Chapter 1510: OIL AND NATURAL GAS MARKETING PROGRAM

1510.01 Oil and natural gas marketing program definitions.

As used in this chapter:

(A) "First purchaser" means:

(1) With regard to crude oil, the person to whom title first is transferred beyond the gathering tank or tanks, beyond the facility from which the crude oil was first produced, or both;

(2) With regard to natural gas, the person to whom title first is transferred beyond the inlet side of the measurement station from which the natural gas was first produced.

(B) "Independent producer" means a person who complies with both of the following:

(1) Produces oil or natural gas and is not engaged in refining either product;

(2) Derives a majority of income from ownership in properties producing oil or natural gas.

(C) "Qualified independent producer association" means an association that complies with all of the following:

(1) It is in existence on December 18, 1997.

(2) It is organized and operating within this state.

(3) A majority of the members of its governing body are independent producers.

(D) "Technical advisory council" or "council" means the technical advisory council created in the division of oil and gas resources management under section 1509.38 of the Revised Code.

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.

Effective Date: 06-14-2000

1510.02 Technical advisory council - powers and duties.

In accordance with this chapter, the technical advisory council shall do all of the following:

(A) Establish procedures by which independent producers in this state may propose, develop, and operate a marketing program to do all of the following:

(1) Demonstrate to the general public the importance and economic significance of the oil and natural gas industry in this state;

(2) Encourage the wise and efficient use of energy;

(3) Promote environmentally sound production methods and technologies in the industry;

(4) Support research and educational activities concerning the industry.

(B) Establish procedures necessary to implement and administer this chapter;

(C) Determine the eligibility of independent producers to participate in referendums and other procedures that may be required to establish a marketing program for oil and natural gas.

Effective Date: 12-18-1997

1510.03 Authority of marketing program.

A marketing program that is established under this chapter may include authority to do at least all of the following:

(A) Carry out the purposes of the program identified in section 1510.02 of the Revised Code;

(B) Enter into contracts with qualified organizations, agencies, or individuals, or any combination thereof, to carry out those purposes;

(C) Contribute to any national or regional marketing program for oil and natural gas if the program is exclusively for the same purposes as the program established under this chapter.

Effective Date: 12-18-1997

1510.04 Petition for referendum to establish a marketing program for oil and natural gas or to amend an existing program.

(A) Independent producers in this state may present the technical advisory council with a petition signed by the lesser of one hundred or ten per cent of all such producers requesting that the council hold a referendum in accordance with section 1510.05 of the Revised Code to establish a marketing program for oil and natural gas or to amend an existing program.

(B) At the time of presentation of the petition to the council under division (A) of this section, the petitioners also shall present the proposed program or amendment, which shall include all of the following:

(1) The rate of assessment to be made on the production of oil and natural gas in this state, which shall not exceed five cents per each gross barrel of oil and one cent per thousand cubic feet of natural gas;

(2) Terms, conditions, limitations, and other qualifications for assessment;

(3) Procedures to refund the assessment.

(C) Before making a decision under this division to approve or disapprove a proposed program or amendment, the council shall publish in at least two appropriate periodicals designated by the council a notice that the program or amendment has been proposed and informing interested persons of the procedures for submitting comments regarding the proposal. After publishing the notice, the council shall provide interested persons with a copy of the proposed program or amendment and an opportunity to comment on the proposed program or amendment for thirty days after the publication of the notice. The petitioners may make changes to the proposed program or amendment based upon the comments received. The council may make technical changes to the proposal to ensure compliance with this chapter. Subsequent to any changes made by the petitioners or any technical changes made by the council to a proposed program or amendment, the council may approve or disapprove the proposed program or amendment.

(D) If the council approves the proposed program or amendment, with any changes made under division (C) of this section, the council shall hold a referendum in accordance with section 1510.05 of the Revised Code to establish a marketing program for oil and natural gas or to amend an existing program.

Effective Date: 12-18-1997; 04-05-2007; 04-06-2007

1510.05 Procedure for referendum.

(A) Not later than ninety days after the technical advisory council has approved a marketing program proposed under section 1510.04 of the Revised Code, or an amendment to such a program, the council shall determine by a referendum whether the eligible independent producers, as determined under division (C) of section 1510.02 of the Revised Code, favor the proposed program or amendment. The council shall cause a ballot request form to be published not less than thirty days before the beginning of the election period established under division (B) of this section in at least two appropriate periodicals designated by the council and shall make the form available for reproduction to any qualified independent producer association.

