To amend sections 1509.02, 1509.071, 5749.01, and 5749.02 and to enact sections 190.01, 190.02, 190.03, 109.04, 190.05, 1509.074, and 5749.18 of the Revised Code to levy a tax on the severance of oil, gas, condensate, and natural gas liquids from horizontal wells, to distribute revenue from the tax to environmental and oil and gas regulatory purposes, local governments impacted and not impacted by horizontal well development, and a permanent fund to promote economic development, and to provide for the administration, investment, and use of the permanent fund.

Section 1.  That sections 1509.02, 1509.071, 5749.01, and 5749.02 be amended and sections 190.01, 190.02, 190.03, 109.04, 190.05, 1509.074, and 5749.18 of the Revised Code be enacted to read as follows:

Sec. 190.01.  There is hereby created the severance tax trust fund, which shall be in the custody of the treasurer of state but shall not be part of the state treasury. Moneys received from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code shall be deposited in the fund in accordance with division (B) of that section. Except as provided in section 190.04 of the Revised Code, money in the fund may not be appropriated by the general assembly except upon approval of four-fifths of the membership of the house of representatives and of the senate. Money in the fund so appropriated may be used for any purpose. Otherwise, money in the fund shall be used in accordance with section 190.04 of the Revised Code.

Sec. 190.02.  (A) The general administration, management, and investment of the severance tax trust fund are hereby vested in a board to be known as the "severance tax trust board," which shall be composed of the following members:

(1) The treasurer of state;

(2) One member of the public who is a representative of the oil and gas industry;

(3) One member of the public who is a representative of a statewide environmental organization;

(4) Six members of the public, each of whom shall have direct experience in the management, analysis, supervision, or investment of financial assets.

(B) The members described in divisions (A)(2) to (4) of this section shall be appointed by the governor with the advice and consent of the senate and may be removed by the governor for good cause. Such members may be reappointed, but may not serve more than two consecutive terms on the board.

Each member described in divisions (A)(2) and (3) of this section shall serve a four-year term. Of the members described in division (A)(4) of this section, for the first term occurring after the effective date of this section:

(1) Two members shall serve a three-year term;

(2) Two members shall serve a two-year term; and

(3) Two members shall serve a one-year term.

For every term thereafter, members described in division (A)(4) of this section shall serve four-year terms. Any member appointed to the board under this section shall hold office until the later of the end of the term for which the member is appointed or the date the member's successor takes office. A vacancy occurring among the members shall be filled in the same manner as the original appointment.

(C) At the first meeting, which shall occur not later than one year after the effective date of this section, members of the board shall elect a chair. The board shall meet annually or more frequently at the call of the chair. A majority of the board constitutes a quorum. The board is a public body for purposes of section 121.22 of the Revised Code. Records of the board are public records for purposes of section 149.43 of the Revised Code.

(D) The board may hire staff to assist the board in the conduct of its duties under this chapter. The staff of the severance tax trust board are in the unclassified service. The director of administrative services shall fix the compensation of the staff.

(E) Compensation of the members, except for the treasurer of state, shall be in accordance with division (J) of section 124.15 of the Revised Code. In addition to such compensation, all members shall be reimbursed for their necessary expenses incurred in the performance of their work as members.

(F) The board shall prepare and submit an operating budget for each fiscal year. Expenses incurred by the board in administering this chapter shall be paid from the severance tax trust administrative fund.

(G) There is hereby created the severance tax trust administrative fund, which shall be in the custody of the treasurer of state but shall not be part of the state treasury. Money received from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code shall be deposited in the fund in accordance with division (B) of that section. Money in the fund shall be used to pay the expenses of the severance tax trust board in administering this chapter. Before the end of each fiscal year, the severance tax trust board shall transfer any money in the fund in excess of that included in the board's operating budget for that fiscal year to the severance tax trust fund. The board shall not appropriate or encumber money in the severance tax trust fund.

Sec. 190.03.  (A) The severance tax trust board and the board's staff, in managing and investing the assets of the severance tax trust fund, shall exercise the judgment and care under the circumstances then prevailing that an institutional investor of ordinary prudence, discretion, and intelligence exercises in the designation and management of large investments entrusted to it, not in regard to speculation, but in regard to the permanent disposition of funds, considering preservation of the purchasing power of the fund over time while maximizing the expected total return from both income and the appreciation of capital.

(B) Not later than one year after the effective date of this section, the board shall do each of the following:

(1) Establish a statement of investment policies and guidelines, including the board's overall investment philosophy and other related policies as necessary for the effective management and investment of the assets of the fund;

(2) Establish a framework or process for the management of the investment risk of the fund;

(3) Approve the long-term or strategic asset allocation of the fund in terms of the proportion of total assets to be invested on average over time in the various asset classes or risk categories, as well as the minimum-maximum range within which the assets can be allocated at any point in time;

(4) Establish an investment management structure for the fund and proportion of assets in an asset class to be managed by external investment managers versus the board's staff.

