My Present

1. The Pennsylvania Dormant
Oil & Gas Act of 2006
58 P.S. § 701.1 et seq.
Lisa C. McManus, Attorney at Law
lisamcmanus616@gmail.com | 814.781.1319

2. Why Do We Need a
Dormant Oil and Gas Act?

3. What are Dormant Interests?
Dormant oil and gas interests can arise
in a number of ways:
•Grantor reserves ½ of O/G in an 1890
deed, but he and his heirs never file
further instruments regarding the interest
•O/G owner dies owning interest in O/G,
but his heirs are not aware of the interest
•Defective tax and judicial sales leave
the interest in the original owner
•Improper conveyancing or estate
administration

4. Purpose of the Act
• Facilitates the development of the subsurface estate
by providing a means to lease the interests of
“Unknown or Unlocatable Owners” of Oil and Gas
• Protects the interests of the Unlocatable Owners
• Unlike other states’ dormant mineral acts, the PA
DOGA does not vest the surface owner with title to
the oil and gas interests that have been severed from
the surface estate
• Does NOT apply to coal or coal bed methane

5. Why Not Just File a QTA?
• QTA requires plaintiff to establish title by a fair
preponderance of the evidence. Moore v.
Commonwealth, Dep’t of Environmental
Resources, 129 Pa. Commw. 628, 566 A.2d 905
(1989); Proctor v. Sagamore Big Game
Club, 166 F.Supp. 465 (W.D. Pa. 1958)
• Can’t quiet title to something you don’t own
• May seek to QTA based on adverse possession
through development > 21 years but only if
plaintiff is not a co-tenant

6. Why File under the DOGA?
• Developers may refuse to proceed with drilling in the absence
of lease from all owners.
• While a co-tenant can lease the entire interest, the lease cannot
be exclusive and the co-tenant/developer has a duty to account
to the missing co-tenant.
o What if the missing co-tenant is found and doesn’t like the
lease terms?? 58 P.S. § 701.6 provides protection to
lessees.
o Increased cost of development may militate against “taking
a business risk” and developing in the absence of lease
approval from a disinterested party.
o DOGA provides protection from liability to an operator.

7. Who Benefits from the DOGA?
• The Missing Heirs
• The Operator
• The Commonwealth
And practically, the co-tenant who may not be able to lease otherwise

8. The Mechanics

9. Standing
• Must have an interest in fee, by lease, as royalty or
through ownership of correlative rights in the oil and gas
• Act does not define “Correlative Rights” – likely that only
an owner of the same hydrocarbon has standing
What does this mean?
• A DOGA petition can only be filed if someone other than
the missing owners have an ownership interest. If the
entire interest is owned by the missing party, no one has
standing under the DOGA.

10. Due Diligence
Before you file anything, you must perform a thorough
search for the missing owners. The necessity for
diligent search for missing heirs cannot be emphasized
enough.

11. What Efforts Are Required?
• DOGA does not enumerate requirements for attempts to
locate Unknown Owners
• 58 P.S. § 701.3 Definitions : "UNKNOWN OWNER OR
OWNERS." The owner or owners of interests in oil and gas
who are unknown or whose present residence or other
addresses cannot be found by reasonable efforts to do so.
• 58 P.S. § 701.4 Creation of trust for unknown owners : …
declare a trust in favor of all unknown owners of an interest
in the oil and gas underlying the tract whose identity, present
residence or present address is unknown and cannot be
determined by diligent efforts.

12. Good Faith Requirements
• Deer Park Lumber, Inc. v. Major, 559 A.2d 941, 945 (Pa. Super.
1989)
o More than a paper search
o Includes (1) inquiries of postal authorities including inquiries
pursuant to the Freedom of information Act, 39 C.F.R. Part
265, (2) inquiries of relatives, neighbors, friends, and
employers of the defendant, and (3) examinations of local
telephone directories, voter registration records, local tax
records, and motor vehicle records.
o Can this really apply to someone who died 100 years ago?
• Statutory and Case Law has not kept pace with technology:
refrain from performing internet searches at your peril.

