Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 ˛ Phone: (614) 466-3615

˛ Internet Web Site: http://www.lsc.state.oh.us/

BILL:

H.B. 443Sub. H.B. 443

DATE:

December 11, 2006May 23, 2006

STATUS:

As Reported by House Agriculture & Natural ResourcesAs Introduced

SPONSOR:

Rep. UeckerRep. Uecker

LOCAL IMPACT STATEMENT REQUIRED:

No —

Minimal cost

 


CONTENTS:

Revises and clarifies various provisions of law governing the Department of Natural Resources, the Coal Mining Law, and the Industrial Minerals Mining Law

 

State Fiscal Highlights

 

STATE FUND

FY 2006

FY 2007

FUTURE YEARS

General Services Division-Operating (Fund 117) Department of Administrative Services

     Revenues

Loss in DNR property management fees

Loss in DNR property management fees

Loss in DNR property management fees

     Expenditures

- 0 -

- 0 -

- 0 -

Enforcement Contraband, Forfeiture, and Other Funds (5 new funds within the Divisions of Forestry; Natural Areas and Preserves, Wildlife, Parks and Recreation, Watercraft)

     Revenues

Potential gain of $17,000 more or less from proceeds from forfeited property, contraband or moneys

Potential gain of $17,000 more or less from proceeds from forfeited property, contraband or moneys

Potential gain of $17,000 more or less from proceeds from forfeited, property, contraband or moneys

     Expenditures

- 0 -

- 0 -

- 0 -

General Revenue Fund

     Revenues

Potential loss of $17,000 more or less in proceeds now transferred to existing DNR funds

Potential loss of $17,000 more or less in proceeds now transferred to existing
DNR funds

Potential loss of $17,000 more or less in proceeds now transferred to existing
DNR funds

     Expenditures

- 0 -

- 0 -

- 0 -

Water and Sewer Fund (Fund 444)

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Draw on current cash balance to support local assessments

Draw on current cash balance to support local assessments

Draw on current cash
balance to support local assessments

State Park Fund (Fund 512)

     Revenues

Potential gain in tens of thousand or more, from the sale of timber

Potential gain in tens of thousand or more, from the sale of timber

Potential gain in tens of thousand or more, from the sale of timber

     Expenditures

- 0 -

- 0 -

- 0 -


 

Capital Project Funds  (Division of Engineering)

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Wildlife Fund (Fund 015)

     Revenues

Minimal gain from additional restitution payments

Minimal gain from
additional restitution payments

Minimal gain from
additional restitution payments

     Expenditures

Minimal savings from
free licenses

Minimal savings from
free licenses

Minimal savings from
free licenses

Waterways Safety Fund (Fund 086) 

     Revenues

Minimal gain from additional identification plate revenue

Minimal gain from
additional identification
plate revenue

Minimal gain from
additional identification
plate revenue

     Expenditures

- 0 -

- 0 -

- 0 -

Note:  The state fiscal year is July 1 through June 30.  For example, FY 2006 is July 1, 2005 – June 30, 2006.

 

·Property Management.  The bill precludes DAS' statutory authority over state property from interfering with the power of DNR to enter into leases of real property, buildings, and to purchase real property, or to prepare plans and specifications for and construct any buildings or other facilities under DNR control.  Any additional resources needed by DNR for these duties will be covered with current funding.  DAS may have to increase property management fees charged to state agencies to cover the fees lost by DNR's exemption. Any increase in fees will affect various state agency funds.

·Law Enforcement and Corrupt Activity Forfeiture Funds.  Several new and existing funds in the Department will experience an increase in proceeds of approximately $17,000 annually from the sale of forfeited property, seized contraband, and forfeited moneys.  The proceeds will be credited to the fund(s) in the Division that actually conducted the investigation.  Any additional revenues will be used to pay the costs of investigations, training or expertise, educational programs, and other purposes. 

·General Revenue Fund Loss.  The GRF would experience a loss of approximately $17,000 in proceeds collected from  forfeited property, forfeited moneys, and contraband.  This money will presumably be transferred to the applicable DNR division funds that conducted the investigation leading to the forfeiture.

·Water and Sewer Fund.  The Water and Sewer Fund (Fund 444) may experience a draw on the fund's current cash balance as advancements are requested by political subdivisions to offset the loss of special assessment exemptions for state nature preserves.

·Timber Sales.  The bill allows the Department to sell standing timber weakened by pestilence or timber that will improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area.  Since this provision is specific to the Division of Parks and Recreation the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage.  The actual amount of new revenue will depend on the number of trees harvested, the species and grade of tree harvested, and local market conditions. 

·Engineering Savings.  The bill makes several changes to the Department's contracting process.  Many of these changes codify current practices.  One of the changes will create incentives for contractors to look for project savings whereby the Department and the contractor would split the savings.  The bill also allows the Department to reduce the amount of wage rate paperwork required in bidding documents.  Currently, the Department does not have an estimate of the amount of savings that may be realized from both provisions. 

·Free Hunting and Fishing Licenses.  The bill allows permanently disabled veterans and former prisoners of war to obtain free hunting and fishing licenses on a multi-year basis or lifetime basis rather than an annual basis.  This change may result in fewer licenses issued annually, in effect saving the Division of Wildlife time and resources to process these licenses.  Any savings are expected to be minimal and will be deposited into the Wildlife Fund (Fund 015). 

·Wildlife Buying Restitution.   The bill adds that buyers of wild animals may also be charged with a fifth-degree felony and be required to pay restitution in the amount of the value of the animal.  Currently, only sellers of wild animals are charged with this offense.  This change may result in a negligible increase in additional revenue to the Wildlife Fund (Fund 015) from buyer restitution payments.

·Historic Watercraft Identification Plates.  The bill eliminates the requirements that historic watercraft identification plates be restricted to wooden boats only.  The Department estimates the Waterways Safety Fund (Fund 086) may experience a minimal increase in identification plate revenue as a result of the change.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

County Auditors

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Minimal increase to track special assessments

Minimal increase to track special assessments

Minimal increase to track special assessments

Local Court

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Note:  For most local governments, the fiscal year is the calendar year.  The school district fiscal year is July 1 through June 30.

 

·Special Assessments.  County Auditors may experience a minimal increase in administrative expenses to track and record property data regarding the exemption of state nature preserves from public entity special assessments.

·Increased Court Costs.  Local courts may experience a minimal increase in administrative expenses to hear cases regarding violations of watercraft and wildlife law, particularly violations regarding boating in federal security zones and buying wild animals.  Any additional expenses are likely to be offset by court costs.


 


 

Detailed Fiscal Analysis

 

The bill makes various changes to the law governing the Department of Natural Resources.  This fiscal note focuses only on those provisions in the bill with fiscal implications.

 

Property Management

 

   The bill precludes the Department of Administrative Services' (DAS) general statutory authority over state property from interfering with the power of the Director of Natural Resources to enter into leases of real property, buildings, and office space for the use of the Department of Natural Resources (DNR), to purchase real property for division or district offices, or to prepare plans and specifications for and construct any buildings or other facilities that the Director may require for the administration of DNR.

 

   DNR notes that no additional staff will be needed to carry out these new duties and any additional office resources that may be needed will be covered from the Division of Real Estate's current budget.

 

   DAS indicates that the change in authority will result in a loss to their General Services Division-Operating Fund (Fund 117).  Currently, DAS' General Services Division charges a property management fee to state agencies.  The fee is in the form of a percentage of the total lease agreement or purchase price of the property.  Currently, the percentage charged to all state agencies is 1.36%.  DAS indicates that with this loss of authority the General Services Division will have to recoup the lost fees by increasing the overall percentage charged to all state agencies.  This will result in an increase in expenditures of various state agencies that use DAS' property management services.  Currently, DAS does not have an estimate of how much they may increase the percentage or how much it may end up costing state agencies.

 

Law Enforcement and Corrupt Activity Forfeiture Funds

 

The bill modifies the forfeited property and money disposition mechanism under the state Corrupt Activity Forfeiture Law and the Contraband Forfeiture Law by (1) expanding the distribution of proceeds, fines, and penalties credited to the Corrupt Activity Investigation and Prosecution Fund  (Fund 629) by allowing DNR to receive a portion of these funds if DNR conducted the investigation, and (2) allowing various divisions of DNR to receive a portion of the proceeds from forfeited contraband or moneys when DNR law enforcement actually seize the contraband or moneys.  The Corrupt Activity Investigation and Prosecution Fund (Fund 629) is administered by the Attorney General.

 

   Corrupt Activity Forfeiture Law

 

   Generally, when property is ordered forfeited pursuant to the Corrupt Activity Forfeiture Law, 10% of the proceeds of all property ordered forfeited is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to the Corrupt Activity Investigation and Prosecution Fund (Fund 629).

 

   From the moneys credited to Fund 629, a certain amount is credited to the law enforcement trust fund of the prosecuting attorney and to the law enforcement trust fund of the law enforcement agency that actually conducted the investigation, be it a county sheriff, municipality, township, or park district.  The bill expands the distribution of the money whereby if a DNR division substantially conducted the investigation, then it would receive a portion of the proceeds.  Currently, none of DNR's funds are credited with any proceeds of any investigations conducted by the Department.  Though it would be presumed that DNR's proceeds would also be credited to Fund 629, DNR states that proceeds are actually deposited into the General Revenue Fund.  The net effect of this change is that the entities currently receiving proceeds will continue receiving them, however, DNR funds will now be credited with the money that currently goes to the GRF.  The Department states that the combined total of these collections under both the Corrupt Activity Forfeiture Law as well as the Contraband Forfeiture Law totaled $17,240 in FY 2005.  This change would result in an annual loss of approximately $17,240 to the GRF with a corresponding gain to the funds outlined below.

 

Under the bill if the Division of Forestry conducts the investigation, the remaining proceeds must be transferred to that Division for deposit into the existing State Forest Fund (Fund 509).  If the Division of Natural Areas and Preserves conducts the investigation, the remaining proceeds must be transferred to the existing Natural Areas Check-Off Fund (Fund 522).  If the Division of Wildlife substantially conducted the investigation, the remaining proceeds must be transferred to the existing Wildlife Fund (Fund 015).  If the Division of Parks and Recreation conducts the investigation, the remaining proceeds must be transferred to the existing State Park Fund (Fund 512).  If the Division of Watercraft substantially conducts the investigation, the remaining proceeds must be transferred to the existing Waterways Safety Fund (Fund 086). 

 

Contraband Forfeiture Law

 

Similar to the Corrupt Activity Forfeiture Law, when certain contraband or forfeited moneys are ordered forfeited pursuant to the Contraband Forfeiture Law, 10% of the proceeds is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to law enforcement trust funds of the law enforcement agency that actually made the seizure of contraband or forfeited moneys.  The bill expands the distribution of the proceeds whereby if the DNR substantially seized the contraband, then the particular division making the seizure would receive a portion of the proceeds.  Like the Corrupt Activity Forfeiture Law, DNR currently does not receive any proceeds from the sale of any seized contraband or forfeited moneys.  According to DNR all of these proceeds in addition to the proceeds collected under the Corrupt Activity Forfeiture Law are credited to the GRF.  The Department reports this combined total to be approximately $17,240 per fiscal year.

 

Under the bill, if the Division of Forestry made the seizure of forfeited contraband or moneys, then the proceeds currently deposited into the GRF must be deposited into the Division of Forestry Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).  If the Division of Natural Areas and Preserves made the seizure, the proceeds must be deposited to the credit of the Division of Natural Areas and Preserves Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).  If the Division of Wildlife made the seizure, the proceeds must be credited to the Division of Wildlife Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).  If the Division of Parks and Recreation made the seizure, the proceeds must be credited to the Division of Parks and Recreation Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).  Finally, if the Division of Watercraft made the seizure, the proceeds must be credited to the Division of Watercraft Law Enforcement Contraband, Forfeiture, and Other Fund (New Fund).

 

Use of money from the new funds

 

For any of the proceeds that are credited to DNR's existing funds, under the Corrupt Activity Forfeiture Law, or any of DNR's new funds, under the Contraband Forfeiture Law, the moneys can only be used to pay the costs of the investigations or prosecutions, for technical training or expertise, for matching funds to obtain federal grants to aid law enforcement in educating adults and children of the dangers of drug abuse, to pay the costs of emergency action relative to the operation of an illegal methamphetamine laboratory if the forfeited property or money involved was that of a person responsible for the operation of the laboratory, or for other law enforcement purposes.  Current law prohibits the specified funds from being used to meet the operating costs of the specified law enforcement agencies that are unrelated to law enforcement. 

 

As of this writing, the Department is uncertain how much of the proceeds may be credited to the aforementioned funds.  Further, the Department does not anticipate the need to hire any additional staff to assist in investigations, provide technical expertise, or program assistance.

 

Internal control.  However, prior to the use of these funds, the Department must adopt a written internal control policy that addresses the use of the proceeds or moneys.  The internal control policy must address the agency's use and disposition of all proceeds and forfeited moneys received and must provide for the keeping of detailed financial records of the receipts of the proceeds and forfeited moneys, the general types of expenditures made out of the proceeds and forfeited moneys, the specific amount of each general type of expenditure, and the amounts that must be used for community preventive education programs such as DARE programs.  Current law states that all financial records of the receipts of the proceeds and forfeited moneys and all information that is prepared and maintained pursuant to the internal control policy are public records.