Sec. 190.04.  Beginning in fiscal year 2020, the general assembly may appropriate money from the severance tax trust fund to provide funding for economic diversification projects, education, workforce development, federal matching grants, and higher education. The amount that the general assembly may appropriate in each fiscal year from the fund shall not exceed amounts equal to the following:

(A) For fiscal year 2020, one per cent of the investment earnings of the fund in the preceding fiscal year;

(B) For fiscal year 2021, two per cent of the investment earnings of the fund in the preceding two fiscal years, divided by two;

(C) For fiscal year 2022, three per cent of the investment earnings of the fund in the preceding three fiscal years, divided by three;

(D) For fiscal year 2023, four per cent of the investment earnings of the fund in the preceding four fiscal years, divided by four;

(E) For fiscal year 2024 and every fiscal year thereafter, five per cent of the investment earnings of the fund in the preceding five fiscal years, divided by five.

Sec. 190.05. On or before the first day of December of each year, the severance tax trust board shall submit to the governor, the speaker and minority leader of the house of representatives, and the president and minority leader of the senate recommendations for legislation to improve the severance tax trust fund.

Sec. 1509.02.  There is hereby created in the department of natural resources the division of oil and gas resources management, which shall be administered by the chief of the division of oil and gas resources management. The division has sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state, excepting only those activities regulated under federal laws for which oversight has been delegated to the environmental protection agency and activities regulated under sections 6111.02 to 6111.029 of the Revised Code. The regulation of oil and gas activities is a matter of general statewide interest that requires uniform statewide regulation, and this chapter and rules adopted under it constitute a comprehensive plan with respect to all aspects of the locating, drilling, well stimulation, completing, and operating of oil and gas wells within this state, including site construction and restoration, permitting related to those activities, and the disposal of wastes from those wells. In order to assist the division in the furtherance of its sole and exclusive authority as established in this section, the chief may enter into cooperative agreements with other state agencies for advice and consultation, including visitations at the surface location of a well on behalf of the division. Such cooperative agreements do not confer on other state agencies any authority to administer or enforce this chapter and rules adopted under it. In addition, such cooperative agreements shall not be construed to dilute or diminish the division's sole and exclusive authority as established in this section. Nothing in this section affects the authority granted to the director of transportation and local authorities in section 723.01 or 4513.34 of the Revised Code, provided that the authority granted under those sections shall not be exercised in a manner that discriminates against, unfairly impedes, or obstructs oil and gas activities and operations regulated under this chapter.

The chief shall not hold any other public office, nor shall the chief be engaged in any occupation or business that might interfere with or be inconsistent with the duties as chief.

All moneys collected by the chief pursuant to sections 1509.06, 1509.061, 1509.062, 1509.071, 1509.13, 1509.22, 1509.222, 1509.28, 1509.34, and 1509.50 of the Revised Code, ninety per cent of moneys received by the treasurer of state from the tax levied in divisions (A)(5) and (6) of section 5749.02 of the Revised Code, four per cent of money received by the treasurer of state from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code, all civil penalties paid under section 1509.33 of the Revised Code, and, notwithstanding any section of the Revised Code relating to the distribution or crediting of fines for violations of the Revised Code, all fines imposed under divisions (A) and (B) of section 1509.99 of the Revised Code and fines imposed under divisions (C) and (D) of section 1509.99 of the Revised Code for all violations prosecuted by the attorney general and for violations prosecuted by prosecuting attorneys that do not involve the transportation of brine by vehicle shall be deposited into the state treasury to the credit of the oil and gas well fund, which is hereby created. Fines imposed under divisions (C) and (D) of section 1509.99 of the Revised Code for violations prosecuted by prosecuting attorneys that involve the transportation of brine by vehicle and penalties associated with a compliance agreement entered into pursuant to this chapter shall be paid to the county treasury of the county where the violation occurred.

The fund shall be used solely and exclusively for the purposes enumerated in division (B) of section 1509.071 of the Revised Code, for the expenses of the division associated with the administration of this chapter and Chapter 1571. of the Revised Code and rules adopted under them, and for expenses that are critical and necessary for the protection of human health and safety and the environment related to oil and gas production in this state. The expenses of the division in excess of the moneys available in the fund shall be paid from general revenue fund appropriations to the department.

