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Ohio Governor Kasich Calls for Severance Tax Hike

Last month, Ohio Governor John Kasich proposed to add additional revenue from the Marcellus and Utica Shale plays of approximately $325 million in his budget. He proposed a variety of tax rates on oil and gas products from horizontal wells. The tax on oil would be 6.5% of the value of oil, and the tax on gas entering the distribution system without further processing would also be 6.5%. Similarly, condensate collected at a point other than the wellhead would be taxed at 6.5% of its value.

For all other gas, the rate would be 4.5% of the value of the gas AFTER processing, regardless where that processing takes place. For natural gas liquids collected at a point other than the wellhead and separated from oil or gas severed by a horizontal well, regardless of where title is transferred, the rate would be 4.5% of the value of natural gas liquids collected. Natural gas liquids would now include ethane, whether it is being rejected or sold.

Kasich recently suggested that if the industry doesn’t agree to his proposal, a ballot measure in the state to create the tax would likely take place. And when it comes to getting something for nothing, who’s to say that such a ballot measure sponsored by urban or environmental groups wouldn’t set the tax at a much higher level than proposed by the Governor?

New York Broadens Solar Hot Water Program
The New York State Energy Research and Development Authority (NYSERDA) is extending portions of its Solar Hot Water Program beyond electricity to include displacing hot water produced by heating oil, natural gas, propane and wood.

The new funding guidelines will provide incentives of up to $6,000 per site for eligible one- to four-family homes and up to $150,000 per site for eligible commercial (including multifamily), agricultural, not-for-profit and government facilities.

The program has $4.3M available for projects that displace hot water produced by electricity and close to $3.4M for displaced hot water by non-electric methods.

Applications will be accepted beginning on March 20 on a first come-first served basis.

For more information on the Solar Hot Water Program, visit NYSERDA’s Web site.

New Jersey DEP Budget Hearings Scheduled/Christie Settlement a sure Topic
The New Jersey Legislature closes out its regular business in March and  plans to spend April and early May modifying Governor Chris Christie’s proposed State Budget. 

In his budget proposal, Gov. Christie said New Jersey should not raise taxes to close a budget shortfall — a decision that will likely endear him to 2016 Republican primary voters but rules out a potential source of funding for the state’s major fiscal problems.

His budget proposal includes language allowing most money from large environmental settlements, such as the recent ExxonMobil agreement, to be shifted away from cleanups and into the state’s general fund.

In the past, all such money went into the Hazardous Discharge Site Cleanup Fund. In the current budget, Christie added language allowing any money over $50 million to be used as general state revenue. He vetoed lawmakers’ attempt to split the amount over $50 million between cleanup and general costs.

Christie repeats the same approach in his proposed budget for the fiscal year that starts in July – a period that could include the state receiving $225 million from ExxonMobil to settle an $8.9 billion lawsuit over environmental damages from its refinery operations in Bayonne and Linden.

Lawmakers plan to phrase that differently in the budget they’ll send Christie in June to prevent such transfers, said Sen. Bob Smith, D-Middlesex, chairman of the Senate environment committee. “That’s where he’s coming from. That doesn’t necessarily mean that’s where the Legislature’s coming from,” Smith said.

The Senate Budget and Appropriations Committee will hold its hearing on the Department of Environmental Protection on April 16 at 10 a.m. in Committee Room 4, in the 1st floor of the State House Annex in Trenton. 

The Assembly Budget Committee holds its hearing on the Department of Environmental Protection April 27, at 10 a.m. in Committee Room 11 on the Fourth Floor of the State House Annex.

It’s a wait-and-see game in Ohio
It’s been three weeks since the Ohio State Supreme Court ruled in the Munroe Falls case that local municipalities could not require gas companies to obtain additional drilling permits.  However, its ruling on whether municipalities could use zoning ordinances to determine where drilling happens was left open.  In the same vein, the Supreme Court did not rule on whether existing municipal bans on drilling could stand.

Local officials across the state are now waiting to see what will happen to other city ordinances.  Broadview Heights, a city south of Cleveland, who passed a “community bill of rights” in 2012 that bans any future oil and gas drilling.  Similarly, Athens recently voted to approve a ban on hydraulic fracturing while Carrollton, the seat of the largest oil- producing county, imposed a ban on drilling inside its village limits even before the Utica Shale boom started.