In the previous three parts of this series (read part 1, part 2 and part 3), we reviewed the Ohio Marketable Title Act (MTA), its application to severed minerals, and the experience of neighboring states, all of which played a role in the development of the Ohio Dormant Minerals Act (DMA).
- The MTA was enacted in 1961 to make land titles marketable, i.e., free of stale claims. It included a grace period and did not require notice before a chain of title was extinguished in favor of another.
- The MTA generally applies to any property interest (presumably still including oil and gas interests) where no conveyance or claim to preserve has been filed during the past 40 years.
- The MTA does not necessarily extinguish all old severed mineral interests, even those with a root of title more than 40 years old, because the severed interest may be a separate chain of title.
- The Illinois DMA was found unconstitutional by the Illinois Supreme Court in 1980 as violating due process because it did not require severed mineral owners to be given notice and an opportunity to be heard.
- Indiana’s Dormant Mineral Interests Act, Ind. Code §§ 32-5-11-1 through 32-5-11-8 (1976) — which includes a grace period, a 20-year use-it-or-lose-it attribute and no notice requirement — was held to be constitutional by the U.S. Supreme Court in 1982. Texaco, Inc. v. Short, 454 U.S. 516, 102 S. Ct. 781, 70 L. Ed. 2d 738, (1982)
- Illinois enacted its Severed Mineral Interest Act, which is based on presumptive adverse possession and requires notice, in 1983.
- Ohio’s lease forfeiture law requires notice and the filing of an affidavit. The law suspends the statutory determination when the lessee files an affidavit contesting the alleged forfeiture. The lessee’s filing must occur no more than 30 days after receiving notice.
- The National Conference of Commissioners on Uniform State Laws approved the Uniform Dormant Interests Act in 1986.
With this history, the legislature enacted Ohio’s Dormant Minerals Act in 1989 by adding R.C. 5301.56 to the MTA (DMA’89). DMA’89 was amended in 2006 (DMA’06). The purpose of the DMA is to address the difficulty of determining the record owner of fractionalized and abandoned mineral interests.
The 1989 DMA
As originally enacted in 1989, the DMA was relatively simple. It provided that the severed mineral interest (excepting coal interests and interests held by the United States) would be deemed abandoned and would vest in the owner of the surface if, within the preceding 20 years, there had not been a specified event (coined a “savings” or “preserving” event). The statute specified the following savings events:
- The mineral interest was the subject of a title transaction that was ﬁled or recorded in the ofﬁce of the county recorder where the land is located;
- Actual production of minerals from the land, from a lease covering the land, or from a unit that includes the land;
- The mineral interest has been used in underground gas storage;
- A drilling permit has been issued that identifies the mineral holder;
- A claim to preserve has been recorded; or
- There is a separately listed tax parcel for the mineral interest.
R.C. 5301.56 (B)(1)(c) of DMA’89.
DMA’89 also established a three-year grace period (more conservative than the two-year period in the Indiana law) and specified requirements for filing a “claim to preserve.” Finally, it expressly allowed the interest to be preserved indefinitely by successive filings of claims to preserve.
DMA’89 did not have a notice or filing requirement before a severed mineral interest was deemed abandoned. Like the MTA, abandonment was automatic unless there was a savings event within the preceding 20-year period.
Though DMA’89 did not specify the beginning of the 20-year “look back” period, at least one Ohio Appellate Court used the date of enactment — March 22, 1989 — as the date to initiate the 20-year period, and March 22, 1992, (20 years plus the three-year grace period) as the deadline for the mineral owner to file a claim to preserve. Riddel v Layman, Fifth Dist. Licking No. 94 CA 114, 1995 LEXIS 6121, (July 10, 1995).
The 2006 amendment
Effective June 30, 2006 the DMA was amended to its current form. Generally, the amended statute now requires notice to the severed mineral owner (called the “holder”), gives the holder sixty days to respond, and requires the surface owner to file an affidavit of abandonment before the mineral interest is deemed abandoned. This amended statute is significantly more complex than the self-executing DMA’89.
The amendment changed the operative provision of DMA’89, so that the interest is now deemed abandoned only if the notice and filing requirements are satisfied (Division (E) of DMA’06) and there has been no savings event within the 20 years. See 5301.56(B). Likewise, the statute was modified to make clear that the 20-year look period now commences on the date the notice is served or published to the holder under Division (E), not the date the statute was enacted.
This notice provision of Division (E) requires the surface owner to do two things:
- Notify the holder (or successors) by certified mail or, if that doesn’t work, by publication — and include information specified in Division (F) of the statute, and
- File an affidavit of abandonment (as prescribed in Division (G) of the statute) between 30 and 60 days after providing notice.
So, it appears that under DMA’06, at least, the severed interest is deemed abandoned only after the surface owner complies with the notice and filing requirements.
The “claim to preserve”
As with the MTA and the lease forfeiture law, the holder has the opportunity to file a claim to preserve. That claim to preserve is found at Division (C) of both DMA’89 and DMA’06 and it has changed very little between the two statutes. But, DMA’06 now also includes a reference to a claim to preserve at Division (H), which has been the source of much confusion and debate.
Division (C) requirements from DMA’06
Division (C)(1) says that, “… [T]he claim shall be filed and recorded in accordance with division (H) of this section and sections 317.18 to 317.201 and 5301.52 and shall consist of a notice that does all of the following:
(a) States the nature of the mineral interest claimed and any recording information upon which the claim is based;
(b) Otherwise complies with section 5301.52 of the Revised Code [the MTA affidavit requirements1]; [and]
(c) States that the holder does not intend to abandon, but instead to preserve, the holder’s rights in the mineral interest.”
R.C. 5301.56 (C)(1) (emphasis added)
Division (H) requirements (DMA’06)
Division (H)(1) says that if a severed mineral interest holder claims that the severed mineral interest that is the subject of an abandonment notice has not, in fact, been abandoned, the holder must file, within 60 days after service of the abandonment notice, one of the following.
(a) A claim to preserve the mineral interest in accordance with division (C) of this section [which is a division (B)(3)(e) savings event, called here, a “claim”];
(b) An affidavit that identifies [a savings event] that has occurred within the 20 years immediately preceding the date on which the notice was served or published ….” [called here, the “savings event affidavit”]
R.C. 5301.56 (H)(1). The mineral interest holder is also required to notify the person that served the notice of abandonment about the filing under Division (H).
How and when a mineral holder can use Division (H) of DMA’06, and whether a claim to preserve under Division (H) can, without more, prevent the abandonment of an otherwise abandoned mineral interest has been, and will continue to be a point of contention in Ohio courts.
But, DMA’06 is clear that if the holder fails to file a timely claim or a savings event affidavit, the surface owner “shall cause the county recorder … to memorialize the record on which the severed mineral interest is based with the following: ‘This mineral interest abandoned pursuant to affidavit of abandonment recorded in volume ____, page ___.’”
Now that we’ve discussed the statutory provisions of DMA’89 and DMA’06, we will conclude in part 5 with a summary of how courts have interpreted the act.
1 Under 5301.52 of the MTA (summarized), the affidavit shall:
- Be in the form of an affidavit;
- State the nature of the claim to be preserved and the names and addresses of the persons for whose benefit the notice is being filed;
- Contain an legal description of the land;
- State the name of each record owner of the land affected by the notice, at the time of its recording, together with the recording information of the instrument by which each record owner acquired title to the land;
- Be made by any person who has knowledge of the relevant facts or is competent to testify concerning them in court.