Sec. 1509.071.  (A) When the chief of the division of oil and gas resources management finds that an owner has failed to comply with a final nonappealable order issued or compliance agreement entered into under section 1509.04, the restoration requirements of section 1509.072, plugging requirements of section 1509.12, or permit provisions of section 1509.13 of the Revised Code, or rules and orders relating thereto, the chief shall make a finding of that fact and declare any surety bond filed to ensure compliance with those sections and rules forfeited in the amount set by rule of the chief. The chief thereupon shall certify the total forfeiture to the attorney general, who shall proceed to collect the amount of the forfeiture. In addition, the chief may require an owner, operator, producer, or other person who forfeited a surety bond to post a new surety bond in the amount of fifteen thousand dollars for a single well, thirty thousand dollars for two wells, or fifty thousand dollars for three or more wells.

In lieu of total forfeiture, the surety or owner, at the surety's or owner's option, may cause the well to be properly plugged and abandoned and the area properly restored or pay to the treasurer of state the cost of plugging and abandonment.

(B) All moneys collected because of forfeitures of bonds as provided in this section shall be deposited in the state treasury to the credit of the oil and gas well fund created in section 1509.02 of the Revised Code.

The chief annually shall spend not less than fourteen per cent of the revenue credited to the fund from sources other than from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code during the previous fiscal year and all of the revenue credited to the fund from the tax levied in those divisions during the previous fiscal year for the following purposes:

(1) In accordance with division (D) of this section, to plug idle and orphaned wells or to restore the land surface properly as required in section 1509.072 of the Revised Code;

(2) In accordance with division (E) of this section, to correct conditions that the chief reasonably has determined are causing imminent health or safety risks at an idle and orphaned well or a well for which the owner cannot be contacted in order to initiate a corrective action within a reasonable period of time as determined by the chief.

Expenditures from the fund shall be made only for lawful purposes. In addition, expenditures from the fund shall not be made to purchase real property or to remove a dwelling in order to access a well.

(C)(1) Upon determining that the owner of a well has failed to properly plug and abandon it or to properly restore the land surface at the well site in compliance with the applicable requirements of this chapter and applicable rules adopted and orders issued under it or that a well is an abandoned well for which no funds are available to plug the well in accordance with this chapter, the chief shall do all of the following:

(a) Determine from the records in the office of the county recorder of the county in which the well is located the identity of the owner of the land on which the well is located, the identity of the owner of the oil or gas lease under which the well was drilled or the identity of each person owning an interest in the lease, and the identities of the persons having legal title to, or a lien upon, any of the equipment appurtenant to the well;

(b) Mail notice to the owner of the land on which the well is located informing the landowner that the well is to be plugged. If the owner of the oil or gas lease under which the well was drilled is different from the owner of the well or if any persons other than the owner of the well own interests in the lease, the chief also shall mail notice that the well is to be plugged to the owner of the lease or to each person owning an interest in the lease, as appropriate.

(c) Mail notice to each person having legal title to, or a lien upon, any equipment appurtenant to the well, informing the person that the well is to be plugged and offering the person the opportunity to plug the well and restore the land surface at the well site at the person's own expense in order to avoid forfeiture of the equipment to this state.

(2) If none of the persons described in division (C)(1)(c) of this section plugs the well within sixty days after the mailing of the notice required by that division, all equipment appurtenant to the well is hereby declared to be forfeited to this state without compensation and without the necessity for any action by the state for use to defray the cost of plugging and abandoning the well and restoring the land surface at the well site.

(D) Expenditures from the fund for the purpose of division (B)(1) of this section shall be made in accordance with either of the following:

(1) The expenditures may be made pursuant to contracts entered into by the chief with persons who agree to furnish all of the materials, equipment, work, and labor as specified and provided in such a contract for activities associated with the restoration or plugging of a well as determined by the chief. The activities may include excavation to uncover a well, geophysical methods to locate a buried well when clear evidence of leakage from the well exists, cleanout of wellbores to remove material from a failed plugging of a well, plugging operations, installation of vault and vent systems, including associated engineering certifications and permits, restoration of property, and repair of damage to property that is caused by such activities. Expenditures shall not be used for salaries, maintenance, equipment, or other administrative purposes, except for costs directly attributed to the plugging of an idle and orphaned well. Agents or employees of persons contracting with the chief for a restoration or plugging project may enter upon any land, public or private, on which the well is located for the purpose of performing the work. Prior to such entry, the chief shall give to the following persons written notice of the existence of a contract for a project to restore or plug a well, the names of the persons with whom the contract is made, and the date that the project will commence: the owner of the well, the owner of the land upon which the well is located, the owner or agents of adjoining land, and, if the well is located in the same township as or in a township adjacent to the excavations and workings of a mine and the owner or lessee of that mine has provided written notice identifying those townships to the chief at any time during the immediately preceding three years, the owner or lessee of the mine.

