VII. Natural Resources House Bill 288 Mineral rights lapse; Oil and Gas Commission quorum Product of the OSBA Natural Resources Committee
Reported by the House Public Utilities and Energy Committee
House Bill 288 contains two proposed amendments to Ohio’s existing statutory scheme affecting energy production. The bill is designed to address technical problems with Ohio’s current dormant mineral statute and procedural problems with the Ohio Oil and Gas Commission. The two amendments can help to increase the availability of domestic energy supplies without adversely affecting the environment or state tax collections. Mineral Rights
Ohio has had an active energy production industry since the mid 1800’s. During this period, landowners in mineral-producing areas have frequently severed the mineral rights in their land from the surface rights. Through the decades, ownership of the severed minerals has been transferred and factionalized through estates and business transfers.
The problem is that it may be difficult, if not impossible, to find the owners or in some cases the multiple partial interest owners of such old severed mineral rights. Twenty years ago, Ohio joined the majority of oil and gas producing states by passing a dormant mineral statute that permitted the surface owner to reunite severed mineral rights with the surface estate if the mineral rights had been abandoned. Unfortunately, Ohio’s dormant mineral statute has seldom been used, in large measure because, in hindsight, the statute did not clearly define when a mineral interest became abandoned and exactly how the process to reunite the mineral ownership with the surface ownership was to be accomplished.
House Bill 288 would remove the ambiguity of the existing statute with a clear definition of when a mineral right is deemed abandoned. The mineral right will be deemed abandoned if there is both
no active use of the mineral rights and a failure by the mineral right owner to file to preserve the inactive mineral right for future use for at least 20 years from the time a surface owner petitions to reunite the surface with the inactive mineral interest.
House Bill 288 will not alter the balance between surface owner and mineral right owners, nor will the bill change the environmental or conservation requirements to drill or produce in Ohio. And, the bill will not adversely affect tax revenues. In fact, if the bill has its intended results of bringing back old or marginal oil and gas fields to production, the bill should increase Ohio’s collection of severance and ad valorem tax. Oil and Gas Commission Quorum
The second issue addressed in House Bill 288 deals with the administrative practices involved with the permitting and regulation of oil and gas wells in Ohio. Currently, an administrative appeal from a decision by the Chief of the Division of Mineral Resources Management in the Department of Natural Resources is to a body called the Ohio Oil and Gas Commission. The Commission has five members and the current statute provides that no decision may be made without the concurrence of three members. The problem is that, in practice, it may be impossible to get three of the five commissioners to even hear, much less decide, an appeal. Lack of a quorum can occur because of vacancies on the Commission, illness of a commissioner or because a commissioner has to recuse him or herself due to a conflict of interest. If a quorum of commissioners cannot be assembled, or three votes secured, the appeal is stalled indefinitely.
A similar problem exists within our courts and is addressed by appointing visiting judges. H.B. 288 would apply the same technique by permitting the Chair of the Oil and Gas Commission to appoint visiting commissioners from the pool of members who make up the Oil and Gas Technical Advisory Council. The Technical Advisory Council members go through the same screening and appointment process as the Oil and Gas Commissioners and have oil and gas experience and technical skills. Thus, drawing temporary members for the Oil and Gas Commission from the Technical Advisory Council will vest the Commission with the same skill set as the Commission’s regular members and will allow the Commission to proceed to decide appeals which are now stalled.