Energy & Natural Resources Alert: The Ohio Supreme Court Rules on Applicability of 1989 and 2006 Dormant Mineral Acts:

Today, the Ohio Supreme Court ruled on 14 Ohio Dormant Mineral Act (“ODMA”) cases, finally resolving some of the most significant legal questions regarding oil and gas development in the state.  The Court issued three opinions, with the remaining cases decided by reference to those decisions.  The most significant ODMA interpretation from the Ohio Supreme Court was issued in Corban v. Chesapeake Exploration, L.L.C. Slip Opinion No. 2016-Ohio-5796, the first opinion published, in which the Court ruled that: (1) the 1989 ODMA did not provide for the automatic vesting of severed mineral interests, but instead required that a surface owner file a quiet title action to reclaim a severed mineral interest; and (2) after the enactment of the 2006 ODMA, the only method for a surface owner to reclaim an abandoned mineral interest was and remains to follow the notice and filing requirements of the 2006 ODMA.

A more in-depth summary of the certified questions presented in each of the three opinions, along with the Court’s decision for each question and an explanation of the practical implications of these decisions, can be found below.

Corban v. Chesapeake Exploration, L.L.C., et al., Slip Opinion No. 2016-Ohio-5796

  • “(1) Does the 2006 version or the 1989 version of the [Dormant Mineral Act] apply to claims asserted after 2006 alleging that the rights to oil, gas, and other minerals automatically vested in the surface land holder prior to the 2006 amendments as a result of abandonment?”

Answer: The 1989 version of the ODMA did not automatically terminate and extinguish severed oil, gas, and mineral rights and vest said interests in the surface owner.  Instead, the statute requires the surface owner to seek a judicial decree through a quiet title action that finds that the severed mineral rights were, in fact, abandoned.  Without a judicial decree, the severed mineral rights remain in full force and effect under this version of the ODMA.

If a surface owner attempts to merge the surface and the severed mineral rights after June 30, 2006, then the surface owner must follow and comply with the 2006 version of the ODMA.  This version requires the surface owner to give advance notice to the severed mineral rights owners that it seeks to have their mineral rights declared abandoned.

Takeaway: A surface owner’s only opportunity to use the 1989 version of the ODMA to declare any severed mineral rights abandoned was between March 22, 1992 and June 29, 2006.  If a title search does not reveal a judicial decree finding the severed mineral rights to be abandoned between those dates, then the severed mineral rights remain in full force and effect.  If a surface owner intends to seek a declaration of abandonment after June 30, 2006, then they must follow and comply with the 2006 version of the ODMA.

  • “(2) Is the payment of a delay rental during the primary term of an oil and gas lease a title transaction and ‘savings event’ under the [Dormant Mineral Act]?”

Answer: A delay rental is not a “title transaction” because it is not filed or recorded in the county recorder’s office.  The Court stated that if the Ohio General Assembly intended for the payment of delay rentals to be considered title transactions, it would have required records of delay rental payments to be filed with the county recorder’s office.  Thus, because delay rental payments arise outside of the record chain of title, they cannot be considered either a title transaction or a savings event under either version of the ODMA.

Takeaway: A severed mineral rights owner can never assert the payment of delay rentals as being a savings event under either version of the ODMA.

Walker v. Shondrick-Nau, Slip Opinion No. 2016-Ohio-5793 

  • “(1) The 2006 version of the [Dormant Mineral Act] is the only version *** to be applied after June 30, 2006, the effective date of the statute.”
  • “(2) To establish a mineral interest as ‘deemed abandoned’ under the 1989 version of the [Dormant Mineral Act], the surface owner must have taken some action to establish abandonment prior to June 30, 2006. In all cases where a surface owner failed to take such action, only the 2006 version of the [Dormant Mineral Act] can be used to obtain relief.”
  • “(6) The 2006 version of the [Dormant Mineral Act] applies retroactively to severed mineral interests created prior to its effective date.” 

Answer: The Court’s decision in Corban found that the 1989 version of the ODMA was not self-executing and that the 2006 version of the ODMA applies to all claims asserted after June 30, 2006 to declare any severed mineral rights abandoned.  Because there was no evidence in the record of the surface owner or his predecessors taking any action to have the severed mineral rights deemed abandoned under the 1989 version of the ODMA prior to June 30, 2006, only the 2006 version of the ODMA applies in this case.

Takeaway: As described in further detail in the summary for Corban, because the surface owner sought to rejoin the surface with the severed mineral rights after June 30, 2006, he could only rely on the 2006 version of the ODMA and its notice requirements. 

  • “(3) To the extent the 1989 version of the [Dormant Mineral Act] remains applicable, the 20-year look-back period shall be calculated starting on the date a complaint is filed which first raises a claim under the 1989 version***.”
  • “(4) For purposes of R.C. 5301.56(B)(3), a severed oil and gas mineral interests is the “subject of” any title transaction which specifically identifies the recorded document creating that interest by volume and page number, regardless of whether the severed mineral interest is actually transferred or reserved.”
  • “(5) Irrespective of the savings events in R.C. 5301.56(B)(3), the limitations in R.C. 5301.49 can separately bar a claim under the [Dormant Mineral Act].” 

Answer: None of these issues surrounding the 1989 version of the ODMA need to be addressed because only the 2006 version of the ODMA applies in this case.

Takeaway: It is still unclear whether or not the mere reference to a previous oil and gas severance by volume and page number in a deed constitutes a savings event under either version of the ODMA.

Albanese v. Batman and Lipperman v. Batman, Slip Opinion No. 2016-Ohio-5814 

  • “(1) The 1989 Dormant Mineral Act was prospective in nature and operated to have a severed oil and gas interest ‘Deemed abandoned and vested in the owner of the surface’ if not of the savings events enumerated in ORC Section 5201.56(B) occurred in the twenty (20) year period immediately preceding any date in which the 1989 Dormant Mineral Act was in effect.”

Answer: The Court’s decision in Corban applies in this case, thus any arguments regarding whether the 1989 version of the ODMA had a fixed or rolling look-back period are moot.  The record in this case indicates that the surface owner attempted to rejoin the surface with the severed mineral rights after June 30, 2006, which means that only the 2006 version of the ODMA applies.

  • “(2) The act of recording an out-of-state Will is not a title transaction.”

Answer: Because the 2006 version of the ODMA applies in this case, this issue is also moot because it only arises under 1989 ODMA analysis.

For Additional Information 

Complete copies of the Ohio Supreme Court Opinions can be found by following the links below: 

Corban v. Chesapeake Exploration, L.L.C.

Walker v. Shondrick-Nau

Albanese v. Batman and Lipperman v. Batman

If you have any questions about this Alert, please contact Brian Boyer, David Hall or any of the attorneys in our Energy and Natural Resources Services Group.

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