(2)(a) The owner of the land on which a well is located who has received notice under division (C)(1)(b) of this section may plug the well and be reimbursed by the division of oil and gas resources management for the reasonable cost of plugging the well. In order to plug the well, the landowner shall submit an application to the chief on a form prescribed by the chief and approved by the technical advisory council on oil and gas created in section 1509.38 of the Revised Code. The application, at a minimum, shall require the landowner to provide the same information as is required to be included in the application for a permit to plug and abandon under section 1509.13 of the Revised Code. The application shall be accompanied by a copy of a proposed contract to plug the well prepared by a contractor regularly engaged in the business of plugging oil and gas wells. The proposed contract shall require the contractor to furnish all of the materials, equipment, work, and labor necessary to plug the well properly and shall specify the price for doing the work, including a credit for the equipment appurtenant to the well that was forfeited to the state through the operation of division (C)(2) of this section. Expenditures under division (D)(2)(a) of this section shall be consistent with the expenditures for activities described in division (D)(1) of this section. The application also shall be accompanied by the permit fee required by section 1509.13 of the Revised Code unless the chief, in the chief's discretion, waives payment of the permit fee. The application constitutes an application for a permit to plug and abandon the well for the purposes of section 1509.13 of the Revised Code.

(b) Within thirty days after receiving an application and accompanying proposed contract under division (D)(2)(a) of this section, the chief shall determine whether the plugging would comply with the applicable requirements of this chapter and applicable rules adopted and orders issued under it and whether the cost of the plugging under the proposed contract is reasonable. If the chief determines that the proposed plugging would comply with those requirements and that the proposed cost of the plugging is reasonable, the chief shall notify the landowner of that determination and issue to the landowner a permit to plug and abandon the well under section 1509.13 of the Revised Code. Upon approval of the application and proposed contract, the chief shall transfer ownership of the equipment appurtenant to the well to the landowner. The chief may disapprove an application submitted under division (D)(2)(a) of this section if the chief determines that the proposed plugging would not comply with the applicable requirements of this chapter and applicable rules adopted and orders issued under it, that the cost of the plugging under the proposed contract is unreasonable, or that the proposed contract is not a bona fide, arm's length contract.

(c) After receiving the chief's notice of the approval of the application and permit to plug and abandon a well under division (D)(2)(b) of this section, the landowner shall enter into the proposed contract to plug the well.

(d) Upon determining that the plugging has been completed in compliance with the applicable requirements of this chapter and applicable rules adopted and orders issued under it, the chief shall reimburse the landowner for the cost of the plugging as set forth in the proposed contract approved by the chief. The reimbursement shall be paid from the oil and gas well fund. If the chief determines that the plugging was not completed in accordance with the applicable requirements, the chief shall not reimburse the landowner for the cost of the plugging, and the landowner or the contractor, as applicable, promptly shall transfer back to this state title to and possession of the equipment appurtenant to the well that previously was transferred to the landowner under division (D)(2)(b) of this section. If any such equipment was removed from the well during the plugging and sold, the landowner shall pay to the chief the proceeds from the sale of the equipment, and the chief promptly shall pay the moneys so received to the treasurer of state for deposit into the oil and gas well fund.

The chief may establish an annual limit on the number of wells that may be plugged under division (D)(2) of this section or an annual limit on the expenditures to be made under that division.

As used in division (D)(2) of this section, "plug" and "plugging" include the plugging of the well and the restoration of the land surface disturbed by the plugging.

(E) Expenditures from the oil and gas well fund for the purpose of division (B)(2) of this section may be made pursuant to contracts entered into by the chief with persons who agree to furnish all of the materials, equipment, work, and labor as specified and provided in such a contract. The competitive bidding requirements of Chapter 153. of the Revised Code do not apply if the chief reasonably determines that an emergency situation exists requiring immediate action for the correction of the applicable health or safety risk. A contract or purchase of materials for purposes of addressing the emergency situation is not subject to division (B) of section 127.16 of the Revised Code. The chief, designated representatives of the chief, and agents or employees of persons contracting with the chief under this division may enter upon any land, public or private, for the purpose of performing the work.

(F) Contracts entered into by the chief under this section are not subject to any of the following:

(1) Chapter 4115. of the Revised Code;

(2) Section 153.54 of the Revised Code, except that the contractor shall obtain and provide to the chief as a bid guaranty a surety bond or letter of credit in an amount equal to ten per cent of the amount of the contract;

(3) Section 4733.17 of the Revised Code.

(G) The owner of land on which a well is located who has received notice under division (C)(1)(b) of this section, in lieu of plugging the well in accordance with division (D)(2) of this section, may cause ownership of the well to be transferred to an owner who is lawfully doing business in this state and who has met the financial responsibility requirements established under section 1509.07 of the Revised Code, subject to the approval of the chief. The transfer of ownership also shall be subject to the landowner's filing the appropriate forms required under section 1509.31 of the Revised Code and providing to the chief sufficient information to demonstrate the landowner's or owner's right to produce a formation or formations. That information may include a deed, a lease, or other documentation of ownership or property rights.

