Recently, the Seventh District Court of Appeals ruled on two cases involving the 1989 and 2006 versions of the Ohio Dormant Mineral Act (“DMA”).
In Taylor v. Crosby (September 24, 2014), the court considered whether mineral rights severed in 1971 were abandoned under the 1989 DMA and 2006 DMA. The trial court construed the 1989 DMA to require a “rolling” look-back period and concluded that severed mineral rights were abandoned where no savings events occurred between 1975 and 1995. The court of appeals reversed, holding that under its prior decisions, the 1989 DMA created a “fixed” look-back period. Under a fixed look-back period, an oil and gas lease executed by the severed mineral owner in 1975 constituted a savings event that preserved the severed mineral rights from abandonment under the 1989 DMA.
The court also considered, but did not decide, whether the severed mineral rights were abandoned under the 2006 DMA. Because the trial court had not made a specific ruling on the 2006 DMA claim, the court of appeals remanded the case back to the trial court.
You can read the decision here.
In Tribett v. Shepherd (September 29, 2014), the court considered a number of procedural and substantive issues relating to the 1989 DMA and 2006 DMA. Drawing in part on its earlier decisions, the court held:
- Severed mineral rights originally reserved in 1962 were not the “subject of” later conveyances of the surface that contained language repeating the prior reservations;
- Although the DMA is a part of the Ohio Marketable Title Act (MTA), the surface owners could not rely on general provisions of the MTA to avoid the specific requirement in the DMA that mineral rights must be the “subject of” a title transaction in order to qualify as a savings event;
- The 1989 DMA is self-executing and resulted in the abandonment and vesting of severed mineral rights into the surface where no savings events occurred during the statute’s look-back period. Conversely, the enactment of the 2006 DMA did not disturb the prior abandonment of mineral rights under the 1989 DMA;
- The surface owners were not barred by the twenty-one year statute of limitations in Ohio Revised Code § 2305.04. The court declined to consider whether the statute of limitations applied to claims for abandonment under the 1989 DMA, finding that even if the statute of limitations did apply, it was not a bar under the particular facts in the case. The earliest date the severed mineral rights would be deemed abandoned under the 1989 DMA was March 22, 1992. The suit, having been brought in April 2012, was within the twenty-one year period;
- The 1989 DMA is constitutional. The court looked to Texaco v. Short, in which the United States Supreme Court upheld Indiana’s dormant mineral act. The Texacocourt found that it was the owner’s failure to make any use of the property, rather than the state’s action, that caused the lapse of the mineral rights. Indiana’s statute provided for a two-year grace period to allow the mineral owner to save their interest from abandonment. Observing that Ohio’s DMA allowed for a three-year grace period, the court found the 1989 DMA constitutional; and
- The 1989 DMA uses a “fixed” look-back period, rather than a “rolling” look-back period. Under the particular facts, the court found that, regardless of whether the look-back period was fixed or rolling, the severed mineral interest was abandoned because no savings events occurred.
Because no savings events occurred, the severed mineral rights were deemed abandoned and vested with the surface as of March 22, 1992. Although the court found the 1989 DMA controlling, the court also addressed the surface owner’s cross-appeals relating to the 2006 DMA. The court held:
- The heirs of the original severed mineral owner qualified as “holders” for the purpose of filing a claim of preservation under the 2006 DMA because such heirs derived their interest in the minerals from the original owner through testate or intestate succession;
- The failure of the surface owners to send a notice of abandonment by certified mail and instead to proceed through publication of the abandonment notice in a newspaper did not prejudice the severed mineral owners, who, having learned of the publication, timely recorded a claim of preservation;
- A claim of preservation, timely filed after the service or publication of a notice of abandonment, can preserve severed mineral rights even if no savings events occurred within the twenty-years preceding the notice of abandonment.
The dissent in Tribett found that the 1989 DMA violates the Ohio constitution: “The 1989 ODMA’s lack of notice provision makes it unconstitutional on its face, and by construing it as a self-executing statute resulting in automatic abandonment of a severed mineral interest…the 1989 ODMA is unconstitutional as applied. Such a statutory construction results in an unlawful taking by operation of law…”
You can read the decision here.