HB 819: Revise oil and natural gas severance tax; electric bill credit

Section 1. That sections 1509.02, 1509.34, 5703.052, 5749.01, 5749.02, 5749.04, 5749.06, 5749.07, 5749.08, 5749.10, 5749.12, 5749.13, 5749.14, and 5749.15 be amended and sections 4928.57 and 4928.571 of the Revised Code be enacted to read as follows:

Sec. 1509.34. (A)(1) If an owner fails to pay the fees imposed by this chapter, or if the chief of the division of oil and gas resources management incurs costs under division (F) of section 1509.071 of the Revised Code to correct conditions associated with the owner's well that the chief reasonably has determined are causing imminent health or safety risks, the division of oil and gas resources management shall have a priority lien against that owner's interest in the applicable well in front of all other creditors for the amount of any such unpaid fees and costs incurred. The chief shall file a statement in the office of the county recorder of the county in which the applicable well is located of the amount of the unpaid fees and costs incurred as described in this division. The statement shall constitute a lien on the owner's interest in the well as of the date of the filing. The lien shall remain in force so long as any portion of the lien remains unpaid or until the chief issues a certificate of release of the lien. If the chief issues a certificate of release of the lien, the chief shall file the certificate of release in the office of the applicable county recorder. (2) A lien imposed under division (A)(1) of this section shall be in addition to any lien imposed by the attorney general for failure to pay the assessment imposed by former section 1509.50 of the Revised Code or the tax levied under division (A)(5) or (6) of section 5749.02 of the Revised Code, as applicable. (3) If the attorney general cannot collect from a severer or an owner for an outstanding balance of amounts due under former section 1509.50 of the Revised Code or of unpaid taxes levied under division (A)(5) or (6) of section 5749.02 of the Revised Code, as applicable, the tax commissioner may request the chief to impose a priority lien against the owner's interest in the applicable well. Such a lien has priority in front of all other creditors. (B) The chief promptly shall issue a certificate of release of a lien under either of the following circumstances: (1) Upon the repayment in full of the amount of unpaid fees imposed by this chapter or costs incurred by the chief under division (F) of section 1509.071 of the Revised Code to correct conditions associated with the owner's well that the chief reasonably has determined are causing imminent health or safety risks; (2) Any other circumstance that the chief determines to be in the best interests of the state. (C) The chief may modify the amount of a lien under this section. If the chief modifies a lien, the chief shall file a statement in the office of the county recorder of the applicable county of the new amount of the lien. (D) An owner regarding which the division has recorded a lien against the owner's interest in a well in accordance with this section shall not transfer a well, lease, or mineral rights to another owner or person until the chief issues a certificate of release for each lien against the owner's interest in the well. (E) All money from the collection of liens under this section shall be deposited in the state treasury to the credit of the oil and gas well fund created in section 1509.02 of the Revised Code. (F) As used in this section, "former section 1509.50 of the Revised Code" means section 1509.50 of the Revised Code as it existed before its repeal by this act.

Sec. 4928.57. (A) The Ohio energy credit fund is created in the state treasury. The fund shall consist of all money credited to the fund under section 5749.02 of the Revised Code and any other money transferred to the fund. All investment earnings of the fund shall be credited to the fund. (B) Disbursements from the fund shall be made to each electric distribution utility, at the direction of the public utilities commission, to pay for bill credit amounts applied to residential customer electricity bills under section 4928.571 of the Revised Code.