The chief shall approve or disapprove the transfer of ownership of the well. If the chief approves the transfer, the owner is responsible for operating the well in accordance with this chapter and rules adopted under it, including, without limitation, all of the following:

(1) Filing an application with the chief under section 1509.06 of the Revised Code if the owner intends to drill deeper or produce a formation that is not listed in the records of the division for that well;

(2) Taking title to and possession of the equipment appurtenant to the well that has been identified by the chief as having been abandoned by the former owner;

(3) Complying with all applicable requirements that are necessary to drill deeper, plug the well, or plug back the well.

(H) The chief shall issue an order that requires the owner of a well to pay the actual documented costs of a corrective action that is described in division (B)(2) of this section concerning the well. The chief shall transmit the money so recovered to the treasurer of state who shall deposit the money in the state treasury to the credit of the oil and gas well fund.

(I) The chief may engage in cooperative projects under this section with any agency of this state, another state, or the United States; any other governmental agencies; or any state university or college as defined in section 3345.27 of the Revised Code. A contract entered into for purposes of a cooperative project is not subject to division (B) of section 127.16 of the Revised Code.

Sec. 1509.074. There is hereby created in the state treasury the oil and gas well inspection fund. Seven per cent of the money from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code shall be credited to the fund. The chief shall use money in the fund to pay for administrative costs associated with conducting inspections of oil and gas wells, including training and hiring individuals to conduct inspections.

Sec. 5749.01.  As used in this chapter:

(A) "Ton" shall mean two thousand pounds as measured at the point and time of severance, after the removal of any impurities, under such rules and regulations as the tax commissioner may prescribe.

(B) "Taxpayer" means any person required to pay the tax levied by Chapter 5749. of the Revised Code.

(C) "Natural resource" means all forms of coal, salt, limestone, dolomite, sand, gravel, natural gas, condensate, and oil.

(D) "Owner," has "well," and "horizontal well" have the same meaning meanings as in section 1509.01 of the Revised Code.

(E) "Person" means any individual, firm, partnership, association, joint stock company, corporation, or estate, or combination thereof.

(F) "Return" means any report or statement required to be filed pursuant to Chapter 5749. of the Revised Code used to determine the tax due.

(G) "Severance" means the extraction or other removal of a natural resource from the soil or water of this state.

(H) "Severed" means the point at which the natural resource has been separated from the soil or water in this state.

(I) "Severer" means any person who actually removes the natural resources from the soil or water in this state.

(J) "British thermal unit" means the measure of heat energy required to raise the temperature of one pound of water by one degree fahrenheit at a specified temperature.

(K) "Condensate" means liquid hydrocarbons that were originally in the gaseous phase in the reservoir.

(L) "Gas" means all hydrocarbons that are in a gaseous state at standard temperature and pressure.

Sec. 5749.02.  (A) For the purpose of providing revenue to administer the state's coal mining and reclamation regulatory program, to meet the environmental and resource management needs of this state, to provide funding for the state's oil and gas regulatory program, to provide revenue to local governments, to fund the severance tax trust fund, and to reclaim land affected by mining, an excise tax is hereby levied on the privilege of engaging in the severance of natural resources from the soil or water of this state. The tax shall be imposed upon the severer and shall be:

(1) Ten cents per ton of coal;

(2) Four cents per ton of salt;

(3) Two cents per ton of limestone or dolomite;

(4) Two cents per ton of sand and gravel;

(5) Ten cents per barrel of oil;

(6) Two and one-half cents per thousand cubic feet of natural gas;

(7) One cent per ton of clay, sandstone or conglomerate, shale, gypsum, or quartzite;

(8) Except as otherwise provided in this division or in rules adopted by the reclamation forfeiture fund advisory board under section 1513.182 of the Revised Code, an additional fourteen cents per ton of coal produced from an area under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code for which the performance security is provided under division (C)(2) of section 1513.08 of the Revised Code. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the reclamation forfeiture fund created in section 1513.18 of the Revised Code is equal to or greater than ten million dollars, the rate levied shall be twelve cents per ton. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the fund is at least five million dollars, but less than ten million dollars, the rate levied shall be fourteen cents per ton. Beginning July 1, 2007, if at the end of a fiscal biennium the balance of the fund is less than five million dollars, the rate levied shall be sixteen cents per ton. Beginning July 1, 2009, not later than thirty days after the close of a fiscal biennium, the chief of the division of mineral resources management shall certify to the tax commissioner the amount of the balance of the reclamation forfeiture fund as of the close of the fiscal biennium. Any necessary adjustment of the rate levied shall take effect on the first day of the following January and shall remain in effect during the calendar biennium that begins on that date.

