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When does an oil and gas lease expire due to lack of production, and how long do landowners have if they want to take recourse in court?
The Ohio Supreme Court ruled on the issue in November 2019, siding with Farm Bureau members Barry and Rosa Browne in Guernsey County.
The case, Browne v. Artex Oil, asked what was the appropriate statute of limitations for the question of whether an oil and gas lease expired due to lack of production. According to Farm Bureau Policy Counsel Leah Curtis, Farm Bureau argued a 21-year statute of limitations was to apply, under court precedent and Ohio law, in support of the Brownes.
The other side argued that it should be a 15-year statute of limitations, which is something that generally applies to a breach of contract case. The Supreme Court ruled, in line with the argument Ohio Farm Bureau made, that there was no breach in this case, rather the Brownes alleged that the lease expired on its own terms. Because there was no breach, the “breach” statute of limitations could not apply and instead the statute of limitations that applies to lawsuits seeking to determine ownership property should apply.
“In general, this is an important decision for landowners and Farm Bureau members,” Curtis said, while noting that while the court was considering a 15-year vs. 21-year statute of limitations, the General Assembly changed the contract statute of limitations and shortened it to eight years and current legislation seeks to shorten this statute of limitations even further.
“Without clarifying the statute of limitations, oil and gas companies would be encouraged to leave unproductive wells on the property, in hopes that within the eight years they would be able to restart production and continue to hold the property,” Curtis said. “It can take some time for a landowner to determine whether they even have a plausible claim worth taking to court. The longer statute of limitations ensures a landowner has ample opportunity to investigate their claim prior to filing a lawsuit.”
The case now returns to the trial court to review in light of this Supreme Court opinion, meaning that the lower court has to now review evidence as to whether the lease expired due to nonproduction prior to 1999.
“This case didn’t answer the specific question as to whether the Brownes lease is still in effect; that will be for the trial court to determine. But from a general standpoint, this is an important clarification of the law for those who believe their oil and gas lease has expired on its own terms, such as due to nonproduction,” Curtis said.
My first recommendation in your journey is to start out with a local farming friend or mentor along with joining an organization like Ohio Farm Bureau.
We’re just so thankful for the Farm Bureau and the foundation for helping put this together. And of course, the Boyert family for the vision they had with this grant. It’s jumping us forward 10 years. It’s unbelievable.
I could not have done it without the resources I have found through Farm Bureau.
It wasn’t until I joined the Wilmington College Collegiate Farm Bureau that I truly saw how my passion could translate into leadership, advocacy and a career.
The issue of property taxation remains as one of the biggest challenges our members face today. Ensuring agricultural property is valued for its agricultural potential and not development is critical to the continued success of Ohio agriculture.
Through the Select Partner program, we became educated in farm insurance and weren't just selling policies. It became more and more clear why farmers need an advocate like Ohio Farm Bureau.
So many of the issues that OFBF and its members are advocating for are important to all Ohioans. I look at OFBF as an agricultural watchdog advocating for farmers and rural communities across Ohio.
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