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Thursday, July 3, 2014

Ohio Court of Appeals Hands Down Latest Oil and Gas Ruling

From Ohio Gas & Oil:
On June 2, 2014, Ohio’s Seventh District Court of Appeals issued another significant ruling based on Ohio’s Dormant Mineral Act found at R.C. §5301.56 (“DMA”), in a case known as Schwartz v. Householder, 2014-Ohio-2359. This ruling expands upon and adds to the Seventh District’s benchmark ruling in Walker v. Noon, 2014-Ohio-1499 issued on April 3, 2014. The Schwartz decision represents another victory for surface owners attempting to recover ownership of severed minerals that were deemed abandoned prior to the amendment of the DMA in 2006. 
To recap the DMA, the statute was originally enacted in 1989 and then amended in 2006. Its purpose is to eliminate “dormant” mineral interests. The 1989 DMA provides where the severed mineral interest owner has not utilized its minerals as specified in the DMA for a period of 20 years, the mineral interests will be deemed abandoned and returned to the current surface owner. Importantly, the 1989 DMA is self-executing, meaning that the severed minerals in question will be automatically abandoned if no activity related to the minerals has occurred. The only subsequent action that surface owners need to take is to file a lawsuit to obtain a court order declaring the minerals to be abandoned under the DMA and returned to the surface owner. Under the 2006 DMA, surface owners must first file and serve a notice of abandonment on the severed mineral owner. Accordingly, the 1989 DMA has become central to the disposition of literally hundreds of oil and gas lawsuits between surface owners and severed mineral owners related to the Utica Shale development.
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