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Ohio Supreme Court Rules on Ohio Marketable Title Act

By December 2, 2020Oil and Gas

By: Heidi R. Kemp
Emens Wolper Jacobs & Jasin Law Firm (www.ewjjlaw.com)

As many of you know, there have been numerous lawsuits in the Ohio courts related to the Ohio Marketable Title Act (“MTA”) and the Ohio Dormant Mineral Act (“DMA”) and how those Acts are applied to severed oil and gas interests. 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 2, 2020 in West v. Bode, which concerned the interplay between the MTA and the DMA and whether the MTA could be used to extinguish severed oil and gas interests or whether the DMA was the exclusive remedy to merge severed oil and gas interests with the surface. See West v. Bode, Slip Opinion No. 2020-Ohio-5473 (hereinafter, “West”).

In West, the appellants argued “that the Marketable Title Act does not apply to severed interests in oil and gas, because the more specific Dormant Mineral Act supersedes it.” West at ¶ 12. The Court first reviewed Ohio Revised Code section 1.51 which basically states that “courts should construe conflicting statutes in a way that gives effect to both” and a “statutory provision will prevail over a general one only when the provisions irreconcilably conflict.” Id. at ¶ 13.

The MTA was enacted “to extinguish interests and claims in land that existed prior to the root of title, with ‘the legislative purpose of simplifying and facilitating land title transactions by allowing persons to rely on a record chain of title.’” Id. at ¶15 citing Corban v. Chesapeake, L.L.C., 149 Ohio St.3d 512, 2016-Ohio-5796, 76 N.E.3d 1089, ¶ 17, quoting R.C. 5301.55. The DMA was enacted as part of the MTA to provide a “mechanism to facilitate the reunification of abandoned mineral interests with surface interests.” Id. at ¶ 21.

The Court acknowledged that the MTA and DMA “operate differently and after different periods of time.” Id. at ¶28. “The Marketable Title Act extinguishes property interests after 40 years without a saving event, measured from the effective date of the surface owner’s root of title; the Dormant Mineral Act provides a mechanism that a surface owner may use to have a severed mineral interest deemed abandoned and vested in the surface owner after a shorter 20-year period.” Id.

The MTA and the DMA affects “mineral interests differently” thus, “it is only reasonable that they contain different savings events.” Id. at ¶ 30. “The acts ask different questions and provide for different results. In light of those differing inquiries and consequences, the fact that joint application of the acts may result in a mineral interest being preserved under one but not under the other does not demonstrate conflict between the acts.” Id. at ¶ 36.

The Court concluded the opinion by finding “[b]ecause there is no irreconcilable conflict between the general provisions of the Marketable Title Act as applied to severed mineral interests and the Dormant Mineral Act, both acts retain effect. The Marketable Title Act and the Dormant Mineral Act afford independent procedures, either of which may be used to effect the termination of a severed mineral interest, depending on the circumstances of the case and the time that has elapsed.” Id. at ¶44.

Thus, the MTA may be applied to extinguish severed oil and gas interests and once extinguished, that interest “cannot be revived.” Id. at ¶15 citing R.C. 5301.49(D). It should be noted that there are exceptions within the MTA that may prevent a severed oil and gas interest from being extinguished. These exceptions may prove to be the subject of further litigation but for the moment, the Ohio Supreme Court has settled the issue about whether the MTA may be utilized to extinguish severed oil and gas interests.