Ohio's Dormant Mineral Act: Current and Unresolved Issues

• Author: Alexander McElroy
• Position: Alexander McElroy is a Senior Associate with Lenington & Parrino, LLP, and he is responsible for advising clients on energy-related issues, with a focus on oil and gas in Ohio. Prior to joining Lenington & Parrino, LLP, he was a project manager for Elexco Land Services Inc. where he managed title and curative projects for oil and gas clients...
• Pages: 325-357

OHIO’S DORMANT MINERAL ACT: CURRENT AND

UNRESOLVED ISSUES

ALEXANDER MCELROY*

I. INTRODUCTION

Ohio’s oil and natural gas development requires oil and gas producers

to make significant investments in capital and resources.1 However, before

drilling or exploration of oil or natural gas can commence, a producer must

obtain the right to drill from those who own those rights.2 Often, oil and gas

rights have been severed from the surface estate; some severances are

decades old, making it difficult—if not impossible—to identify current

owners of the severed interests. To address this issue, the Ohio General

Assembly enacted Ohio’s Dormant Mineral Act (DMA)3 to deem dormant

mineral interests abandoned after twenty years of non-use.4 The original

Act took effect in 1989 (1989 Statute),5 and was later amended in 2006

(2006 Amendment),6 and most recently in 2013.7 Although the DMA was

intended to remove uncertainty regarding the ownership of prior unused and

severed mineral interests, the DMA’s imprecise statutory construction and

Copyright © 2016, Alexander McElroy.

* Alexander McElroy is a Senior Associate with Lenington & Parrino, LLP, and he is

responsible for advising clients on energy-related issues, with a focus on oil and gas in Ohio.

Prior to joining Lenington & Parrino, LLP, he was a project manager for Elexco Land

Services Inc. where he managed title and curative projects for oil and gas clients with

operations in the Appalachian Basin. He obtained his Jur is Doctor degree from Case Western

Reserve University School of Law in 2010 and participated in the accelerated joint degree

program, concurrently earning his Master of Business Administration degree from Case

Western Reserve University Weatherhead School of Management.

1 Keith Schneider & Codi Yeager, Fossil Fuel Boom Shakes Ohio, Spurring Torrent of

Investment and Raising Water Concerns, CIRCLE O F BLUE (Mar. 12, 2012, 4:54 PM),

http://www.circleofblue.org/waternews/2012/world/fossil-fuel-boom-shakes-ohio-spurring-

torrent-of-investment-and-worry-over-water.

2 OHIO REV. CODE ANN. § 1509.06 (West 2014).

3 OHIO REV. CODE ANN. § 5301.56 (West Supp. 2015).

4 Id.

5 Sub. S.B. 223, OHIO LAWS FILE 314 (1988) (amending OHIO REV. CODE ANN.

§ 5301.56).

6 Sub. H.B. 288, OHIO LAWS FILE 5960 (2006) (amending OHIO REV. CODE ANN.

§ 5301.56).

7 Sub. H.B. 72, OHIO LAWS FILE 90 (2013) (amending OHIO REV. CODE ANN. § 5301.56).

326 CAPITAL UNIVERSITY LAW REVIEW [44:325

multiple amendments have led to varying interpretations of its application.8

The various interpretations, as well as questions regarding the statute’s

constitutionality, have led to a multitude of cases before Ohio courts within

the past three years.9 A number of key issues have made their way through

the Ohio appellate courts, and the Supreme Court of Ohio has a number of

cases presently before it regarding the correct application of certain aspects

of the DMA.10 Additionally, unresolved questions remain.11 Some are not

currently in litigation, and more have yet to be discovered.12 This Article

explains the current state of the DMA under Ohio case law and provides

guidance to practitioners.

First, Part II of this Article discusses the history of the DMA. Next, Part

III discusses and analyzes key issues currently before the Supreme Court of

Ohio regarding the DMA. Then, Part IV expounds upon unresolved issues

that have not yet been litigated in Ohio courts. Finally, Part V concludes

with a succinct summary of how to apply the DMA given current Ohio court

precedent.

