Ohio's Dormant Mineral Act After Corban
Under Ohio law, land ownership can include a multitude of different rights, including the right to occupy and make use of the surface of the land, and the right to access and remove the minerals beneath the surface. These subsurface mineral rights, including the rights to extract oil and gas, may be sold separately, or severed from the surface estate. Unfortunately, such severance of the surface rights from the mineral rights may create problems, especially when an owner of the mineral rights fails to affirmatively exercise its mineral rights. With the passage of time, it can become difficult to identify the current holder of the severed mineral rights. To address these problems, Ohio enacted the Dormant Mineral Act (ODMA), which allowed for mineral interests not used for 20 years or more (i.e. dormant mineral rights), to be deemed abandoned.
The original ODMA became effective in 1989 and was amended in 2006 (and again in 2013). As originally enacted, dormant mineral rights were automatically deemed abandoned with the passage of time. The 2006 amendment, however, created a procedure that the owner of the surface rights must follow in order to have the dormant mineral rights deemed abandoned. Specifically, Ohio Revised Code 5301.56(E) (as provided in the 2006 amendment) requires the surface owner of the lands, subject to the interest, to give the mineral rights holder notice of the intent to declare that interest abandoned. The mineral interest holder is then allowed an opportunity to preserve its rights from being deemed abandoned and merged with the surface estate. If no claim to preserve the interest or affidavit proving that a saving event occurred within the preceding 20 years is timely recorded, the surface owner may record an affidavit that the mineral interest has been abandoned. At the time an affidavit of abandonment has been recorded, the mineral interest vests in the surface owner and the existence of the mineral interest or of any rights under it will cease.
The procedure enacted by the 2006 amendment created questions about such procedural requirements for the abandonment of mineral rights that became dormant prior to the 2006 amendment. In other words, if dormant mineral rights were automatically deemed abandoned under the original version of the ODMA, were they still abandoned after the 2006 amendment? The Ohio Supreme Court recently decided a number of cases regarding the interpretation of the ODMA and its amendments.
In the case of Corban v. Chesapeake Exploration, L.L.C., the Ohio Supreme Court ruled that dormant mineral interests do not automatically pass by operation of law to the surface owner under the 1989 version of the ODMA. Instead, as of June 30, 2006, a surface owner seeking to merge dormant mineral rights with the surface estate must follow the 2006 ODMA procedures enacted in ORC 5301.56. Those procedures require providing notice to the dormant mineral owners of the attempted merger and govern the manner by which mineral rights are deemed abandoned and vested in the surface holder. If the requirements established by the 2006 ODMA are satisfied, a dormant mineral interest shall be deemed abandoned and vested in the surface owner of the lands.
Applying its interpretation of the ODMA in Corban, the Ohio Supreme Court found that the estate of John Noon, in Walker v. Shondrick-Nau, properly retained the mineral rights by following the procedures set forth in the 2006 ODMA and properly filing a claim to preserve the mineral interests. Similarly, in Albanese v. Batman, the high Court concluded that dormant mineral rights did not pass to the surface owners because they failed to follow the notice requirement of the 2006 ODMA prior to attempting to declare the mineral rights abandoned.
The Ohio Supreme Court’s decision in Corban provides clarity for establishing the surface owner’s marketable record title in the mineral estate under the 2006 version of the ODMA.
If you have questions regarding either merging or preserving mineral rights or the implications that the decision may have on your mineral rights, please contact one of our real estate attorneys.
Disclaimer: The article in this publication has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.