Archive for November, 2012

(Posted by Trent Dougherty, Director of Legal Affairs, Ohio Environmental Council)

Yesterday, the Ohio House of Representatives’ Agriculture and Natural Resources Committee, heard sponsor testimony during its First Hearing on three fracking related bills. Unfortunately, it will be the last time we hear of them.

Normally, three bills that provide support for local governments, safeguard property rights, and secure consumer protections would receive bi-partisan support and be on the Governor’s desk for signature in a heartbeat.  However, because these bills deal with protecting landowners from the impacts of oil and gas drilling, they received one perfunctory hearing in the waning days of the 129th General Assembly.

These three bills (HB537, HB493, and HB528) could go a long way in protecting Ohio landowners from unscrupulous landmen, preventing drillers withholding  royalties from landowners, and handing back shared health and safety oversight of fracking to local communities.  Instead, they receive one hearing in which the sponsor of the bill has one chance to defend his or her legislation. And these bills will die a quick and quiet death in Committee – an all too familiar fate for bills sponsored by legislators from the substantially outnumbered Minority party in the Ohio House.

The first of the bills, HB537 seeks to bring at least a little bit of local control back to the communities in Ohio’s Gaslands – a right that was taken away from local governments in 2004.  One of OEC’s Public Servants of the Year, Representative Robert Hagan (D-Youngstown), sponsored this bill and argued before the Committee that loss of local control has resulted in private property violations, and thus at least some shared oversight should be given back to local governments.

The lead sponsor of the other two bills, Representative Mark Okey (D-Carrollton), presented his defense of HB493 and HB528 as a “wake up call” for the Ohio Legislature on issues he sees firsthand in Carroll County — the epicenter of drilling in Ohio. Representative Okey’s legislation would:

  • Require registration of landmen and require them to disclose information about the lease and other important information that any other real estate agent would be required to disclose;
  • Require audits of oil and gas production numbers to make sure landowners receive the full amount of royalties;
  • Increase setbacks from unleased neighboring property;
  • Require pre-and post-drilling groundwater testing;
  • Create a 15% minimum royalty;
  • Require full fracking chemical disclosure.

Although Representative Okey will not be back for the 130th General Assembly next year, he testified that he has received a promise from Governor Kasich that many of the landowner protections in HB493 will appear in the Governor’s biennial budget bill to be introduced in February, 2013.

OEC will continue to be a watchdog at the Statehouse during the next General Assembly.  We will fight to  to make sure that these landowner protections do, in fact, appear in the Governor’s Budget Bill and that the House and Senate enact them and other necessary protections for citizens living in Ohio’s gaslands.

Read Full Post »

Keep the Burden on the Industry to Protect Ohio from Fracking’s Risks

(Posted by Grant Maki, Attorney, Ohio Environmental Council)

There are a lot of unknowns about the potential impacts of fracking.  The technologies involved in fracking have never been done on this kind of scale before, and the impacts have not been thoroughly studied.  How likely is groundwater contamination—and over what timeframe?  How do we reconcile the divergent reports about the risks to air quality and global warming?  Even our regulators admit that there are many unknowns, and industry is often two steps ahead of regulation.

OEC and its attorneys with the Ohio Environmental Law Center are working now to develop protective regulations to present to ODNR and Ohio EPA to make sure the air, land, and water in Ohio’s Gaslands are protected.

Because of the unprecedented scale of hydraulic fracturing activities expected to come to Ohio, we need an effective set of laws in place that will make sure that people are quickly and fully compensated even for risks that are well understood, like the risk that a truck carrying chemicals to a well site springs a leak.  But when there is so much uncertainty and the State has taken a regulatory approach that can be described as “drill first, ask questions later,” it becomes even more important to plan for the fact that many impacts caused by fracking will “fall through the cracks.”

Thus, lawmakers should be concerned with creating a set of rules that can quickly and cost-effectively adjudicate disputes surrounding the harms caused by fracking.   Lawmakers should also try to create a set of rules that gives the people who know the most about the industry—the fracturing companies themselves—the proper incentives to avoid harms by forcing them to internalize all of the costs of their activities.

So beyond the necessary water quality and property rights regulations that desperately need strengthened, the actual legal and regulatory structure, itself, also needs an overhaul.

The Law Center has developed a list of five recommendations for how lawmakers can prepare the legal system to “fill in the cracks” in our regulatory scheme.  Because there is so much unknown about this industry—in part because the technology and industry practices are changing rapidly and vary from site to site—the proposed framework is designed to assign costs to the drilling companies while placing minimal administrative burden on the courts.

Read the Law Center’s Fracking Litigation Report VOL. 1 Filling in the Structural Cracks of Fracking Regulation for details on what the General Assembly can do to fix the system.

First, pre-drilling, post-drilling, and continuous environmental quality monitoring should be borne by the industry . . period.

Secondly, drilling companies should be held strictly liable for all harms caused by fracking operations, and rules should be put in place to minimize the administrative burden on both the courts and on parties seeking redress.

Furthermore, insurance requirements should be required to provide for potential catastrophic risks, and a severance tax should be levied to pay for latent harms that are not yet apparent, and to plug the abandoned oil wells that provide a potential pathway for fracking fluid migration.

Finally, drilling companies should have to pay attorneys fees and court costs for plaintiffs who successfully sue them for damages.

