Supreme Court Digs Into Mineral Rights Disputes In Utica Shale Region
Ohio Supreme Court justices delved into the complex issue of mineral rights Wednesday with two cases that are likely the first of many to flood the courts as oil and gas drilling activity ramps up in the Utica Shale. Both cases argued before the court originated from property rights disputes in Harrison County and both address application of the Ohio Dormant Mineral Act (ODMA), which governs conflicting ownership claims to minerals beneath real property.
According to the Supreme Court's summary, a federal court says the ODMA is designed to restore mineral rights that have been severed from the property owner and are dormant back to the surface property owner after 20 years if there are "savings events." A 2006 amendment to the law requires the property owner to first give notice to the mineral rights holders, who then have 60 days to file a claim to preserve their rights or an affidavit identifying a savings event.
Dodd v. Croskey deals with the question of what actions someone needs to take under the DMA in order to preserve mineral interests during the 20-year time period before another party takes steps to acquire the mineral rights.
When Phillip Dodd and Julie Bologna bought 128 acres of land in Harrison County in 2009, the deed excluded the minerals rights to the property, which had been transferred decades earlier by Samuel and Blanche Porter, who are now deceased. The next year an oil and gas company contacted the property owners seeking to buy the mineral rights beneath their land and the couple placed a notice in a local newspaper stating that the oil and gas interests had been abandoned. Shortly after John Croskey filed an affidavit stating he was an heir of the Porters and wanted to preserve the rights to the oil and gas on the property. Mr. Dodd and Ms. Bologna filed a lawsuit in February 2011 to establish their claim on the property's mineral rights, but the trial court ruled that some of the Porter heirs retained their oil and gas rights. The Seventh District Court of Appeals agreed that Mr. Croskey's filing met the requirements of DMA and preserved the heirs' rights.
Attorney Paul Hervey, who represented Mr. Dodd and Ms. Bologna, told justices that the heirs did not take any required actions, or "savings events," in the 20 years prior to the public notice that are necessary to retain their mineral rights. "To accept the appellee's position would leave mineral rights all over this state undevelopable and leave titles in a state of confusion," he said. "No oil and gas company is going to risk trespassing on someone's land without a clear issue of title." Filing the affidavit alone is not sufficient for the heirs to retain ownership of their mineral rights, Mr. Hervey said. "To let some family members wait 70 years without developing mineral rights, without having them go through probate court, and simply filing a claim and nothing more after notice has been filed, completely subverts the meaning of the intent of the statute."
Chief Justice Maureen O'Connor noted that the heirs could still bring their claims to probate court that could unravel ownership rights. "That's not the toughest thing in the world to do - to go back to 1947 and just figure it out - who gets probated. I mean it's a lot of work, but it's not rocket science. No disrespect to probate lawyers," she said.
Jeff Pollock, the attorney representing the heirs, said the validity of Mr. Croskey's affidavit was not an issue before the court and argued that it satisfies the requirements of the DMA and is sufficient to block the property owners' claim to the mineral rights. The DMA was not designed to clear property owners' title, but to establish a procedure for clarifying who owns the mineral rights, he said.
Justice Paul Pfeifer said the case is the first of many disputes over mineral ownership rights that will result from the oil and gas boom in eastern Ohio. "This is our first look at a freight train that's coming down the track at us," he said. InChesapeake Exploration v. Buell, the federal district court in Ohio asked the Ohio Supreme Court to resolve two questions surrounding the DMA: is a recorded lease of the mineral rights beneath a property a title transaction and is the expiration of the recorded lease and the reversion of the mineral rights under the lease a title transaction that restarts the 20-year clock for calculating forfeiture of the mineral rights?