To amend section 123.01, to enact sections 131.50, 1509.50, 1509.51, 1509.52, 1509.53, and 1509.54, and to repeal sections 5119.40, 5120.12, and 5123.23 of the Revised Code to create the Oil and Gas Leasing Board and to establish a procedure by which the Board may enter into leases for oil and gas production on land owned or under the control of a state agency for the purpose of providing funding for capital and operating costs for the agency.

Section 1. That section 123.01 be amended and sections 131.50, 1509.50, 1509.51, 1509.52, 1509.53, and 1509.54 of the Revised Code be enacted to read as follows:

Sec. 123.01.  (A) The department of administrative services, in addition to those powers enumerated in Chapters 124. and 125. of the Revised Code and provided elsewhere by law, shall exercise the following powers:

(1) To prepare, or contract to be prepared, by licensed engineers or architects, surveys, general and detailed plans, specifications, bills of materials, and estimates of cost for any projects, improvements, or public buildings to be constructed by state agencies that may be authorized by legislative appropriations or any other funds made available therefor, provided that the construction of the projects, improvements, or public buildings is a statutory duty of the department. This section does not require the independent employment of an architect or engineer as provided by section 153.01 of the Revised Code in the cases to which that section applies nor affect or alter the existing powers of the director of transportation.

(2) To have general supervision over the construction of any projects, improvements, or public buildings constructed for a state agency and over the inspection of materials previous to their incorporation into those projects, improvements, or buildings;

(3) To make contracts for and supervise the construction of any projects and improvements or the construction and repair of buildings under the control of a state agency, except contracts for the repair of buildings under the management and control of the departments of public safety, job and family services, mental health, mental retardation and developmental disabilities, rehabilitation and correction, and youth services, the bureau of workers' compensation, the rehabilitation services commission, and boards of trustees of educational and benevolent institutions and except contracts for the construction of projects that do not require the issuance of a building permit or the issuance of a certificate of occupancy and that are necessary to remediate conditions at a hazardous waste facility, solid waste facility, or other location at which the director of environmental protection has reason to believe there is a substantial threat to public health or safety or the environment. These contracts shall be made and entered into by the directors of public safety, job and family services, mental health, mental retardation and developmental disabilities, rehabilitation and correction, and youth services, the administrator of workers' compensation, the rehabilitation services commission, the boards of trustees of such institutions, and the director of environmental protection, respectively. All such contracts may be in whole or in part on unit price basis of maximum estimated cost, with payment computed and made upon actual quantities or units.

(4) To prepare and suggest comprehensive plans for the development of grounds and buildings under the control of a state agency;

(5) To acquire, by purchase, gift, devise, lease, or grant, all real estate required by a state agency, in the exercise of which power the department may exercise the power of eminent domain, in the manner provided by sections 163.01 to 163.22 of the Revised Code;

(6) To make and provide all plans, specifications, and models for the construction and perfection of all systems of sewerage, drainage, and plumbing for the state in connection with buildings and grounds under the control of a state agency;

(7) To erect, supervise, and maintain all public monuments and memorials erected by the state, except where the supervision and maintenance is otherwise provided by law;

(8) To procure, by lease, storage accommodations for a state agency;

(9) To lease or grant easements or licenses for unproductive and unused lands or other property under the control of a state agency. Such leases, easements, or licenses shall be granted for a period not to exceed fifteen years and shall be executed for the state by the director of administrative services and the governor and shall be approved as to form by the attorney general, provided that leases, easements, or licenses may be granted to any county, township, municipal corporation, port authority, water or sewer district, school district, library district, health district, park district, soil and water conservation district, conservancy district, or other political subdivision or taxing district, or any agency of the United States government, for the exclusive use of that agency, political subdivision, or taxing district, without any right of sublease or assignment, for a period not to exceed fifteen years, and provided that the director shall grant leases, easements, or licenses of university land for periods not to exceed twenty-five years for purposes approved by the respective university's board of trustees wherein the uses are compatible with the uses and needs of the university and may grant leases of university land for periods not to exceed forty years for purposes approved by the respective university's board of trustees pursuant to section 123.77 of the Revised Code.

