Senate Energy Committee holds first hearing on bill to update Ohio oil and gas laws, protect orphan-well fund

The Senate Energy Committee on Tuesday held the first hearing on Senate Bill 219, a wide-ranging update to Ohio law governing oil and gas operations that would create a custodial fund for severance-tax revenue, change permit and lease rules, and clarify regulatory authority for certain pipeline and drilling matters. Vice Chair Senator Landis sponsored the bill and presented sponsor testimony; the committee took no vote.

"Energy is national security," Senator Landis said in his opening remarks as he described the measure as the first general update to Ohio's oil and gas laws since 2012. He told the committee Ohio is a major producer of crude oil and natural gas and said the bill is intended to align statute with current industry practices and to protect the state's orphan well plugging efforts.

The bill would create a custodial fund within the Ohio Treasurer's office to hold severance taxes and related fees earmarked for the Division of Oil and Gas and Geological Survey (ODNR) and for plugging orphan wells. Landis said the change is intended to shield that money from being reallocated by the executive branch for unrelated purposes. The sponsor said the bill would also streamline notice requirements for the landowner pass-through plugging program by allowing notice via posting on the ODNR website or in a local newspaper.

Landis described additional provisions that would shorten the statute of limitations to terminate an oil and gas lease from 21 years to 6 years, allow either the seller or buyer in a well transfer to submit parts of the paperwork to speed liability transfers, and permit up to 10 expedited permits per operator each year when business or operational circumstances justify them. The bill would also set standards for road-use maintenance agreements, define "owner" for permitting when multiple parties hold rights to drill, clarify that gathering lines are not subject to the public utilities tax, and expressly grant the Chief of the Division of Oil and Gas Resources Management authority to regulate cross‑state drilling.

During questioning, Senator Serino asked how existing funding for orphan wells had been handled and why a custodial fund was necessary. Landis said that in past administrations the severance fund had sometimes been used for unrelated state needs and, in some cases, to help settle lawsuits, and that the custodial account would focus the resources on their intended purpose. Landis said ODNR currently plugs about 500 orphan wells per year and that the agency would like to increase that pace to roughly 1,000 per year if funding allows.

Senator Lang asked whether reducing the lease-termination statute from 21 to 6 years was intended to track broader changes in contract statute limitations statewide. Landis said the bill takes a step to reduce the lease limit to 6 years to align with other business contracts and that future adjustments could follow any statewide changes.

Senator Demora asked whether cross‑state drilling between Ohio and neighboring states occurs. Landis said there are currently no instances of cross‑state drilling with Pennsylvania or West Virginia but that the bill would clarify authority and allow for coordination, such as through memoranda of understanding, if needed.

The committee heard no testimony indicating opposition on record and no formal amendment or vote was taken during the hearing. The chair closed the hearing after questions and testimony.

Formal action: the committee held a first hearing on SB 219; no vote or committee action was recorded.

For reference, sponsor testimony noted the 2012 update to Ohio oil and gas law (cited in testimony as Senate Bill 315) as prior comprehensive legislation and repeatedly referenced ODNR and severance-tax funding for orphan-well plugging.