The Legal Saga of the ODMA Continues

The Legal Saga of the ODMA Continues

For much of the past decade plus one of the most confusing and hotly litigated issues in Ohio oil and gas law has been the Ohio Dormant Mineral Act. In theory, the law was created to make it easier to identify the owners of severed oil and gas interests and make oil and gas leasing easier. With the billions of dollars at state in the shale play, however, major fights have brewed. The biggest fight has been over the apparent conflict between the two different versions of the law. The first version was passed in 1989 and it was amended in 2006. Both law start with the premise that a surface land owner could obtain the ownership of the severed oil and gas rights under their property if the prior owner had not used the minerals in certain ways over a 20-year period. Questions such to what constituted using the minerals and/or what 20-year period do you look at previously dominated the dispute. Most believed that the 1989 law was automatic or self-executing. That would have meant that the surface owner really did not have to do anything to claim the minerals. Once the applicable 20-year window passed without and mineral use the minerals automatically went back to the surface owner. In 2016 the Ohio Supreme Court, however, ruled that the law was no automatic or self-executing. The mineral owner had to do something to assert the claim. That something was probably a quiet title legal action.

The Ohio Supreme Court ruled, additionally, that after 2006 even if you had potential claim under the 1989 act, you still had to follow the notice requirements and provisions of the new law. That meant some sort of effort to identify the prior owner and provide notice that the abandonment was to occur. Unfortunately, this meant that many people who had assumed they owned their minerals under the provisions of the 1989 law and whom had signed leases did not, in fact, clearly own their minerals because they had not followed the provisions of the new law. People who had signed leases and received their bonus money are now not receiving royalty payments. A new cottage industry of legal issues has arisen arguing that many people who believe that they had pursued the ODMA provision appropriately had not, if fact, done so. A new major issue seems to lie with the nature of the search that landowners and their attorneys did to try and locate and notice prior mineral owners or their heirs. How much of a search was or is necessary? Was proper notice provided? Was publication notice appropriate?

The 7th Appellate District recently had the occasion to weigh in on the issue. In Sharp v. Miller, 2018-Ohio-4740, the Court determined that upon the facts of that particular case the search of available courthouse records was sufficient. This had long been considered sufficient for title search purposes. With the advent of new people and family search tools on the internet parties have argued that more is now necessary. The 7th Appellate District could not and did not provide a bright line rule as to how much of search is necessary. The issue remains a case by case analysis. At a minimum, it looks like every search could or should include some type of internet search.  Whether that is a simple Google or other search engine search, or some sort more intense people or family history search depends on the results of the search. Maybe one can find obituaries which identify heirs? Maybe the family is well known enough that there are references to them in news articles? What is clear is that person doing such a search should keep clear notes as to what they have done, why they did it and why they stopped when they did.

People have hoped that ODMA issues would be resolved with each new decision from the Courts. Unfortunately, each new decision seems to breed additional confusion rather than clarification. With so much money at stake it is difficult to see a one size fits all approach to these cases.

Image courtesy of Unsplash.

Today's blog: Are you familiar with the Ohio Dormant Mineral Act? This has been a hotly litigated issue for over a decade and there doesn't seem to be an end in sight - Jeremy explains more on the blog today.