 

At this time, the Department does not foresee the need to hire any additional staff to account for the financial records and receipts in regard to a new internal control policy.

 

   Reporting requirements

 

The bill requires the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, and Watercraft to each file a financial report with the Attorney General not later than January 31 of each calendar year.  The report will contain information verifying that the proceeds in the fund were spent in accordance with the law.

  

Any additional costs for preparing the report will be handled with current staff and office resources.  Expanding the filing requirements with the Attorney General (AG) is not expected to cause any additional fiscal impact since the AG already performs similar functions.

 


Special assessments on real property in nature preserves

 

The bill exempts state nature preserves from the collection of public entity special assessments for the purposes of sewer, water, or electrical service on real property.  

 

As part of this change, the bill requires the county auditor, for each special assessment levied by a public entity on real property within a nature preserve for purposes of sewer, water, or electrical service, to make and maintain a list showing all of the following:  (1) the name of the owner of each lot, tract, or parcel of land that is exempt, (2) a description of the exempt land, (3) the purpose of the special assessment, and (4) the amount of the uncollected assessment on the exempt land.  The auditor also must record the assessments that are not collected under the bill in the county water works record.  The recording of the assessments does not permit the collection of the assessments until the time that exempt lands are withdrawn from dedication as a nature preserve. 

 

At this time, the County  Auditor's Association reports that any additional administrative requirements for county auditors as outlined in the bill will create a minimal fiscal impact, if any.

 

   Water and Sewer Commission.  To offset the loss from the assessment, a board of county commissioners, legislative authority of a municipal corporation, or other governing board of any other public entity may apply to the Water and Sewer Commission for an advance of money from the existing Water and Sewer Fund (Fund 444) in an amount equal to that portion of the costs of a water or sewer improvement authorized by law that is to be financed by assessments whose collection is prohibited under the bill.  The application for such an advance of money must be made in the manner prescribed by rules of the Commission.  Upon collection of any assessment whose collection was prohibited under the bill, the board of county commissioners, legislative authority, or other governing board must repay the Commission the amount of any money advanced by it in regard to the assessments. 

 

In discussions with the Water and Sewer Commission, there is currently no extra money in Fund 444 to support a significant number of advancements from local governments.  Over the past few years the Commission has disbursed between $500,000 and $1,000,000 in loans.  In most cases the loans are paid back by political subdivisions allowing Fund 444 to operate as a revolving loan fund.  However, since the bill states that upon collection of any assessment whose collection was prohibited under the bill (in this case a state nature preserves), the Commission does not anticipate any of the advancements will be paid back to Fund 444.  Ultimately, if the cash balance in Fund 444 is drawn down by advancements, various political subdivisions may not have the dollars to cover the full costs of certain utility projects.  The amount of the advancements will depend on the level of assessment and the amount of state nature preserve property that would have been assessed.  The Department states that the assessment exemption would apply to all existing nature preserves and future nature preserves.

 

Sale of timber

 

    Currently, DNR is authorized to sell timber in a manner that will benefit the Division of Parks and Recreation that as a result of wind, storm, or any other natural occurrence may present a hazard to life or property or timber that has fallen on lands under the control and management of the Division.  The bill also allows the Chief to sell standing timber that has been weakened by pestilence and presents a hazard to life or property, or any timber that requires management to improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area. 

 

Since this provision is specific to the Division of Parks and Recreation, the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage.  The actual amount of revenue the Department may realize per park will depend on several factors including the number of trees harvested, the species and grade of tree harvested, and local market conditions.  That said, in total, annually, Fund 512 may realize a range of increased revenue from tens of thousands of dollars to hundreds of thousands of dollars depending on certain conditions.

 

   Currently, the Department does not have an estimate of the amount of timber revenue it may realize.  Furthermore, the Department indicates that these new provisions will allow the Department to harvest timber in parks as a result of the Emerald Ash Borer beetle infestation as well as giving the Division flexibility in clearing logs for habitat management, fire protection, and opening areas around lodges for better viewing by visitors.

 

Contracting

 

Bidding threshold.  Currently, the Department is not required to bid out a construction or maintenance project if the project costs less than $10,000.  The bill increases this threshold to $25,000.  The Department notes that this increase is merely to adjust the bidding threshold to coincide with current market price for labor and materials.  The Department does not anticipate an increase in in-house construction and maintenance projects as a result of the increase.

 

"Value engineering."  The bill authorizes the Director to insert in any contract awarded under DNR's contracting authority a clause providing for value engineering change proposals.  This incentive will allow a contractor who has been awarded a contract to propose a change in the plans and specifications of the project that saves DNR time or money on the project.  The savings from the proposal must be divided between DNR and the contractor according to guidelines established by the Director, resulting in the contractor  receiving at least 50% of the savings from the proposal. 

 

The Department notes that this provision will result in savings for both the Department and the contractor.  The contractor and the Department will determine how much a value engineering change will reduce the project's total cost and split the amount of the savings.  Any additional savings will be credited to the Department's capital project funds.

 

Completing work.  Under the bill when DNR determines that any contract work performed for the Department is not completed to specifications or as intended in the contract, DNR may require the contractor to provide, at no additional expense to DNR, any additional labor and materials that are necessary to complete the improvements at the level of quality and within the time of performance specified in the contract.  The bill requires these procedures concerning such a requirement together with its format must be specified in the contract.  If the contractor fails to comply with the requirement within the period specified in the contract, DNR may take action to complete the work through other means, up to and including termination of the contract.

 

Prevailing wage rate notices.  The Wages and Hours on Public Works Law requires every public authority authorized to contract for or construct with its own forces a public improvement, to have the Director of Commerce determine the prevailing wage rates of mechanics and laborers for the class of work called for by the public improvement in the locality where the work is to be performed.  The schedule of wages must be attached to and made part of the bid specifications.  A copy of the schedule must be filed with the Director before the contract is awarded.  The bill provides that DNR must include language in the contracts requiring the wage rate schedule be obtained electronically from the Department of Commerce, rather than attaching them to the actual bidding documents. 

 

The Department notes that this change will create considerable printing and paper cost savings.  Currently, 50% or more of contract documents are wage rate sheets.  The Department recovers these costs by building them into the contract.

 

Provisions with Minimal or No Fiscal Effect

 

·Chief Engineer.  The bill requires the Chief Engineer of the Division of Engineering to be either a Certified Professional Engineer or a Certified Professional Architect.  This provision will have no fiscal effect on the Department's operations.

·Credit cards.  The bill allows the supervisors of a soil and water conservation district (SWCD), or any approved employee of the district to use credit cards to pay for various expenses of the district.  This provision was a recommendation by the Department's internal auditor and the Attorney General and will help make daily operations more efficient.  Money in a county's special fund for the SWCD (typically from a tax levy used to support the district) may be used to pay the credit card expenses.

·Discretionary suspension or revocation of licenses and permits.  The bill makes violations related to the protection of wild animals, shooting near airports, or any rule of the Division of Wildlife resulting in the suspension or revocation of a license or permit discretionary rather than mandatory.  If fewer suspensions occur as a result of the bill, the Department may see a negligible decrease in relicensing revenue.  This change would allow courts more flexibility in making suspensions on a case-by-case basis.

·Water diversion.  The bill requires the Director to issue a water diversion permit to any person who lawfully diverted more than 100,000 gallons per day of any waters of the state out of the Ohio River Drainage basin during the calendar year ending October 14, 1984.  This provision addresses three diversions that did not get a permit before the Revised Code was changed in 1984.  The bill does not require applicable entities to pay the current $1,000 application fee.

·Migratory game birds.  The bill eliminates the provision against using a rifle, at any time, in taking migratory game birds.  This provision was included to be consistent with federal law, which allows rifles to be used on migratory birds for wildlife control purposes.  This provision will not affect the Division of Wildlife's operations.

·River designations.  The bill revises the statutes governing the authority of the Director to declare part or parts of any watercourse in the state as a wild, scenic, or recreational river area, and revises in part the classifications for "wild river areas," "scenic river areas," and "recreational river areas."  This provision may result in additional designation of such areas; however, such duties will be handled with current budgetary resources.

·Well sealing reports.  The bill establishes requirements governing the submission of well sealing reports.  Currently, well sealing reports are governed by agency rules.  The bill eliminates this rule-making requirement and instead establishes the well sealing report requirements in statute.  The Division of Water has an on-line version of a well sealing report.  The Division does not anticipate any additional costs from this provision. 

·Education requirements.  The bill requires the Division of Wildlife to promote, educate, and inform citizens about conservation and values of fishing, hunting, and trapping.  The bill also requires the Division of Watercraft to promote, educate, and inform citizens about conservation, navigation, safety practices, and benefits of recreational boating.  These provisions merely codify activities already performed by the divisions.

·Dredging spoils.  The bill changes the authority to give away or sell the spoils from dredging canal areas to the Director of Natural Resources rather than the Chief of the Division of Water.  This change will have no fiscal impact.

·Deer and wild turkey permits.  The bill removes the word "special" when referring to deer and turkey permits and simply calls them what they are, deer permits and turkey permits.  Hunters are required to obtain these permits in addition to a hunting license if they want to hunt these animals.  This change will reduce the confusion that the word "special" often causes.  This provision will have no fiscal impact.

·Disabled veterans and former POW permits and licenses.  Currently, permanently disabled veterans and former prisoners of war can obtain free annual hunting and fishing licenses, permits, and stamps.  However, the bill adds that these free licenses, permits, and stamps may be obtained for a multi-year basis or life-time basis as well.  This provision may result in minimal savings to the Wildlife Fund (Fund 015) by reducing the processing of annual licenses.

·Watercraft titles.  The bill requires the Chief of the Division of Watercraft to cancel a watercraft certificate of title if it appears the title is no longer required.  Currently, the Chief only cancels a certificate of title if it has been improperly issued.  Adding the new responsibility of canceling titles should not add any additional financial or administrative burden to the Division.

·Use of Natural Areas and Preserves Fund.  The bill expands the use of the Natural Areas Check-off Fund (Fund 522) to be used for routine maintenance for health and safety purposes.  Currently, the money in the fund is used for purposes such as acquisition of new or expanded natural areas, nature preserves, and wild, scenic, and recreational river areas.  The Department notes that current budgetary resources in the funds will support the fund's expanded purpose.

·Canal lands.  The bill makes several changes to administration of the canal lands program such as distinction between the administrative authority of the Chief of Division of Water and the Director and eliminates an obsolete exception that previously transferred canal lands to the Department of Transportation and the Ohio Historical Society.  The bill also requires the Division of Water to have the care and control of all canals and canal reservoirs owned by the state, and the water in them, and to protect, operate, and maintain them, and keep them in repair.  The care and control provision codifies current practice and will have no fiscal effect.

·Wildlife diversity database.  The Division of Wildlife has already developed a wildlife diversity database.  The bill states that information in the database is considered public record and is available upon request; however, information regarding sensitive site locations of species and features are not subject to the Public Records Law if the Chief determines the release of such information could be detrimental to the conservation of a species or feature.  This provision will have no fiscal effect.

·Security required for clerk of court of common pleas as authorized agent.  Currently, the Chief of the Division of Watercraft or the Chief's authorized agent may issue registration certificates for watercraft.  An agent must post a security with the Division.  The bill requires that if a clerk of common pleas applies to be an authorized agent the Chief must accept the clerk's bond as a security.  This provision will create no fiscal effect and will eliminate the need of the clerks of courts to obtain two bonds, one for the court and one for the Department.

·Prohibitions against operation of a vessel in certain areas.  Currently, a boater cannot operate his or her vessel near a bathing area; cannot create wakes within specified time periods near marinas, certain harbors, and certain buoyed areas; operate in any restricted or controlled area; or within 300 feet of a diver's flag.  The bill adds entering a federally declared security zone as defined in federal regulations to the list.  If so, a perpetrator  could be found guilty of a first-degree misdemeanor.  These zones are along ports on the Ohio River and Lake Erie.  The Department notes that no additional resources will be needed to patrol these zones.  Local courts may experience an increase in cases related to this issue; however, an increase is likely to be covered with court fees.

·Division of Real Estate and Land Management.  The bill authorizes the Division of Real Estate and Land Management to coordinate and administer compensatory mitigation grant programs and other programs for streams and wetlands as approved in accordance with certifications and permits issued under Sections 401 and 404 of the Federal Water Pollution Control Act by the Environmental Protection Agency and the United States Army Corps of Engineers.  This provision was included in the bill so that if and when a partnership with the Department of Transportation and Ohio Environmental Protection Agency is formed, DNR can be in a position to receive grants.

·Recycling market development plan.  The bill repeals the section of law that requires the Chief of the Division of Recycling and Litter Prevention to prepare a revised state recycling market development plan every two years.  This change was due to the elimination of the Interagency Work Group (IWG) that was previously responsible for the plan.  Despite the elimination of the IWG, the Department continues to develop and or support recycling market development.  This provision will create no fiscal impact.

