Use It or Lose It - Lapsing Mineral Rights

Due to shifting commodity prices, land use regulations, and a variety of other factors, mineral interests often go unused for significant periods of time.  A recent Wisconsin Court of Appeals’ decision looked at the effects of non-use on ownership of mineral interests.  Lakeland Area Property Owners Assoc. v. Oneida County, 2021 WI App 19, 957 N.W.2d 605.  Under Wis. Stat. § 706.057(3), mineral interests that are not used for 20 years revert to the owner of the surface interest in the real estate.  In order to allow mineral interest owners to preserve their rights following enactment of § 706.057(3), the Wisconsin legislature provided that an interest in minerals which was not used during the 20 year period prior to July 1, 1984, would not lapse if the interest in minerals was used within three years after July 1, 1984.  Under Wisconsin law, an interest in minerals can be “used” in a variety of ways, including actual exploitation of the minerals, a conveyance of the mineral interests, or as discussed further in Lakeland, if the owner of the minerals records a statement of claim in the real estate records.

Lakeland dealt with a property owner association’s attempts to stop a proposed gravel mine.  In addition to challenging the re-zoning of the proposed mine, the association also claimed that it was the true owner of the gravel claimed by the mine operator.  The association based its ownership claim on the fact it recorded a statement of its mineral interests with the local register of deeds on January 12, 1987 (within the three-year period referenced in § 706.057(3)).  The association argued that because it had recorded notice of its claim within the statutory time frame, its ownership of the mineral interests could not lapse despite the fact it had not actually used the minerals at any period since recording that statement in 1987.  The court of appeals rejected the association’s argument primarily because it would have created the absurd result that all mineral rights owners who did not use their interest during the 20 years before July 1, 1984, could permanently prevent their interest from ever lapsing by simply “using” them once between July 1, 1984, and July 1, 1987.  As a result, the Lakeland court found that the mineral interests had lapsed and become the property of the mine operator due to its ownership of the surface interests of the proposed mine location.

Ownership of mineral interests can be lucrative.  And statutes like the one discussed in Lakeland providing for the loss of unused mineral rights are common.  See North Dakota Century Code Ch. 38-18.1; see also Texaco v. Short, 454 U.S. 516 (1982) (upholding constitutionality of Indiana’s statute on lapsing of unused mineral rights).  Accordingly, owners of mineral interests that have gone unused for a significant period of time should consider actions to preserve their rights.