II. HISTORY OF THE DMA

In 1961, the General Assembly enacted Ohio’s Marketable Title Act

(MTA).13 The MTA was adopted to simplify and facilitate land title

transactions by extinguishing ancient claims and interests in land that had

become stale.14 The MTA provides that a person who has an unbroken chain

of title or record to any interest in land for forty years or more has a

marketable record title to such interest, unless certain exceptions apply.15

8 CHRIS BARONZZI, The Dormant Mineral Act: Lots of Questions, Few Answers, OIL &

GAS L. REP. (Jan. 2, 2015), http://www.oilandgaslawreport.com/2015/01/02/the-dormant-

mineral-act-lots-of-questions-and-still-no-answers.

9 Id. See also, e.g., Tribett v. Shepherd, 2014-Ohio-4320, 20 N.E.3d 365 (7th Dist.),

appeal allowed, 142 Ohio St. 3d 1447, 2015-Ohio-1591, 29 N.E.3d 1003; Taylor v. Crosby,

7th Dist. Belmont No. 13 BE 42, 2014-Ohio-4433, appeal allowed, 142 Ohio St. 3d 1421,

2015-Ohio-1353, 28 N.E.3d 121; Wendt v. Dickerson, 5th Dist. Tuscawarus No. 2014 AP 01

0003, 2014-Ohio-4615, appeal allowed, 142 Ohio St. 3d 1464, 2015-Ohio-1896, 30 N.E.3d

973; Thompson v. Custer, 2014-Ohio-5711, 26 N.E.3d 278 (11th Dist.), appeal allowed, 143

Ohio St. 3d 1416, 2015-Ohio-2911, 34 N.E.3d 929.

10 BARONZZI, supra note 8.

11 Id.

12 Id.

13 OHIO REV. CODE ANN. §§ 5301.47–.55 (West 1961).

14 OHIO REV. CODE ANN. § 5301.50 (West 2014).

15 Id. § 5301.51.

2016] OHIO’S DORMANT MINERAL ACT 327

On March 22, 1989, the General Assembly enacted the 1989 Statute,16

amended it in 2006—effective June 30 of that year17—and again amended

it in 2013—effective January 30, 2014.18 The DMA is part of the MTA and

was enacted to encourage the development of Ohio’s natural resources by

declaring a severed mineral interest “abandoned” after a twenty-year period

of non-use.19 Under the DMA, an abandoned mineral estate may become

reunified with the surface estate if certain conditions are satisfied.20 The

DMA applies to all mineral severances except coal or mineral interests

owned by the United States, the State of Ohio, or any political subdivision

(e.g., county, township, municipality, or school district).21

The 1989 Statute provides a surface owner with the opportunity to gain

title to previously-severed mineral interests if those interests or rights had

not been subject to a “savings event” during a preceding twenty-year time

period.22 The 1989 Statute provided for a twenty-year look-back period, and

a three-year savings period, effectively giving severed mineral interest

holders until March 22, 1992, to prevent their severed mineral interests from

being “deemed abandoned”23 by virtue of the DMA. The 1989 Statute did

not require notice to be served on the severed mineral interest holders,

although a notice requirement was added by the 2006 Amendment.24

Nevertheless, under the 1989 Statute, if no savings events occurred within

the preceding twenty years, the severed mineral interest would be deemed

abandoned and vested in the surface owner.25 The following is a summary

of the savings events as enumerated in the 1989 Statute:

16 Sub. S.B. 223, OHIO LAWS FILE 314 (1988) (amending OHIO REV. CODE ANN.

§ 5301.56).

17 Sub. H.B. 288, OHIO LAWS FILE 5960 (2006) (amending OHIO REV. CODE ANN.

§ 5301.56).

18 Sub. H.B. 72, OHIO LAWS FILE 90 (2013) (amending OHIO REV. CODE ANN. § 5301.56).

19 OHIO REV. CODE ANN. § 5301.56(B) (West Supp. 2015).

20 Id. § 5301.56(E).

21 Id. § 5301.56(B)(1)–(2).

22 Sub. S.B. 223, OHIO LAWS FILE 314 (1988) (amending OHIO REV. CODE ANN.

§ 5301.56).

23 OHIO REV. CODE ANN. § 5301.56(B)(1) (1989).

24 OHIO REV. CODE ANN. § 5301.56(E)(1) (West 2007).

25 See OHIO REV. CODE ANN. § 5301.56(B)(1) (1989).