Court and government controls make both the federal and S.D. versions of property rights a pipe dream
One’s property rights, in a goodly number of instances, are controlled by the government under which you live. Property rights are further controlled by the contracts and agreements one makes.
Courts in the U.S. also have the power to interpret and therefore realign property rights. And, not the least, legislatures and Congress control, impede and materially change property rights.
What are property rights? Property rights include the ownership of tangible things such as real estate, and intangible properties such as ideas, patents, as well as stock ownership (equity and private equity) in a business. Both the government, through its inimitable powers (eminent domain, taxation), and individuals by way of contract (mortgages, liens, easements) impose restrictions on one’s property.
Surface and subsurface real estate. You need not own the surface of land to own any mineral rights (property rights) under that surface. Yes, a non-surface owner may have title to mineral rights under a stranger’s land. This mineral ownership is a property right.
Such an approach to U.S. property law is true outside of Indian Country. Individuals, companies, and trusts may be your unseen neighbors with claims against the minerals under your land.
About half of mineral interest owners in North Dakota and South Dakota live outside of North Dakota and South Dakota. Mineral interest owners are not always local. See my article at: A respectable number of mineral interests are not “in use.” This means the owners are not actively mining or producing minerals, and mineral owners are not actively managing the interests.
Why should they? It is in effect a passive investment in ownership.
Now consider the following ‘new requirement’ in property law passed by the Legislature. In 2016 the South Dakota Legislature added the following new requirement for all mineral rights owners who do not also own the surface land:
It is the record mineral owner’s obligation to maintain an address of record in the office of the register of deeds in the county in which their mineral interest is located. Failure to maintain an address of record is a waiver by the record mineral owner of the requirement to mail a copy of the notice of lapse to the record mineral owner.
This law is part of a long-established legal procedure for eliminating so-called inactive, or lapsed, mineral rights. The law contains a process for terminating mineral rights. I will criticize the new requirement codified in 2016 and also make a confession at the end of my criticism.
The requirement demands a new particular act by an owner to preserve mineral rights where the owner is not also the surface owner. Nowhere else in real estate property law must a property owner maintain a “current” address just to keep his or her ownership rights. For example, if you own real estate in South Dakota and move to Salt Lake City from South Dakota but do not prepare a change of address recording in the register of deeds offices, you will still own the real estate you previously purchased.
However if one owns not the surface but the mineral rights, such a move to Salt Lake could result in the loss of the mineral rights based on the failure to keep current one’s mailing address.
Another problem is that the new requirement is retroactive. Black's Law Dictionary defines a retroactive law as a law “that looks backward or contemplates the past, affecting acts or facts that existed before the act came into effect.”
The 2016 South Dakota requirement applies to already existing property rights. An existing mineral rights owner who had purchased, been granted or inherited mineral rights before 2016 will be at risk of losing those rights if he has not kept the mailing address current with the register of deeds.
The South Dakota Constitution closely follows the U.S. Constitution and directs that, “Private property shall not be taken for public use, or damaged, without just compensation … .”
I submit to the reader that the law and the Constitution giveth to others and taketh away from thee. Welcome to the new world order.
The question of whether a new statute would have a retroactive effect requires a court to consider whether it would impair rights a party possessed at the time the owner originally acted or established ownership in the property, or would impose new duties with respect to transactions and contracts already completed.
But all in all, courts are a conservative institution with a minimal appetite for upsetting the societal apple cart, even when challenged on constitutional grounds. Courts have sustained the retroactive operation of statutes. One former chief justice of the U.S. Supreme Court once opined on retroactivity, “Contracts, however express, cannot fetter the constitutional authority of the Congress [here you can write in state legislatures]. Contracts may create rights of property, but when contracts deal with a subject matter which lies within the control of the Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them.”
I disagree.
Confession: I was a member of the State Bar committee which recommended the above discussed new requirement as proposed statutory language to the Legislature. I had at the time determined that maintaining current contact information by mineral owners was paramount and justified the new requirement. My bad.
I now think the new requirement may be subject to challenge as depriving a party of their pre 2016 property rights. An involuntary change to one’s property rights may be challenged, more particularly when the change in law affects property rights established before the change in the law. If you hold mineral rights but the rights are extinguished because you did not register a current address, you are quite literally deprived of all possible economic use of your former property.
That is a taking and violates due process of the law.
David L. Ganje is an attorney who practices natural resources, environmental and commercial law. The Ganje Law Office website is lexenergy.net.
Photo: public domain, wikimedia commons
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