Ohio Supreme Court: Which Dormant Mineral Act applies?

COLUMBUS — Many eyes are on the Ohio Supreme Court as it muddles through the question of which Ohio Dormant Mineral Act applies to surface rights and mineral rights owners. The Ohio Supreme Court ruled on one case June 18 involving the Ohio Dormant Mineral Act and heard another case June 23.

Ohio Dormant Minerals Act

The Dormant Mineral Act governs the ownership rights of minerals that have been severed from the surface lands. It establishes conditions and procedures by which the ownership of mineral rights are preserved with the mineral holder or abandoned to the owner of the surface lands.
The 1989 version of the Dormant Minerals Act has been described as a “use it or lose it” statute: If the mineral interest owners did not “use” their mineral interests during a 20-year time period, they automatically vested in the surface owner.

The 2006 version of the Dormant Minerals Act says the surface owner must adhere to a multi-step process to accomplish the merging of the surface and mineral interests. The surface owner must confirm that the oil and gas mineral interests have not been used within the previous 20 years.
Dodd v. Croskey. The Supreme Court of Ohio rendered its first decision regarding Ohio’s Dormant Mineral Act in the case of Dodd v. Croskey, with significant implications for landowners and owners to mineral rights involving Utica shale.

In a unanimous decision, the Supreme Court ruled that under the 2006 amendments to the statute, after an owner of surface land gives notice of his intent to declare the mineral interest abandoned, the holder of the mineral rights can preserve his rights by timely filing an affidavit with the county recorder.
The affidavit must state the nature of the mineral interest, the recording information upon which the claim is based, and that the mineral holder intends to preserve the mineral interest.
McDonald Hopkins represented a group of the mineral holders in this case.
Jeff Pollock, of McDonald Hopkins, said all mineral rights owners should be alert for notices about their rights.

“People who have mineral rights should definitely be on the lookout for notices sent to them directly or put in newspapers that they should respond by filling a claim with the county recorder that they claim and maintain the mineral rights,” said Pollock.

What ‘holds’ rights

Under the original 1989 statute, the conditions (referred to as “savings events”) by which a mineral holder could preserve the mineral interest from being deemed abandoned included, for example, actual production or withdrawal of minerals, the issuance of a drilling or mining permit, or the mineral interest being the subject of a title transaction.

In the Dodd case, the Ohio Supreme Court determined that, at least under the 2006 amendments to the Dormant Mineral Act, the mineral holder can preserve his mineral interest upon the timely filing of the affidavit even if there had been no prior savings events that would otherwise have been required to preserve the mineral interest.

The Supreme Court ruled that the affidavit did not have to refer to a prior savings event nor did the affidavit itself have to be filed in the 20 years preceding notice by the surface owner.
Which version? The Supreme Court specifically noted that it was not ruling on the issue of when to apply the 1989 original version of the Dormant Mineral Act and when to apply the 2006 version.
And that is going to be the issue the Ohio Supreme Court takes up next with the cases still pending before the court, including the Walker vs. Noon case and the Corban vs. Chesapeake Exploration case.

The Ohio Supreme Court heard arguments June 23 in the case of Jon Walker Jr. vs. Patricia J. Shondrick-Nau, executrix of the estate of John R. Noon and his trust.
The eventual Ohio Supreme Court ruling could change how mineral rights severed from the surface land are handled and define ownership of the mineral rights.

The case, over who owns the mineral rights under 42 acres in Noble County, began in Noble County court and was then appealed to the Seventh District Court of Appeals by Noon in 2014, and eventually, the Ohio Supreme Court in the fall of 2014.

Background

Walker filed the lawsuit against Noon in 2012 in an attempt to get the mineral rights to the property. Walker owns the surface rights.
According to court records, Noon purchased the property in 1964, and when he sold the property in 1965, he severed the mineral rights from the surface rights and maintained the mineral rights. In 1970, the property changed hands two more times.
Then, in 2009, Walker purchased the property. In December 2011, Walker sent a notice of abandonment of mineral interest to Noon.

Affidavit filed

But in January 2012, Noon filed an affidavit and laid claim to preserve his mineral interest, and in April 2012, Walker filed a complaint asking the trial court rule that he is the lawful owner of the mineral rights.
Walker claimed in the court records that the mineral rights merged with the surface rights in 1992 by the way of the 1989 Ohio Dormant Mineral Act.
He claimed Noon abandoned his interest in the mineral rights when he failed to stop them from expiring.

Justices ask questions

One question brought forth to both sides by the Ohio Supreme Court justices June 23 is whether the former Ohio law allows surface owners to claim mineral rights without notification.
Justice Paul E. Pfeifer said the 1989 statute appears straightforward and that Noon could have claimed the mineral rights after the 1989 Ohio Dormant Mineral Rights Act was implemented, but didn’t.
The justices questioned why Noon never filed a recorded document preserving his mineral rights until Walker served him, as required under the 2006 Dormant Mineral Rights Act.
The justices did not rule on the case, and instead, decided to take the matter under advisement and issue a decision at a later time, which could be late fall to late December or even early 2016.