On November 5, 2015, in a divided yet decisive decision,

[1] the Supreme Court of Ohio ruled in the second of eleven Ohio Dormant Mineral Act (ODMA) cases accepted for review in 2014 and 2015. ODMA litigation began in 2012 and by 2015 the number of cases accepted for review by the Supreme Court of Ohio has peaked at eleven with a myriad of unique and complex certified questions to be answered by the Court.

In Chesapeake Exploration, L.L.C., et al. v. Kenneth Buell et al., Slip Opinion No. 2015-Ohio-4551, the Court answered two certified questions from the United States District Court for the Southern District of Ohio:

  1. Is the recorded lease of a severed subsurface mineral estate a title transaction under the Ohio Dormant Mineral Act, Ohio Rev. Code § 5031.56(B)(3)(a)?
  2. Is the expiration of a recoded lease and the reversion of the rights granted under the lease a title transaction that restarts the 20-year forfeiture clock under the ODMA at the time of the reversion?

The Court held that a recorded oil and gas lease is a title transaction under Ohio Rev. Code § 5031.56(B)(3)(a), but the expiration of such a lease is not. Thus, the Court answered the first certified question in the affirmative and the second certified question in the negative.

In its analysis of the first certified question, the Court held:

Under R.C. 5301.47(F), the recorded oil and gas lease constitutes a title transaction because it affects title to the surface and mineral owners’ interests in land. And it is therefore a saving event under R.C. 5031.56(B)(3)(a) because “[t]he mineral interest has been the subject of a title transaction that has been filed or recorded” in the appropriate county recorder’s office.

Id. ¶ 66.

In the answer to the second certified question, the court states:

[T]he terms of a recorded oil and gas lease cannot provide sufficient notice of activity under the lease to toll the 20-year clock during the life of the lease, nor can the expiration of such a lease be considered a ‘title transaction that has been recorded or filed’ within the meaning of R.C.5301.56(B)(3)(a) when the expiration is unrecorded. Accordingly, we conclude that the unrecorded expiration of an oil and gas lease does not constitute a saving event under R.C. 5301.56(B)(3)(a) that would restart the 20-year clock.

Id. ¶ 81.

In reaching this conclusion, the Court provided a clear signal that, had the lease expiration in question been recorded (rather than unrecorded), the outcome would have been different. See id. ¶¶ 74-75.

In the first ODMA case decided by the Supreme Court of Ohio, a unanimous decision was reached on June 18, 2015, in Dodd v. Croskey, 143 Ohio St.3d 293, 2015-Ohio-2362. There, the Supreme Court of Ohio held that, under the 2006 version of the ODMA, the mineral-interest holder’s filing of an affidavit of preservation under R.C. 5301.56(H) was sufficient to prevent abandonment of the mineral interests.

The ODMA decisions are important to provide clarity to the players in the oil and gas development in Ohio – both the surface and mineral-interest holders, but also oil and gas lessees. A variety of other issues involving the ODMA will be answered in due course, once the Ohio Supreme Court is able to draft decisions in the other remaining cases, the current statuses of which are outlined below.

Oral Arguments have been presented in these cases and are awaiting the court’s decision:

Hans Michael Corban v. Chesapeake Exploration, L.L.C. et al. Case Number 2014-0804 Oral Argument Presented 5-6-2015

 
Jon Walker Jr. v. Patricia J. Shondrick-Nau, executrix of the Estate of John R. Noon and Successor Trustee of the John R. Noon Trust Case Number 2014-0803 Oral Argument Presented 6-23-2015

 
Leland Eisenbarth, et al. v. Dean Reusser, et al. Case Number 2014-1767 Oral Argument Presented 11/17/2015

 

The Supreme Court of Ohio has accepted these appeals for review, but further briefing and review have been stayed pending decisions in one or more of the above-referenced cases:

Ronald Dahlgren, et al. v. Brown Farm Properties LLC, et al. Case Number 2014-1655 Accepted For Review 3/11/2015

(Briefing stayed pending a decision in Walker v. Shondrick-Nau and Corban v. Chesapeake Exploration, L.L.C.)
Dan Swartz et al. v. Jay Householder, Sr., et al. Case Number 2014-1208 Accepted For Review 11-19-2014

(Briefing stayed pending a decision in Walker v. Shondrick-Nau)
Virgil Farnsworth, et al. v. James Burkhart, et al. Case Number 2014-1909 Accepted For Review 4/29/2015

(Briefing stayed pending a decision in Dodd v. Crosky and Eisenbarth v. Reusser)
Vernon Tribett, et al. v. Barbara Shepherd, et al. Case Number 2014-1966 Accepted For Review 4/29/2015

(Briefing stayed pending a decision in Walker v. Shondrick-Nau)
Christopher Wendt et al. v. Judith Dickerson et al. Case Number 2014-2051 Accepted For Review 5/20/2015

(Briefing stayed pending a decision in Walker v. Shondrick-Nau)
Benjamin F. Taylor, et al. v. Donald L. Crosby, et al. Case Number 2014-1886 Accepted For Review 4/8/2015

(Briefing stayed pending a decision in Walker v. Shondrick-Nau)

For further information on the subject matter of this alert, please contact:

Michael R. Traven
michael.traven@fisherbroyles.legal
614.721.5573

For further information or assistance regarding matters affecting the oil and gas industry, contact any of the following FisherBroyles attorneys:

Robert S. Ballentine, LL.M.
robert.ballentine@fisherbroyles.legal
281.547.8952

Randy Burton
randy.burton@fisherbroyles.legal
832.509.2564

Christian Goff
christian.goff@fisherbroyles.legal
210.454.2548

Kenneth M. Krasny
kenneth.krasny@fisherbroyles.legal
281.376.8838

Michael V. Passella
michael.passella@fisherbroyles.legal
614.468.1088

Landon Speights
landon.speights@fisherbroyles.legal
832.915.2300

[1] Chief Justice O’Connor penned the majority opinion, which was joined by Justices Lanzinger, French, and O’Neill. Justices Pfeifer and O’Donnell concurred in part and dissented in part, while Justice Kennedy concurred in the answers to the certified questions and concurred in part.