A New Trend Toward Active Leasing of State-owned Land in Ohio

A New Trend Toward Active Leasing of State-owned Land in Ohio

Pending Ohio HB 507 & Oil and Gas Land Management Commission – New Lease Form

The State of Ohio, through its various agencies, may own oil, gas and mineral rights under certain state-owned lands, including state parks and highways. In 2021, the State of Ohio passed Ohio HB 110 to provide state agencies with an avenue by which a state agency “may lease a formation within a parcel of land that is owned or controlled by the state agency for the exploration for and development and production of oil or natural gas.” (codified at O.R.C. 155.33). Following the passage of the 2021 law, the State instituted the Oil and Gas Land Management Commission to provide guidance on the leasing of state-owned mineral rights, including the issuance of a standard oil and gas lease form. To date, the State and its agencies have not actively leased state-owned mineral rights under this new guidance.

However, recent activity within the Commission and the State legislature indicates that leasing may be more readily available to operators in 2023. On December 1, 2022, the Commission adopted changes to their standard lease form, and those proposed changes remain open to public comment through January 13, 2023. Additionally, on December 7, 2022, the Ohio Senate passed HB 507, which among other items, proposes to change the language of O.R.C. 155.33 to recite that a state agency “shall lease, in good faith…” its oil and gas rights. HB 507 will now return to the House for additional consideration. The shift from a passive option whereby the state “may” lease its mineral interests, to an active obligation whereby the state “shall” lease its mineral interests under the pending legislation, partnered with recent activity by the Oil and Gas Land Management Commission, signals a change in the industry which may present new opportunities for oil and gas development under state-owned lands. We will continue to monitor the progress of HB 507 and the new proposed lease form before the Commission.

If you would like additional information about leasing of state-owned minerals in Ohio, please contact Christopher Hall at 412-275-5613 or chall@atenciohall.com.

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