Lease Option Removed from H.B. 152; Non-Participation Penalty Remains

By: Steven R. R. Anderson

Today, the Ohio House Energy and Natural Resources Committee held its fourth hearing on H.B. 152, and Rep. Brian Stewart (R-Ashville), co-chairman of the committee and co-sponsor of H.B. 152, took the opportunity to amend the bill once again.

Primarily, this latest amendment removes the option for non-participating landowners to opt into an oil and gas lease under terms prescribed by H.B. 152. Because these terms were problematic for a variety of reasons, this revision is a step in the right direction.

Unfortunately, the newly-revised bill still contains the new, massive “non-participation charge” that will be assessed against any landowner who cannot afford to pay his proportionate share of drilling costs. This provision, alone, is enough to raise serious constitutional concerns about H.B. 152. It is also sufficient to create the previously identified perverse incentives that could lead to a “death-spiral” in the market for oil and gas leases in Ohio.

For as long as the “non-participation charge” remains in the bill, the bill will remain bad law.