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Supreme Court to rule on oil, gas lease question
By Marc Kovac
COLUMBUS
The Ohio Supreme Court must decide whether hundreds of Ohio landowners can exit leases with an energy company that for years has not drilled for oil or gas on the sites.
Justices heard oral arguments Tuesday on separate Monroe County cases involving Beck Energy that were combined for the deliberations. Oral arguments stretched for more than an hour and included comments from five separate attorneys representing different parties.
The initial case was filed more than four years ago. Five Monroe County landowners sued Beck Energy, fearing the company would stretch leases on their properties beyond initial 10-year terms despite failing to drill, according to a summary from the Ohio Supreme Court.
The second case involves hundreds of other landowners who are similarly situated and who were added to a larger class action involving comparable lease agreements but who were not directly involved in the earlier court proceedings.
Owners in the initial case say the leases are void because Beck included contract stipulations allowing the company to control mineral rights on the parcels without ever actually drilling for oil and gas.
Richard Zurz Jr., representing several of the landowners, argued that the leases were written to allow Beck to continue to control the mineral rights indefinitely.
“This lease is so complex and so esoteric that a layperson cannot understand it,” he said. “Three trial judges and three courts of appeals judges have argued over what it means. But I think if you look at the four corners of this lease ... it’s clear to us that it was intended to be a perpetual lease.”
Under a previous high-court ruling, such perpetual leases are void.
Justice Terrence O’Donnell summed up that argument: “So your view is that this is a perpetual lease, and under our decision [in an earlier case], it’s void? Because Beck never has to drill until maybe market conditions are correct and by paying the nominal $3 an acre or whatever it is, $100 a year, the landowners are deprived of the royalty and they’re deprived of the ability to get a well drilled.”
Zurz responded, “Correct. ... That’s the essence of our case.”
Daniel Plumly, a Wooster attorney representing other landowners who are affected by the larger legal questions but who were not involved in proceedings at the trial and appeals court levels, argued that his clients should have been allowed to move forward with a lease with another company after its initial 10-year lease with Beck ended.
But Scott Zurakowski, legal counsel for Beck Energy Corp., countered that the leases in the case are commonly used throughout the state with “well-known terms and defined meanings.”
There’s no time line for a final decision.