97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1876

 

Introduced 2/10/2011, by Sen. A. J. Wilhelmi

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Dormant Mineral Interests Act. Provides a statement of public policy and definitions. Describes mineral interests to which the Act does not apply. Describes the process for and the limitations on the termination of an interest in a dormant mineral interest. Provides for the preservation of a mineral interest through a recorded notice process. Allows for late recording of a mineral interest by the mineral owner in specified circumstances. Describes the effect of a court termination of a mineral interest. Provides for the implementation of the Act, limitations on actions under the Act, and uniformity of application and construction of the Act. Contains a severability provision.


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A BILL FOR

 

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1    AN ACT concerning mineral interests.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 0.1. Short title. This Act may be cited as the
5Dormant Mineral Interests Act.
 
6    Section 1. Statement of policy.
7    (a) The public policy of this State is to enable and
8encourage marketability of real property and to mitigate the
9adverse effect of dormant mineral interests on the full use and
10development of both surface estate and mineral interests in
11real property.
12    (b) This Act shall be construed to effectuate its purpose
13to provide a means for termination of dormant mineral interests
14that impair marketability of real property.
 
15    Section 2. Definitions. As used in this Act:
16    "Mineral interest" means an interest in a mineral estate,
17however created and regardless of form, whether absolute or
18fractional, divided or undivided, corporeal or incorporeal,
19including a fee simple or any lesser interest or any kind of
20royalty, production payment, executive right, nonexecutive
21right, leasehold, or lien, in minerals, regardless of
22character.

 

 

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1    "Minerals" includes gas, oil, coal, other gaseous, liquid,
2and solid hydrocarbons, oil shale, cement material, sand and
3gravel, road material, building stone, chemical substance,
4gemstone, metallic, fissionable, and nonfissionable ores,
5colloidal and other clay, steam and other geothermal resource,
6and any other substance defined as a mineral by the law of this
7State.
 
8    Section 3. Exclusions.
9    (a) This Act does not apply to:
10        (1) a mineral interest of the United States or an
11    Indian tribe, except to the extent permitted by federal
12    law; or
13        (2) a mineral interest of this State or an agency or
14    political subdivision of this State, except to the extent
15    permitted by State law other than this Act.
16    (b) This Act does not affect water rights.
 
17    Section 4. Termination of dormant mineral interest.
18    (a) The surface owner of real property subject to a mineral
19interest may maintain an action to terminate a dormant mineral
20interest. A mineral interest is dormant for the purpose of this
21Act if the interest is unused within the meaning of subsection
22(b) for a period of 20 or more years next preceding
23commencement of the action and has not been preserved pursuant
24to Section 5. The action must be in the nature of and requires

 

 

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1the same notice as is required in Section 5 of the Severed
2Mineral Interest Act. The action may be maintained whether or
3not the owner of the mineral interest or the owner's
4whereabouts is known or unknown. Disability or lack of
5knowledge of any kind on the part of any person does not
6suspend the running of the 20-year period.
7    (b) For the purpose of this Section, any of the following
8actions taken by or under authority of the owner of a mineral
9interest in relation to any mineral that is part of the mineral
10interest constitutes use of the entire mineral interest:
11        (1) Active mineral operations on or below the surface
12    of the real property or other property unitized or pooled
13    with the real property, including production, geophysical
14    exploration, exploratory or developmental drilling,
15    mining, exploitation, and development, but not including
16    injection of substances for purposes of disposal or
17    storage. Active mineral operations constitute use of any
18    mineral interest owned by any person in any mineral that is
19    the object of the operations.
20        (2) Payment of taxes on a separate assessment of the
21    mineral interest or of a transfer or severance tax relating
22    to the mineral interest.
23        (3) Recordation of an instrument that creates,
24    reserves, or otherwise evidences a claim to or the
25    continued existence of the mineral interest, including an
26    instrument that transfers, leases, or divides the

 

 

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1    interest. Recordation of an instrument constitutes use of
2    (i) any recorded interest owned by any person in any
3    mineral that is the subject of the instrument, and (ii) any
4    recorded mineral interest in the property owned by any
5    party to the instrument.
6        (4) Recordation of a judgment or decree that makes
7    specific reference to the mineral interest.
8    (c) This Section applies notwithstanding any provision to
9the contrary in the instrument that creates, reserves,
10transfers, leases, divides, or otherwise evidences the claim to
11or the continued existence of the mineral interest or in
12another recorded document unless the instrument or other
13recorded document provides an earlier termination date.
 
