A recent change in the Mineral Code should be noted by all title examiners and title researchers in Louisiana. Subsection (I) was added to Article 149 of the Louisiana Mineral Code (Louisiana Revised Statute 31:149) effective August 1, 2014. Subsection I provides as follows:
When land is acquired from any person by an acquiring authority or other person, through act of sale, exchange, donation, or other contract, as part of an economic development project pursuant to a cooperative endeavor agreement between the acquiring authority and the state through the Department of Economic Development, as evidenced in a certification by the secretary of the Department of Economic Development attached to the instrument by which the land is acquired, and a mineral right subject to the prescription of nonuse is reserved in the instrument by which the land is acquired, the prescription of nonuse shall be for a period of twenty years from the date of acquisition whether the title to the land remains in the acquiring authority or is subsequently transferred to a third person, public or private.
An analysis of Article 149 suggests that the newly added Subsection I is a narrowly tailored variation of the previously existing Subsection B of Article 149, which provides as follows:
When land is acquired from any person by an acquiring authority through act of sale, exchange, donation, or other contract, or by condemnation or expropriation, and a mineral right subject to the prescription of nonuse is reserved in the instrument or judgment by which the land is acquired, prescription of the mineral right is interrupted as long as title to the land remains with the acquiring authority, or any successor that is also an acquiring authority. The instrument or judgment shall reflect the intent to reserve or exclude the mineral rights from the acquisition and their imprescriptibility as authorized under the provisions of this Section and shall be recorded in the conveyance records of the parish in which the land is located.
While similar, Subsections B and I provide certain differences that could create title ambiguities in certain circumstances. Below is an analysis of these differences:
Under Subsection I, the transfer may be between any person and an acquiring authority or other person. This differs from Subsection B, which applies only when land is being acquired from any person by an acquiring authority.
Type of Transfer:
Subsection I pertains only to a narrow set of transfers, namely, those that are part of an economic development project pursuant to a cooperative endeavor agreement between the acquiring authority and the state through the Department of Economic Development. By contrast, Subsection B is much broader in nature and includes acts of sale, exchanges, donations, or other contracts, or transfers by condemnation or expropriation between a person and any qualifying acquiring authority. An exception to the type of transfers applicable to Subsection B includes tax sales or other types of transfers resulting from the enforcement of obligations.
The form requirements under Subsection I include the attachment of a certificate issued by the Secretary of the Department of Economic Development attached to the instrument by which the land was acquired. The certificate must evidence that the transfer is part of a cooperative endeavor agreement. Title examiners, in particular, should be aware of this requirement and confirm that these certificates are attached to such conveyances. This may be the only hint in the conveyance records that a transfer falling under Subsection I has occurred. No such requirement exists under Subsection B.
The reservation language required for a valid mineral reservation in the instrument of conveyance is also different under Subsections B and I. Under Subsection I, it appears that as long as “a mineral right subject to the prescription of nonuse is reserved in the instrument,” then a valid reservation under Subsection I has occurred.
By contrast, the language required for a valid mineral reservation is much more onerous under Subsection B. The requisite language under Subsection B must “reflect the intent to reserve or exclude the mineral rights from the acquisition and their imprescriptibility as authorized under the provisions of this Section and shall be recorded in the conveyance records of the parish in which the land is located.”
The commencement of the tolling of the period of prescription of nonuse differs between Subsections I and B. Also, the term of the prescription of nonuse is different under Subsections I and B. Under Subsection I, the prescriptive period begins to run from the date of the acquisition whether or not the acquiring authority or other person transfers the property to a third person who may be public or private. The period of nonuse under Subsection I is for twenty (20) years. By contrast, under Subsection B, the mineral rights are held in perpetuity and the ten (10) year prescriptive period of nonuse does not begin to run until such time as the public body transfers the land back into the private domain.
The difference in the period of prescription of nonuse under Subsections I and B could create ambiguity in a situation where an acquiring authority acquires property and the mineral rights have been reserved pursuant to the requirements under Subsection I, whereby a mineral servitude was created by the transfer with a valid reservation and all the requirements of Subsection B have also been met. The question arises whether the prescription of nonuse on the transferor’s servitude would start to run upon the date of the transfer with a 20-year prescriptive period, as stated under Subsection I or instead whether the prescriptive period would be interrupted for as long as title to the land remains with the acquiring authority, or any successor in title that is also an acquiring authority as applicable under Subsection B. Although the answer is not clear, any transferor in the above factual scenario should make certain that the mineral reservation in the instrument of conveyance is stated as being made under Subsection B in order to ensure that the intention to reserve the minerals for the period of nonuse allowed under Subsection B is clear.
Generally, under Louisiana mineral law, the expectancy of a landowner in the extinction of an outstanding mineral servitude cannot be conveyed or reserved directly or indirectly. But Subsection D to Article 149 is an exception to this general rule. Subsection D provides that “if a mineral right subject to prescription has already been established over land at the time it is acquired by an acquiring authority, the mineral right shall continue to be subject to the prescription of nonuse to the same extent as if the acquiring authority had not acquired the land. Upon the prescription or other extinction of such mineral right, the transferor of the land shall without further action or agreement become vested with a mineral right identical to that extinguished, if (1) the instrument or judgment by which the land was acquired expressly reserves or purports to reserve the mineral right to the transferor, whether or not the transferor then actually owns the mineral right that is reserved, and (2) the land is still owned by an acquiring authority at the time of extinguishment.”
Based on the language of Subsection D, it is unclear as to what the result would be where an acquiring authority acquires lands under Subsection I and the mineral reservation made by the transferor in the instrument making the transfer is one of a reversionary interest. The outcome of such a reservation upon the extinguishment of the prior reservation is not clear under Article 149. As above, a transferor may want to express intent in the mineral reservation language to be bound by Subsection B with regard to the prescriptive period.
In short, the change to the Mineral Code with the addition of Subsection I to Article 149 needs clarification. Why the legislature felt the need to stray from a ten year prescriptive period to a twenty year period is unclear. We can only hope that this is not the beginning of a trend of creating multiple prescriptive periods for different scenarios in Louisiana. Over time some clarity on the changes to Article 149 should emerge. In the meantime, all title examiners and researchers should keep an eye out for scenarios where Article 149 is applicable and act accordingly to protect their client’s interests.