In the wake of the Ohio Utica shale boom, the Ohio Dormant Mineral Act (“DMA”), Revised Code 5301.56, has become a hot bed of litigation. The Ohio DMA was enacted in 1989 and subsequently amended in 2006 and 2014. Due to the relatively recent adoption of the DMA, the case law interpreting its statutory provisions is in its infancy. The following is a summary of the cases and issues currently pending before the Ohio Supreme Court:

Cases interpreting the 1989 version of the DMA

Chesapeake Exploration LLC v. Kenneth Buell, S. Ct. Case No. 2014-0067

Buell came before the Ohio Supreme Court upon the request of the U.S. District Court for the Southern District of Ohio to certify questions of law presented by the parties in summary judgment motions. The mineral rights at issue in Buell underlie 90 acres of property located in Harrison County. The mineral rights were severed from the surface estate in 1958 by virtue of a deed reservation.

The current surface owners argue that, pursuant to the 1989 DMA, the title to the mineral interest underlying the property was “deemed abandoned” and vested with the surface owners as no “savings event” occurred in the 20 years before the DMA went into effect. The mineral interest owners, on the other hand, argue that a number of savings events, including oil and gas leases and assignments, occurred during that 20-year period.

The court has certified the following issues:

  1. Is the recorded lease of a severed subsurface mineral estate a title transaction under the DMA, Ohio Revised Code 5301.56(5)(3)(a)?
  2. Is the expiration of a recorded lease and the reversion of the rights granted under that lease a title transaction that restarts the twenty-year forfeiture clock under the DMA at the time of the reversion?

Oral argument took place on August 20, 2014. Watch it here. A decision has not yet been rendered.

Eisenbarth v. Ruesser, S.Ct. Case No. 2014-1767

Eisenbarth involves severed mineral interests underlying property located in Monroe County. The property was the subject of a 1954 mineral deed, which contained a reservation of ½ the oil and gas. An oil and gas lease covering the property was executed in 1973, and each subsequent deed in the chain of title repeated the mineral reservation. The current holders of the ½ mineral interest reservation contend that a 1974 oil and gas lease is a “savings event” sufficient to preserve their interest in ½ of the oil and gas underlying the property.

The central issue is whether the severed mineral interest has been the subject of a title transaction that has been filed or recorded in the office of the county recorder in the county in which the lands are located within the preceding twenty years. Upholding the decision of the trial court, the Seventh District interpreted the DMA such that the “look-back” period begins on the date of the statute’s enactment- March 22, 1989.

The court has certified the following issues

  1. The 1989 DMA 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 none of the savings events enumerated in ORC 5301.56(B) occurred in the twenty (20) year period immediately preceding any date in which the 1989 DMA was in effect.
  2. Assuming, arguendo, that the 1989 ODMA operates on a “fixed” twenty (20) year look-back period from the date of enactment, an oil and gas lease is not a “title transaction” within the meaning of O.R.C. 5301.47(F) and Appellee’s interest is nonetheless “deemed abandoned.”

Oral argument has not yet been scheduled.

Taylor v. Crosby, S. Ct. Case No. 2014-1886

Crosby involves a fractional reservation of mineral interests underlying 108.708 acres in Belmont County. In 1972, the mineral interests were severed by virtue of a deed reservation. At the time of 1972 transfer, the grantor reserved a ½ undivided interest in the oil and gas underlying the property. The grantor then entered into an oil and gas lease of his ½ mineral interest in 1975.

On appeal, the Seventh District held, echoing Eisenbarth, the 20-year look-back period was fixed as of the date of enactment of the 1989 Version- March 22, 1989. The sole proposition of law submitted to the court is whether the 1989 DMA is prospective in nature and operates using a rolling application of the phrase “preceding twenty years.”

The appeal has been accepted, but briefing has been stayed pending a decision in Walker v. Shondrick-Nau.

Cases interpreting the 2006 version of the DMA

Dodd v. Croskey, S. Ct. Case No. 2013-1730

Dodd involves 127 acres of property located in Harrison County, which was subject to a 1947 partial mineral reservation by deed. In 2009, the Appellants purchased the unreserved portion of the property. Appellants allege that no subsequent transfers of the mineral interest reservation appeared in the chain of title.

In 2010, Appellants published a notice of intent to declare abandoned the partially reserved mineral interest. Shortly thereafter, Appellee John Croskey recorded a quit-claim deed conveying his rights in the reserved oil and gas interest to the John William Croskey Revocable Trust. Appellee Croskey then recorded an affidavit preserving mineral interests. Appellants subsequently filed a complaint with the Harrison County Court of Common Pleas to quiet title to the mineral interests.