13. Best Practice: Leave No Stone Unturned
To ensure that your DOGA Trust is protected against attack for failure to
perform adequate due diligence, search the following:
• Grantor/Grantee Indexes
• Estate Records
• Judgment Indexes
• Tax Assessments
• Guardianship proceedings
• Voting Records
• Marriage/Death Records
• Veterans’ Records
• Cemetery Records
• Historical Society Records
• Genealogical Sites
• White page directory
Consider hiring a private investigator and search surrounding counties.

14. Your New Best Friend

15. Filing the Petition
The Orphans’ Court has jurisdiction of DOGA
actions pursuant to 20 Pa.C.S. § 711(11).
DOGA requires the filing of a petition in the name of
the co-owner of the rights. If interest is leased, the
Lessee will not file the petition, unless the Lessee
has actually purchased the rights at some point.
Who foots the bill? Due diligence and prosecuting
the action can be costly. Lessee can pay and then
decide to absorb the cost or pass on to Lessor.

16. Service of the Petition
Pa. R.C.P. Rule 430 provides mechanism for special
service by publication:
If service cannot be made under the applicable rule the
plaintiff may move the court for a special order directing the
method of service. The motion shall be accompanied by an
affidavit stating the nature and extent of the investigation
which has been made to determine the whereabouts of the
defendant and the reasons why service cannot be made.

17. Identifying the Trustee
• The Trustee must be a financial institution authorized
to do business in the Commonwealth of Pennsylvania.
• From a practical standpoint, the petitioner should
contact the proposed trustee before filing the petition
to obtain consent to expedite the process.
• May encounter difficulty: trusts may not be funded for
some time, and balance may be small.

18. Establishing a Trust
Hearing on Petition is scheduled
•Co-owner must testify that it is his desire to develop the oil/gas
and to have the unlocatable heirs’ royalties placed into trust.
•An abstractor must testify with regard to the efforts made to
locate the heirs through searching courthouse and other
records.
•Petitioner’s attorney may also advise the courts of additional
efforts made to locate the heirs through internet searches, etc.
•Trustee need not testify.
•The trust must be in the best interest of all the owners.
•The court may make its decision from the bench and will
usually do so if the evidence is unequivocal.

19. The Lease
• Once the trust is approved and the trustee is appointed,
the lease is negotiated with the trustee, and the proposed
lease must be submitted to the court for approval.
• When approval is obtained, the trustee may execute the
lease, and the lessee may proceed.
• Pursuant to § 701.5, the lessee must pay all bonuses,
rental payments, royalties and other income due to the
unknown owner or owners to the trustee until the trust is
terminated and notice of its termination given to all
interested parties.

20. Administration of the Trust
• Section 701.5 provides that the trust shall be
administered in accordance with the PEF Code (20
Pa.C.S.).
• The trust remains in effect until the beneficiaries are
found and confirmed to the satisfaction of the trustee.
Court approval is required.
• If the owners are not found, the trust proceeds eventually
escheat to the Commonwealth.
• What happens when the money is gone?
• Protection for Trustee in § 701.7, which provides for
penalty for delinquency in payments of amounts due

21. Alternatives to DOGA
Surface owners or owners of rights in the corresponding
hydrocarbon (e.g., oil v. gas) may file an action pursuant to
the Inalienable Property chapter of the PEF Code, which
would appear to be appropriate to allow for the sale of the
interest, the receipt of the Commonwealth of the proceeds
of escheated property (see Links Estate, 319 Pa. 513; 180
A. 1 (1935)), and the subsequent exploitation of the mineral
estate.
• N.B. The petitioner may not be the winning bidder at
sale. Time and expense could be for nothing.

22. On the Horizon
SB 258 of 2013 would amend the Action to
Quiet Title law to provide for a ‘rebuttable
presumption’ that OGMs have been abandoned
in favor of a surface owner after a 50-year
period if the subsurface ownership is unclear or
unknown.
•Bill exempts fee interests reserved or acquired
by a recorded conveyance.
•Does not appear to provide much assistance
other than in cases involving tax title issues.

23. Other Proposed Legislation
HB 1707 of 2011
•Proposed amendment of current DOGA
•Primary benefit was inclusion of notice
provisions
•Encouraged commercial development

24. Questions?