·Wildlife collecting.  The bill makes minor changes to the collection of wildlife.  The bill requires someone that wants to collect or possess wild animals or their nests or eggs to apply for a $25 annual collecting permit, provided that the Chief finds that the collection is acceptable.  Previously, the Chief had to issue the permit if the collecting application was made in good faith.  The bill also changes the collecting reporting requirement from February 15 to March 15 of each year for administrative ease.  The Department does not anticipate any change in the revenue stream from collecting permits as a result of the bill.

·Ginseng collection.  Current law establishes requirements governing the collection of ginseng and establishes certain definitions related to those requirements.  Under current law, "harvest" means to cut, pick, dig, root up, gather, or otherwise collect ginseng.  The bill adds attempting to cut, pick, dig, root up, gather, or otherwise collect ginseng to the definition.  The Department indicates that this provision merely tightens up the law to allow more enforcement regarding illegal ginseng collection.  No additional costs are expected with this provision.

·Floodplain management.  The bill makes numerous changes to the statutes that govern the floodplain management program.  In some instances, the bill simply relocates statutes, and in others it makes minor changes to the statutes.  The Department notes that none of the provisions will create a fiscal impact to the Department or local governments and many of the provisions codify current practices.  The majority of changes remove the rule-making authority related to the floodplain management program and put them into statute.

·Use of Water Management Fund.  The bill expands the use of the Water Management Fund to be used for the purposes of administering the water diversion and consumptive use permit programs established in current law and to perform watershed and water resource studies for the purposes of water management planning.  Currently, the fund is used to make loans and grants to governmental agencies for water management and water supply improvements, as well as acquiring, constructing, reconstructing, improving, equipping, maintaining, operating, and disposing of water management improvements.  The Department indicates that this provision merely codifies current practices regarding the diversion of water from the Great Lakes basin to the Ohio River basin.  Furthermore, the Department does not expect any additional draw on the Water Management Fund.

·Ohio natural heritage database.  The bill removes the word habitat from the requirement that the Chief of the Division of Natural Areas and Preserves prepare and maintain surveys and inventories of natural areas and habitats of rare and endangered species of plants and animals.  The bill also requires the Chief to prepare and maintain surveys and inventories of other unique natural features.  Further, the bill limits certain database records from the Public Records Law for the conservation of a certain species or unique natural feature.  The Department notes that these provisions will create no fiscal effect on current operations.

Historic watercraft identification plates.  The bill eliminates the requirement that historic watercraft identification plates for boats older than 25 years old be wooden boats.  This change may result in the Department seeing an increase in requests for historic identification plates and in turn an increase in identification plate revenue.  Any revenue gain is expected to be minimal and would be deposited in the Waterways Safety Fund (Fund 086).  The Department notes that elimination of the word "wooden" will allow those boat owners who have a boat that is 25 years old and is made of fiberglass or other material to be eligible for the plate.

·Ohio Water Resources Council.  The bill adds four members to the advisory group for the Water Resources Council.  Furthermore, the bill allows the Council to enter into contract and agreements with federal agencies to assist in accomplishing the Council's objectives.  Any additional expenditures of the Council is expected to be minimal and will be paid out of the Water Resources Council Fund (Fund 4X8).  The Department notes that adding additional members to the advisory group will expand the expertise of the Council and allow for more stakeholder participation.

·Buying, selling, or offering for sale wild animals.  Currently if someone sells a wild animal or animal parts, and the value of the wild animal is more than $1,000, he or she may be found guilty of a fifth-degree felony and be required to pay restitution to the Wildlife Fund (Fund 015) for the value of the animal.  The bill adds that buyers of wild animals or animal parts may also be charged for the same offense.  Currently, the actual number of cases where restitution is required to be paid is unknown.  As for any additional costs to the courts, it is possibly that court costs and fines may be used to offset any court administrative costs.  The Department anticipates a negligible amount of additional revenue from buyer restitution payments.

·Proceedings for forfeiture of seized vehicles, boats, and other devices used in unlawful taking or transporting of wild animals.  The bill expands the time a forfeiture proceeding can take place from 5 days to 30 days after a wildlife officer seizes a motor vehicle, all-terrain vehicle, or boat used in the unlawful taking or transporting of wild animals, and any net, seine, trap, ferret, gun, or other device used in the unlawful taking of wild animals, is a public nuisance.  This change may result in minimal administrative savings to the Division of Wildlife.

·Market Development for Synthetic Rubber.  The bill adds that grants from the Scrap Tire Grant Fund may also be used to support market development activities for synthetic rubber from tire manufacturing processes and tire recycling processes.  The Department indicates that they anticipate a slight increase in grant requests due to the change; however, the current levels of grant awards is not expected to change significantly.

·Advertising requirements.  Currently, DNR has the power to contract for the general construction, improvement, or maintenance of facilities on lands and waters under the control of the Department.  The bill revises the requirement that DNR advertise the contract in the county where it is to be let once a week for four consecutive weeks and state that the advertising requirement only has to occur in the region where the activity is to occur rather than the county.  This provision codifies current practices.  Currently, the Division of Engineering advertises contracts in eight newspapers throughout the state.  The Department's advertising costs typically range from $2,500 to $5,000 per project.

·Emergency bid solicitation.  The Director is not required to advertise for bids regardless of the cost of the contract if it involves an exigency that concerns the public health, safety, or welfare, or addresses an emergency situation in which timeliness is crucial in preventing the cost of the contract from increasing significantly.  Regarding such a contract, the Director may solicit bids by sending a letter to a minimum of three contractors in the region where the contract is to be let or by any other means that the Director considers appropriate.  The Division of Engineering notes that this provision codifies a practice the Department has been using.

·Exigency occurrences.  Under existing law, when an emergency situation arises that would materially impair the successful construction or completion of a project, improvement, or building, the Director may make necessary plan and specification change orders.  The bill revises this provision by authorizing the Director to revise related plans and specifications as necessary to address the exigency through the issuance of an addendum prior to the opening of bids or, in accordance with procedures established in the Public Improvements Law, through the issuance of a change order after the contract has been awarded.  The Department indicates that this provision codified current practices.  Furthermore, the Department notes that the ability to write change orders of contingency funds in the past has resulted in project time-savings.

 

State Fiscal Highlights

 

STATE FUND

FY 2007

FY 2008

FUTURE YEARS

Enforcement Contraband, Forfeiture, and Other Funds (Five new funds within the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, Watercraft)

     Revenues

Potential gain of $17,000 more or less from proceeds from forfeited property, contraband, or moneys

Potential gain of $17,000 more or less from proceeds from forfeited property, contraband, or moneys

Potential gain of $17,000 more or less from proceeds from forfeited, property, contraband, or moneys

     Expenditures

- 0 -

- 0 -

- 0 -

State Park Fund (Fund 512)

     Revenues

Potential gain in tens of thousands or more from the sale of timber

Potential gain in tens of thousands or more from the sale of timber

Potential gain in tens of thousands or more from the sale of timber

     Expenditures

- 0 -

- 0 -

- 0 -

Capital Project Funds  (Division of Engineering)

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Potential savings through value engineering and paperwork reduction

Wildlife Fund (Fund 015)

     Revenues

Minimal gain from additional restitution payments

Minimal gain from additional restitution payments

Minimal gain from additional restitution payments

     Expenditures

Minimal savings from
free licenses

Minimal savings from
free licenses

Minimal savings from
free licenses

Waterways Safety Fund (Fund 086)

     Revenues

Minimal gain from additional identification plate revenue and title transfer fees

Minimal gain from additional identification plate revenue and title transfer fees

Minimal gain from additional identification plate revenue and title transfer fees

     Expenditures

- 0 -

- 0 -

- 0 -

Water Resources Council Fund (Fund 4X8)

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Minimal increase in administrative expenses due to new members and authority

Minimal increase in administrative expenses due to new members and authority

Minimal increase in administrative expenses due to new members and authority

Automated Title Processing Fund (Fund 849)

     Revenues

Minimal gain from watercraft title transfer fees

Minimal gain from watercraft title transfer fees

Minimal gain from
watercraft title transfer fees

     Expenditures

- 0 -

- 0 -

- 0 -

Geological Mapping Fund (Fund 511)

     Revenues

Gain of $26,625 from new severance tax revenue

Gain of $26,625 from new severance tax revenue

Gain of $26,625 from new severance tax revenue

     Expenditures

- 0 -

- 0 -

- 0 -

Reclamation Forfeiture Fund (Fund 531)

     Revenues

Overall gain of $997,182; gain from lien collections and fine moneys

Gain of $1.68 million in new supplemental severance tax revenue; gain from lien collections and fine moneys

Gain of $1.68 million in new supplemental severance tax revenue; gain from lien collections and fine moneys

     Expenditures

Unknown increase to
cover reclamation costs, provide tax credits, and
cover the expenses of the Advisory Board

Unknown increase to
cover reclamation costs, provide tax credits, and
cover the expenses of the Advisory Board

Unknown increase to
cover reclamation costs, provide tax credits, and
cover the expenses of the Advisory Board

Coal Mining and Reclamation Reserve Fund (Fund 527)

     Revenues

Overall gain of $438,064

Gain of $1,238,064 in new severance tax revenue

Gain of $1,238,064 in new severance tax revenue

     Expenditures

Increase to hire permitting and inspection staff;
potential increase in administrative costs

Increase to hire permitting and inspection staff;
potential increase in administrative costs

Increase to hire permitting and inspection staff;
potential increase in administrative costs

Unreclaimed Lands Fund (Fund 529)

     Revenues

Overall gain of $659,570

Overall gain of $659,570

Overall gain of $659,570

     Expenditures

Savings from transfer elimination

Savings from transfer elimination

Savings from transfer elimination

General Revenue Fund and Potentially Other State Funds

     Revenues

Potential loss of $17,000 in proceeds now transferred to existing DNR funds

Potential loss of $17,000 in proceeds now transferred to existing DNR funds

Potential loss of $17,000 in proceeds now transferred to existing DNR funds

     Expenditures

Potential increase of approximately $5 million to cover bill's intent

Potential increase of approximately $5 million to cover bill's intent

Potential increase of approximately $5 million to cover bill's intent

Mine Land Set-Aside Fund (New Fund)

     Revenues

Potential gain from federal grant awards and interest earnings

Potential gain from federal grant awards and interest earnings

Potential gain from federal grant awards and interest earnings

     Expenditures

- 0 -

- 0 -

- 0 -

Surface Mining Fund (Fund 527)

     Revenues

Potential gain in fees, collection of liens, investment earnings, and penalties

Potential gain in fees, collection of liens, investment earnings, and penalties

Potential gain in fees, collection of liens, investment earnings, and penalties

     Expenditures

- 0 -

- 0 -

- 0 -

Note:  The state fiscal year is July 1 through June 30.  For example, FY 2007 is July 1, 2006 – June 30, 2007.  For the purposes of this fiscal analysis, a minimal effect on a state fund means an estimated change of less than $100,000 per year.

 

·        Law enforcement and corrupt activity forfeiture funds.  Several new funds in the Department will experience an increase in proceeds in total of approximately $17,000 annually from the sale of forfeited property, seized contraband, and forfeited moneys.  The proceeds will presumably be credited to the fund(s) in the division that actually conducted the investigation.  These new funds will be created in the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, and Watercraft and will be called the Law Enforcement Contraband, Forfeiture, and Other Fund(s).  Any additional revenues credited to these funds will be used to pay the costs of investigations, training or expertise, educational programs, and other purposes.

·        General Revenue Fund loss.  The GRF would experience a loss of approximately $17,000 in proceeds collected from forfeited property, forfeited moneys, and contraband.  This money will be transferred to the newly created Law Enforcement Contraband, Forfeiture, and Other Fund in each division that conducted the investigation leading to the forfeiture or seizure.

·        Timber sales.  The bill allows the Department to sell standing timber weakened by pestilence or timber that will improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area.  Since this provision is specific to the Division of Parks and Recreation the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage.  The actual amount of new revenue will depend on the number of trees harvested, the species and grade of tree harvested, and local market conditions. 

·        Engineering savings.  The bill makes several changes to the Department's contracting process.  Many of these changes codify current practices.  One of the changes will create incentives for contractors to look for project savings whereby the Department and the contractor would split the savings.  The bill also allows the Department to reduce the amount of wage rate paperwork required in bidding documents.  Currently, the Department does not have an estimate of the amount of savings that may be realized from both provisions. 

·        Free hunting and fishing licenses.  The bill allows permanently disabled veterans and former prisoners of war to obtain free hunting and fishing licenses on a multi-year basis or lifetime basis rather than an annual basis.  This change may result in fewer licenses issued annually, in effect saving the Division of Wildlife time and resources to process these licenses.  Any savings are expected to be minimal.  Like other such licenses, these fees will be deposited into the Wildlife Fund (Fund 015). 

