Recent Supreme Court of Ohio Rulings May Alter the Status of Dormant Mineral Rights Throughout the State

by BakerHostetler
Contact

[author:

The Supreme Court of Ohio recently brought clarity to issues plaguing the holders of both mineral and surface rights for years by addressing two questions: When does the owner of dormant mineral rights abandon those rights? And when do those rights merge with the surface holders’ rights?

Surface owners, mineral rights owners, and the courts in Ohio have, for decades, disagreed about when mineral rights are deemed abandoned and are merged with the surface owner’s estate. The Ohio legislature attempted to clear up this issue by passing the Dormant Mineral Act in 1989. The law provided that “any mineral interest held by any person, other than the owner of the surface of the lands subject to the interest, shall be deemed abandoned and vested in the owner of the surface” unless one of a number of “saving events” had occurred within the preceding 20 years. Former R.C. 5301.56(B)(1), 142 Ohio Laws, Part I, at 985, 986–87.

The law was later amended in 2006. The only true substantive change was that surface rights holders were required to (1) provide advance notice to the mineral rights holder; and (2) give the mineral rights holder an opportunity to preserve its rights before those rights could be deemed abandoned and merged with the surface estate. R.C. 5301.56 (E)–(G).

Because the 2006 version included the notice requirement and the 1989 version did not, many believed the Dormant Mineral Act of 1989 was “self-executing.” Therefore, under this interpretation, if no saving event occurred after 20 years, the dormant mineral rights would automatically transfer to the surface holder. Relying on this reading of the law, many surface owners assumed that they owned the mineral rights under their property due to the automatic vesting. In addition, many mineral rights owners assumed that their mineral rights had been abandoned and were therefore worthless.

However, the Supreme Court of Ohio recently issued a number of decisions affecting mineral rights throughout the state.

In the lead case, Corban v. Chesapeake Exploration, L.L.C., Slip Opinion No. 2016-Ohio-5796, the Supreme Court of Ohio settled the debate and declared the 1989 version of the Dormant Mineral Act was not self-executing. Therefore, no mineral rights in Ohio automatically passed to surface holders.

In Corban, North American Coal Corporation conveyed 164.5 acres of land to Orelen and Hans Corban in 1959. However, in doing so, the corporation reserved to itself all oil, gas and mineral rights. The surface rights were later transferred down through the Corban family while the mineral rights were continually leased and assigned to numerous exploration entities. In 2013, then-surface-owner Hans Michael Corban filed an action in Harrison County Common Pleas Court seeking to quiet title to the oil and gas rights under his surface lands.

In response to this action, the mineral rights holders moved for summary judgment, which Corban followed with a motion of his own. Facing the dual motions for summary judgment, the district court asked the Supreme Court of Ohio to clarify “whether the 1989 or 2006 version of the Dormant Mineral Act should be applied to a quiet title action filed after 2006 that asserts that the rights to minerals vested in the surface owner as a result of abandonment prior to 2006.” The Ohio Supreme Court obliged.

The court heard the same arguments others have been hearing for years. Corban argued the 1989 version was self-executing because the statute did not require any affirmative action or judicial confirmation for the mineral rights to be deemed abandoned. Therefore, the General Assembly must have intended the mineral rights to automatically transfer to the surface holder after the 20-year period, he argued. In response, the mineral rights holders argued that the 1989 version was not self-executing and that the surface owner under the 1989 Act must have taken legal action to quiet title in order to obtain the mineral interest.

In its opinion, the court noted that the 1989 law did not use the words “extinguish” or “null and void,” but simply stated the mineral rights “shall be deemed abandoned and vested in the owner of the surface.” Analyzing Sixth Circuit precedent, the word “deemed” was found to merely create a conclusive presumption that the mineral rights had been abandoned. Therefore, the 1989 law provided surface owners seeking to quiet title evidentiary proof that the mineral rights holder had abandoned its interest, nothing more. It did not automatically transfer the mineral rights interest to the surface owner.

Therefore, according to the Ohio Supreme Court, the 1989 Dormant Mineral Act “was not self-executing” and “did not automatically transfer ownership of dormant mineral rights” to surface owners. Under the 1989 Act, the only way surface holders were able to merge their rights with the underlying mineral rights was to quiet title.

Following Corban, the status of dormant mineral rights throughout the state of Ohio has been clarified. Surface owners who wished to merge their rights with the dormant mineral rights prior to 2006 only did so successfully if they quieted title. No mineral rights automatically transferred to surface holders under the 1989 Act. Furthermore, any surface holder seeking to have the mineral rights below its property merged after 2006 must comply with the provisions outlined in the statute to do so. These provisions include providing the mineral rights holder advance notice of an abandonment proceeding and giving it an opportunity to preserve its rights.

In short, if you think you own the dormant mineral rights below your surface estate in the state of Ohio because those rights automatically transferred to you under the 1989 Dormant Mineral Act, you do not. You may need to take further action to solidify your interest. On the other hand, if you believe your mineral rights were automatically abandoned, and the surface right holder did not quiet title or follow the procedures outlined in the 2006 amendments, you may still have an ownership interest in those rights.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:

BakerHostetler
Contact
more
less

BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.