Sec. 4928.571. (A) Each electric distribution utility shall apply a bill credit to the electricity bill of all electric distribution utility residential customers in this state in accordance with this section. (B) The bill credit shall be applied to customer bills at the following times: (1) For the first bill credit, at the time ordered by the public utilities commission under division (D)(1)(b) of this section; (2) After the first bill credit is issued, not later than each subsequent thirty-first day of December. (C) The bill credit shall be in the following amounts: (1) For the first bill credit, one hundred fifty dollars for each electric distribution utility residential customer; (2) For each subsequent bill credit, the amount ordered by the commission under division (D)(2)(b) of this section for each electric distribution utility residential customer. (D) The commission shall do all of the following to implement the bill credit under this section: (1) For the first bill credit: (a) Determine when the amount in the Ohio energy credit fund is sufficient to pay the total cost of the first bill credit amount to all electric distribution utility residential customer electric bills in this state; (b) After making the determination under division (D)(1)(a) of this section, order each utility to promptly apply the first bill credit amount to all of the utility's residential customer electric bills; (c) Direct the treasurer of state to disburse money from the Ohio energy credit fund to each electric distribution utility to pay all costs of applying the first bill credit amount to residential customer electric bills. (2) For each subsequent bill credit: (a) Determine the bill credit amount for each electric distribution utility residential customer electric bill by evenly distributing, as near as practical, the total amount in the Ohio energy credit fund among the total number of electric distribution utility residential customers in this state; (b) After determining the bill credit amount under division (D)(2)(a) of this section, order each utility to apply the bill credit amount to all of the utility's residential customer electric bills by not later than the thirty-first day of December of each year; (c) Direct the treasurer of state to disburse money from the Ohio energy credit fund to each electric distribution utility to pay all costs of applying the bill credit amount to residential customer bills. (3) Take any other action the commission deems necessary.

Sec. 5703.052. (A) There is hereby created in the state treasury the tax refund fund, from which refunds shall be paid for amounts illegally or erroneously assessed or collected, or for any other reason overpaid, with respect to taxes levied by Chapter 3796., 4301., 4305., 5726., 5728., 5729., 5731., 5733., 5735., 5736., 5739., 5741., 5743., 5747., 5748., 5749., 5751., or 5753. and sections 3737.71, 3905.35, 3905.36, 4303.33, 5707.03, 5725.18, 5727.28, 5727.38, 5727.81, and 5727.811 of the Revised Code. Refunds for fees levied under sections 3734.90 to 3734.9014 of the Revised Code, wireless 9-1-1 charges imposed under section 128.40 of the Revised Code, next generation 9-1-1 access fees imposed under sections 128.41 and 128.42 of the Revised Code, or any penalties assessed with respect to such fees or charges, that are illegally or erroneously assessed or collected, or for any other reason overpaid, also shall be paid from the fund. Refunds for amounts illegally or erroneously assessed or collected by the tax commissioner, or for any other reason overpaid, that are due under former section 1509.50 of the Revised Code as that section existed before its repeal by this act shall be paid from the fund. Refunds for amounts illegally or erroneously assessed or collected by the commissioner, or for any other reason overpaid to the commissioner, under sections 718.80 to 718.95 of the Revised Code shall be paid from the fund. However, refunds for amounts illegally or erroneously assessed or collected by the commissioner, or for any other reason overpaid to the commissioner, with respect to taxes levied under section 5739.101 of the Revised Code shall not be paid from the tax refund fund, but shall be paid as provided in section 5739.104 of the Revised Code. (B)(1) Upon certification by the tax commissioner to the treasurer of state of a tax refund, a wireless 9-1-1 charge refund, a next generation 9-1-1 access fee refund, or another amount refunded, or by the superintendent of insurance of a domestic or foreign insurance tax refund, the treasurer of state shall place the amount certified to the credit of the fund. The certified amount transferred shall be derived from the receipts of the same tax, fee, wireless 9-1-1 charge, next generation 9-1-1 access fee, or other amount from which the refund arose. (2) When a refund is for a tax, fee, wireless 9-1-1 charge, next generation 9-1-1 access fee, or other amount that is not levied by the state or that was illegally or erroneously distributed to a taxing jurisdiction, the tax commissioner shall recover the amount of that refund from the next distribution of that tax, fee, wireless 9-1-1 charge, next generation 9-1-1 access fee, or other amount that otherwise would be made to the taxing jurisdiction. If the amount to be recovered would exceed twenty-five per cent of the next distribution of that tax, fee, wireless 9-1-1 charge, next generation 9-1-1 access fee, or other amount, the commissioner may spread the recovery over more than one future distribution, taking into account the amount to be recovered and the amount of the anticipated future distributions. In no event may the commissioner spread the recovery over a period to exceed seventy-two months.