Read Full Post »

This Wednesday, the Ohio Senate State & Local Government & Veterans Affairs Committee will meet to consider an easily overlooked issue that is essential to the proper functioning of our State government.  The Committee will consider changes to the workings of the Joint Committee for Agency Rule Review (JCARR), a joint committee of the Ohio General Assembly that reviews rules from Ohio’s executive branch agencies such as Ohio EPA, Department of Agriculture, and scores of others.

Under current law, all proposed agency rules must be submitted to JCARR for review based on limited statutory criteria.  JCARR may then recommend that the General Assembly adopt a concurrent resolution to invalidate all or part of the proposed rule.  If both chambers of General Assembly approve the resolution, the rule is invalidated and the agency may not re-introduce any version any part of it.  Unlike a bill that must be presented to the Governor to be signed to become law, a resolution needs only to be passed by both houses of the legislature. Thus, JCARR permits the legislature to “veto” all or part of a proposed agency action.

The proposal, Ohio House Bill 396 (HB396), would require JCARR’s recommendations to become a bill before the General Assembly, which, if passed by both Houses, would be presented to the Governor for a signature or a veto.  This approach will eliminate the “legislative veto” and improves the functioning of state government.

The Legislative Veto Problem

The problem is that such “legislative veto” provisions have been struck down as unconstitutional violations of the separation of powers all across the country.  The seminal case on the issue is Immigration and Naturalization Service v. Chadha,[1] where the U.S. Supreme Court struck down a federal legislative veto provision.  As the concurring opinion in Chadha noted, the holding is broad enough to invalidate almost every conceivable use of the legislative veto.  After that case, the Supreme Court reiterated its stance by issuing summary affirmances to lower court decisions invalidating legislative veto provisions.[2]

Fast forward to today, and 11 of the 12 State Supreme Courts to consider the issue have ruled that legislative veto provisions violate the separation of powers embodied in their state constitutions.   The Ohio Supreme Court would almost certainly fall in line with the majority on this issue.

The Ohio Constitution requires each branch of government to stay within the bounds its respective authority.  The legislative power of the state is vested in a general assembly,[3] the executive power is vested in the governor,[4] and the judicial power is vested in the courts.[5]  A statute that violates the doctrine of separation of powers is unconstitutional.[6]  Although the branches of government can’t be completely sealed off from one another, “[t]he principle of separation of powers is embedded in the constitutional framework of our state government.”[7]

Part of the Ohio Constitution’s embodiment of the separation of powers is represented by the Enactment and Presentment Clauses.  The Enactment Clause states that “t]he General Assembly shall enact no law except by bill,” which must pass both houses.[8]   The Presentment Clause requires that all bills be presented for the Governor to sign or veto before they become law.[9]

As Alexander Hamilton noted while defending a nearly identical Presentment and Enactment clauses in the U.S. Constitution:

[t]he primary inducement to conferring the power in question upon the executive, is to enable him to defend himself; the secondary one is to encrease the chances in favor of the community, against the passing of bad laws, through haste, inadvertence, or design.[10]

Another advantage of requiring the Governor’s approval of each legislative act is that it ensures that each bill is considered from a state-wide perspective.  Some legislation might grant a moderate benefit to 2/3 of the state at a huge cost to the other 1/3.  Requiring bills to go before the governor ensures that each law is passed by at least one person with a broad, state-wide perspective in mind.

As the US Supreme Court explained in Chadha, in order to preserve this balance of power in the government, “[t]he hydraulic pressure inherent within each of the separate Branches to exceed the outer limits of its power, even to accomplish desirable objectives, must be resisted.”[11]

Thus, the Presentment and Enactment Clause requirements apply whenever the legislative branch attempts to make rules of general application.  The U.S. Supreme Court has explained that an act of Congress is legislative if it has “the purpose and effect of altering the legal rights, duties, and relations of persons. . . outside the Legislative Branch.”[12]  “Amendment and repeal of statutes, no less than enactment, must conform with this requirement.”[13]

Applying these precedents to JCARR, the Constitutional problems are clear.  The legislature’s veto of proposed rules counts as a legislative act because it affects the rights of people outside the legislature.  This kind of action may only be taken by creating a bill that is presented to the Governor.

That is why the proposal before the Senate is so important.  As it stands, JCARR is an unconstitutional hindrance to the proper functioning of state government.  The General Assembly has a “back door” method to usurp the function of the executive branch, and the executive has no proper way to defend itself.

OEC Attorney, Grant Maki will deliver testimony before the Senate Committee in support of HB396 this Wednesday.

[1] 462 U.S. 919 (1983)

[2] See Process Gas Consumer Group vs. Consumer Energy Council , 463 U.S. 1216 (1983)

[3] Oh. Const. Art. II, §01,

[4] Oh. Const. Art III, §05

[5] Oh. Const. Art. IV, §01.

[6] State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 86 Ohio St. 3d 451, 475 (Ohio 1999).

[7] State v. Hochhausler, 76 Ohio St. 3d 455, 465-466 (1996)

[8] Ohio Cost., Art. 2, Section 15(A)

[9] Ohio Cost. Art 2, Section 15(E)

[10] The Federalist No. 73, at 458 (J. Cooke ed. 1961) (A. Hamilton).

[11] Chadha, 462 U.S. at 951

[12] Chadha, 462 U.S. at 952

[13] Chadha, 462 U.S. at 954

Read Full Post »