(9) An additional one and two-tenths cents per ton of coal mined by surface mining methods;

(10) Seven and one-half per cent of the product of the metered quarterly volume of oil or condensate severed through use of a horizontal well multiplied by the average of the daily closing spot price for the quarterly reporting period for oil or condensate as established by the tax commissioner under division (D)(2) of this section;

(11)(a) If the British thermal unit measurement of gas severed through use of a horizontal well is equal to or less than one thousand fifty per cubic foot, seven and one-half per cent of the product of the metered quarterly volume of gas severed through use of the horizontal well multiplied by the quarterly average of the daily closing spot price of gas for the quarterly reporting period as established by the tax commissioner under division (D)(1) of this section;

(b) If the British thermal unit measurement of gas severed through use of a horizontal well is greater than one thousand fifty per cubic foot but less than or equal to one thousand two hundred per cubic foot, the rate established by the tax commissioner under division (E)(1) of this section multiplied by the metered quarterly volume of gas severed through use of the horizontal well;

(c) If the British thermal unit measurement of gas severed through use of a horizontal well is greater than one thousand two hundred per cubic foot but less than or equal to one thousand three hundred fifty per cubic foot, the rate established by the tax commissioner under division (E)(2) of this section multiplied by the metered quarterly volume of gas severed through use of the horizontal well;

(d) If the British thermal unit measurement of gas severed through use of a horizontal well is greater than one thousand three hundred fifty per cubic foot, the rate established by the tax commissioner under division (E)(3) of this section multiplied by the metered quarterly volume of gas severed through use of the horizontal well.

(B) Of the moneys received by the treasurer of state from the tax levied in division (A)(1) of this section, four and seventy-six-hundredths per cent shall be credited to the geological mapping fund created in section 1505.09 of the Revised Code, eighty and ninety-five-hundredths per cent shall be credited to the coal mining administration and reclamation reserve fund created in section 1513.181 of the Revised Code, and fourteen and twenty-nine-hundredths per cent shall be credited to the unreclaimed lands fund created in section 1513.30 of the Revised Code.

The money received by the treasurer of state from the tax levied in division (A)(2) of this section shall be credited to the geological mapping fund.

Of the moneys received by the treasurer of state from the tax levied in divisions (A)(3) and (4) of this section, seven and five-tenths per cent shall be credited to the geological mapping fund, forty-two and five-tenths per cent shall be credited to the unreclaimed lands fund, and the remainder shall be credited to the surface mining fund created in section 1514.06 of the Revised Code.

Of the moneys received by the treasurer of state from the tax levied in divisions (A)(5) and (6) of this section, ninety per cent shall be credited to the oil and gas well fund created in section 1509.02 of the Revised Code and ten per cent shall be credited to the geological mapping fund. All of the moneys received by the treasurer of state from the tax levied in division (A)(7) of this section shall be credited to the surface mining fund.

All of the moneys received by the treasurer of state from the tax levied in division (A)(8) of this section shall be credited to the reclamation forfeiture fund.

All of the moneys received by the treasurer of state from the tax levied in division (A)(9) of this section shall be credited to the unreclaimed lands fund.

The money received by the treasurer of state from the tax levied in divisions (A)(10) and (11) of this shall be credited as follows:

(1) Forty-seven per cent to the impacted subdivision fund created in section 5749.18 of the Revised Code;

(2) Twenty per cent to the nonimpacted subdivision fund created in section 5749.18 of the Revised Code;

(3) Eleven and seven-tenths per cent to the severance tax trust fund created in section 190.01 of the Revised Code;

(4) Nine per cent to the immediate removal fund created in section 3745.12 of the Revised Code;

(5) Seven per cent to the well inspection fund created in section 1509.074 of the Revised Code;

(6) Four per cent to the oil and gas well fund created in section 1509.02 of the Revised Code;

(7) One and three-tenths per cent to the severance tax trust administrative fund created in section 190.02 of the Revised Code.

(C) When, at the close of any fiscal year, the chief finds that the balance of the reclamation forfeiture fund, plus estimated transfers to it from the coal mining administration and reclamation reserve fund under section 1513.181 of the Revised Code, plus the estimated revenues from the tax levied by division (A)(8) of this section for the remainder of the calendar year that includes the close of the fiscal year, are sufficient to complete the reclamation of all lands for which the performance security has been provided under division (C)(2) of section 1513.08 of the Revised Code, the purposes for which the tax under division (A)(8) of this section is levied shall be deemed accomplished at the end of that calendar year. The chief, within thirty days after the close of the fiscal year, shall certify those findings to the tax commissioner, and the tax levied under division (A)(8) of this section shall cease to be imposed for the subsequent calendar year after the last day of that calendar year on coal produced under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code if the permittee has made tax payments under division (A)(8) of this section during each of the preceding five full calendar years. Not later than thirty days after the close of a fiscal year, the chief shall certify to the tax commissioner the identity of any permittees who accordingly no longer are required to pay the tax levied under division (A)(8) of this section for the subsequent calendar year.

