase half their renewable energy from Ohio-based sources. A provision in his bill removing the mandate has generated substantial push back from the renewable industry in the state.

No additional hearings on Senate Bills 58 or 34 have been scheduled at this time.

House leadership introduces bill to increase taxes on oil and gas

Having twice rejected Governor John Kasich’s proposal to increase the state’s severance tax on oil and gas, House Republicans unveiled a proposal of their own this week. Sponsored by House Speaker Pro Tempore Matt Huffman (R-Lima), House Bill 375 would increase the tax on horizontal shale wells from 20 cents per barrel of oil, which currently has a market value of about $100, to a one percent gross receipts tax for the initial five years of production, and two percent thereafter. The tax would fall back to one percent when production falls below 100 mcf or 17 barrels of oil per day, per quarter.

Representative Huffman anticipates the legislation will generate roughly $1.7 billion over 10 years. Revenue exceeding the costs of the statutory regulatory oversight programs would be split between the Idle and Orphan Well Fund and the Income Tax Reduction Fund.

House Speaker William Batchelder (R-Medina), who had previously opposed the governor’s efforts to increase the tax, is a co-sponsor of the legislation. “As Ohio moves toward a significant energy-based economy, House Bill 375 will not only provide much-needed clarity about severance taxes and regulations, but also take significant steps to protect the environment and ensure that energy exploration in Ohio is safe and responsible,” said Batchelder in a release following the bill’s introduction.

Governor Kasich’s previous proposal would have increased the severance tax to four percent for oil, natural gas liquids and condensate. It was estimated that his plan would have generated roughly $2.8 billion over 10 years, which would have been dedicated to an income tax reduction.

The Ohio Oil and Gas Association (OOGA) worked with Republican leaders in drafting the proposal and recently announced support for the bill. The legislation is scheduled for a hearing in the House Ways and Means Committee on December 10.

Legislation considered this week

Tax overpayments: Sponsored by Representatives Michael Stinziano (D-Columbus) and Mike Duffey (R-Worthington), House Bill 365 would require the Tax Commissioner to notify a taxpayer that they overpaid certain business taxes. The bill was introduced on December 2 and has been referred to the House Ways and Means Committee.

Controlled substances: Sponsored by Representative Robert Sprague (R-Findlay), House Bill 366 requires hospice care programs to establish procedures to prevent diversion of controlled substances that contain opioids. The bill was introduced on December 2 and has been referred to the House Health and Aging Committee.

Landlord tax credit: Sponsored by Senator Eric Kearney (D-Cincinnati), Senate Bill 247 proposes to authorize an income tax credit for residential landlords who improve a rental unit’s energy efficiency. The bill was introduced on December 3.

Medicaid coverage: Sponsored by Representative Robert Sprague (R-Findlay), House Bill 369 proposes to require the Medicaid program and health insurers to cover certain services for recipients with opioid addictions. The bill was introduced on December 3 and referred to the House Health and Aging Committee.

Medicaid revisions: Sponsored by Senators Dave Burke (R-Marysville) and Capri Cafaro (D-Hubbard), Senate Bill 206 requires the Medicaid Director to implement various reforms to the Medicaid program, including a reduction in the infant mortality rates among Medicaid recipients and a limit to the growth of per recipient per month costs. Additionally, the bill creates the Joint Medicaid Oversight Committee (JMOC) to:

  1. Review how the Medicaid program relates to the public and private provision of health care coverage
  2. Review the reforms the Medicaid Director is to implement

  3. Recommend policies and strategies that encourage self-sufficiency and less use of the program and improvements in statutes and rules concerning the program

The bill passed the House on December 4.

For more information, please contact:

Michael Caputo
(non-attorney professional)
216.348.5770
mcaputo@mcdonaldhopkins.com

Rebecca M. Kuhns
(non-attorney professional)
614.458.0043
rkuhns@mcdonaldhopkins.com

Government affairs work is so much more than networking with government officials. It requires a strategic plan drafted by specialists who understand economic development and legislative issues. We help identify ways the government can contribute a solution to a business challenge, such as complying with regulatory and legislative mandates, securing funding for an important project, or obtaining government contracts. Our Government Affairs team has an impressive background. They work together to listen to clients, assess opportunities and recommend how government might contribute to achieving the goal.

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