(10) To lease office space in buildings for the use of a state agency;

(11) To have general supervision and care of the storerooms, offices, and buildings leased for the use of a state agency;

(12) To exercise general custodial care of all real property of the state;

(13) To assign and group together state offices in any city in the state and to establish, in cooperation with the state agencies involved, rules governing space requirements for office or storage use;

(14) To lease for a period not to exceed forty years, pursuant to a contract providing for the construction thereof under a lease-purchase plan, buildings, structures, and other improvements for any public purpose, and, in conjunction therewith, to grant leases, easements, or licenses for lands under the control of a state agency for a period not to exceed forty years. The lease-purchase plan shall provide that at the end of the lease period, the buildings, structures, and related improvements, together with the land on which they are situated, shall become the property of the state without cost.

(a) Whenever any building, structure, or other improvement is to be so leased by a state agency, the department shall retain either basic plans, specifications, bills of materials, and estimates of cost with sufficient detail to afford bidders all needed information or, alternatively, all of the following plans, details, bills of materials, and specifications:

(i) Full and accurate plans suitable for the use of mechanics and other builders in the improvement;

(ii) Details to scale and full sized, so drawn and represented as to be easily understood;

(iii) Accurate bills showing the exact quantity of different kinds of material necessary to the construction;

(iv) Definite and complete specifications of the work to be performed, together with such directions as will enable a competent mechanic or other builder to carry them out and afford bidders all needed information;

(v) A full and accurate estimate of each item of expense and of the aggregate cost thereof.

(b) The department shall give public notice, in such newspaper, in such form, and with such phraseology as the director of administrative services prescribes, published once each week for four consecutive weeks, of the time when and place where bids will be received for entering into an agreement to lease to a state agency a building, structure, or other improvement. The last publication shall be at least eight days preceding the day for opening the bids. The bids shall contain the terms upon which the builder would propose to lease the building, structure, or other improvement to the state agency. The form of the bid approved by the department shall be used, and a bid is invalid and shall not be considered unless that form is used without change, alteration, or addition. Before submitting bids pursuant to this section, any builder shall comply with Chapter 153. of the Revised Code.

(c) On the day and at the place named for receiving bids for entering into lease agreements with a state agency, the director of administrative services shall open the bids and shall publicly proceed immediately to tabulate the bids upon duplicate sheets. No lease agreement shall be entered into until the bureau of workers' compensation has certified that the person to be awarded the lease agreement has complied with Chapter 4123. of the Revised Code, until, if the builder submitting the lowest and best bid is a foreign corporation, the secretary of state has certified that the corporation is authorized to do business in this state, until, if the builder submitting the lowest and best bid is a person nonresident of this state, the person has filed with the secretary of state a power of attorney designating the secretary of state as its agent for the purpose of accepting service of summons in any action brought under Chapter 4123. of the Revised Code, and until the agreement is submitted to the attorney general and the attorney general's approval is certified thereon. Within thirty days after the day on which the bids are received, the department shall investigate the bids received and shall determine that the bureau and the secretary of state have made the certifications required by this section of the builder who has submitted the lowest and best bid. Within ten days of the completion of the investigation of the bids, the department shall award the lease agreement to the builder who has submitted the lowest and best bid and who has been certified by the bureau and secretary of state as required by this section. If bidding for the lease agreement has been conducted upon the basis of basic plans, specifications, bills of materials, and estimates of costs, upon the award to the builder the department, or the builder with the approval of the department, shall appoint an architect or engineer licensed in this state to prepare such further detailed plans, specifications, and bills of materials as are required to construct the building, structure, or improvement. The department shall adopt such rules as are necessary to give effect to this section. The department may reject any bid. Where there is reason to believe there is collusion or combination among bidders, the bids of those concerned therein shall be rejected.

(15) To acquire by purchase, gift, devise, or grant and to transfer, lease, or otherwise dispose of all real property required to assist in the development of a conversion facility as defined in section 5709.30 of the Revised Code as that section existed before its repeal by Amended Substitute House Bill 95 of the 125th general assembly;

(16) To lease for a period not to exceed forty years, notwithstanding any other division of this section, the state-owned property located at 408-450 East Town Street, Columbus, Ohio, formerly the state school for the deaf, to a developer in accordance with this section. "Developer," as used in this section, has the same meaning as in section 123.77 of the Revised Code.