14    Section 5. Preservation of mineral interest by notice.
15    (a) An owner of a mineral interest may record at any time a
16notice of intent to preserve the mineral interest or a part
17thereof. The mineral interest is preserved in each county in
18which the notice is recorded. A mineral interest is not dormant
19if the notice is recorded within 20 years next preceding
20commencement of the action to terminate the mineral interest or
21pursuant to Section 6 after commencement of the action.
22    (b) The notice may be executed by an owner of the mineral
23interest or by another person acting on behalf of the owner,
24including an owner who is under a disability or unable to
25assert a claim on the owner's own behalf or whose identity

 

 

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1cannot be established or is uncertain at the time of execution
2of the notice. The notice may be executed by or on behalf of a
3co-owner for the benefit of any or all co-owners or by or on
4behalf of an owner for the benefit of any or all persons
5claiming under the owner or persons under whom the owner
6claims.
7    (c) The notice must contain the name of the owner of the
8mineral interest or the co-owners or other persons for whom the
9mineral interest is to be preserved or, if the identity of the
10owner cannot be established or is uncertain, the name of the
11class of which the owner is a member, and must identify the
12mineral interest or part thereof to be preserved by one of the
13following means:
14        (1) A reference to the location in the records of the
15    instrument that creates, reserves, or otherwise evidences
16    the interest or of the judgment or decree that confirms the
17    interest.
18        (2) A legal description of the mineral interest. If the
19    owner of a mineral interest claims the mineral interest
20    under an instrument that is not of record or claims under a
21    recorded instrument that does not specifically identify
22    that owner, a legal description is not effective to
23    preserve a mineral interest unless accompanied by a
24    reference to the name of the record owner under whom the
25    owner of the mineral interest claims. In such a case, the
26    record of the notice of intent to preserve the mineral

 

 

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1    interest must be indexed under the name of the record owner
2    as well as under the name of the owner of the mineral
3    interest.
4        (3) A reference generally and without specificity to
5    any or all mineral interests of the owner in any real
6    property situated in the county. The reference is not
7    effective to preserve a particular mineral interest unless
8    there is, in the county, in the name of the person claiming
9    to be the owner of the interest, (i) a previously recorded
10    instrument that creates, reserves, or otherwise evidences
11    that interest or (ii) a judgment or decree that confirms
12    that interest.
 
13    Section 6. Late recording by mineral owner.
14    (a) In this Section, "litigation expenses" means costs and
15expenses that the court determines are reasonably and
16necessarily incurred in preparing for and prosecuting an
17action, including reasonable attorney's fees.
18    (b) In an action to terminate a mineral interest pursuant
19to this Act, the court shall permit the owner of the mineral
20interest to record a late notice of intent to preserve the
21mineral interest as a condition of dismissal of the action,
22upon payment into court for the benefit of the surface owner of
23the real property the litigation expenses attributable to the
24mineral interest or portion thereof as to which the notice is
25recorded.

 

 

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1    (c) This Section does not apply in an action in which a
2mineral interest has been unused within the meaning of Section
34(b) for a period of 40 or more years next preceding
4commencement of the action.
 
5    Section 7. Effect of termination. A court order terminating
6a mineral interest, when recorded, merges the terminated
7mineral interest, including express and implied appurtenant
8surface rights and obligations, with the surface estate in
9shares proportionate to the ownership of the surface estate,
10subject to existing liens for taxes or assessments.
 
11    Section 8. Savings and transitional provisions.
12    (a) Except as otherwise provided in this Section, this Act
13applies to all mineral interests, whether created before, on,
14or after its effective date.
15    (b) An action may not be maintained to terminate a mineral
16interest pursuant to this Act until 2 years after the effective
17date of the Act.
18    (c) This Act does not limit or affect any other procedure
19provided by law for clearing an abandoned mineral interest from
20title to real property.
21    (d) This Act does not affect the validity of the
22termination of any mineral interest made pursuant to any
23predecessor statute on dormant mineral interests.
 

 

 

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1    Section 9. Uniformity of application and construction.
2This Act shall be applied and construed to effectuate its
3general purpose to make uniform the law with respect to the
4subject of this Act among states enacting it.
 
5    Section 10. Severability clause. If any provision of this
6Act or its application to any person or circumstance is held
7invalid, the invalidity does not affect any other provision or
8application of this Act that can be given effect without the
9invalid provision or application, and to this end the
10provisions of this Act are severable.