Sec. 5749.01. As used in this chapter: (A) "Ton" shall mean two thousand pounds as measured at the point and time of severance, after the removal of any impurities, under such rules and regulations as the tax commissioner may prescribe. (B) "Taxpayer" means any person required to pay the tax levied by Chapter 5749. of the Revised Code. (C) "Natural resource" means all forms of coal, salt, limestone, dolomite, sand, gravel, natural gas, and oil. (D) "Owner", "oil," and "exempt domestic well" have the same meanings as in section 1509.01 of the Revised Code. (E) "Person" means any individual, firm, partnership, association, joint stock company, corporation, or estate, or combination thereof. (F) "Return" means any report or statement required to be filed pursuant to Chapter 5749. of the Revised Code used to determine the tax due. (G) "Severance" means the extraction or other removal of a natural resource from the soil or water of this state. (H) "Severed" means the point at which the natural resource has been separated from the soil or water in this state. (I) "Severer" means any person who actually removes the natural resources from the soil or water in this state. (J) "Average quarterly spot price" means the following: (1) For oil, the average of each day's closing spot price reported for one barrel of crude oil for the calendar quarter that begins six months before the current calendar quarter, as reported by a publicly available source determined by the commissioner; (2) For natural gas, the average of each day's closing spot price reported for one thousand cubic feet of natural gas for the calendar quarter that begins six months before the current calendar quarter, as reported by a publicly available source determined by the commissioner. (K) "Former section 1509.50 of the Revised Code" means section 1509.50 of the Revised Code as it existed before its repeal by this act.

Sec. 5749.02. (A) For the purpose of providing revenue to administer the state's coal mining and reclamation regulatory program, to meet the environmental and resource management needs of this state, to reduce the electric bills of Ohioans, and to reclaim land affected by mining, an excise tax is hereby levied on the privilege of engaging in the severance of natural resources from the soil or water of this state. The tax shall be imposed upon the severer at the rates prescribed by this section: (1) Eight cents per ton of coal; (2) Four cents per ton of salt; (3) Two cents per ton of limestone or dolomite; (4) Two cents per ton of sand and gravel; (5) Ten cents per barrel seven per cent of the total volume of oil severed during the calendar quarter multiplied by the average quarterly spot price for oil applicable to that quarter; (6) Two and one-half cents per thousand cubic feet seven per cent of the total volume of natural gas severed during the calendar quarter multiplied by the average quarterly spot price for natural gas applicable to that quarter; (7) One cent per ton of clay, sandstone or conglomerate, shale, gypsum, or quartzite; (8) Except as otherwise provided in this division or in rules adopted by the reclamation forfeiture fund advisory board under section 1513.182 of the Revised Code, an additional fourteen cents per ton of coal produced from an area under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code for which the performance security is provided under division (C)(2) of section 1513.08 of the Revised Code. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the reclamation forfeiture fund created in section 1513.18 of the Revised Code is equal to or greater than ten million dollars, the rate levied shall be twelve cents per ton. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the fund is at least five million dollars, but less than ten million dollars, the rate levied shall be fourteen cents per ton. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the fund is less than five million dollars, the rate levied shall be sixteen cents per ton. Beginning July 1, 2009, not later than thirty days after the close of a fiscal biennium, the chief of the division of mineral resources management shall certify to the tax commissioner the amount of the balance of the reclamation forfeiture fund as of the close of the fiscal biennium. Any necessary adjustment of the rate levied shall take effect on the first day of the following January and shall remain in effect during the calendar biennium that begins on that date. (9) An additional one and two-tenths cents per ton of coal mined by surface mining methods. (B) After the director of budget and management transfers money from the severance tax receipts fund as required in division (H) of section 5749.06 of the Revised Code, money remaining in the severance tax receipts fund, except for money in the fund from the amounts due under section 1509.50 of the Revised Code, shall be credited as follows: (1) All of the moneys in the fund from the tax levied in division (A)(1) of this section shall be credited to the mining regulation and safety fund created in section 1513.30 of the Revised Code. (2) The money in the fund from the tax levied in division (A)(2) of this section shall be credited to the mining regulation and safety fund. (3) Of the moneys in the fund from the tax levied in divisions (A)(3) and (4) of this section, seven and five-tenths per cent shall be credited to the geological mapping fund and the remainder shall be credited to the mining regulation and safety fund created in section 1513.30 of the Revised Code. (4) Of the moneys in the fund from the tax levied in divisions (A)(5) and (6) of this section, ninety-eighty-five and seven-tenths per cent shall be credited to the Ohio energy credit fund created in section 4928.57 of the Revised Code, twelve and nine-tenths per cent shall be credited to the oil and gas well fund, and ten-one and four-tenths per cent shall be credited to the geological mapping fund. (5) All of the moneys in the fund from the tax levied in division (A)(7) of this section shall be credited to the mining regulation and safety fund. (6) All of the moneys in the fund from the tax levied in division (A)(8) of this section shall be credited to the reclamation forfeiture fund. (7) All of the moneys in the fund from the tax levied in division (A)(9) of this section shall be credited to the mining regulation and safety fund. (C) When, at the close of any fiscal year, the chief finds that the balance of the reclamation forfeiture fund, plus the estimated revenues from the tax levied by division (A)(8) of this section for the remainder of the calendar year that includes the close of the fiscal year, are sufficient to complete the reclamation of all lands for which the performance security has been provided under division (C)(2) of section 1513.08 of the Revised Code, the purposes for which the tax under division (A)(8) of this section is levied shall be deemed accomplished at the end of that calendar year. The chief, within thirty days after the close of the fiscal year, shall certify those findings to the tax commissioner, and the tax levied under division (A)(8) of this section shall cease to be imposed for the subsequent calendar year after the last day of that calendar year on coal produced under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code if the permittee has made tax payments under division (A)(8) of this section during each of the preceding five full calendar years. Not later than thirty days after the close of a fiscal year, the chief shall certify to the tax commissioner the identity of any permittees who accordingly no longer are required to pay the tax levied under division (A)(8) of this section for the subsequent calendar year. (D) On or before the last day of the first month of each calendar quarter, the tax commissioner shall certify and post to the department of taxation's web site the average quarterly spot price applicable to oil and natural gas for that quarter.

