Why your mineral rights might be in danger

If you think it’s always clear who owns the mineral rights to a piece of land, you might want to think again. Several cases across Ohio have worked their way through the court system up to the Ohio Supreme Court on this very issue. With the explosion in oil and natural gas drilling, some of those mineral rights could be worth hundreds of thousands of dollars to the owner.

“There’s a lot at stake. In some cases, the financial opportunity is huge; we’re talking very serious money,” said Dale Arnold, OFBF’s director of energy, utility and local government policy. Both Arnold and Amy Milam, OFBF’s director of legal education, have been handling phone calls from members asking questions about their mineral rights.

For generations, Ohioans have commonly separated the mineral rights under the ground from the surface rights on the ground. Selling those mineral rights to energy, gas, oil or other companies has been a way for landowners to make some extra money. Those rights weren’t worth much until recently when horizontal drilling allowed companies to reach pockets of gas or oil that previously couldn’t be accessed. Now that old oil or gas deed could be worth a lot of money, and attorneys have been combing through county records trying to find the heirs.

“I had a call from a lady from Tucson, Ariz., recently who said she’d been notified that she was heir to mineral rights on land located in Belmont County and could wind up with a lot of money. She wanted to know if it was legit, which it was,” Arnold said. “I get a lot of calls like this. In the past, it wasn’t worth the time or money to track down a large number of lost family members and heirs nationwide, but everything has changed over the past decade.”

While each case is different, many center around which version of the state’s Dormant Mineral Act applies to oil and natural gas activity. The Dormant Mineral Act, enacted in 1989 and amended in 2006, determines when the mineral rights are returned to those who own the surface rights.

The 1989 version has a “use-it-or-lose-it” approach. It says the mineral rights are considered abandoned and revert back to the surface rights owner if the mineral interests have not been subjected to a “savings event” for 20 years. A “savings event” includes title transactions, actual production of mineral interests, usage of mineral interests for underground storage, issuance of a drilling permit to the holder of the mineral interests and creation of a separate tax listing for the mineral rights.

The 2006 version differs in that it requires surface owners to inform mineral rights owners that they plan to declare the mineral rights abandoned. That notification must be made by certified mail or published in a newspaper or similar publication. In the past, no notification was required. The surface rights owner also must confirm that mineral interests have not been used or that there has been a “savings event” within the past 20 years. Many questions center around when that 20-year clock starts — under the 1989 version of the law or the 2006 one.

“Tens of thousands of leases since 2003 have changed hands. Each time that happens, there’s a savings event,” Arnold said. “Even though nothing has happened with the mineral rights for years, you might not be able to get them back for awhile because of those lease transfers.”

Because the cases are complicated and involve a lot of money, both Arnold and Milam said landowners should do their research and hire experienced attorneys to look at claims or contracts. Arnold cited a case where a couple sold their mineral rights to a company, which told them it had done all the research and the couple owned those rights. It turned out somebody else actually owned the mineral rights and the company wanted the money back.

“Don’t take anybody’s word when it comes to these cases. They can be very convoluted. You still need to hire an attorney and go through the process to determine no one else has a claim to the mineral rights,” Arnold said.