The Ohio Dormant Minerals Act
Now is an exciting time to be living and working in Ohio. The potential economic impact to this area through the exploration of oil and gas in the Marcellus and Utica shale is likely to have long term and resounding effects on oil and gas producers, ancillary businesses, and landowners alike. The big question for all parties involved has become “Who owns the mineral rights?” However, simply identifying ownership of mineral rights by conducting a standard oil and gas title search may not fully determine the answer to this most important question. It is possible that even if the mineral rights were severed from a landowner’s chain of title, there has been no actual development or production of those minerals, or at least not for quite some time.
In 1989, the Ohio General Assembly enacted The Ohio Dormant Mineral Act to address such an issue where the development or production of a mineral interest appears to be inactive or abandoned. Thus, it is of the utmost importance for oil and gas producers and holder’s of mineral interests to preserve their mineral rights in light of this Act. Unless the holder of the mineral interest takes action to protect the mineral rights, the Act declares the interest abandoned and the landowner who holds title to the surface estate will re-gain title to the abandoned mineral estate.
The Ohio Dormant Mineral Act, through Ohio Revised Code Section 5301.56, sets forth the procedure for declaring abandonment of mineral interests. These procedures include:
- Providing notice of intent to the interest holder to declare a mineral interest abandoned; and
- Filing an affidavit of abandonment with the county recorder no less than 30 days, but no more than 60 days, after providing the notice of intent.
Among other required information, the notice of intent must include a statement of abandonment, attesting that none of the events that would preserve the mineral interest have occurred within the 20 years immediately preceding the date the notice was served or published.
Fortunately for the minerals holder, there are two procedures to preserve and protect the mineral interest. Failure to take action will deem the mineral interest to be abandoned according to the Act. These procedures to preserve the mineral interest include:
- Filing an affidavit of the mineral holder’s intent to preserve the mineral interest no more than 60 days after receiving the notice of intent; or
- Filing an affidavit of event preventing abandonment no more than 60 days after receiving the notice of intent.
This second option, among other requirements, must contain a statement that an event occurred during the 20 years immediately preceding the notice of intent that would prevent abandonment. Such events include:
- The mineral interest has been the subject of a title transaction filed or recorded in the county recorder’s office where the land is located.
- There has been actual production or withdrawal of minerals by the holder of the mineral interest.
- The holder used the mineral interest for underground gas storage operations.
- The holder was issued a drilling or mining permit and filed an affidavit in the county recorder’s office.
- An affidavit to preserve the mineral interest has been filed.
- A separately listed tax parcel number has been created for the mineral interest.
It is important to note that there are also several exceptions to the Act. This procedure does not apply to coal resources or minerals held by the federal or state government or any political subdivision.
Producers and holders — Don’t act too late and risk abandoning your mineral interests. For more information on preserving your oil & gas, and other mineral rights, please consult with one of our experienced oil & gas attorneys at (330) 456-8341. Black McCuskey Law Firm has represented producers, developers, drilling companies, service companies and financial institutions for more than 40 years, and its attorneys are recognized locally and regionally for their knowledge of the industry.