Section 2. That existing sections 1509.02, 1509.34, 5703.052, 5749.01, 5749.02, 5749.04, 5749.06, 5749.07, 5749.08, 5749.10, 5749.12, 5749.13, 5749.14, and 5749.15 of the Revised Code are hereby repealed.

Section 3. That section 1509.50 of the Revised Code is hereby repealed, effective on the first day of the first calendar quarter beginning on or after the effective date of this section.

Section 4. Not later than ten days after the effective date of this section, the Director of Budget and Management shall transfer $150,000,000 from the Oil and Gas Well Fund (Fund 5180), used by the Department of Natural Resources, to the Ohio Energy Credit Fund (Fund 5DT1) created in section 4928.57 of the Revised Code, as enacted by this act.

Section 5. All items in this act are hereby appropriated as designated out of any moneys in the state treasury to the credit of the designated fund. For all operating appropriations made in this act, those in the first column are for fiscal year 2026 and those in the second column are for fiscal year 2027. The operating appropriations made in this act are in addition to any other operating appropriations made for these fiscal years.

Section 6.

A	PUC PUBLIC UTILITIES COMMISSION OF OHIO
B	Dedicated Purpose Fund Group
C	5DT1 870652 Ohio Energy Credit Fund	$0	$150,000,000
D	Dedicated Purpose Fund Group Total	$0	$150,000,000

OHIO ENERGY CREDIT FUND

The foregoing appropriation item 870652, Energy Credit Fund, shall be used to pay for bill credit amounts applied to residential customer electricity bills pursuant to section 4928.571 of the Revised Code.

Section 7. Within the limits set forth in this act, the Director of Budget and Management shall establish accounts indicating the source and amount of funds for each appropriation made in this act, and shall determine the manner in which appropriation accounts shall be maintained. Expenditures from operating appropriations contained in this act shall be accounted for as though made in, and are subject to all applicable provisions of, H.B. 96 of the 136th General Assembly.

Section 8. The amendment by this act of sections 1509.02, 1509.34, 5703.052, 5749.01, 5749.02, 5749.04, 5749.06, 5749.07, 5749.08, 5749.10, 5749.12, 5749.13, 5749.14, and 5749.15 of the Revised Code applies on and after the first day of the first calendar quarter beginning on or after the effective date of this section.