(D) Not later than fifteen days after the close of each calendar quarter, the tax commissioner shall establish and post on the department of taxation's web site the average daily closing spot price or factor, as applicable, for each quarterly reporting period as follows:

(1) For the purposes of division (A)(11) of this section, the average daily closing spot price for gas shall be calculated by dividing the sum of the daily closing spot price for gas as reported on the New York mercantile exchange index for each day in the quarter by the number of days in the quarter.

(2) For the purposes of division (A)(10) of this section, the average daily closing spot price for oil and condensate shall be calculated by dividing the sum of the daily closing spot price for oil and condensate as reported for west Texas intermediate on the New York mercantile exchange index for each day in the quarter by the number of days in the quarter.

(3) For the purposes of division (E) of this section, the average daily closing spot price for natural gas liquids shall be calculated by dividing the sum of the daily closing spot prices for natural gas liquids as reported on the Mont Belvieu NGL index for each day in the quarter by the number of days in the quarter.

(E) Not later than fifteen days after the close of each calendar quarter, the tax commissioner shall calculate and post on the department of taxation's web site the rate of the tax levied under divisions (A)(11)(b) to (d) of this section, which the commissioner shall calculate for each quarterly reporting period as follows:

(1) For the purposes of division (A)(11)(b) of this section, the sum of the average daily closing spot price for gas established under division (D)(1) of this section multiplied by seven and one-half per cent multiplied by nine thousand three hundred twenty-nine ten-thousandths, plus the average daily closing spot price for natural gas liquids established under division (D)(3) of this section multiplied by seven and one-half per cent multiplied by two and one-half;

(2) For the purposes of division (A)(11)(c) of this section, the sum of the average daily closing spot price for gas established under division (D)(1) of this section multiplied by seven and one-half per cent multiplied by eight thousand two hundred thirty-two ten-thousandths, plus the average daily closing spot price for natural gas liquids established under division (D)(3) of this section multiplied by seven and one-half per cent multiplied by five and one-half;

(3) For the purposes of division (A)(11)(d) of this section, the sum of the average daily closing spot price for gas established under division (D)(1) of this section multiplied by seven and one-half per cent multiplied by seven thousand three hundred sixty-six ten-thousandths, plus the average daily closing spot price for natural gas liquids established under division (D)(3) of this section multiplied by seven and one-half per cent multiplied by eight and one-half.

Sec. 5749.18.  (A) As used in this section:

(1) "Impacted subdivision" means a county, township, or municipal corporation located in an area of this state that is or will be a major producer of oil and gas from horizontal wells, as designated and certified by the chief of the division of oil and gas resources management in the department of natural resources pursuant to division (B) of this section.

(2) "Nonimpacted subdivision" means a county, township, or municipal corporation that is not an impacted subdivision.

(3) "Current operating expenses" and "permanent improvement" have the same meanings as in section 5705.01 of the Revised Code.

(B) On or after the thirty-first day of July of each year, the chief of the division of oil and gas resources management in the department of natural resources shall determine each county, township, or municipal corporation that is an impacted subdivision and certify that determination to the tax commissioner.

(C)(1) There is hereby created in the state treasury the impacted subdivision fund. Forty-seven per cent of the moneys from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code shall be credited to the fund. Investment earnings on the balance in the fund shall be credited to the fund. The tax commissioner shall distribute money in the fund to impacted subdivisions pursuant to division (C)(2) of this section.

(2) The tax commissioner, on or before the thirty-first day of August of each year, shall distribute moneys in the impacted subdivision fund to the severance tax fund of each impacted subdivision. The payment to each impacted county or municipal corporation shall be allocated based on the following factors:

(a) The proportion of employees who are employed in oil, gas, or condensate production operations and who reside in any such county's unincorporated territory or in the part of the territory of any such municipal corporations situated within the county to the total number of such employees reported as residents in the county as a whole;

(b) The proportion of the population in any such county's unincorporated territory or in the part of the territory of any such municipal corporation situated within the county to the total population in the county, as such population is reported in the most recently published population estimate from the development services agency;

(c) The proportion of centerline road miles in any such county's unincorporated territory or in the part of the territory of any such municipal corporation situated within the county to the total centerline road miles in the county, as determined annually by the department of transportation.