Such a lease shall be for the purpose of development of the land for use by senior citizens by constructing, altering, renovating, repairing, expanding, and improving the site as it existed on June 25, 1982. A developer desiring to lease the land shall prepare for submission to the department a plan for development. Plans shall include provisions for roads, sewers, water lines, waste disposal, water supply, and similar matters to meet the requirements of state and local laws. The plans shall also include provision for protection of the property by insurance or otherwise, and plans for financing the development, and shall set forth details of the developer's financial responsibility.

The department may employ, as employees or consultants, persons needed to assist in reviewing the development plans. Those persons may include attorneys, financial experts, engineers, and other necessary experts. The department shall review the development plans and may enter into a lease if it finds all of the following:

(a) The best interests of the state will be promoted by entering into a lease with the developer;

(b) The development plans are satisfactory;

(c) The developer has established the developer's financial responsibility and satisfactory plans for financing the development.

The lease shall contain a provision that construction or renovation of the buildings, roads, structures, and other necessary facilities shall begin within one year after the date of the lease and shall proceed according to a schedule agreed to between the department and the developer or the lease will be terminated. The lease shall contain such conditions and stipulations as the director considers necessary to preserve the best interest of the state. Moneys received by the state pursuant to this lease shall be paid into the general revenue fund. The lease shall provide that at the end of the lease period the buildings, structures, and related improvements shall become the property of the state without cost.

(17) To lease to any person any tract of land owned by the state and under the control of the department, or any part of such a tract, for the purpose of drilling for or the pooling of oil or gas. Such a lease shall be granted for a period not exceeding forty years, with the full power to contract for, determine the conditions governing, and specify the amount the state shall receive for the purposes specified in the lease, and shall be prepared as in other cases.

(18) To manage the use of space owned and controlled by the department, including space in property under the jurisdiction of the Ohio building authority, by doing all of the following:

(a) Biennially implementing, by state agency location, a census of agency employees assigned space;

(b) Periodically in the discretion of the director of administrative services:

(i) Requiring each state agency to categorize the use of space allotted to the agency between office space, common areas, storage space, and other uses, and to report its findings to the department;

(ii) Creating and updating a master space utilization plan for all space allotted to state agencies. The plan shall incorporate space utilization metrics.

(iii) Conducting a cost-benefit analysis to determine the effectiveness of state-owned buildings;

(iv) Assessing the alternatives associated with consolidating the commercial leases for buildings located in Columbus.

(c) Commissioning a comprehensive space utilization and capacity study in order to determine the feasibility of consolidating existing commercially leased space used by state agencies into a new state-owned facility.

(B) This section and section 125.02 of the Revised Code shall not interfere with any of the following:

(1) The power of the adjutant general to purchase military supplies, or with the custody of the adjutant general of property leased, purchased, or constructed by the state and used for military purposes, or with the functions of the adjutant general as director of state armories;

(2) The power of the director of transportation in acquiring rights-of-way for the state highway system, or the leasing of lands for division or resident district offices, or the leasing of lands or buildings required in the maintenance operations of the department of transportation, or the purchase of real property for garage sites or division or resident district offices, or in preparing plans and specifications for and constructing such buildings as the director may require in the administration of the department;

(3) The power of the director of public safety and the registrar of motor vehicles to purchase or lease real property and buildings to be used solely as locations to which a deputy registrar is assigned pursuant to division (B) of section 4507.011 of the Revised Code and from which the deputy registrar is to conduct the deputy registrar's business, the power of the director of public safety to purchase or lease real property and buildings to be used as locations for division or district offices as required in the maintenance of operations of the department of public safety, and the power of the superintendent of the state highway patrol in the purchase or leasing of real property and buildings needed by the patrol, to negotiate the sale of real property owned by the patrol, to rent or lease real property owned or leased by the patrol, and to make or cause to be made repairs to all property owned or under the control of the patrol;

(4) The power of the division of liquor control in the leasing or purchasing of retail outlets and warehouse facilities for the use of the division;

(5) The power of the director of development to enter into leases of real property, buildings, and office space to be used solely as locations for the state's foreign offices to carry out the purposes of section 122.05 of the Revised Code;

(6) The power of the director of environmental protection to enter into environmental covenants, to grant and accept easements, or to sell property pursuant to division (G) of section 3745.01 of the Revised Code.

(C) Purchases for, and the custody and repair of, buildings under the management and control of the capitol square review and advisory board, the rehabilitation services commission, the bureau of workers' compensation, or the departments of public safety, job and family services, mental health, mental retardation and developmental disabilities, and rehabilitation and correction, and buildings of educational and benevolent institutions under the management and control of boards of trustees, are not subject to the control and jurisdiction of the department of administrative services.

