State Criticized for Shifting Millions from Oil and Gas Fund to Settle Unrelated Lawsuit
July 12, 2017
Alliance Review. With three legislators objecting to the “raid,” a state board on Monday approved appropriating $15 million from an oil and gas fund designated by law to protect Ohioans and the environment, to be used to pay a settlement of an unrelated lawsuit.
The Controlling Board voted 4-3 to remove the money from the fund, which is used in part to seal “orphan” natural gas and oil wells, to fund a settlement with landowners near Grand Lake St. Marys whose properties have flooded since a widening of the dam spillway in 1997.
In response to questions about the legality of the move, Department of Natural Resources officials said temporary language long inserted in state budgets permits money to be withdrawn from an assortment of funds to pay legal settlements.
Rep. Jack Cera, D-Bellaire, objected to using the fund for an unrelated purpose.
“This multimillion-dollar cash grab by the state shows where Columbus politicians’ priorities are — not with hardworking taxpayers and property owners in eastern Ohio,” Cera said. “After almost 10 years to plan for a lawsuit settlement in the western part of Ohio, state officials failed to responsibly plan for the future and instead are robbing our area of what’s rightfully ours.”
Last month, Cera was thwarted in his bid to take $10 million from the fund to repair roads and other infrastructure damaged by fracking in eastern Ohio.
Sen. Charleta B. Tavares, D-Columbus, and Rep. Scott Ryan, R-Newark, joined Cera in his protest. Tavares said the fund should not be viewed as a “cash cow” that can be tapped for purposes other than intended.
The oil and gas fund, generated by severance taxes imposed on drillers, can easily withstand the $15 million withdrawal, said Tom Johnston, the natural resources agency’s chief financial officer. The fund took in $52.1 million last fiscal year, and spending totaled $17.1 million, he said.
In addition, state spending to cap abandoned wells whose owners can no longer be located will double from $3 million a year to $6 million, Johnston said.
Last month, the legislature authorized removing $10 million from the oil and gas fund to prop up spending in the new state budget that took effect July 1.
The $17.5 million payment to settle with nearly 90 landowners near Grand Lake St. Marys in Mercer and Auglaize counties has been a long time coming. The Ohio Supreme Court cited the Department of Natural Resources for contempt in 2014 after it balked at moving to pay damages owed the landowners over the flooding.
The settlement came about as a result of court-ordered mediation. Three years ago, the landowners offered to settle for $35 million, while the state countered with a $4 million offer.
The American Petroleum Institute Ohio, representing oil drillers, wrote Controlling Board members to object to the use of the tax money, stating it believes the withdrawal is illegal because the Mercer County judge handling the case has not yet formally approved the settlement.
The money also should be used for its dedicated purpose of “protecting Ohioans and the environment,” said Christina Polesovsky, associate director of the institute.
By Randy Ludlow
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