(B) In a referendum held under this section, each eligible independent producer is entitled to one vote. The council shall establish a three-day period during which eligible independent producers may vote either in person during normal business hours at polling places designated by the council or by mailing a ballot to such a polling place. The council shall send a mail-in ballot by first-class mail to any eligible independent producer who requests one by sending in the ballot request form provided for in division (A) of this section, by calling one of the polling places designated by the council, or by any additional method that the council may provide. A ballot that is returned by mail is not valid if it is postmarked later than the third day of the election period established by the council.

(C) A marketing program or an amendment to a marketing program is favored by independent producers if a majority of the independent producers who vote in the referendum vote in favor of the program or amendment. If the independent producers who vote in the referendum do not favor the proposed program or amendment, the council shall not hold another referendum on the proposed program or amendment during the ten months following the close of the referendum at which the independent producers did not favor the proposed program or amendment.

Effective Date: 12-18-1997

1510.06 Establishing marketing program.

(A) When the independent producers who vote in a referendum held under section 1510.05 of the Revised Code favor a proposed marketing program, the technical advisory council shall order the program established. The council shall appoint an operating committee consisting of seven members. Six of the members shall be independent producers. The council shall select those members from lists of names submitted by qualified independent producer associations. Each member who is an independent producer shall be at least twenty-five years old, be a resident of this state, and have at least five years of active experience in the oil and natural gas industry.

The seventh member shall be a member of an organization that represents farmers. The council shall select that member from a list submitted by such an organization.

Of the initial appointments, the council shall appoint two members for terms of one year, two members for terms of two years, and three members for terms of three years. Thereafter, the council shall appoint each member for a three-year term unless the appointee is to fill a vacancy, in which case the appointee shall be appointed for the unexpired term. Each such subsequent appointment shall be made prior to the expiration date of the preceding or vacant term. The council shall not appoint any member of an operating committee to serve more than three successive full three-year terms.

(B) Each member of an operating committee is entitled to actual and necessary travel and incidental expenses while attending meetings of the committee or while engaged in the performance of official responsibilities delegated to the committee.

(C) No person is liable in a civil action for any actions taken in good faith as a member of an operating committee.

Effective Date: 12-18-1997

1510.07 Council to monitor actions of operating committee.

The technical advisory council shall monitor the actions of an operating committee to ensure all of the following:

(A) A marketing program is self-supporting;

(B) The committee keeps all records that are required for agencies of the state;

(C) All program operations are in accord with both of the following:

(1) The provisions of the marketing program;

(2) This chapter and procedures established under it.

Effective Date: 12-18-1997

1510.08 Assessments on production of oil and natural gas.

(A)

(1) Except as provided in division (A)(2) of this section, an operating committee may levy assessments on the production of oil and natural gas in this state for the purposes of a marketing program established under this chapter.

(2) An operating committee shall not levy an assessment that was not approved by independent producers or that exceeds the amount authorized under division (B)(1) of section 1510.04 of the Revised Code. An operating committee shall not levy an assessment against an independent producer who is not eligible to vote in a referendum for the marketing program that the operating committee administers, as determined under division (C) of section 1510.02 of the Revised Code.

(B) The technical advisory council may require a first purchaser to withhold assessments from any amounts that the first purchaser owes to independent producers and, notwithstanding division (A)(2) of this section, to remit them to the chairperson of the council at the office of the division of oil and gas resources management. A first purchaser who pays an assessment that is levied pursuant to this section for an independent producer may deduct the amount of the assessment from any moneys that the first purchaser owes the independent producer.

(C) A marketing program shall require a refund of assessments collected under this section after receiving an application for a refund from an independent producer. An application for a refund shall be made on a form furnished by the council. The operating committee shall ensure that refund forms are available where assessments for its program are withheld.

An independent producer who desires a refund shall submit a request for a refund not later than the thirty-first day of March of the year in which the request is submitted. The council shall refund the assessment to the independent producer not later than the thirtieth day of June of the year in which the request for the refund is submitted.

(D) An operating committee shall not use moneys from any assessments that it levies for any political or legislative purpose or for preferential treatment of one person to the detriment of another person who is affected by the marketing program that the operating committee administers.

Amended by 129th General AssemblyFile No.28, HB 153, §101.01, eff. 9/29/2011.

Effective Date: 06-14-2000

1510.09 Fund for marketing program.

(A) There is hereby established a fund for any marketing program that is established by the technical advisory council under this chapter. The fund shall be in the custody of the treasurer of state, but shall not be part of the state treasury. Except as authorized in division (B) of this section, all moneys collected pursuant to section 1510.08 of the Revised Code for the marketing program shall be paid into the fund for the marketing program and shall be disbursed only pursuant to a voucher signed by the chairperson of the council for use in defraying the costs of administration of the marketing program and for carrying out sections 1510.02 , 1510.03 , and 1510.11 of the Revised Code.

(B) In lieu of deposits in the fund established under division (A) of this section, the operating committee of a marketing program established under this chapter may deposit all moneys collected pursuant to section 1510.08 of the Revised Code with a bank or a savings and loan association as defined in sections 1101.01 and 1151.01 of the Revised Code. All moneys collected pursuant to section 1510.08 of the Revised Code for the marketing program and deposited pursuant to this division also shall be used only in defraying the costs of administration of the marketing program and for carrying out sections 1510.02 , 1510.03 , and 1510.11 of the Revised Code.

(C) An operating committee shall establish a fiscal year for its marketing program, shall publish an activity and financial report within sixty days of the end of each fiscal year, and shall make the report available to each independent producer who pays an assessment or otherwise contributes to the marketing program that the committee administers and to other interested persons.

(D) In addition to the report required by division (C) of this section, an operating committee that deposits moneys in accordance with division (B) of this section shall submit to the council both of the following:

(1) Annually, a financial statement prepared by a certified public accountant holding valid certification from the Ohio board of accountancy issued pursuant to Chapter 4701. of the Revised Code. The operating committee shall file the financial statement with the council not more than sixty days after the end of each fiscal year.

(2) Monthly, an unaudited financial statement.

Effective Date: 12-18-1997

1510.10 Suspending operation of program.

(A) The technical advisory council temporarily may suspend the operation of a marketing program, or any part of a program, for any reason upon recommendation by the operating committee of the program for a period of not more than twelve consecutive months.

(B) At least once in each five years of operation, or at any time upon written petition by the lesser of one hundred or ten per cent of the independent producers in this state, the council shall hold a hearing as prescribed in Chapter 119. of the Revised Code to consider the continuation of the program.

(C) Not later than thirty days after the close of any hearing to consider the continuation of a marketing program, the council shall recommend continuation or termination of the program, shall give public notice, and shall notify each independent producer of record, all parties appearing at the hearing, and other interested parties of the recommendation.

(D) When the council recommends termination of a marketing program, within forty-five days the council shall conduct a referendum to determine whether independent producers favor the proposed termination. Independent producers favor the termination of the program if a majority of the independent producers who vote in the referendum vote in favor of termination of the program.

Effective Date: 12-18-1997

1510.11 Termination procedure.

(A) When independent producers favor termination of a marketing program established under this chapter, the operating committee of the program and the technical advisory council shall terminate all operations of the program.

(B)

(1) Except as provided in division (B)(2) of this section, upon termination of a program, the council shall return any remaining unobligated moneys to the independent producers who paid the assessments levied under section 1510.08 of the Revised Code during the immediately preceding twelve months and shall prorate the moneys accordingly.

(2) If a program is operated by a nonprofit corporation that is organized under Chapter 1702. of the Revised Code for the purpose of carrying out the purposes identified in division (A) of section 1510.02 of the Revised Code, and if the nonprofit corporation is exempt from federal income taxation pursuant to section 501(a) of the Internal Revenue Code and is described in section 501(c)(3) of the Internal Revenue Code, upon termination of the program, the nonprofit corporation shall distribute any remaining unobligated money to be used for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code or to the federal, a state, or a local government to be used for a public purpose. If there remains any unobligated money after the distribution by the nonprofit corporation, the court of common pleas of the county in which the principal office of the nonprofit corporation is located shall distribute the remaining unobligated money to be used for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, to the federal, a state, or a local government to be used for a public purpose, or to one or more organizations that are organized and operated exclusively for one or more of the purposes that are within the meaning of section 501(c)(3) of the Internal Revenue Code, as the court determines is best to accomplish the exempt purposes of the nonprofit corporation.

Effective Date: 12-18-1997; 09-16-2004

1510.12 Action to enforce compliance.

The technical advisory council may institute an action at law or in equity that appears necessary to enforce compliance with this chapter, a procedure established under it, or a marketing program established under it.

Effective Date: 12-18-1997

1510.13 Prohibited acts regarding assessments.

(A) No person shall knowingly fail or refuse to withhold or remit any assessment levied under section 1510.08 of the Revised Code.

(B) Before criminal proceedings are instituted pursuant to this section, the technical advisory council shall give the alleged violator an opportunity to present the alleged violator's views concerning why the proceedings should not be instituted.

Effective Date: 12-18-1997

1510.99 Penalty.

Whoever violates section 1510.13 of the Revised Code is guilty of a misdemeanor of the fourth degree.

Effective Date: 12-18-1997