(D) Any instrument by which real property is acquired pursuant to this section shall identify the agency of the state that has the use and benefit of the real property as specified in section 5301.012 of the Revised Code.

Sec. 131.50.  (A) There is hereby created in the state treasury the state land royalty fund consisting of money credited to it under section 1509.51 of the Revised Code. Any investment proceeds earned on money in the fund shall be credited to the fund and used as required in division (B) of this section.

(B) Money in the state land royalty fund shall be used to pay capital and operating costs of state agencies on whose behalf money has been contributed to the fund by the oil and gas leasing board under section 1509.51 of the Revised Code. Such a state agency is entitled to receive from the fund the amount contributed on its behalf by the board and a share of the investment earnings of the fund in an amount that is equivalent to the proportionate share of contributions made on behalf of the state agency to the fund.

Sec. 1509.50. (A) It is the policy of the state to provide access to and support the exploration for, development of, and production of oil and natural gas resources owned or controlled by the state in an effort to stabilize energy prices for citizens of this state and to use the state's natural resources responsibly.

(B) There is hereby created the oil and gas leasing board consisting of the chief of the division of mineral resources management and the following four members appointed by the governor:

(1) Two members recommended by a statewide organization representing the oil and gas industry;

(2) One member representing a statewide environmental advocacy organization;

(3) One member representing the public.

(B) Of the initial members appointed to the board, one shall serve a term of two years, one shall serve a term of three years, one shall serve a term of four years, and one shall serve a term of five years. Thereafter, terms of office of members shall be for five years from the date of appointment. Each member appointed by the governor shall hold office from the date of appointment until the end of the term for which the member was appointed. The governor shall fill a vacancy occurring on the board by appointing a member within sixty days after the vacancy occurs. A member appointed to fill a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall hold office for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until the member's successor takes office, or until a period of sixty days has elapsed, whichever occurs first.

(C) Three members constitute a quorum of the board, and no action of the board is valid unless it has the concurrence of at least three members. The board shall keep a record of its proceedings. The chief of the division of mineral resources management shall serve as the chairperson of the board.

(D) The governor may remove an appointed member from the board for inefficiency, malfeasance, misfeasance, or nonfeasance.

(E) Members of the board shall receive no compensation, but shall be reimbursed for their actual and necessary expenses incurred in the course of the performance of their duties as members of the board.

(F) The division of mineral resources management shall provide staff assistance to the board if requested by the board.

Sec. 1509.51. (A) As used in this section, "state agency" has the same meaning as in section 1.60 of the Revised Code.

(B) The oil and gas leasing board has exclusive authority to lease any parcel of land that is owned or controlled by a state agency for the purpose of exploring for and developing and producing oil and natural gas resources. A person that is an owner and that is interested in leasing a parcel of land that is owned or controlled by a state agency for the exploration for and the development and production of oil or natural gas may submit to the board a nomination that identifies the parcel of land. A person submitting a nomination shall submit it in the manner and form established in rules adopted under section 1509.52 of the Revised Code and shall include with the nomination the information required by those rules.

(C) Not later than thirty days after the receipt of a nomination, the board shall conduct a meeting for the purpose of determining whether to enter into a lease for the parcel of land that is identified in the nomination. Not later than sixty days after the meeting, the board shall approve or disapprove the nomination. In making its decision to approve or disapprove the nomination, the board shall consider all of the following:

(1) The economic benefits, including the potential income from an oil or natural gas operation, that would result if the lease that is the subject of the nomination were approved;

(2) Whether the proposed oil or gas operation is compatible with the current uses of the parcel of land that is the subject of the nomination;

(3) Any objections to the nomination submitted to the board by the state agency that owns or controls the land on which the proposed oil or natural gas operation would take place;

(4) Any other factors that the board establishes in rules adopted under section 1509.52 of the Revised Code.

Prior to making its decision to approve or disapprove a nomination, the board shall notify the agency that owns or controls the land on which the oil or gas operation would take place.

The board shall approve or deny a nomination not later than ninety days after the receipt of the nomination. Notice of the decision of the board shall be sent by certified mail to the person that submitted the nomination.