·        Wildlife buying restitution.  The bill adds that buyers of wild animals may also be charged with a fifth-degree felony and be required to pay restitution in the amount of the value of the animal.  Currently, only sellers of wild animals are charged with this offense.  This change may result in a negligible increase in additional revenue to the Wildlife Fund (Fund 015) from buyer restitution payments.

·        Historic watercraft identification plates.  The bill eliminates the requirements that historic watercraft identification plates be restricted to wooden boats only.  The Department estimates the Waterways Safety Fund (Fund 086) may experience a minimal increase in identification plate revenue as a result of the change.

·        Ohio Water Resources Council.  The Ohio Water Resources Council Fund (Fund 4X8) may experience a minimal increase in expenditures for reimbursement for four additional members and for any administrative expense related to its expanded duties with federal agencies.

·        Watercraft title transfers.  Both the Waterways Safety Fund and the Automated Title Processing Fund may receive a small amount of revenue from the new transfer title fee applied to certain watercraft.  Any gain is expected to be minimal.

·        Geological Mapping Fund.  Based on the new severance tax, the Geological Mapping Fund (Fund 511) will experience a gain of $26,625 in revenue. Current tax collections are $100,575 and new collections are estimated at $127,200.  It is unknown how DNR will distribute these added funds.

·        Reclamation Forfeiture Fund.  The new supplemental severance tax will bring in an additional $997,182 in revenue to the Reclamation Forfeiture Fund (Fund 531).  The amount is derived by taking the estimated new revenue of $1.68 million and subtracting the current collections of $682,818.  Over time the $1.68 million in revenue to the fund may be drawn down by reclamation costs and tax credits taken by operators.  A current estimate of what these draws may be is unknown.  Offsetting some of this loss is the possible increase in the supplemental tax rate as approved by the Reclamation Forfeiture Fund Advisory Board.  The Board may also decrease the tax rate if the balance in the fund is considered too high.  The amount of revenue the tax credit may draw down will be no more than the amount of revenue collected by the fund.

·        Coal Mining and Reclamation Reserve Fund.  The Coal Mining and Reclamation Reserve Fund (Fund 527) will experience a gain of $1,238,064 from the changes in the severance tax.  This amount is based on current collections of $924,336 and collections of $2,162,400 under the new tax rate and distribution formula.  Initially, the $1,238,064 will be further drawn down from a loss in acreage fees estimated at $400,000 annually as well as $400,000 DNR estimates it will incur in new permitting and inspection personnel costs.  Accounting for these draws results in a total gain of $438,064 in the first year.  Over time the fund will continue to receive approximately $2,162,400 in severance tax revenue.  This fund may also experience minimal added administrative costs related to general operations of the Coal Regulatory Program.

·        Unreclaimed Land Fund.  The changes in the severance tax and distribution formula will result in an initial loss to the Unreclaimed Land Fund (Fund 529) of approximately $90,430.  The figure is based on current revenue collections of $344,830 and estimated new revenue collections of $254,400.  However, though this fund may experience a loss from the severance tax changes, the fund will now keep upwards of $1 million that was previously transferred to the Reclamation Forfeiture Fund to cover needed reclamation project costs.  Based on past transfer rates, it is likely this fund will experience savings of $750,000 annually.  Applying this savings rate to the loss of $90,430 from the severance tax changes results in an overall gain of $659,570.  This added revenue will likely be used for the state's Abandoned Mine Lands Program.

·        General Revenue Fund and potentially other state funds.  Section 3 of the bill states that it is the intent of the General Assembly to appropriate $5 million for the reclamation of land affected by surface mining.  The bill does not specify which fund or funds will provide the $5 million.  Therefore, LSC assumes the $5 million may come from the GRF or other state funds.

·        Mine Land Set-Aside Fund.  The bill creates the new Mine Land Set-Aside Fund.  The fund will be used to receive and administer grants from the federal government.  The fund may experience a gain in revenue from the grant awards as well as interest earnings credited to the fund.  The amount of these interest earnings is unknown but could potentially be $100,000 more or less annually.

·        Surface Mining Fund.  The Surface Mining Fund (Fund 527) may experience a gain in revenue from the changes in the Industrial Minerals Law.  Most of these revenues will result in a minimal gain to the fund and will come from fees, collection of liens, investment earnings, and penalties.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

County Auditors

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Minimal increase to track special assessments

Minimal increase to track special assessments

Minimal increase to track special assessments

Local Courts

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Minimal increase in court costs to hear cases related to watercraft and wildlife law violations

Counties - County Recorders

     Revenues

Potential minimal gain in filing fees

Potential minimal gain in filing fees

Potential minimal gain in filing fees

     Expenditures

Potential minimal increase in administrative costs

Potential minimal increase in administrative costs

Potential minimal increase in administrative costs

Counties and Townships - Boards of Zoning Appeals

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Potential minimal increase in administrative costs to revise zoning resolutions and review zoning certificates

Potential minimal increase in administrative costs to revise zoning resolutions and review zoning certificates

Potential minimal increase
 in administrative costs to revise zoning resolutions
 and review zoning
certificates

Courts of Common Pleas

     Revenues

Minimal gain from boat transfer title fees

Minimal gain from boat transfer title fees

Minimal gain from boat transfer title fees

     Expenditures

Minimal increase in administrative costs to hear zoning appeals; potential minimal rules savings from rules filings

Minimal increase in administrative costs to hear zoning appeals; potential minimal rules savings from rules filings

Minimal increase in administrative costs to hear zoning appeals; potential minimal rules savings from rules filings

Note:  For most local governments, the fiscal year is the calendar year.  The school district fiscal year is July 1 through June 30.  For the purposes of this fiscal analysis, a minimal expenditure increase means an estimated annual cost of no more than $5,000 for any affected local court or court of common pleas.  Also, in regard to other local governments minimal means an estimated expenditure increase of:  (1) no more than $5,000 for any affected county, city, or township with a population of 5,000 or more, and (2) no more than $1,000 for any affected village or township with a population of less than 5,000.

 

·        Special assessments.  County Auditors may experience a minimal increase in administrative expenses to track and record property data regarding the exemption of state nature preserves from public entity special assessments.

·        Increased court costs.  Local courts may experience a minimal increase in administrative expenses to hear cases regarding violations of watercraft and wildlife law, particularly violations regarding boating in federal security zones and buying wild animals.  Any additional expenses are likely to be offset by court costs.

·        County recorders.  County recorders may experience a minimal increase in administrative costs to file statements indicating a lien on property where surface mining has occurred and the estimated costs to reclaim land as well as filing a certificate to either modify or release the lien.  Any costs incurred by county recorders will likely be offset by filing fees authorized under R.C. 317.32.

·        County boards of commissioners and township boards of trustees.  County boards of county commissioners and boards of township trustees may experience minimal costs to include provisions in their zoning resolution that allows for surface mining operations to be conducted in any district or zone in which aggregate minerals are located.  These costs may include reviewing conditional zoning certificates as they relate to surface mining operations, reviewing written recommendations by the county engineer, sending notices, and conducting hearings.  As part of this process county engineers experience minimal costs to prepare written recommendations.

·        County courts of common pleas.  If an applicant or a board of township trustees is not satisfied with the decision of the board of county commissioners regarding the issuance of a conditional zoning certificate, the applicant or the board of township trustees may appeal the decision to the appropriate court of common pleas.  If this happens, courts of common pleas may experience administrative costs to hear appeals and make a decision on the case.  Certain court costs are likely to be offset by court fees.  Also, the bill eliminates the requirement that certain Division of Wildlife rules be filed with the local clerk of the court of common pleas.  This provision could create minimal savings to the clerk. Offsetting some of these expenditures are revenues from the transfer of watercraft title fees that clerks will now collect.  Clerks will receive a portion of the $5 fee charged.  The amount of revenue from this fee is expected to be minimal.


 


 

Detailed Fiscal Analysis

 

The bill makes various changes to the law governing the Department of Natural Resources (DNR), the Coal Mining Law, and the Industrial Minerals Law.  A discussion of the fiscal effects related to each of these areas is discussed in the Detailed Fiscal Analysis.  Please consult the LSC Bill Analysis for more information on individual provisions.

 

I.  Department of Natural Resources Provisions

 

A.  Law Enforcement and Corrupt Activity Forfeiture Funds

 

The bill modifies the forfeited property and money disposition mechanism under the state Corrupt Activity Forfeiture Law and the Contraband Forfeiture Law by (1) expanding the distribution of proceeds, fines, and penalties credited to the Corrupt Activity Investigation and Prosecution Fund  (Fund 629) by allowing DNR to receive a portion of these funds if DNR conducted the investigation, and (2) allowing various divisions of DNR to receive a portion of the proceeds from forfeited contraband or moneys when DNR law enforcement actually seize the contraband or moneys.  The Corrupt Activity Investigation and Prosecution Fund (Fund 629) is administered by the Attorney General.

 

1.  Corrupt Activity Forfeiture Law.  Generally, when property is ordered forfeited pursuant to the Corrupt Activity Forfeiture Law, 10% of the proceeds of all property ordered forfeited is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to the Corrupt Activity Investigation and Prosecution Fund (Fund 629).

 

From the moneys credited to Fund 629, a certain amount is credited to the law enforcement trust fund of the prosecuting attorney and to the law enforcement trust fund of the law enforcement agency that actually conducted the investigation, be it a county sheriff, municipality, township, or park district.  The bill expands the distribution of the money whereby if a DNR division substantially conducted the investigation, then it would receive a portion of the proceeds.  Currently, none of DNR's funds are credited with any proceeds of any investigations conducted by the Department.  Though it would be presumed that DNR's proceeds would also be credited to Fund 629, DNR states that proceeds are actually deposited into the General Revenue Fund. 

 

The net effect of this change is that the entities currently receiving proceeds will continue receiving them, however, DNR funds will now be credited with the money that currently goes to the GRF.  The Department states that the combined total of these collections under both the Corrupt Activity Forfeiture Law as well as the Contraband Forfeiture Law totaled $17,240 in FY 2005.  This change would result in an annual loss of approximately $17,240 to the GRF with a corresponding gain to the funds outlined below.  Under the bill if either the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, or Watercraft conducts the investigation, the remaining proceeds must be transferred to that division for deposit into its new Law Enforcement Contraband, Forfeiture, and Other Fund.

 

2.  Contraband Forfeiture Law.  Similar to the Corrupt Activity Forfeiture Law, when certain contraband or forfeited moneys are ordered forfeited pursuant to the Contraband Forfeiture Law, 10% of the proceeds is credited to certified alcohol and drug addiction treatment programs and the other 90% is credited to law enforcement trust funds of the law enforcement agency that actually made the seizure of contraband or forfeited moneys.  The bill expands the distribution of the proceeds whereby if DNR substantially seized the contraband, then the particular division making the seizure would receive a portion of the proceeds.  Like the Corrupt Activity Forfeiture Law, DNR currently does not receive any proceeds from the sale of any seized contraband or forfeited moneys.  According to DNR all of these proceeds in addition to the proceeds collected under the Corrupt Activity Forfeiture Law are credited to the GRF.  The Department reports this combined total to be approximately $17,240 per fiscal year.

 

Similar to the crediting of proceeds under the Corrupt Activity Forfeiture Law, if either the divisions of Forestry, Natural Areas and Preserves, Wildlife, Parks and Recreation, or Watercraft made the seizure the remaining proceeds must be transferred to the appropriate division Law Enforcement Contraband, Forfeiture, and Other Fund.

 

3.  Use of money from the new fund.  For any of the proceeds that are credited to DNR's new funds (Law Enforcement Contraband, Forfeiture, and Other Fund) per the Corrupt Activity Forfeiture Law and Contraband Forfeiture Law, the moneys can only be used to pay the costs of:  (1) the investigations or prosecutions, (2) for technical training or expertise, (3) for matching funds to obtain federal grants to aid law enforcement in educating adults and children of the dangers of drug abuse, (4) to pay the costs of emergency action relative to the operation of an illegal methamphetamine laboratory if the forfeited property or money involved was that of a person responsible for the operation of the laboratory, and (5) for other law enforcement purposes.  Current law prohibits the specified funds from being used to meet the operating costs of the specified law enforcement agencies that are unrelated to law enforcement.  The bill adds to this by restricting the proceeds from these funds to pay the salaries of employees of the applicable DNR division or to provide for any other remuneration of personnel.

 

As of this writing, the Department is uncertain how much of the proceeds may be credited to the aforementioned funds.  Further, the Department does not anticipate the need to hire any additional staff to assist in investigations, provide technical expertise, or program assistance.

 

4.  Internal control.  However, prior to the use of these funds, the Department must adopt a written internal control policy that addresses the use of the proceeds or moneys.  The internal control policy must address the agency's use and disposition of all proceeds and forfeited moneys received and must provide for the keeping of detailed financial records of the receipts of the proceeds and forfeited moneys, the general types of expenditures made out of the proceeds and forfeited moneys, the specific amount of each general type of expenditure, and the amounts that must be used for community preventive education programs such as DARE programs.  Current law states that all financial records of the receipts of the proceeds and forfeited moneys and all information that is prepared and maintained pursuant to the internal control policy are public records.