The court has certified the following issue for decision: whether Ohio Revised Code Section 5301.56(B)(3) requires a showing by a party claiming the preservation of a prior mineral interest of a “savings event” that occurred in the 20 years prior to the notice being served and not a “savings event” after the date of the notice being served.

Oral argument took place on August 20, 2014. Watch it here. The Supreme Court has not yet rendered an opinion.

Cases involving the application of both versions of the DMA

Walker v. Noon, S. Ct. Case No. 2014-0803

Walker involves mineral rights underlying approximately 42 acres of property in Noble County. In 1965, the fee owner sold the surface acreage, but expressly reserved the oil and gas mineral rights underlying the property. The surface rights were subsequently transferred in 1970 and 1977, and each of the conveyances referenced the mineral rights reservation.

On summary judgment, the trial court applied the 1989 version of the DMA and concluded that the surface transfers that occurred in the 1970s did not qualify as “savings events” under the DMA. On appeal, the Seventh District held: (1) in order for the mineral interests to be the “subject of a title transaction” under 5301.56(B)(3), the grantor must actually convey or retain that interest, and (2) the 1989 version of the DMA controls over the 2006 version.

The court has certified the following issues:

  1. The 2006 version of the DMA is the only version of the DMA to be applied after June 30, 2006, the effective date of said statute.
  2. To establish a mineral interest as “deemed abandoned” under the 1989 version of the DMA, 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 DMA can be used to obtain relief.
  3. To the extent the 1989 version of the DMA remains applicable, the 20-year look-back period shall be calculated starting on the date a complaint is filed that first raises a claim under the 1989 version of the DMA.
  4. For purposes of R.C. 5301.56(B)(3), a severed oil and gas mineral interest is the “subject of” any title transaction that 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 DMA.
  6. The 2006 version of the DMA applies retroactively to severed mineral interests created prior to its effective date.

Oral argument is scheduled for June 23, 2015.

Tribett v. Shepherd, S. Ct. Case No. 2014-1966

Tribett involves severed mineral rights underlying 61.573 acres of real property located in Union Township, Belmont County. The mineral rights were severed by virtue of a deed reservation in 1962. The surface rights to 137 acres, including the 61 acres at issue, were sold in 1986 and 1992. Each conveyance referenced the 1962 deed reservation. Appellees eventually bought 61 acres of property and, in 2011, published a notice of abandonment of mineral rights pursuant to R.C. 5301.56. The successors in interest to the mineral rights underlying the 61 acres allege they did not receive the required statutory notice.

On appeal from the trial court, the Seventh District: (1) held in order for the mineral interest to be the ‘subject of’ the title transactions, for purposes of R.C. 5301.56(B)(3)(a), the grantor must actually convey or retain that interest; (2) held the 1989 DMA controls over the 2006 DMA; and (3) declined to decide whether applying the 1989 version in a case filed after enactment of the 2006 version violates the constitution.

The following propositions of law have been submitted to the court:

  1. The 2006 version of the DMA is the only version of the DMA to be applied after June 30, 2006 (the effective date of the statute) because the 1989 version of the DMA was not self-executing.
  2. To establish a mineral interest as “deemed abandoned” under the 1989 version of the DMA, 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 DMA can be used to obtain relief.
  3. Interpreting the 1989 version of the DMA as “self-executing” violates the Ohio Constitution.
  4. A severed oil and gas mineral interest is the “subject of” any title transaction that specifically identifies the recorded document creating that interest by volume and page number.
  5. Irrespective of the “savings event” in R.C. 5301.53(B)(3), the limitations in R.C. 5301.49 can independently bar a claim under the DMA.
  6. If a court applies the 1989 version of the DMA in a lawsuit filed after June 30, 2006, the 20-year look-back period shall be calculated starting on the date a complaint is filed that first raises a claim under the 1989 version of the DMA.
  7. A claim brought under the 1989 version of the DMA must have been filed within 21 years of March 22, 1989 (or, at the very latest, March 22, 1992), or such claim is barred by the statute of limitations in R.C. 2305.04.

The appeal has been accepted. The court has stayed briefing pending a decision in Walker.

Shannon v. Householder, S. Ct. 2014-1208

Shannon v. Householder involves mineral rights underlying 71.8 acres of property in Jefferson County. The property was transferred by deed in 1946 and was subject to a reservation of minerals in the grantor. In 2011, the purchasers of the surface estate published notice of their intent to declare the mineral interest abandoned, pursuant to the 2006 DMA, but did not serve the current holders of the mineral estate. Subsequent to said publication, the mineral interest holders filed a claim to preserve the mineral interest with the Jefferson County Recorder. The owners of the surface estate filed a complaint for quiet title and declaratory judgment relying on both the 1989 and 2006 versions of the DMA. The trial court granted summary judgment in favor of the surface owners applying only the 1989 DMA. The Seventh District Court of Appeals affirmed.

