Ohio Mineral Owners Win Huge Six-Year-Long Standoff Over Fracking Under State Lands

At the urging of the National Association of Royalty Owners (NARO) Appalachia and Landowners for Energy Access and Safe Exploration (LEASE), Ohio lawmakers and Gov. John Kasich are finally working together to make appointments to a commission required to govern the process of shale gas development under state lands. In what appears to be a ceasefire between Ohio House and Senate Republicans and Gov. Kasich over the issue, a spokesperson from Kasich’s office now reports they are “working hard” to get the Oil and Gas Commission going. The action could be a significant step toward ending what has essentially been a six-year fracking moratorium under Ohio state lands and parks, and is just the latest win for mineral owners, who recently emerged victorious following a two-year fight with the Bureau of Land Management (BLM) to gain access to the leasing of federal minerals in the state.

 Background

Similar to the Wayne National Forest (WNF) saga, bureaucratic inaction has led to private landowners adjacent to Ohio state lands and parks finding themselves in a position where their minerals are not able to be fully realized and less desirable to develop. Ohio’s General Assembly actually approved fracking under state lands six year ago, but development has yet to take place. At the time, the legislation essentially laid out a plan toward leasing and development under various state lands using a tiered system where some state-owned lands could be developed with surface disturbance, while other areas would not be accessible. To get the ball rolling, the legislation included a provision to create an Oil and Gas Leasing Commission to govern the process, which required appointments by Gov. Kasich. The Commission establishment and rules were supposed to be in place by June 2012, but that never happened, resulting in what can best be described as a de facto moratorium on state land shale development.

In response, mineral owners took their private property rights fight to Columbus, where they’ve been working hard to educate legislators of their concerns. And as a result of those efforts, Ohio House Republicans, led by Rep. Andy Thompson, recently passed H.B 49, which added a provision to the state budget that would strip appointment authority from the governor and bestow it to the General Assembly.

Gov. John Kasich vetoed that provision, but the Ohio House made a historic move to override his veto, with the Ohio Senate in talks to do the same. However ahead of that action, Gov. Kasich’s team appears to have struck a deal with Ohio lawmakers, ending a six-year impasse to commit to finally move the Oil and Gas Leasing Commission forward by starting the process of appointments to the commission, which will ultimately establish rules govern the mineral development of state lands.  Ohio lawmakers are serious about this issue, as Ohio Senators are threatening to take up the House’s override of the Governor’s veto if Kasich fails to keep his word to move the Commission forward.

Oil and Gas Leasing Commission: What You Should Know

In passing HB 133 in 2011, Ohio lawmakers overhauled the process of leasing and development of lands owned or controlled by the State of Ohio. To establish the process, the Oil and Gas Leasing Commission was to be set up by the Ohio governor six years ago. According to the Ohio Revised Code, the governor must appoint four of the total five members on the Commission.

The Ohio Oil and Gas Association (OOGA) will submit four nominees for consideration to the governor, two of which will be selected. The Commission is also to include a representative from a statewide environmental or conservation group, a member of the public with experience in finance or real estate, and the head of the Ohio Department of Natural Resources’ Division of Geological Survey. Appointees will serve between two and five years and are not subject to confirmation by the Ohio Senate.  Once the commission is established, the rules of exploration of state resources will begin and provide a much-needed roadmap for operators and landowners to determine a long-term path forward for the future of mineral development.

Industry,  Mineral Owners and Anti-Fracking Groups Respond

NARO and the OOGA were pleased with the news that Gov. Kasich’s office will finally move to appoint members to the Oil and Gas Leasing Commission.

Shawn Bennett, Executive Vice President of the Ohio Oil and Gas Association said,

“We are encouraged to hear that the governor is working to fill the appointments. The ability to start the conversation to develop our state’s resources will not only help our industry continue to provide low cost energy to our citizens but also allow landowners adjacent to state owned property to access their minerals as well as generate a new revenue stream for our state.”

Jerry Simmons, Executive Director of the National Association of Royalty Owners said,

“The National Association of Royalty Owners (NARO) who speaks on behalf of the millions of citizens that own private mineral property in this country, encourages Governor Kasich to move as quickly as possible to make appointments to the Oil and Gas leasing Commission. The Commission will hopefully ensure the private property rights of Ohio citizens whose private mineral rights are currently being held hostage by the State of Ohio.  No one should lose the right to develop their private property simply because the State of Ohio is their neighbor.  The dominance of the mineral estate (and the ability to develop) over the surface has been established and upheld in every local, state and federal jurisdiction since the founding of this country.  Therefore, NARO urges Governor Kasich and the state of Ohio to resolve this issue and move quickly to protect the private property rights of Ohio mineral owners.”

The Landowners for Energy Access and Safe Exploration (LEASE) reported to EID,

“We applaud Governor John Kasich’s commitment to move the Oil and Gas Leasing Commission forward. It’s been six years since there’s been any action taken to fill the seats of the commission as required under Ohio Revised Code. At the end of the day this is a property rights issue and we are grateful that the legislature and the governor’s office are listening to private mineral and land owners in Ohio who are being impacted by this gridlock.”

After initially claiming “victory” over fracking under state lands, Sierra Club’s Ohio Chapter is now eating crow. And although the Sierra Club is clearly unhappy with the decision to move the commission forward, so far it has been eerily quiet on their frustrations, as is obvious by the fact that its Facebook page mentions nothing of the recent news from Gov. Kasich that was reported by Gongwer News Service.

Conclusion

As EID recently highlighted, leasing federal and state lands can be a major boost to tax revenues and royalties for Ohio. In fact, if we assume the 41,697 acres owned by Ohio Department of Transportation and the Ohio Department of Natural Resources were developed, that acreage alone could mean up to $160 million in bonus payments for the state. This income would surely help add revenue to meet Ohio’s budget needs.

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