 

At this time, the Department does not foresee the need to hire any additional staff to account for the financial records and receipts in regard to a new internal control policy. 

 

B.  Sale of timber

 

Currently, DNR is authorized to sell timber in a manner that will benefit the Division of Parks and Recreation that as a result of wind, storm, or any other natural occurrence may present a hazard to life or property or timber that has fallen on lands under the control and management of the Division.  The bill also allows the Chief to sell standing timber that has been weakened by pestilence and presents a hazard to life or property, or any timber that requires management to improve wildlife habitat, protect against wildfires, provide access to recreational facilities, or improve the safety, quality, or appearance of any state park area. 

 

Since this provision is specific to the Division of Parks and Recreation, the State Parks Fund (Fund 512) will realize all the revenue from the sale of sawlogs and stumpage.  The actual amount of revenue the Department may realize per park will depend on several factors including the number of trees harvested, the species and grade of tree harvested, and local market conditions.  That said, in total, annually, Fund 512 may realize a range of increased revenue from tens of thousands of dollars to hundreds of thousands of dollars depending on certain conditions.

 

Currently, the Department does not have an estimate of the amount of timber revenue it may realize.  Furthermore, the Department indicates that these new provisions will allow the Department to harvest timber in parks as a result of the Emerald Ash Borer beetle infestation as well as giving the Division flexibility in clearing logs for habitat management, fire protection, and opening areas around lodges for better viewing by visitors.

 

C.  Contracting

 

1.  Bidding threshold.  Currently, the Department is not required to bid out a construction or maintenance project if the project costs less than $10,000.  The bill increases this threshold to $25,000.  The Department notes that this increase is merely to adjust the bidding threshold to coincide with current market price for labor and materials.  The Department does not anticipate an increase in in-house construction and maintenance projects as a result of the increase.

 

2.  "Value engineering."  The bill authorizes the Director to insert in any contract awarded under DNR's contracting authority a clause providing for value engineering change proposals.  This incentive will allow a contractor who has been awarded a contract to propose a change in the plans and specifications of the project that saves DNR time or money on the project.  The savings from the proposal must be divided between DNR and the contractor according to guidelines established by the Director, resulting in the contractor receiving at least 50% of the savings from the proposal. 

 

The Department notes that this provision will result in savings for both the Department and the contractor.  The contractor and the Department will determine how much value engineering change will reduce the project's total cost and split the amount of the savings.  Any additional savings will be credited to the Department's capital project funds.

 

3.  Completing work.  Under the bill when DNR determines that any contract work performed for the Department is not completed to specifications or as intended in the contract, DNR may require the contractor to provide, at no additional expense to DNR, any additional labor and materials that are necessary to complete the improvements at the level of quality and within the time of performance specified in the contract.  The bill requires these procedures concerning such a requirement together with its format must be specified in the contract.  If the contractor fails to comply with the requirement within the period specified in the contract, DNR may take action to complete the work through other means, up to and including termination of the contract.

 

4.  Prevailing wage rate notices.  The Wages and Hours on Public Works Law requires every public authority authorized to contract for or construct with its own forces a public improvement, to have the Director of Commerce determine the prevailing wage rates of mechanics and laborers for the class of work called for by the public improvement in the locality where the work is to be performed.  The schedule of wages must be attached to and made part of the bid specifications.  A copy of the schedule must be filed with the Director before the contract is awarded.  The bill provides that DNR must include language in the contracts requiring the wage rate schedule be obtained electronically from the Department of Commerce, rather than attaching them to the actual bidding documents. 

 

The Department notes that this change will create considerable printing and paper cost savings.  Currently, 50% or more of contract documents are wage rate sheets.  The Department recovers these costs by building them into the contract.

 

D.  Provisions with minimal, no fiscal effect, or currently unknown fiscal effect

 

·        Chief Engineer.  The bill requires the Chief Engineer of the Division of Engineering to be either a Certified Professional Engineer or a Certified Professional Architect.  This provision will have no fiscal effect on the Department's operations.

·        Credit card usage by soil and water conservation district supervisors.  The bill allows the supervisors of a soil and water conservation district (SWCD), or any approved employee of the district to use credit cards to pay for various expenses of the district.  This provision was a recommendation by the Department's internal auditor and the Attorney General and will help make daily operations more efficient.  Money from donations, gifts, grants, and contributions and/or money in a county's special fund for the SWCD (typically from a tax levy used to support the district) may be used to pay the credit card expenses.

·        Discretionary suspension or revocation of licenses and permits.  The bill makes violations related to the protection of wild animals, shooting near airports, or any rule of the Division of Wildlife resulting in the suspension or revocation of a license or permit discretionary rather than mandatory.  If fewer suspensions occur as a result of the bill, the Department may see a negligible decrease in relicensing revenue.  This change would allow courts more flexibility in making suspensions on a case-by-case basis.

·        Water diversion.  The bill requires the Director to issue a water diversion permit to any person who lawfully diverted more than 100,000 gallons per day of any waters of the state out of the Ohio River Drainage Basin during the calendar year ending October 14, 1984.  This provision addresses three diversions that did not get a permit before the Revised Code was changed in 1984.  The bill does not require applicable entities to pay the current $1,000 application fee.

·        Migratory game birds.  The bill eliminates the provision against using a rifle, at any time, in taking migratory game birds.  This provision was included to be consistent with federal law, which allows rifles to be used on migratory birds for wildlife control purposes.  This provision will not affect the Division of Wildlife's operations.

·        Well sealing reports.  The bill establishes requirements governing the submission of well sealing reports.  Currently, well sealing reports are governed by agency rules.  The bill eliminates this rule-making requirement and instead establishes the well sealing report requirements in statute.  The Division of Water has an on-line version of a well sealing report.  The Division does not anticipate any additional costs from this provision. 

·        Education requirements.  The bill requires the Division of Wildlife to promote, educate, and inform citizens about conservation and values of fishing, hunting, and trapping.  The bill also requires the Division of Watercraft to promote, educate, and inform citizens about conservation, navigation, safety practices, and benefits of recreational boating.  These provisions merely codify activities already performed by the divisions.

·        Dredging spoils.  The bill changes the authority to give away or sell the spoils from dredging canal areas to the Director of Natural Resources rather than the Chief of the Division of Water.  This change will have no fiscal impact.

·        Deer and wild turkey permits.  The bill removes the word "special" when referring to deer and turkey permits.  Hunters are required to obtain these permits in addition to a hunting license if they want to hunt these animals.  This change will reduce the confusion that the word "special" often causes.  This provision will have no fiscal impact.

·        Disabled veterans and former POW permits and licenses.  Currently, permanently disabled veterans and former prisoners of war can obtain free annual hunting and fishing licenses, permits, and stamps.  However, the bill adds that these free licenses, permits, and stamps may be obtained for a multi-year basis or lifetime basis as well.  This provision may result in minimal savings to the Wildlife Fund (Fund 015) by reducing the processing of annual licenses.

·        Watercraft titles.  The bill requires the Chief of the Division of Watercraft to cancel a watercraft certificate of title if it appears the title is no longer required.  Currently, the Chief only cancels a certificate of title if it has been improperly issued.  Adding the new responsibility of canceling titles should not add any additional financial or administrative burden to the Division.

·        Use of Natural Areas and Preserves Fund.  The bill expands the use of the Natural Areas Check-off Fund (Fund 522) to be used for routine maintenance for health and safety purposes.  Currently, the money in the fund is used for purposes such as acquisition of new or expanded natural areas, nature preserves, and wild, scenic, and recreational river areas.  The Department notes that current budgetary resources in the funds will support the fund's expanded purpose.

·        Canal lands.  The bill makes several changes to administration of the canal lands program such as distinction between the administrative authority of the Chief of Division of Water and the Director and eliminates an obsolete exception that previously transferred canal lands to the Department of Transportation and the Ohio Historical Society.  The bill also requires the Division of Water to have the care and control of all canals and canal reservoirs owned by the state, and the water in them, and to protect, operate, and maintain them, and keep them in repair.  The care and control provision codifies current practice and will have no fiscal effect.

·        Wildlife diversity database.  The Division of Wildlife has already developed a wildlife diversity database.  The bill states that information in the database is considered public record and is available upon request; however, information regarding sensitive site locations of species and features are not subject to the Public Records Law if the Chief determines the release of such information could be detrimental to the conservation of a species or feature.  This provision will have no fiscal effect.

·        Security required for clerk of court of common pleas as authorized agent.  Currently, the Chief of the Division of Watercraft or the Chief's authorized agent may issue registration certificates for watercraft.  An agent must post a security with the Division.  The bill requires that if a clerk of common pleas applies to be an authorized agent the Chief must accept the clerk's bond as a security.  This provision will create no fiscal effect and will eliminate the need of the clerks of courts to obtain two bonds, one for the court and one for the Department.

·        Prohibitions against operation of a vessel in certain areas.  Currently, a boater cannot operate his or her vessel near a bathing area; cannot create wakes within specified time periods near marinas, certain harbors, and certain buoyed areas; operate in any restricted or controlled area; or within 300 feet of a diver's flag.  The bill adds entering a federally declared security zone as defined in federal regulations to the list.  If so, a perpetrator could be found guilty of a first-degree misdemeanor.  These zones are along ports on the Ohio River and Lake Erie.  The Department notes that no additional resources will be needed to patrol these zones.  Local courts may experience an increase in cases related to this issue; however, an increase is likely to be covered with court fees.

·        Division of Real Estate and Land Management.  The bill authorizes the Division of Real Estate and Land Management to coordinate and administer compensatory mitigation grant programs and other programs for streams and wetlands as approved in accordance with certifications and permits issued under Sections 401 and 404 of the Federal Water Pollution Control Act by the Environmental Protection Agency and the United States Army Corps of Engineers.  This provision was included in the bill so that if and when a partnership with the Department of Transportation and Ohio Environmental Protection Agency is formed, DNR can be in a position to receive grants.

·        Recycling market development plan.  The bill repeals the section of law that requires the Chief of the Division of Recycling and Litter Prevention to prepare a revised state recycling market development plan every two years.  This change was due to the elimination of the Interagency Work Group (IWG) that was previously responsible for the plan.  Despite the elimination of the IWG, the Department continues to develop and/or support recycling market development.  This provision will create no fiscal impact.

·        Wildlife collecting.  The bill makes minor changes to the collection of wildlife.  The bill requires someone that wants to collect or possess wild animals or their nests or eggs to apply for a $25 annual collecting permit, provided that the Chief finds that the collection is acceptable.  Previously, the Chief had to issue the permit if the collecting application was made in good faith.  The bill also changes the collecting reporting requirement from February 15 to March 15 of each year for administrative ease.  The Department does not anticipate any change in the revenue stream from collecting permits as a result of the bill.

·        Ginseng collection.  Current law establishes requirements governing the collection of ginseng and establishes certain definitions related to those requirements.  Current law also establishes certain prohibitions regarding the collection of ginseng.  The bill establishes a new prohibition against attempting to harvest ginseng.  The Department indicates that this provision merely tightens up the law to allow more enforcement regarding illegal ginseng collection.  No additional costs are expected with this provision.

·        Floodplain management.  The bill makes numerous changes to the statutes that govern the floodplain management program.  In some instances, the bill simply relocates statutes, and in others it makes minor changes to the statutes.  The Department notes that none of the provisions will create a fiscal impact to the Department or local governments and many of the provisions codify current practices.  The majority of changes remove the rule-making authority related to the floodplain management program and put them into statute.

·        Use of Water Management Fund.  The bill expands the use of the Water Management Fund to be used for the purposes of administering the water diversion and consumptive use permit programs established in current law and to perform watershed and water resource studies for the purposes of water management planning.  Currently, the fund is used to make loans and grants to governmental agencies for water management and water supply improvements, as well as acquiring, constructing, reconstructing, improving, equipping, maintaining, operating, and disposing of water management improvements.  The Department indicates that this provision merely codifies current practices regarding the diversion of water from the Great Lakes Basin to the Ohio River Basin.  Furthermore, the Department does not expect any additional draw on the Water Management Fund.

·        Ohio natural heritage database.  The bill removes the word habitat from the requirement that the Chief of the Division of Natural Areas and Preserves prepare and maintain surveys and inventories of natural areas and habitats of rare and endangered species of plants and animals.  The bill also requires the Chief to prepare and maintain surveys and inventories of other unique natural features.  Further, the bill limits certain database records from the Public Records Law for the conservation of a certain species or unique natural feature.  The Department notes that these provisions will create no fiscal effect on current operations.

·        Historic watercraft identification plates.  The bill eliminates the requirement that historic watercraft identification plates for boats older than 25 years old be wooden boats.  This change may result in the Department seeing an increase in requests for historic identification plates and in turn an increase in identification plate revenue.  Any revenue gain is expected to be minimal and would be deposited in the Waterways Safety Fund (Fund 086).  The Department notes that elimination of the word "wooden" will allow those boat owners who have a boat that is 25 years old and is made of fiberglass or other material to be eligible for the plate.

