Posted In: Litigation & Oil & Gas
By Christopher F. Swing on September 20, 2016
The profound legal implications concerning who owns Ohio's vast mineral interests (i.e., oil and natural gas) was decided by the Ohio Supreme Court in two seminal cases (Corban v. Chesapeake Exploration, LLC and Walker v. Shondrick-Nau), interpreting and applying the Ohio Dormant Mineral Act (the "DMA"). The DMA operates to “abandon” sub-surface mineral rights, in favor of the surface owner, in instances where the surface and sub-surface rights previously were severed. Under the 1989 version of the statute, as originally enacted, owners of oil, gas, and mineral interests were required to take some action to enforce or preserve those rights within a twenty-year period or the interests were "deemed abandoned." Under the 1989 DMA, therefore, the interests were deemed abandoned based upon non-use alone. The 2006 amendment, on the other hand, requires notice to potential mineral rights/sub-surface owners, and a mechanism for recording notices and affidavits, so that a potential mineral interests’ owner first is made aware of any intent to declare those interests abandoned.
Predominant issues emerged, creating uncertainty in the statute’s interpretation and application, including whether the 2006 version of the statute (i.e. with notice requirements) applied if the mineral interests already could be "deemed abandoned," based upon non-use alone, under the 1989 version (a self-executing statute).
The Ohio Supreme Court overturned the substantial body of appellate case law, concluding that the 1989 DMA is not self-executing. This means that surface owners were required to initiate litigation under the 1989 DMA to exploit the "evidentiary" presumption afforded by the 1989 DMA based upon non-use alone; stated otherwise, the 2006 DMA applies to all claims asserted after its enactment (including compliance with its notice requirements) and such sub-surface mineral rights did not rejoin the surface estate based upon non-use alone under the 1989 DMA -- judicial action was required to perfect such interests.
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