(D) Each calendar quarter, the board shall proceed to advertise for bids for each lease that was the subject of a nomination approved during the previous calendar quarter. The advertisement shall be published on a web site that is maintained by the board and in a newspaper of general circulation in Franklin county and in each county in which the parcel of land that was the subject of the nomination is located. The advertisement shall be published once a week for four consecutive weeks prior to the date that is established by the board for the submission of bids. The notice shall include all of the following:

(1) The procedure for the submission of a bid to enter into a lease for a parcel of land;

(2) A statement that a standard lease form that is consistent with the practices of the oil and natural gas industries will be used for the lease of the parcel of land;

(3) Instructions for obtaining a copy of the standard lease form that will be used for the lease of the parcel of land;

(4) A statement, if applicable, that special terms and conditions apply to the lease because of specific conditions related to the parcel of land. If such special terms and conditions apply to the lease, the statement shall include instructions for obtaining a copy of them.

(5) Any other information that the board considers pertinent to the advertisement for bids.

(E) In order to encourage the submission of bids and the responsible and reasonable development of the state's natural resources, the information that is contained in a bid submitted to the board under this section shall be confidential and shall not be disclosed.

(F) Not later than fifteen days after a deadline established by the board for the submission of bids for a particular parcel of land, bids received by the board shall be unsealed and opened on the date designated by the board. Not later than thirty days after the date on which the board unseals and opens the bids, the board shall enter into a lease under this section with the person who submits the highest and best bid for that parcel of land, taking into account the financial responsibility of the prospective lessee and the ability of the prospective lessee to perform its obligations under the lease.

(G) All money received by the board in payment for leases entered into under this section shall be paid by the board into the state treasury to the credit of the state land royalty fund created in section 131.50 of the Revised Code, except money that is required to be credited to the oil and gas leasing board administration fund created in section 1509.53 of the Revised Code as required in rules adopted under section 1509.52 of the Revised Code. Money credited to the state land royalty fund shall be contributed on behalf of the state agency that owns or controls the parcel of land on which the drilling for oil or gas takes place.

Sec. 1509.52. The oil and gas leasing board shall adopt rules in accordance with Chapter 119. of the Revised Code establishing all of the following:

(A) The form of and the information to be included in nominations that are submitted under section 1509.51 of the Revised Code;

(B) Procedures for the submission of nominations to the board;

(C) Factors that the board may consider when determining whether to approve or disapprove a nomination submitted under section 1509.51 of the Revised Code;

(D) A standard lease form that is consistent with the practices of the oil and natural gas industries and that contains a one-eighth landowner royalty, which standard lease form shall be used by the board for leases entered into under section 1509.51 of the Revised Code;

(E) Factors that the board shall consider when determining whether special terms and conditions of leases may be required for a particular parcel of land because of specific conditions related to the parcel and to the development of any oil or natural gas from the parcel;

(F) A percentage of the proceeds of each lease agreement that shall be credited to the oil and gas leasing board administration fund created in section 1509.53 of the Revised Code for the purpose of providing funding for the board's administrative expenses and actual and necessary expenses of the board members;

(G) Any other procedures and requirements that the board determines necessary to implement sections 1509.50 to 1509.54 of the Revised Code.

Sec. 1509.53. There is hereby created in the state treasury the oil and gas leasing board administration fund consisting of a percentage of the money derived from leases as provided in rules adopted under section 1509.52 of the Revised Code. Money in the fund shall be used by the oil and gas leasing board to pay the administrative expenses of the board and to pay the actual and necessary expenses incurred by members of the board in the course of the performance of their duties.

Sec. 1509.54. If a nomination to lease a parcel of land that is submitted under section 1509.51 of the Revised Code is disapproved by the oil and gas leasing board, the person that submitted the nomination may appeal the board's disapproval to the oil and gas commission for an order reversing the disapproval. The requirements and procedures established in section 1509.36 of the Revised Code that apply to an appeal of an order of the chief of the division of mineral resources management apply to appeals filed under this section.

Section 2.  That existing section 123.01 and sections 5119.40, 5120.12, and 5123.23 of the Revised Code are hereby repealed.

Section 3.  A lease entered into under section 123.01, 155.011, 5119.40, 5120.12, or 5123.23 of the Revised Code as those sections existed prior to their amendment or repeal by this act shall remain in effect until the term of the lease expires as provided in the lease.