The 20-year Period of the Dormant Mineral Act is a Fixed and not Rolling Period

The twenty-year look-back period in the Dormant Mineral Act, effective March 22, 1989 (“1989 DMA”), is a fixed period.  Ohio Rev. Code § 5301.56.  Until the decisions in Taylor v. Crosby, 2014-Ohio-4433, 2014 Ohio App. LEXIS 4349 (Belmont Cty.  Sept. 24, 2014), Tribett v. Shepherd, 2014-Ohio-4320, 2014 Ohio App. LEXIS 4222 (Belmont Cty.  Sept. 29, 2014), and Wendt v. Dickerson, 2014-Ohio-4615, 2014 Ohio App. LEXIS 4511 (Tuscarawas Cty.  Oct. 16, 2014), it was unclear whether Ohio courts would apply a fixed or rolling look-back period when applying the 1989 DMA.

In Taylor, Benjamin Belt conveyed the property to Eli and Virginia Bell, reserving one-half of the oil and gas estate (the “Belt Interest”) and, in 1975, Belt executed an oil and gas lease.  Taylor, at ¶2-3.  In 1979, the Bells conveyed their entire interest in the property to the Donald Crosby and Richard Crosby (“the Crosbys”), which deed referenced Belt’s reservation of one-half oil and gas estate.  Id. at ¶4.  Belt died in January 1983 and the Belt Interest passed to his heirs and was memorialized by a Certificate of Transfer recorded on May 26, 2011.  Id. at ¶9.  In October 2007, the Crosbys leased the mineral rights in the property to Reserve Energy Exploration (“Reserve Energy”) and Reserve Energy sought to have the Belt Interest deemed abandoned pursuant to the Dormant Mineral Act.  Id. at ¶6-7.

In Tribett, Joseph Shepherd, John Shepherd, and Keith Shepherd, in 1962, conveyed the property to Seaway Coal and reserved the entire oil and gas estate in the property (the “Shepherd Interest”).  Tribett, at ¶3.  No further conveyance or lease of the Shepherd Interest was made until 2011.  Id. at ¶6.  The current surface owners, Vernon Tribett and Susan Tribett (“the Tribetts”), sought to have the Shepherd Interest deemed abandoned and filed an action for Quiet Title and Declaratory Judgment.  Id.

In Wendt, John and Marjorie Dickerson (“the Dickersons”), in 1952, conveyed the property to Pittsburgh Consolidation Coal Company and reserved a one-half interest each to the oil and gas estate in the property (the “Dickerson Interest”).  Wendt, at ¶2.  No further conveyances or lease of the Dickerson Interest was made until 2011.  Id. at ¶5.  John Dickerson died in September 1976 and Marjorie Dickerson died in 1994 and the Dickerson Interest passed to their heirs.  Id. at ¶3.  In May 2011, the Dickersons’ heirs leased the mineral rights in the property to Chesapeake Exploration LLC.  Id. at ¶6.  Later, the current surface owners, Christopher and Veronica Wendt (“the Wendts”), tried multiple times to lease the mineral rights in the property to Chesapeake Exploration LLC, but the leases failed because of the Dickersons’ potential interest.  Id. at ¶7.  Thus, the Wendts sought to have the Dickerson Interest deemed abandoned.  Id. at ¶8.

All three decisions applied the 1989 DMA to the severed oil and gas interests and concluded that the twenty-year look-back period was a fixed and not rolling period.  In analyzing the 1989 DMA, Taylor explained that the 1989 DMA could be applied to the Belt Interest even though the litigation ensued after the 2006 version of the Dormant Mineral Act (“2006 DMA”) was enacted, because the interest was abandoned and vested in the surface owner prior to the enactment of the 2006 DMA.  Taylor, at ¶46.  Similarly, Tribett concluded that the 1989 DMA was applicable because the statute was self-executing and lapsed mineral interests automatically vested in the surface owner.  Tribett, at ¶41.  Tribett also noted that the 2006 DMA does not contain any language to permit its retroactive application.  Id. at ¶44.[1]  Before addressing the twenty-year look-back period, Tribett also reaffirmed prior decisions that to be the “subject of a title transaction” the grantor must be conveying the interest or retaining that interest.  Id. at ¶22, Dodd v. Croskey, 2013-Ohio-4257, 2013 Ohio App. LEXIS 4475, ¶48 (Harrison Cty.  Sept. 23, 2013).  Therefore, a transaction that merely restates an oil and gas reservation in the conveyance of the surface rights without conveying the oil and gas interest is not a savings event under the Dormant Mineral Act.  Tribett, at ¶22.

While noting the prior decisions were ambiguous as to whether the twenty-year look back was fixed or rolling, Taylor explained that because the statute failed to refer to what specific preceding event the twenty years should run from when it used the words “preceding twenty years,” the look-back period must be construed as a fixed period from the date of enactment of the statute.  Taylor, ¶24-25; Tribett, ¶59.  In Taylor, the Court concluded that Belt’s lease of his interest on July 10, 1975, was a savings event within the 20-year fixed look-back period and preserved the severed mineral interest and remanded the case for further proceedings.  Taylor, at ¶28.

Tribett applied a fixed twenty-year look back period and concluded that no savings event occurred within the preceding twenty-three years to prevent the mineral interest from becoming abandoned and automatically vesting with the surface owner.  Tribett, ¶61.  Tribett explained that the only potential savings events were two deeds conveying the surface rights that repeated the mineral reservations but did not convey the severed oil and gas interest.  Id.  Those deeds do not constitute savings events because the mineral interests were not the “subject of the title transaction.”  Id.  Thus, the mineral interest automatically reverted to the surface owner on March 22, 1992.  Id. at ¶77.

Similar to Tribett, Wendt concluded that the minerals rights automatically vested with the surface owners on March 22, 1992 because no savings events occurred in the preceding twenty-three years prior to that date.  Wendt, at ¶37.  Specifically, the Court noted “[they] [were] inclined to follow the persuasive authority of [their] colleagues in the Seventh District Court of Appeals,” citing the case of Swartz v. Householder, 2014-Ohio-2359 (Ohio Ct. App. 2014).  Id.  Nevertheless, the Court noted that as of October 16, 2014, there are three cases before the Ohio Supreme Court questioning the appropriate application of the DMA:  Chesapeake v. Buell, Case No. 2014-0067; Corban v. Chesapeake, Case No. 2014-0804; and Dodd v. Crosky, Case No. 2013-1730.  Id., at ¶30.

Following Taylor, Tribett and Wendt, a consistent application of the 1989 DMA is emerging among the Ohio Appellate Courts.  However, the majority of the decisions are from the Seventh Appellate District and it remains unclear how many other appellate districts will follow the guidance of the Seventh Appellate District.  Additionally, the Ohio Supreme Court is considering three DMA cases.  Thus, the coming months may result in a series of cases providing clear guidance on the interpretation and application of the DMA.  Until the Ohio Supreme Court settles the ambiguities surrounding the DMA it is a best practice to obtain protection leases or stipulations of interest when confronted with severed oil and gas interests that may be subject to the 1989 DMA.

[1] Ohio Rev. Code § 1.48 provides “a statute is presumed to be prospective in its operation unless expressly made retrospective.”