(3) The tax commissioner shall credit one-half of the county's allocation calculated under division (C)(2) of this section to the severance tax fund of the impacted county. The commissioner shall credit the remaining one-half of the county's allocation to the severance tax fund of each impacted township in the county based on the proportions in divisions (C)(2)(a) to (c) of this section, except that the employment, population, and centerline road miles factors for the unincorporated territory of each impacted township shall be compared to those for the unincorporated area of the county as a whole.

(D)(1) There is hereby created in the state treasury the nonimpacted subdivision fund. Twenty per cent of the moneys from the tax levied in divisions (A)(10) and (11) of section 5749.02 of the Revised Code shall be credited to the fund. Investment earnings on the balance in the fund shall be credited to the fund. The tax commissioner shall distribute moneys in the fund to nonimpacted subdivisions pursuant to division (D)(2) of this section.

(2) The tax commissioner, on or before the thirty-first day of August of each year, shall distribute moneys in the nonimpacted subdivision fund to the severance tax fund of each nonimpacted subdivision. The payment to each nonimpacted county or municipal corporation shall be allocated based on the following factors:

(a) The proportion of employees who are employed in oil, gas, or condensate production operations and who reside in any such county's unincorporated territory or in the part of the territory of any such municipal corporation situated within the county to the total number of such employees reported as residents in the county as a whole;

(b) The proportion of the population in any such county's unincorporated territory or in the part of the territory of any such municipal corporation situated within the county to the total population in the county, as such population is reported in the most recently published population estimate from the development services agency;

(c) The proportion of centerline road miles in any such county's unincorporated territory or in the part of the territory of any such municipal corporation situated within the county to the total centerline road miles in the county, as determined annually by the department of transportation.

(3) The tax commissioner shall credit one-half of the county's allocation calculated under division (D)(2) of this section to the severance tax fund of the nonimpacted county. The commissioner shall credit the remaining one-half of the county's allocation to the severance tax fund of each nonimpacted township in the county based on the proportions in divisions (D)(2)(a) to (c) of this section, except that the employment, population, and centerline road miles factors for the unincorporated territory of each nonimpacted township shall be compared to those for the unincorporated territory of the county as a whole.

(E) Impacted and nonimpacted subdivisions shall use revenue received under this section solely for permanent improvements and current operating expenses.

(F) Not later than the first day of March each year, the commissioner shall send every severer who is subject to the tax levied under division (A)(5), (6), (10), or (11) of section 5749.02 of the Revised Code a form on which the producer shall report to the department of taxation the name and address of the severer and the names of the counties and the municipal corporations or townships in which the severer's employees employed in production operations maintain their actual residences as given by the employees, including the number of employees for each such municipal corporation or unincorporated area of each such county and township.

A severer may use and submit any other report form in lieu of the form sent by the commissioner that contains the same information as prescribed in the commissioner's form. The report shall be due by the thirtieth day of April of each year.

(G) On or before August 30, 2014, each county, township, and municipal corporation shall create a severance tax fund in each respective subdivision's treasury to which the tax commissioner shall credit revenue distributed under this section.

(H) The commissioner shall adopt rules in accordance with Chapter 119. of the Revised Code to administer the distribution of the impacted subdivision fund and the nonimpacted subdivision fund, including the weight that each of the factors in divisions (C)(2)(a) to (c) and (D)(2)(a) to (c) of this section shall be given, which shall apply uniformly across impacted subdivisions and uniformly across nonimpacted subdivisions.

Section 2.  That existing sections 1509.02, 1509.071, 5749.01, and 5749.02 of the Revised Code are hereby repealed.

Section 3. The amendment or enactment by this act of sections 190.01, 190.02, 190.03, 109.04, 190.05, 1509.02, 1509.071, 1509.074, 5749.01, 5749.02, and 5749.18 of the Revised Code applies to the severance of natural resources occurring in calendar quarters beginning on or after October 1, 2013.

Section 4. The amendment or enactment by this act of sections 190.01, 190.02, 190.03, 109.04, 190.05, 1509.02, 1509.071, 1509.074, 5749.01, 5749.02, and 5749.18 of the Revised Code below is exempt from the referendum under Ohio Constitution, Article II, Section 1d and section 1.471 of the Revised Code and therefore takes effect immediately when this act becomes law.

Section 5.  Section 5749.02 of the Revised Code is presented in this act as a composite of the section as amended by both Am. Sub. H.B. 1 and S.B. 73 of the 128th General Assembly. The General Assembly, applying the principle stated in division (B) of section 1.52 of the Revised Code that amendments are to be harmonized if reasonably capable of simultaneous operation, finds that the composite is the resulting version of the section in effect prior to the effective date of the section as presented in this act.