·        Ohio Water Resources Council.  The bill adds four members to the advisory group for the Water Resources Council.  Furthermore, the bill allows the Council to enter into contract and agreements with federal agencies to assist in accomplishing the Council's objectives.  Any additional expenditures of the Council are expected to be minimal and will be paid out of the Water Resources Council Fund (Fund 4X8).  The Department notes that adding additional members to the advisory group will expand the expertise of the Council and allow for more stakeholder participation.

·        Buying, selling, or offering for sale wild animals.  Currently if someone sells a wild animal or animal parts, and the value of the wild animal is more than $1,000, he or she may be found guilty of a fifth-degree felony and be required to pay restitution to the Wildlife Fund (Fund 015) for the value of the animal.  The bill adds that buyers of wild animals or animal parts may also be charged for the same offense.  Currently, the actual number of cases where restitution is required to be paid is unknown.  As for any additional costs to the courts, it is possible that court costs and fines may be used to offset any court administrative costs.  The Department anticipates a negligible amount of additional revenue from buyer restitution payments.

·        Proceedings for forfeiture of seized vehicles, boats, and other devices used in unlawful taking or transporting of wild animals.  The bill expands the time a forfeiture proceeding can take place from 5 days to 30 days after a wildlife officer seizes a motor vehicle, all-terrain vehicle, or boat used in the unlawful taking or transporting of wild animals, and any net, seine, trap, ferret, gun, or other device used in the unlawful taking of wild animals, is a public nuisance.  This change may result in minimal administrative savings to the Division of Wildlife.

·        Market development for synthetic rubber.  The bill adds that grants from the Scrap Tire Grant Fund may also be used to support market development activities for synthetic rubber from tire manufacturing processes and tire recycling processes.  The Department indicates that they anticipate a slight increase in grant requests due to the change; however, the current levels of grant awards is not expected to change significantly.

·        Advertising requirements.  Currently, DNR has the power to contract for the general construction, improvement, or maintenance of facilities on lands and waters under the control of the Department.  The bill revises the requirement that DNR advertise the contract in the county where it is to be let once a week for four consecutive weeks and state that the advertising requirement only has to occur in the region where the activity is to occur rather than the county.  This provision codifies current practices.  Currently, the Division of Engineering advertises contracts in eight newspapers throughout the state.  The Department's advertising costs typically range from $2,500 to $5,000 per project.

·        Emergency bid solicitation.  The Director is not required to advertise for bids regardless of the cost of the contract if it involves an exigency that concerns the public health, safety, or welfare, or addresses an emergency situation in which timeliness is crucial in preventing the cost of the contract from increasing significantly.  Regarding such a contract, the Director may solicit bids by sending a letter to a minimum of three contractors in the region where the contract is to be let or by any other means that the Director considers appropriate.  The Division of Engineering notes that this provision codifies a practice the Department has been using.

·        Exigency occurrences.  Under existing law, when an emergency situation arises that would materially impair the successful construction or completion of a project, improvement, or building, the Director may make necessary plan and specification change orders.  The bill revises this provision by authorizing the Director to revise related plans and specifications as necessary to address the exigency through the issuance of an addendum prior to the opening of bids or, in accordance with procedures established in the Public Improvements Law, through the issuance of a change order after the contract has been awarded.  The Department indicates that this provision codifies current practices.  Furthermore, the Department notes that the ability to write change orders of contingency funds in the past has resulted in project time savings.

·        Rules filing with clerk of court.  The bill eliminates the requirement that each of the Division of Wildlife's rules be filed with the clerk of the court of common pleas of each county where the rule is effective.  This provision may create minimal administrative savings to both the Division of Wildlife and various courts of common pleas.

·        Sale, purchase, or disposal of watercraft or outboard motor by a minor.  The bill requires a minor under 18 who wants to sell, purchase, or dispose of a watercraft or outboard motor have a form filled out that was prescribed by the Chief of the Division of Watercraft.  The form must accompany the certificate of title when the minor decides to sell, purchase, or dispose of the watercraft or outboard motor.  The form must then be signed in the presence of a clerk or deputy clerk of court of common pleas.  The Chief of the Division of Watercraft may experience one-time costs, likely minimal, to prepare and provide the form.

·        Title transferring when buying and selling watercraft.  The bill allows a person to sell a watercraft to a watercraft dealer even though the seller has not been issued a physical certificate of title and to transfer ownership of the watercraft.  This transfer can occur as long as the seller has proof of the person's identity, in a manner approved by the Chief of the Division of Watercraft, and sign a form detailing the seller's identity and assignment of the watercraft to the dealer.  The watercraft dealer can then present the assignment form to any clerk of a court of common pleas together with an application for a certificate of title and payment of associated fees.  Also, in a case where an electronic certificate of title has been issued and the buyer or seller is an electronic watercraft dealer, the dealer may inform a clerk of a court of common pleas via electronic means of the sale of the watercraft and assignment of ownership of the watercraft.  The clerk shall then enter the information related to the assignment into the automated title processing system.  When doing this the clerk may charge a fee of $5 for each watercraft assignment sent by the dealer to the clerk.  When these fees are collected the clerk retains a portion, the Division of Watercraft gets a portion, and the Automated Title Processing Fund gets a small amount.  Any potential gain from these fees is expected to be minimal and will likely offset any minimal administrative costs associated with carrying out the duties of this provision.

·        Reimbursement of volunteers.  The bill allows the Director of Natural Resources to reimburse volunteers of the Department for necessary and appropriate expenses, such as travel expenses, that they incur in the course of their volunteer service to the Department.  The volunteers are used for clean up and beautification programs.  Currently it is unknown how many volunteers will be reimbursed, by how much, and how often.  The reimbursements are likely to be minimal and will come out of the fund(s) of the division that is using the services of such volunteers.

·        Compensatory mitigation grant programs.  The bill allows the Division of Real Estate and Land Management to coordinate and administer compensatory mitigation and grant programs and other programs for streams and wetlands as approved and in accordance with certifications and permits issued under sections 401 and 404 of the Federal Water Pollution Control Act by the Environmental Protection Agency and the United States Army Corps of Engineers.

·        Nuisances involving agricultural pollution.  Currently, any person making a complaint regarding the nuisances involving agricultural pollution may do so only by submitting a written, signed, and dated complaint to the chief of the Division of Soil and Water.  Under the bill, someone may make a complaint orally as well.  After receiving this oral complaint the chief may cause an investigation to be conducted to determine whether agricultural pollution has occurred or is imminent.  After receiving a written, signed, and date complaint the chief shall cause an investigation to be conducted.  Depending on the number of both oral and written complaints the chief of the Division of Soil and Water may experience an increase in expenditures to conduct these investigations.  It is unknown whether the Department has resources to do these investigations or whether they will have to be contracted out.  Currently, an estimate of such services and requirements to be provided and conducted during the investigation is unknown.

·        Assistance from a state preserve officer to a state or local law enforcement officer.  The bill allows a preserve officer to render assistance to a state or local law enforcement officer at the request of the officer or in the even of an emergency.  The bill provides that these preserve officers shall be considered as performing services within their regular employment for the purposes of compensation, pension, or indemnity fund rights, workers' compensation, and other rights or benefits to which the preserve officer may be entitled as incidents of their regular employment.  Depending on the number of times and duration of the assistance, payroll costs of the Division of Natural Areas and Preserves may increase to cover the added payroll expense.  This expense may not be realized in the event that the state or local law enforcement agencies reimburse the preserve officer for any expenses, such as payroll, incurred while rendering assistance. 

·        Soil and water assessment.  The bill authorizes a board of county commissioners to charge an assessment of less than $25 if the board determines that the lower amount is appropriate, provided the lower amount includes the cost of preparing and mailing notice of the assessments required under current law.  The bill also authorizes a board of county commissioners to charge a minimum assessment of $25 for an improvement in a soil and water conservation district on a multi-parcel basis rather than on a per-parcel basis if the multi-parcel lot has a dwelling and comprises two or more contiguous parcels of land.

 

II.  Coal mining provisions

 

This portion of the fiscal note discusses the coal mining provisions of the bill.  This analysis does not go into detail regarding whether Ohio's Mining Laws, as modified in H.B. 443, conform to recommendations of the U.S. Office of Surface Mining within the U.S. Department of the Interior.

 

A.  Background on the bill's coal mining provisions

 

Generally, under current law, if an operator wants to mine coal in Ohio they must obtain a permit and provide a bond.  The bond is $2,500 times the number of acres of land where the coal mining and reclamation operation will occur.  The bond serves as collateral that the operator will fulfill the terms of the permit and conduct all reclamation operations on the land.  Currently, if an operator forfeits their bond DNR must complete the reclamation of the land from the money in the Reclamation Forfeiture Fund (Fund 531), also known as the bond pool.

 

Under the bill, operators will now be able to pay either a full cost bond or a partial bond. Prior to payment of the bond and the permit, DNR must assess the reclamation costs of the acreage to be mined.  The operator will now have the choice to pay a full cost bond (the total cost of the estimated reclamation), or a partial bond (payment of additional severance tax, payment of $2,500 per acre, and reliance on the bond pool for reclamation costs).  If the operator forfeits the bond the Chief of Mineral Resources and Management must draw on the bond pool.  The amount drawn down will be the difference between the cost of reclamation determined by DNR and the amount of the bond.

 

Furthermore, operators that pay a full cost bond will be required to pay the new base severance tax of 10.6 cents per ton of coal.  If an operator pays a partial bond they will be required to pay 10.6 cents plus a new supplemental severance tax of 14 cents (possibly adjusted).  All of the money from the 14 cents paid by the partially bonded operators will go into the bond pool (Fund 531).  The money from the fully bonded operators will go into three other DNR funds:  the Geological Mapping Fund (Fund 511); the Coal Mining and Reclamation Reserve Fund (Fund 527), sometimes called the Coal Regulatory Fund; and the Unreclaimed Lands Fund (Fund 529), sometimes known at the AML Fund.  The bill also provides a dollar for dollar severance tax credit to partially bonded operators that pay the 14 cents.  Essentially, if the operator reclaims land, he or she can get a credit in the amount DNR estimates the reclamation to cost.  The operator can save this credit and apply it to the severance tax that they will have to pay on future coal severed.

 

B.  Severance tax - background

 

Persons or firms that extract, or sever, certain natural resources from the soil and waters are charged a severance tax.  Various tax rates are applied to resources such as salt, coal, oil, natural gas, and other minerals such as limestone, gravel, sand, clay, sandstone, shale, etc.  In FY 2005, the total tax revenue generated was $7.6 million.  The revenue is then distributed among various DNR funds, largely for the purposes of reclaiming land, geologic mapping, and administration of the Coal Regulatory Program.

 

Focusing on the coal severance tax, the current tax rate on the severance of coal is 7 cents per ton with two additional severance tax levies applied for a total of a 9-cent levy.  According to the Department of Taxation, in FY 2005 the coal severance tax generated $2,052,560 in revenue. This amount is based on an estimated 22,806,222 tons.  Over the years revenues from the coal tax have been consistent, indicating that it is a relatively stable source of revenue.  Comparing revenue collections from FY 2001 to FY 2005, the average amount of collections per fiscal year is roughly $2,047,890.

 

C.  Base severance tax

 

The current severance tax is composed of a 7-cent tax on coal plus two additional severance taxes of 1 cent each for a total tax of 9 cents per ton.  The bill eliminates the two additional severance taxes of 1 cent each.  The bill also changes the 7-cent tax to 10.6 cents.  In revenue terms, the net effect of these changes is an additional 1.6 cents charged per ton, or $364,899.  These moneys will be credited to DNR funds.

 

D.  Supplemental severance tax

 

On top of this 1.6 cents, the bill adds (except as otherwise provided by rules adopted by the Reclamation Forfeiture Fund Advisory Board) an additional 14-cent tax on coal for the permit holder who chose to provide performance security together with reliance on the Reclamation Forfeiture Fund (Fund 531), otherwise known as the bond pool.  These individuals shall be considered partially bonded and are mainly surface mining operators rather than subsurface operators.

 

1.  Adjustments to the supplemental tax rate.  The supplemental tax rate levied depends on the balance in the Reclamation Forfeiture Fund at the end of the state's fiscal biennium.  If the Reclamation Forfeiture Fund Advisory Board finds that the balance is equal to or greater than $10 million, then the supplemental tax rate will be reduced to 12 cents per ton.  If the balance is equal to or greater than $5 million, but less than $10 million, then the tax rate will stay at 14 cents per ton, and if the balance is less than $5 million, then the tax rate will increase to 16 cents per ton.  Again, all the revenues from the new supplemental tax will go into the bond pool (Reclamation Forfeiture Fund).

 

E.  Calculation of revenues from the changes in severance tax(s)

 

Currently, all operators, subsurface or surface operators, have to be bonded.  Since the bill allows operators to be fully bonded or partially bonded, it is estimated that about half of the current operators will become partially bonded.  In terms of tonnage, this is approximately 12 million tons of an estimated 24 million total annual tonnage.

