SB-1408, As Passed House, December 13, 2006

SUBSTITUTE FOR

SENATE BILL NO. 1408

     A bill to amend 1963 PA 42, entitled

"An act to provide for the termination of dormant oil and gas

interests in land owned by persons other than the owners of the

surface and for the vesting of title to same in the surface owners

in the absence of the filing of a notice of claim of interest

within a specified period of time,"

by amending sections 1, 2, and 4 (MCL 554.291, 554.292, and

554.294).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1. (1) Any interest in oil or gas in any land owned by

any person other than the owner of the surface, which has not been

sold, leased, mortgaged, or transferred by instrument recorded in

the register of deeds office for the county where  such  that

interest in oil or gas is located for a period of 20 years shall,

in the absence of the issuance of a  drilling permit to drill an

oil or gas well issued by the department of environmental quality,

or its predecessor or successor, as to  such  that interest in oil

or gas or the actual production or withdrawal of oil or gas from

said lands, or from lands covered by a lease to which  such  that

interest in oil or gas is subject, or from lands pooled, unitized,

or included in unit operations therewith, or the use of  such  that

interest in underground gas storage operations, during such period

of 20 years, be deemed abandoned, unless the owner thereof shall,

within 3 years after  the effective date of this act  September 6,

1963 or within 20 years after the last sale, lease, mortgage, or

transfer of record of  such  that interest in oil or gas or within

20 years after the last issuance of a drilling permit as to  such

that interest in oil or gas or actual production or withdrawal of

oil or gas, from said lands, or from lands covered by a lease to

which  such  that interest in oil or gas is subject, or from lands

pooled, unitized, or included in unit operations therewith, or the

use of  such  that interest in oil or gas in underground gas

storage operations, whichever is later, record a claim of interest

as  hereinafter provided in section 2.

     (2) Any interest in oil or gas deemed abandoned as  herein

provided in subsection (1) shall vest as of the date of such

abandonment in the owner or owners of the surface in keeping with

the character of the surface ownership.

     The phrase "drilling permit" shall mean a permit to drill an

oil or gas well issued by the conservation department or its

successor.

     (3) Notwithstanding any other provision of this act to the

contrary, if a judgment of foreclosure is entered under section 78k

of the general property tax act, 1893 PA 206, MCL 211.78k, for the

nonpayment of delinquent taxes levied on property, an oil or gas

interest in the property owned by a person other than the owner of

the surface shall not be preserved from foreclosure under section

78k of the general property tax act, 1893 PA 206, MCL 211.78k,

unless that interest is sold, leased, mortgaged, transferred,

reserved, or subject to a claim of interest under section 2 and an

instrument evidencing the sale, lease, mortgage, transfer,

reservation, or claim of interest is recorded in the office of the

register of deeds in the county in which the property is located

during the 20-year period immediately preceding the date of filing

a petition for foreclosure under section 78h of the general

property tax act, 1893 PA 206, MCL 211.78h.

     Sec. 2. (1) Any interest in oil or gas referred to in this act

may be preserved by  the recording within the period specified in

this act a written notice in the register of deeds office for the

county  where such interest  in which the land is located.  , which

The notice shall be verified by oath  ,  and shall describe the

land and the nature of the interest claimed, give the name and

address of the person or persons claiming the interest, and state

that  such  the person or persons desire to preserve the interest

and do not intend to abandon  same: Provided, however, That any

the interest.

     (2) A person other than the owner of the surface holding  such

interests in oil or gas in any land for use in underground gas

storage operations may preserve  his  the oil or gas interests, and

the  interests  rights of any lessor  thereof  of the oil or gas

interests, by recording a single  such written notice  , defining

the boundaries of and the formations included in the underground

gas storage field or pool  , and the formations included therein,

within which  said  the oil or gas interests are located, without

the necessity of describing each separate  interest claim therein

by said  oil or gas interest claimed in that underground gas

storage field or pool by that person.  The recording of such notice

     (3) Recording a written notice under this section shall

operate to preserve  such interest from the operation of  the oil

or gas interest included in the written notice from abandonment

under this act for a period of 20 years  thereafter when, if  after

recording. At the conclusion of that 20-year period, that interest

in oil or gas shall be deemed abandoned if, during that 20-year

period, the nondormant character of the oil or gas interest has not

been evidenced by sale, lease, mortgage, or transfer by instrument

recorded in the register of deeds office for the county  where such

in which that oil or gas interest is located, a drilling permit

issued, oil or gas actually produced or withdrawn from said lands,

or from lands covered by a lease to which  such  that interest in

oil or gas is subject, or from lands pooled, unitized, or included

in unit operations therewith, or the use of  such  that interest in

oil or gas in underground gas storage operations, or a like notice

filed.  , such interest shall be deemed abandoned.

     (4) In the absence of prior abandonment,  such interests  an

interest in oil or gas in any land owned by any person other than

the owner of the surface may be preserved indefinitely from  the

operation of  abandonment under this act by  the filing  of the

written notices as  herein provided in this act or the performance

of any of the acts specified  herein  in this act evidencing

nondormancy of the interest in oil or gas within each succeeding

20-year period.

(5) This act shall not apply to any interest in oil or gas

owned by any governmental body or agency.  thereof.

     Sec. 4.  The word "person" shall be deemed to include natural

persons, corporations, co-partnerships, associations and

organizations and the singular thereof shall be deemed to include

the plural.  As used in this act, "person" means an individual,

partnership, corporation, association, or other legal entity.