Oil and Gas Update

The Supreme Court of Ohio Issues Ohio Dormant Mineral Act Opinions

September 16, 2016

On September 15, 2016 the Supreme Court of Ohio issued a decision resolving key issues involving the application of Ohio’s Dormant Mineral Act, R.C. § 5301.56. The Dormant Mineral Act was first enacted in 1989 to facilitate the termination of dormant mineral interests, but was amended in 2006 to require notice to the holder of a severed mineral interest and the recording of certain instruments evidencing and memorializing abandonment. Several cases pending before the Supreme Court of Ohio turned on whether the 1989 version of the Dormant Mineral Act was self-executing, such that a dormant mineral interest would automatically vest in the surface owner by operation of law.

The Supreme Court of Ohio held that the “1989 Dormant Mineral Act was not self-executing and did not automatically transfer dormant mineral rights by operation of law; rather, the surface holder was required to bring a quiet title action seeking a decree that the mineral rights had been abandoned in order to merge those rights into the surface estate.” Corban v. Chesapeake Exploration, L.L.C., Slip Opinion No. 2016-Ohio-5796 at ¶ 40.

Further the Court in Corban held that the 2006 version of the Dormant Mineral Act applies to all claims brought after June 30, 2006.  The Court relied on this ruling in Corban to resolve this issue in several other pending cases, including Walker v. Shondrick-Nau (Slip Opinion No. 2016-Ohio-5793), and Albanese v. Batman (Slip Opinion No. 2016-Ohio-5814). In addition the holding in Corban provides that the payment of delay rentals pursuant to an oil and gas lease is not a title transaction or “savings event” under the statute.

The decision by the Supreme Court of Ohio is expected to broadly affect surface owners and mineral holders of severed mineral interests which may have been subject to unification under the 1989 Dormant Mineral Act, as well as their respective lessees.

This article was authored by Andrew Schock, Jackson Kelly PLLC. For more information on the author, see here.