The court has certified the following issues:

  • The 1989 version of the DMA does not apply after the effective date of the 2006 version of the DMA.
  • In order for a mineral interest to vest under the 1989 version of the DMA, the surface owner must take some action in order to establish abandonment prior to the effective date of the 2006 DMA.
  • The 2006 DMA operates retrospectively and applies to severed mineral interests created before its effective date.

The Ohio Supreme Court has stayed briefing in this case pending a decision in Walker v. Shondrick-Nau.

Wendt v. Dickerson, S. Ct. 2014-2051

Wendt v. Dickerson involves mineral rights underlying 81 acres in Harrison County. The property was subject to a mineral reservation contained in a 1952 deed. In 2011, the holders of the mineral interests recorded two affidavits and notices to preserve the mineral interests underlying the property. Also in 2011, the owners of the surface estate published a notice of intent to deem the mineral rights abandoned, pursuant to the 2006 DMA.

In 2012, the surface owners filed suit to claim ownership of the mineral interest pursuant to the 1989 DMA. At the trial court, the mineral interest holders claimed ownership under the 1989 version as well.

The following propositions of law have been submitted to the court:

  1. The 2006 version of the DMA controls the vesting of title in a surface owner who did not make a claim for the mineral interests before the 2006 enactment.
  2. The 1989 version of the DMA did not provide mineral owners with the due process of law required under the state and federal constitution.
  3. The Ohio Dormant Minerals Rights Act is not now and never was self-executing.

The court has stayed briefing pending a decision in Walker.

Dahlgren v. Brown Farm Properties, LLC, S. Ct. Case No. 2014-1655

Dahlgren involves a dispute over the ownership of mineral rights underlying 225 acres of property in Carroll County. The mineral rights underlying this property were subject to a reservation in a 1949 warranty deed. In 2012, the mineral interest holders received notice that surface owners had the intent to declare the mineral interests abandoned pursuant to the DMA. In 2013, the mineral interest holders filed a complaint for quiet title. The trial court granted summary judgment in favor of the mineral interest holders. On appeal, the Seventh District overturned the decision of the trial court finding that the 1989 statute was self-executing and transferred the mineral interests to the surface owners in 1992.

The Supreme Court has certified the following issues:

  1. The 2006 version of R.C. 5301.56 controls in the DMA proceedings and quiet title action initiated by the Plaintiff after 2006.
  2. The 1989 version of the DMA does not provide for an “automatic” transfer of mineral rights from record holders to surface owners.

While the court has accepted jurisdiction, this case is being held pending a decision in Walker v. Shondrick-Nau.

Hans Michael Corban v. Chesapeake Exploration, S. Ct. 2014-0804

Corban involves real property that was the subject of a 1959 transfer, which conveyed property to Petitioner’s predecessors-in-interest and reserved the oil, gas and other minerals to the grantor. Respondents are the successors-in-interest to the grantor of the 1959 transfer. An oil and gas lease was executed in 1974, but expired at the end of the primary term. Another oil and gas lease was executed in 1984, and delay rental payments were paid pursuant to 1984 up to 1988. There was no production from the property pursuant to the 1984 lease.

The following questions of state law have been certified from the United States District Court for the Southern District of Ohio, which arose from a complaint seeking declaratory judgment and quiet title to the oil and gas rights underlying 164.48 acres of real property located in Harrison County:

  1. Does the 2006 version or the 1989 version of the DMA apply to claims asserted after 2006 alleging that the rights to oil, gas and other minerals automatically vested in their surface land holder prior to the 2006 amendments as a result of abandonment?
  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 DMA?

Oral argument in this case was held on May 6, 2015. Watch it here. The court has not rendered a decision.

Farnsworth v. Burkhart, S. Ct. Case No. 2014-1909

The Farnsworth case involves a dispute over the mineral rights underlying 104 acres of real property located in Monroe County. In 1980, the minerals underlying the real property were severed by virtue of a deed reservation.

The court has certified the following questions of law:

  • The 1989 version of R.C. §5301.56, the Ohio Dormant Minerals Act (“Former DMA”), was prospective in nature; division (B) applies to any 20-year period that elapses while the Former DMA was in effect.
  • A Claim to Preserve filed and recorded under division H(1)(a) of the current version of R.C. §5301.56 (“Current DMA”) does not have the same effect as a claim filed and recorded under division B(3)(e) of the Current DMA.

The court has accepted the appeal, but has stayed the briefing scheduled pending decisions in Eisenbarth and Croskey.