 

If 12 million tons would be subject to the 10.6-cent base tax rate and the other 12 million tons would be subject to the combined 24.6-cent tax rate (10.6-cent base rate + the 14.6-cent supplemental tax rate), total revenues would be $4,224,000.  Of this amount, all $2,544,000 would be divided among the Geologic Mapping Fund (Fund 511), Coal Mining and Reclamation Reserve Fund (Fund 527), and the Unreclaimed Lands Fund (Fund 529).  The remaining $1,680,000 would be credited to the Reclamation Forfeiture Fund (Fund 531).  The $1.68 million gain to the Reclamation Forfeiture Fund (Fund 531) would be used to cover the state's expenses for reclaiming mined lands under which an operator failed to reclaim.

 

F.  Reclamation tax credit

 

The bill establishes a nonrefundable tax credit against taxes payable under the new 14-cent supplemental tax.  The bill allows operators to perform reclamation on land for which a performance security was forfeited.  The Chief is required to send an application form to the operator requesting information on the operator himself, identification of the land in question, a reclamation plan, timetables, and estimated costs.  The Chief will then approve or disapprove the application.  If approved the Chief shall issue a reclamation tax credit certificate to the operator.  The Chief shall determine the amount of the credit.  The credit shall be equal to the cost that the Division would have expended from the Reclamation Forfeiture Fund to complete the reclamation.  DNR and industry experts report that these reclamation costs range from tens of thousands to hundreds of thousands of dollars, if not more.

 

The bill requires the Chief to adopt rules governing the administration and implementation of the credit.  Any unused portions of a credit may be carried forward until they are fully used.  The credit will be paid dollar for dollar.  In other words, if DNR estimates the reclamation costs to be $100,000, the operator would then receive a $100,000 credit.  The operator has the option to use this credit against future severance tax he is required to pay.  In addition, the bill also allows the severer receiving a tax credit to transfer the credit to any other eligible severer that is subject to the additional severance tax of 14 cents per ton on coal.

 

The revenue loss from the new tax credit would depend on rules not yet established by the Division of Mineral Resources.  As a nonrefundable credit, it would also depend on the tax liability of eligible firms before claiming the credit, data to which LSC does not have access.  Because of both factors, LSC is unable to provide a reliable estimate of the revenue loss due to the credit.  That revenue loss is against the new 14-cent supplemental tax, and therefore could not exceed the revenue from that source—estimated to be $1.68 million or more annually.  Any such revenue loss would be from revenue to the Reclamation Forfeiture Fund.  The amount of the revenue loss would depend on the number of operators actually claiming the credit and DNR's estimated cost of reclamation.  If the revenue in the fund starts to draw down based on the claimed credit, it is possible the Advisory Reclamation Forfeiture Fund Advisory Board (new board created by bill; see page 24 of this analysis) may increase the severance tax, within allowable limits, to maintain an appropriate balance in the fund.

 

The theory behind this tax credit is that despite the actual revenue loss, and considering the fact that DNR would have to draw down on the bond pool fund anyway for reclamation costs, by offering the credit DNR may fulfill its goal of reclaiming land more timely and more efficiently.

 

G.  Change in the severance tax distribution

 

The bill also revises the distribution of the base severance tax on coal.  The table below displays the funds that currently receive a portion of the base coal severance tax, the percent distribution under current law, the percent distribution under the bill, and current and estimated new revenues per the changes in the bill. The table also shows the estimated revenue to the Reclamation Forfeiture Fund from the new supplemental tax.

 

The new distribution formula shown in the fifth column of Table 2 would apply to the base (general) severance tax of 10.6 cents, not the additional 14-cent severance tax, as shown in column 7.  The 14-cent supplemental severance tax would be deposited only in the Reclamation Forfeiture Fund (Fund 531), the bond pool.  Following the table is a discussion of the revenue changes of each fund.

 

 

Table 2.  New Distribution Formula of Base Coal Severance Tax at 10.6 Cents
and Supplemental Tax at 14 Cents

Fund

Purpose

% Distribution under Current Law[1]

Current Revenue

% Distribution under the Bill

New Revenue

Amount of Supplemental Tax Revenue (Directed to Fund 531 Only)

Difference (Gain/Loss)

 

 

Geological Mapping Fund (Fund 511)

Laboratory, administrative, mapping, and public reporting of geological and mineral resources

6.3%

$100,575

4.76%

$127,200

Not Applicable

Gain of $26,625

 

Reclamation Forfeiture Fund (Fund 531)

Moneys used to reclaim land which an operator failed to reclaim

14.2%

$682,818

Not Applicable

Not Applicable

$1,680,000

Gain of $997,182

 

Coal Mining and Reclamation Reserve Fund (Fund 527)

Administration and enforcement of DNR's surface mining reclamation program

57.9%

$924,336

85.95%

$2,162,400

Not Applicable

Gain of $1,238,064

 

Unreclaimed Lands Fund (Fund 529)

For state expenses for reclaiming both coal and surfaced mined lands

21.6%

$344,830

14.29%

$254,400

Not Applicable

Loss of $90,430

 

1.  Changes to the revenues to the Geological Mapping Fund.  Aside from the change in the distribution of the overall severance tax formula, the Geological Mapping Fund will experience a gain of approximately $27,000.  This money will be added to the Geological Survey budget and allocated within its current program.  Currently, it is unknown whether the additional funds will be earmarked for a particular purpose.

 

2.  Changes to the revenues to the Reclamation Forfeiture Fund.  The bill makes several changes to the revenues coming into the Reclamation Forfeiture Fund.  The purpose of the fund will not change and will still be used for reclaiming lands that failed to be reclaimed by operators.  Current law allows the moneys to be spent on the administrative costs, including engineering and design services of the Division related to reclamation.  The bill also adds that the chief may expend moneys from the fund to pay the necessary administrative costs of the Reclamation Forfeiture Fund Advisory Board.  The revenue changes to the fund are listed below:

 

·        As shown in Table 2 above, the fund will receive the supplemental severance tax.  This is estimated to be approximately $1.68 million annually, based on 24 million tons severed.  This is the only fund that will receive this tax revenue.  This amount may be adjusted at a later time by the Reclamation Forfeiture Fund Advisory Board based on its assessment of the balance in the fund.

·        The bill no longer allows the Reclamation Forfeiture Fund to receive transfers from the Unreclaimed Lands Fund.  Based on data from DNR, over the last three years the transfer from Fund 529 to Fund 531 has been $750,000.  The fiscal effect of this change is that more money will now stay in the Unreclaimed Lands Fund (Fund 529) that otherwise would have been transferred.  This money may now be committed to more long-term watershed projects.  The money that had been transferred to the bond fund will be offset by the new 14-cent supplemental tax.

·        The bill allows the Reclamation Forfeiture Fund to receive all money from the collection of liens.  This provision is estimated to bring in a minimal amount of revenue.

·        The bill allows the Reclamation Forfeiture Fund to continue receiving money transferred to it from the Coal Mining and Reclamation Reserve Fund.  Based on records provided by DNR, no transfers have occurred between these two funds since 1999.  It is possible if the bond pool fund is drawn down below acceptable levels the transfer may occur.

·        Several fine moneys will also now be credited to the fund.  These fine moneys will consist of fines for penalties for violations of the law governing coal mining and reclamation operations.  These moneys are currently deposited into both the Coal Mining Administration Fund and the Reclamation Reserve Fund.  This bill now only allows the moneys to be deposited into the Reclamation Forfeiture Fund.  This provision is estimated to bring in a minimal amount of revenue.

 

3.  Changes to the Coal Mining and Reclamation Reserve Fund.  This fund is often called the Coal Regulatory Fund.  Under the bill, based on the new severance tax rate, this fund will receive the lion's share of the severance tax, 85.85% of the total.  Compared to current funding levels, under the bill, the fund will gain roughly $1.2 million in revenue.  The fund's purpose will remain the same by providing administration and enforcement of DNR's surface mining reclamation program (see Estimated Cost of Reclamation for more information on staffing needs from this fund).

 

Elimination of the permit fee.  The fund will be affected by the elimination of permit fees.  Current law requires each application for a coal mining and reclamation permit or renewal of a permit to be accompanied by a permit or renewal fee in an amount equal to the product of $75 multiplied by the number of acres estimated in the application to be affected by coal mining operations.  This fee is often called an acreage fee.  The bill eliminates this permit and renewal fee.  DNR estimates this loss to be about $400,000 per year.

 

The bill also eliminates language under which an operator is entitled to a refund of the excess permit fee if the number of acres of land affected by the coal mining operation proves to be smaller than the number of acres in which the operator paid a permit fee.  The amount of annual refunds paid is about $500,000.  This change will result in initial savings to the Coal Regulatory Fund, which will later to be drawn down in the course of general operations.  It is possible DNR may use the refund savings to hire additional personnel.

 

4.  Changes to the Unreclaimed Lands Fund (Fund 529).  The Unreclaimed Lands Fund (Fund 529) is known as the state AML Fund, or Abandoned Mines Land Fund.  Under the bill, and with the new severance tax distribution formula, Fund 529 will experience a loss of about $90,430.  This loss is not estimated to impact the overall operations of the fund, primarily since the bill eliminates transfer language that transfers additional moneys to the Reclamation Forfeiture Fund (Fund 531) from the Unreclaimed Lands Fund (Fund 529).  This transfer cannot be more than $1 million.  Based on data from DNR, over the last three years the transfer from Fund 529 to Fund 531 has been $750,000.

 

The fiscal effect of this change is that more money will now stay in the Unreclaimed Lands Fund (Fund 529) that otherwise would have been transferred.  The Reclamation Forfeiture Fund will experience a loss from this transfer being eliminated; however, the revenues from the supplemental severance tax will offset the loss.  As shown in Table 2, the Reclamation Forfeiture Fund will experience a gain of $997,182 above current levels.  This gain is due to the added 14-cent supplemental severance tax.  At start-up as the Reclamation Forfeiture Fund is building up revenues from the supplemental tax, coupled with the loss of the $750,000 transfer, the first year revenue gain to the bond pool is estimated to be about $250,000.  After the first year as new revenues stabilize the bond pool will likely level off at a balance of $1.68 million.

 

H.  Estimated cost of reclamation

 

The bill will now require DNR to estimate the cost of reclamation for all sites throughout the state as part of the responsibility of permitting operators and administering the bond pool.  The estimated cost of the reclamation will be the basis for the determination of someone's bond (performance security under the bill).  Currently, all operators now are paying the same bond rate which is $2,500 times the number of acres an operator plans to mine.  Under the bill, the bond may be more or less for some operators because it will now be based on a reclamation estimate from DNR.  For example, subsurface operators, who have little surface operations, may have a bond amount lower than a surface miner's bond amount.

 

Essentially, what may happen is that of all operators currently paying into the bond pool, under the bill, subsurface miners will pay the full cost bond and surface miners will pay the partial bond, thus paying a severance tax rate of 10.6 cents per ton and 24.6 cents per ton, respectively.  Since the annual amount of tonnage mined from these operators is about even, approximately 12 million tons will likely be charged 10.6 cents per ton and the other 12 million tons will be taxed at 24.6 cents per ton.

 

Impact on DNR.  DNR estimates that this provision will likely impact it the most, costing close to $400,000 at start-up.  However, in the end, the goal is for these moneys to be used to provide more staff for permitting and inspecting in order to provide more accurate estimates of the cost of reclamation as well as general regulatory oversight functions.  In order to comply with federal requirements, DNR may need to hire several more staff.  The gain of $1.24 million in the Coal Mining Administration Fund and the Reclamation Reserve Fund as well as the added revenue from permit fee refunds may be enough to cover their current and future staffing and administrative costs.

 

I.  Appropriation of $5 million for the Reclamation of Land & Management Study

 

Section 3 of the bill states that it is the intent of the General Assembly to appropriate $5 million for the reclamation of land affected by the surface mining of coal.  In the past, in similar cases, LSC has assumed the GRF to be the source of such funding.  Based on conversations with an industry expert and data from DNR suggesting a $3.8 million backlog in surface mine reclamation projects, this funding may permit DNR to cover many of the current reclamation costs throughout the state.  Once these costs are covered, the bond pool would have no liabilities.  Whether or not the General Assembly will actually appropriate this money, where it will come from, and whether it will be the full $5 million, is unknown.

 

J.  Management study

 

Section 3 also states that of that $5 million, not more than $50,000 shall be used to study the management of the financial resources of the coal mining regulatory program of the Division of Mineral Resources Management.  DNR may experience minimal administrative costs related to this provision including developing an outline of the subjects for the study and selecting a third party to conduct the study.

 


K.  Five-year mine safety report

 

Section 4 of the bill requires that after five years after the effective date of the act, the Chief of the Division of Mineral Resources Management shall submit a report to the Governor summarizing the activities of the Division of Mineral Resources Management related to the Division's establishment and enforcement of safety standards governing surface mining operations.  The Division of Mineral Resources Management may experience minimal administrative expenses to prepare this report.

