Recently, the Court of Common Pleas in Noble County, Ohio, issued a judgment entry determining that a prior version of the Ohio Dormant Mineral Act (“Act”) was effective. As a result, the Court concluded the party who originally reserved the oil and gas rights had abandoned the rights resulting in the rights to the oil and gas under the property vesting in the surface owner.
The Act, originally adopted in 1989, provides that an individual who owns mineral rights through a reservation, or prior severance, will be deemed to have abandoned their mineral rights (other than coal) if certain events have not occurred within the prior 20 years. These events are commonly referred to as savings events and generally include production of the reserved minerals, assignment of a tax parcel number to the reserved minerals, the filing of a claim to preserve the mineral interest or the occurrence of a title transaction in which the reserved minerals are the subject of the title transaction. If the minerals are deemed abandoned under the Act, the reserved mineral interest becomes vested in the surface owner.
In 2006, the Act was modified to require notice to the mineral owner (known as the “Holder” in the Act) prior to the abandonment occurring. However, prior to 2006, notification to the Holder was not necessary under the Act. Rather, the Pre-2006 Act simply provided that if a savings event did not occur within the prior 20 years the Holder's mineral interest was abandoned and vested in the surface owner. Unlike the current version of the Act, the Pre-2006 Act did not specify any action that the surface owner must take to have the mineral interest deemed abandoned, including any notification to the Holder. Thus, many assume that under the Pre-2006 Act the abandonment of the minerals occurs automatically without any notice or documents being recorded.
In the case of Walker v. Noon, the Defendant, John Noon, conveyed the surface but reserved the oil and gas and other minerals under his property in a deed recorded July 27, 1965. Subsequent deeds in 1970 and 1977 which conveyed the surface of the property to subsequent owners specifically noted that the oil and gas had been previously reserved. After the 1965 reservation that Mr. Noon did not convey the oil and gas at any point in time or utilize the oil and gas rights in any manner. Additionally, Mr. Noon did not file a claim to preserve his oil and gas rights prior to the effective date of the Pre-2006 Act, March 22, 1992.
The trial court concluded that the 1970 and 1977 reference to the oil and gas reservation did not constitute a savings event because the oil and gas were not the “subject of a title transaction” as defined in the Pre-2006 Act. The trial court found that in order for the references to the reservation in the 1970 and 1977 deeds to be the “subject of a title transaction,” it would need to affect an interest in the land (O.R.C. § 5301.47(F)), and the trial court found for purposes of this case that the applicable interest in land was the “mineral interest.” (O.R.C. § 5301.56(B)(1)(c)(i)). The trial court reasoned that while the surface transfers referenced the mineral reservation, those transfers do not affect the mineral interest. The trial court concluded that any discussion of the revisions to the Act that were effective June 30, 2006, was moot because any interest that Mr. Noon had in the oil and gas had been previously abandoned, and vested in the surface owner. To read Walker v. Noon decision, click here.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
If you have any questions about this article, feel free to contact Gregory W. Watts at 330.497.0700.