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Ohio Supreme Court Rules on Ohio Dormant Mineral Act

By:  Heidi R. Kemp
Emens Wolper Jacobs & Jasin Law Firm

There have been numerous lawsuits in the Ohio courts related to the Ohio Dormant Mineral Act (“DMA”) and, specifically, the requirements a landowner must undertake to attempt to locate holders of a severed mineral interest to notify the holders of the landowners’ intent to have the interest deemed abandoned under the DMA. In a decision much anticipated by those interested in Ohio oil and gas law, the Ohio Supreme Court (the “Court”) issued an opinion on December 17, 2020 in Gerrity v. Chervenak, which concerned the “notice requirements that R.C. 5301.56(E)(1) imposes as prerequisites to deeming a severed mineral interest abandoned and vested” in the landowner. See Gerrity v. Chervenak, Slip Opinion No. 2020-Ohio-6705 (hereinafter, “Gerrity”).

As part of the DMA abandonment process, a landowner must satisfy R.C. 5301.56(E)(1) which states that the landowner must serve each holder of the interest notice by certified mail; however, if service of notice cannot be completed to any holder, then the landowner must publish notice of his intent to have the severed mineral interest deemed abandoned at least once in a newspaper of general circulation in the county in which the interest is located. R. C. 5301.56(E)(1).

Gerrity, the severed mineral interest holder, initially argued that the DMA “requires strict compliance, such that a surface owner must identify and attempt service by certified mail on every holder of a mineral interest. He argues that the act does not apply unless all holders are identified.” Gerrity at ¶ 12. The Court rejected this argument by “reading R.C. 5301.56 as a whole and in light of the General Assembly’s codified legislative intent.” Id. at ¶ 13. By the plain language of the DMA, “the statute operates anytime service of notice by certified mail ‘cannot be completed to any holder.’” Id. at ¶ 24. “When it appears from the outset that service of notice cannot be completed by certified mail, as when a holder is unidentifiable or unlocatable, R.C. 5301.56(E)(1) permits service of notice by publication.” Id.

So, what actions must a landowner take to complete service prior to publication? The Court refused to “adopt a bright-line rule that defines the steps a surface owner must take to identify and locate holders of a severed mineral interest to comply with R.C. 5301.56(E)(1).” Id. at ¶ 31. Rather, the Court followed the lead of the Seventh District and held that “whether a party has exercised reasonable diligence will depend on the facts and circumstances of each case.” Id.

The Court did provide some guidance as to what was reasonable in this case. The Court indicated that the “surface owner’s chain of title is the necessary starting point for determining the applicability of the [DMA]”. Id. at ¶ 35. “Review of public-property and court records in the county where the land subject to a severed mineral interest is located will generally establish a baseline of reasonable diligence in identifying the holder or holders of the severed mineral interest.” Id. at ¶ 36. However, there may be “circumstances in which the surface owner’s independent knowledge or information revealed by the surface owner’s review of the public-property and court records would require the surface owner, in the exercise of reasonable diligence, to continue looking elsewhere to identify or locate a holder.” Id. “But whether that additional search is required will depend on the circumstances of each case….” Id.

Gerrity suggested that the landowners should have searched the Internet, including paid subscriptions, as many other severed mineral holders have suggested in these types of cases. The Court stated “the record, however, contains no specific evidence of what an Internet search would have revealed in 2012, when the Chervenaks followed the Dormant Mineral Act. We decline to impose the requirements that Gerrity has proposed as a matter of law. The ever-changing quantum and quality of information available on the Internet, the inconsistent reliability of that information, and the variability of Internet-search results all weigh against a bright-line requirement for online searches, let alone a bright-line requirement that a surface owner consult any particular paid subscription services, to identify heirs to a severed mineral interest.” Id. at ¶ 34.

Thus, the standard is reasonable diligence under the particular facts and circumstances of each case. There are several other cases pending before the Court regarding this issue as well as cases in the lower courts. As more cases are decided, more light may be shed on what is considered reasonable. However, while this case has provided guidance and a standard, it likely will not lessen the litigation concerning this issue.