 

L.  Reclamation Forfeiture Fund Advisory Board

 

The bill creates the Reclamation Forfeiture Fund Advisory Board.  The Board shall include the Director of Natural Resources, the Director of Insurance, and five members appointed by the Governor.  The bill allows the directors of Natural Resources and Insurance to be reimbursed for actual and necessary expenses; however, they shall not receive compensation for serving on the Board.  The members appointed by the Governor shall receive per diem compensation and reimbursement for their necessary and actual expenses.  The Board shall hold its meetings as often as necessary.  The Board shall do the following:

 

·        Review the deposits into and expenditures from the Reclamation Forfeiture Fund;

·        Authorize the expenditure of money from the fund to pay the administrative costs of the Board and to pay any reclamation costs;

·        Conduct actuarial studies of the Reclamation Forfeiture Fund, and adjust the 14-cent tax rate on coal pursuant to R.C. section 5749.02;

·        Evaluate any rules, procedures, and estimating methods used in determining the cost of reclamation and rules related to performance securities;

·        Provide a forum for the discussion of issues related to the Reclamation Forfeiture Fund and performance securities;

·        Submit a report to the Governor biennially describing the status of the Reclamation Forfeiture Fund; and

·        Provide alternative methods to the Governor regarding use of money in the fund for cases when performance security has been forfeited.

 

Section 1513.18 of the bill authorizes moneys from the Reclamation Forfeiture Fund to be used to pay the necessary administrative costs of the Advisory Board.  The actual amount of these expenditures is unknown.  The largest expense the Board may incur is for actuarial studies.  This expense will depend largely on the complexity of the studies.  Less complex studies may cost a few thousand dollars, whereas more complex studies may cost upwards of $100,000.  Any actuary contracted with will likely be paid by the hour.  Internet survey research reveals that consulting actuary rates may range from $200 to $300 per hour.  Though a different subject area, as perspective, past LSC research on actuarial studies related to health care benefit analysis pegs these costs ranging from $135 to $435 per hour.

 

M.  Mined Land Set-Aside Fund

 

The bill creates the Mined Land Set-Aside Fund to receive grants made by the U.S. Department of Interior.  The grants will be used for the reclamation and restoration of land and water resources adversely affected by past coal mining.  The actual amount of grants the Department may receive is currently unknown.  It is possible that DNR may deposit federal grants into this fund and capture the interest earnings.  These interest earnings may result in an annual revenue gain of a few hundred thousand dollars, assuming the moneys are invested at conservative bond rates.

 

N.  Council on Unreclaimed Strip Mine Lands

 

The bill makes various procedural changes to the Council.  One change will eliminate DNR's requirement to submit project proposals to affected local governments.  This provision may save the Department minimal administrative expenses.

 

O.  Diesel equipment in an underground mine

 

The bill does not prohibit or impede the use of diesel equipment in an underground coal mine, provided that the Chief approves the use of that equipment.  Prior to the use of diesel equipment in a coal mine, the operator or manufacturer of the diesel equipment must submit a written request on a form prescribed by the Chief of the Division of Mineral Resources Management, for approval of the use of that equipment.  The Chief shall approve or disapprove of the equipment based on the requirements of 30 C.F.R. parts 36 and 72.  The Chief may experience minimal costs to develop these forms as well as review them for approval of diesel equipment.

 

P.  State programmatic general permit

 

The bill allows DNR to establish programs, rules, and procedures designed to implement the terms, limitations, and conditions of a state programmatic general permit.  This permit is issued by the U.S. Army Corps of Engineers for discharge of dredged or fill material into the waters of the United States by operations that conduct surface and underground coal mining and reclamation operations and the restoration of abandoned mine lands.  Any impact that may have otherwise impacted the Department may be lessened based on the rules and procedures related to the permit.

 

Q.  Testing Prior to Permit Approval

 

The bill requires the Chief of the Division of Mineral Resources Management, regarding whether to approve an application for a permit for a coal mining operation, to assess the potential acidity and neutralization potential of the rock strata that would be disturbed under the permit.  The measurement of potential acidity shall be based on laboratory analysis of the sulfur content of the coal and overburden to be disturbed by mining.  The analysis will require the use of test borings or core sampling.  The Department does have a laboratory to perform such services.  Any assessments beyond the expertise and resources of current DNR staff may require the Department to contract out for these services.  An estimate of such service costs is currently unknown, but one may reasonably assume costs could range from a few hundred dollars to a few thousand dollars.

 


III.  Industrial Minerals Provisions

 

The majority of the provisions in this section of the bill affect the Surface Mining Fund.  Overall, the Surface Mining Fund will experience a gain from fees, collection of liens, investment earnings, and penalties.  The amount of the revenue gain is expected to be minimal.  For the purposes of this fiscal analysis, a minimal effect on a state fund means an estimated change of less than $100,000 per year.

 

A.  Surface Mining Regulatory Responsibilities

 

The Chief of the Division of Mineral Resources Management may experience the costs associated with the following requirements in the bill: 

 

·        Incorporating federal mine safety standards governing surface mining operations;

·        Establishing criteria, standards, and procedures governing safety performance evaluations;

·        Providing notice to operators of surface mine operations of state inspections;

·        Reporting and investigating accidents at surface mining operations;

·        Establishing a fee, if any, for the purpose of mine safety training; 

·        Establishing qualifications for a new certified mine forepersons certification examination;

·        Establishing requirements and fees governing the renewal of certificates of certified mine forepersons;

·        Establishing requirements and procedures for the approval of training plans for qualified persons to conduct examinations of surface mining operations;

·        Conducting safety inspections of surface mining operations;

·        Conducting safety audits at surface mining operations and preparing a subsequent report that describes any hazardous conditions, safety violations, and possible remedies at the operation;

·        Requiring the ceasing of operations if the mining conditions or practices may cause death or physical harm to individuals;

·        Conducting an annual safety performance evaluation of all surface mining operations in the state;

·        Submitting a report to the Governor summarizing activities regarding mine safety at surface mining operations, trends in miner accident rates, and the number and causes of life-threatening accidents and fatalities since the bill's effective date;

·        Approving or disapproving an operator's reclamation and releasing performance bonds, cash, letters of credit, or certificates of deposit when the reclamation is determined to be complete.

 

DNR indicates that the Division of Mineral Resource Management will result in a minimal increase in expenditures and that the Division will be able to comply with all the new responsibilities provided in the bill with current staffing and funding levels.  In Am. Sub. H.B. 66, the main appropriations bill, the Division of Mineral Resource Management was appropriated approximately $33 million in each fiscal year of the biennium.

B.  Reclamation Commission

 

The Reclamation Commission within DNR hears appeals under the law governing coal mining and industrial mineral mining.  Under the bill, a surface mining operator may appeal the determination of the Chief that is made in the enforcement of the industrial minerals safety standards within ten days after the operator receives a copy of the determination that there is in fact a safety violation at the site.  Currently, appeals are made within 30 days.  Decreasing the time period appeals will be heard may require the Commission to hold more meetings resulting in more staff time and resources.  Prior to the FY 2006-2007 biennium, the Reclamation Commission was funded by GRF.

 

C.  Property liens and affect on county recorders

 

If a mine operator or partners fail to reclaim the land at the surface mining site and the operator or partner forfeits a performance bond, the Division of Mineral Resources Management has a priority lien in front of all other interested creditors against the assets of that operator for the amount that is needed to perform any reclamation that is required as a result of the operator's mining activities.  The Chief must file a statement in the office of the county recorder of each county in which the mined land lies of the estimated costs to reclaim the land.  The estimated costs must include direct and indirect costs of the development, design, construction, management, and administration of the reclamation.  The lien continues 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, the Chief must file a certificate of release in the office of each applicable county recorder.  Also, the bill authorizes the Chief to modify the amount of a lien.  If the Chief modifies a lien, the Chief must file a statement in the office of the county recorder of each applicable county of the new amount of the lien. 

 

County recorders of various counties may experience costs to file statements indicating the lien and the estimated costs to reclaim land as well as filing a certificate to either modify or release the lien.  Any costs incurred by county recorders to file such statements are likely to be offset by filing fees authorized under R.C. 317.32.

 

The bill also requires all money from the collection of liens to be credited to the Surface Mining Fund.  Currently, it is unknown how many liens may be filed and the amount of collections that may be credited to the fund.

 

D.  Surface Mining Fund (Fund 527)

 

The bill makes revisions to the law governing the Surface Mining Fund. The Fund receives revenues from the severance tax on various minerals, permit fees, money from the forfeiture of bonds for surface or in-stream mining operations, and all fines and civil penalties for violations of the surface mining laws.  The bill adds that the fund consists of money that becomes the property of the state from the collection of liens and that all investment earnings of the fund be credited to the fund.  The bill also expands the use of the fund to allow for broader mine safety and first aid training.  Finally, the bill requires DNR to prepare an annual report of the financial status of the fund.

 

The additional credit of revenues from the collection of liens and investment earnings will result in a revenue gain to the fund.  An estimate of this amount is unknown but is likely to be several thousand dollars.  The new revenues will offset any administrative costs related to preparing the annual report.

 

E.  Required use of roads by certain vehicles

 

The bill requires certain vehicles entering or leaving a surface mining operation that weigh more than 66,000 pounds to use specific roads for transporting the unfinished aggregate materials.  The bill also requires owners or operators to post signs directing these trucks along the proper routes.  If an operator violates this provision, they will first receive a warning, a second offense could result in a minor misdemeanor, and a third offense could result in a fourth-degree misdemeanor.  All moneys from these offenses will be deposited into the Surface Mining Fund. The number of citations that may be issued is unknown.  Any costs to law enforcement will have to be absorbed within their current operations since the bill does not credit any proceeds of the penalties to local governments.  The amount of the offenses is likely to range between $100-$250.  These moneys may result in a small revenue gain to the Surface Mining Fund.  As operators post signs and truckers become aware of the requirements, there are likely to be fewer violations.

 

F.  County and township zoning

 

Current law authorizes a board of county commissioners and a board of township trustees to regulate the size and location of buildings by resolution in the unincorporated territory of the county or township.  Current law also authorizes a county board of zoning appeals and a township board of zoning appeals to grant conditional zoning certificates for the use of land, buildings, or other structures if they are provided for in the zoning resolution.  In making its determination to grant conditional zoning certificates related to surface mining operations, the board(s) may require as a condition of approval of a conditional zoning certificate one or more of the following:  water wells inspections; compliance with federal, state, and local laws and regulations; identification of specific roads as the primary means of ingress to and egress from the proposed activity; compliance with reasonable noise abatement measures; compliance with reasonable dust abatement measures; establishment of berms and buffers for the proposed activity; establishment of a complaint procedure; and any other measure reasonably related to public health and safety.  In addition, if the applicant for a conditional zoning certificate for such an activity agrees in writing, the board may impose reasonable hours of operation as a condition to the issuance of the certificate. 

 

However, prior to the approval of the conditional zoning certificate, the applicant shall send written notice to the county engineer of the applicant's intent to apply for the certificate.  Once received, the county engineer will set up a meeting with the applicant and the fiscal officer of each township in which the proposed activity is to be located or expanded in order to discuss the proposed activity.  These discussions will cover the location of the activity, the amount of material that will be hauled from the site, and the market destination points of the aggregate material.  Thirty days after the meeting, the county engineer will submit a written recommendation of the specific roads to be used as the primary means of ingress to and egress from the site to the board of county commissioners.  The board shall adopt the recommendations or adopt the recommendations with modifications.  Once the board adopts the recommendations, the board is required to forward the recommendations to the county board of zoning appeals.

 

Any affected board of township trustees or applicant may appeal the recommendations 10 days after the board of commissioner's recommendation.  The board of commissioners shall then conduct an appeal hearing no later than 14 days after receiving the appeal notice.  No later than 14 days after the hearing, the board of commissioners shall send notice of its final decision to the applicant, affected board of township trustees, and the county board of zoning appeals.  If a board of township trustees or applicant is still not satisfied with the decision, the board of township trustees may appeal the decision to the appropriate court of common pleas. 

 

Boards of county commissioners and a board of township trustees may experience minimal costs to include provisions in their zoning resolution that allows for surface mining operations to be conducted in any district or zone in which aggregate minerals are located.  Furthermore, these entities may experience minimal costs to review conditional zoning certificates as they relate to surface mining operations, review written recommendations by the county engineer, send notices, and conduct hearings.  As part of this process, a county engineer may experience minimal costs to prepare the recommendations.  Furthermore, courts of common pleas may also experience costs to hear decision appeals.  A portion of court costs are likely to be offset by court fees.

 

 

 

LSC fiscal staff:  Jonathan Lee, Senior Budget Analyst

                          Ross Miller, Senior Economist

 

HB0443H2.doc/lb



[1] The percentage distribution applied to each fund is based on the base tax rate of 7 cents of the total 9 cents under current law, and on the base tax rate of 10.6% under the bill.  For example, the current revenue calculation for the Geological Mapping Fund (Fund 511) is calculated by multiplying the current revenue $2,052,560 x 7/9 x 6.3%.  This same formula is applied to the Coal Mining and Reclamation Reserve Fund (Fund 527) and the Unreclaimed Lands Fund (Fund 529).  The Reclamation Forfeiture Fund (Fund 531) receives the two additional severance taxes under current law so its calculation is as follows:  $2,052,560 x ((7/9 x 14.2%) + 2/9).