Judge rules for mineral rights owner under Dormant Mineral Act

CARROLLTON, Ohio — A court case in Carroll County pitted surface owners’ rights against those who own the mineral rights.

Visiting Judge Richard M. Markus ruled Nov. 5 a family that inherited the mineral rights to a piece of Carroll County property in 1977 still owns the mineral rights and they get the benefits that comes with it.

Property dispute

The case, Ronald Edward Dahlgren et. al. vs. Brown Farm Properties, LLC. et al., was filed Feb. 11, 2013, in Carroll County.

The case involves eight plaintiffs (Dahlgren family members) who filed the case to contend they own the oil and gas rights they inherited from either their mother or grandmother in 1977.

The three defendant landowners (Brown Farm Properties, LLC.) contend that Ohio’s Dormant Mineral Act deemed the Dahlgren family abandoned the rights, which then merged into the landowners’ surface titles. The case involves 225 acres of land in Carroll County.

The fourth defendant, Chesapeake Exploration, holds the lease for those oil and gas rights. The Dahlgren family leased their oil and gas interests in 2009 to a gas developer, which then turned the lease over to Chesapeake.

In March of 2012, the Brown Farm Properties owners sent the Dahlgrens and Chesapeake a “notice of owner’s intent to declare the abandonment of mineral interest for the property.”

Within 60 days after receiving the notice, five of the eight plaintiffs (Dahlgrens) filed claims for their relevant mineral interests in the Carroll County Recorders’ Office.

Dormant Mineral Act

The argument in the case is over which version of the Ohio Dormant Mineral Act applies to the case.

The 1989 version included a “use it or lose it” clause. The mineral rights had to be used within 20 years. The Carroll County recorder’s office showed no title transactions between 1969-1989.

In 2006, however, changes were made to the law, which meant additional steps had to be taken before the surface rights owner could assume the mineral rights.

Markus ruled that because the surface owners had taken no steps under the 1989 version of the Ohio Dormant Minerals Act to implement the claimed abandonment of the mineral rights, the surface owners only had a claim under the 2006 (and current) version of the statute.

The court concluded the 2006 version was in control and denied the landowners’ abandonment claim. That means the plaintiffs (Dahlgren family) retained the rights because the landowners failed to follow the procedures detailed in the 2006 version of the act.

**Correction**

Appeal expected

The case is expected to be appealed to the 7th District Court of Appeals.

Dahlgren’s attorney, Eric Johnson, from the law firm of Johnson and Johnson, said the statute is an old statute that is confusing. Markus had a different view of the statute than other judges.

Here is a glimpse at the Ohio Dormant Minerals Act:

Ohio’s Dormant Minerals Act (Revised Code 5301.56) provides a landowner with the opportunity to acquire title to previously severed oil and gas mineral rights if the mineral interest owner does not “use” those rights during a specific 20-year time period.

As originally enacted in 1989, the Ohio Dormant Minerals Act constituted a “use it or lose it” statute: if the mineral-interest owners did not “use” their mineral rights during a 20-year time period, then they automatically vested in the surface owner.

The 1989 version, however, underwent substantial revision in 2006 when the General Assembly added certain notice requirements to the statute.

Under the current version of the statute, the following multi-step process must be followed in order to accomplish the merging of the surface and mineral interests:

• Confirm that the mineral interest at issue is not coal.

• Confirm that the mineral interest is not owned by the United States, the state of Ohio, or any political subdivision (for example, a county, township, municipality or school district).

• Ensure that the following “savings events” did not occur in the 20 years prior to the notice described below being sent to the holders of the mineral interest. 

• The oil and gas mineral interest has been the “subject of” a recorded “title transaction,” which refers to any transaction affecting title to any interest in land, including title by will or descent,” as well as warranty deed, quit claim deed or mortgage.

• There has been actual production or withdrawal of oil and gas by the holder of the mineral interest.

• The mineral interest has been used in underground gas storage.

• A drilling or mining permit has been issued to the holder of the mineral interest

• A statutorily compliant affidavit to preserve the mineral interest has been filed.

• A separately listed tax parcel number has been created for the mineral interest by the county auditor.

• Serve notice by certified mail, return receipt requested, to each holder of the mineral interest (defined to include “any person who derives the person’s rights from, or has a common source with, the record holder” of the mineral interest) at the last known address of each, of the owner’s intent to declare the mineral interest at issue abandoned. The notice must contain: (i) the name of each mineral interest holder and any successors and assignees; (ii) a description of the surface with references to recorded documents; (iii) a description of the mineral interest to be abandoned; (iv) a statement that no savings events occurred within the 20 years preceding the date of service; and (v) a statement that the surface owner intends to record an affidavit of abandonment.

• If certified mail notice is not possible (e.g., the certified mail notice is returned undelivered or unsigned), publish notice in a newspaper of general circulation in each county in which the land is located.

• Confirm that one of the mineral interest holders has not recorded one of the following documents within 60 days of service or publication of the notice: a claim to preserve the mineral interest or an affidavit that identifies an event that has occurred within the 20 years preceding the date of service or publication.

• File in the county recorder’s office an affidavit of abandonment between 30 and 60 days after the date notice was served. The affidavit must contain: (i) a statement that the person filing the affidavit is the surface owner; (ii) the volume and page number of the recorded severance deed; (iii) a statement that the mineral interest has been abandoned; (iv) the facts constituting the abandonment; and (v) a statement that notice was served on each mineral interest holder or their successors or assignees.

(Source: Ohio Revised Code and the law firm of Bricker and Eckler)

Read the whole code here: