Amendments to Ohio Oil and Gas Statutes Signed Into Law

Senate Bill 219, recently signed into law by Gov. Mike DeWine, includes changes regarding (i) the leasing of state lands; (ii) the statute of limitations for lawsuits alleging lease expiration; (iii) the regulatory authority of the Chief of the Division of Oil and Gas Resources Management; (iv) procedural requirements for administrative proceedings; and (v) transfers of permits.

State Lands: The following provisions will now be required in leases of state lands: (i) a shut-in royalty of $50 per net mineral acre per year; (ii) an optional extension term of five years rather than three years; (iii) a 60-day payment period for signing bonuses or advanced delay rentals; and (iv) tolling of the primary term and deferment of payments to comply with federal grant requirements, during litigation that prevents operations, or in instances of force majeure. Additionally, statutory deadlines are now imposed. The Oil and Gas Land Management Commission must award the bid within 60 days of approval of the nomination. The state agency whose lands are being leased must execute the lease within 30 days of the Commission awarding a bid, and the lessee must countersign the lease within 45 days after receiving the lease from the agency.

Statute of Limitations for Lease Expiration Lawsuits: A 10-year statute of limitations now applies to lawsuits alleging the expiration of any oil and gas lease.

Cross-State Drilling: Senate Bill 219 clarifies that the Division of Oil and Gas Resources Management has the authority to regulate any portion of a well located in Ohio and allows for the Chief to enter into a memorandum of understanding with the regulatory agency of the other state in which the well is located.

Simultaneous Operations: The Chief cannot require owners of a well to limit or cease production from a well to engage in simultaneous operations on a well pad without good cause.

Administrative Procedure Requirements

• The Ohio Administrative Procedure Act does not apply to orders or notices required to be made by the Chief, including orders and notices in statutory unitization proceedings. The Chief is required to adopt rules setting forth applicable procedures for the service of notices and orders.
• If the Chief imposes conditions on a permit, the applicant may now appeal those conditions to the Ohio Oil and Gas Commission.
• Appeals from orders of the Ohio Oil and Gas Commission are now to be filed in one of the counties in which the unit is located instead of the Franklin County Court of Common Pleas.

Ownership Transfers: When an owner of a permit wants to transfer its interest in a well, it can now provide the Division with most of the new owner’s information itself rather than wait for the new owner to provide the information.

For any assistance or if you have questions about this alert, we encourage you to contact the authors.