House Bill 38

AN ACT TO PROVIDE THAT EACH OF THE OWNERS OR HOLDERS OF ANY NONPRODUCING OIL, GAS OR OTHER MINERAL INTEREST IN REAL ESTATE, WHICH IS OWNED OR HELD SEPARATELY FROM THE RIGHTS OWNED IN THE SURFACE OF SUCH REAL ESTATE, SHALL PAY FIFTY CENTS PER MINERAL ACRE AS HIS PORTION OF THE AD VALOREM TAXES DUE ON THE LAND; TO PROVIDE THAT FAILURE TO PAY THE TAXES DUE SHALL RESULT IN A TAX SALE OF THE MINERAL INTEREST IN ACCORDANCE WITH THE SAME PROCEDURE AS PRESCRIBED BY LAW FOR THE SALE OF LANDS FOR NONPAYMENT OF TAXES; TO REPEAL SECTION 27-31-73, MISSISSIPPI CODE OF 1972, WHICH EXEMPTS NONPRODUCING OIL, GAS AND OTHER MINERAL INTERESTS, THAT ARE OWNED OR HELD SEPARATELY AND APART FROM THE RIGHTS OWNED IN THE SURFACE ESTATE, FROM ALL AD VALOREM TAXES; TO AMEND SECTIONS 27-25-523, 27-25-721, 27-25-307 AND 27-35-51, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Each of the owner(s) or holder(s) of any nonproducing oil, gas or other mineral interest in real estate, which is owned or held separately and apart from and independently of the rights owned in the surface of such real estate, shall pay Fifty Cents (50¢) per mineral acre as his portion of the ad valorem taxes due on the land. The ad valorem taxes which the owner(s) or holder(s) of any of the interests described in the first sentence of this section must pay shall be due and payable at the same time and in the same manner as the ad valorem taxes due on the land.

SECTION 2. (1) If the owner or holder of any nonproducing oil, gas or other mineral interest in real estate, which is owned or held separately and apart from and independently of the rights owned in the surface of such real estate, does not pay the ad valorem taxes that he or she is required to pay on the surface of the land under which the oil, gas or mineral interest is located, the nonproducing, separately owned or held mineral interest shall be sold in the same manner and in accordance with the same procedure as prescribed by law for the sale of lands for nonpayment of taxes.

(2) In addition to the parties which the chancery clerk is required to provide with notice of a tax sale pursuant to Section 27-43-1 et seq., the chancery clerk shall provide notice to the owner of the surface estate under which the separately owned or held, nonproducing oil, gas or other mineral interest sold for nonpayment of taxes is located that such interest was sold for taxes. In addition to the owner or holder of the oil, gas or other mineral interest sold for nonpayment of taxes, or any person for him with his consent or any person interested in the oil, gas or other mineral interest, the owner of the surface estate under which the interest is located shall have the right, secondary only to the preceding parties, to redeem the oil, gas or other mineral interest sold for nonpayment of taxes.

(3) If the owner of the surface estate pays the amount necessary to redeem the oil, gas or mineral interest sold for nonpayment of taxes, the chancery clerk shall notify the owner or holder of the interest sold for nonpayment of taxes that the owner of the surface estate has tendered the amount necessary to redeem the interest from the tax sale, and that such tender of the amount necessary to redeem the interest does not operate to redeem the interest from the tax sale. The chancery clerk shall notify the owner or holder of the oil, gas or other mineral interest sold for nonpayment of taxes that if such owner or holder, or any persons for him with his consent, or any person interested in the oil, gas other mineral interest does not redeem the interest before the expiration of the time of redemption, title to the oil, gas or other mineral interest shall vest in the owner of the surface estate who tendered the amount necessary to redeem the interest from the tax sale. If the owner or holder of the oil, gas or other mineral interest does not redeem the interest from the tax sale before the expiration of the redemption period, after being notified by the chancery clerk in accordance with the provisions of this section, title to the interest shall vest in the owner of the surface estate who tendered the amount necessary to redeem the interest from the tax sale, and the chancery clerk shall execute a deed of conveyance to such owner of the surface estate.

(4) If any such nonproducing oil, gas or other mineral interest in real estate of a delinquent taxpayer is offered for sale, and no person bids the whole amount of taxes and costs incident to the sale of the mineral interest, such mineral interest shall revert to the owner of the surface estate under which the mineral interest is located. The owner of the surface estate to whom such mineral interest reverts shall be liable, beginning with the next year of tax liability, for the amount of delinquent taxes for which the mineral interest was offered for sale and for his portion of the ad valorem taxes due on the land as provided in Section 1 of this act.

SECTION 3. This act shall apply to any nonproducing oil, gas or other mineral interest in real estate which is owned or held separate and apart from and independently of the rights owned in the surface of such real estate, regardless of whether such interest was created or became nonproducing before or after the effective date of this act.

SECTION 4. Section 27-25-523, Mississippi Code of 1972, is amended as follows:

27-25-523. (1) All oil produced or under the ground on producing properties within the State of Mississippi and all producing oil equipment, including wells, connections, pumps, derricks and other appurtenances actually owned by and belonging to the producer, and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any county, municipality, levee district, road, school or any other taxing district within this state. This exemption shall not apply to drilling equipment, including derricks, machinery, and other materials necessary to drilling, nor to oil gathering systems, nor to the surface of lands leased for oil production or upon which oil producing properties are situated, but all such drilling equipment, gathering systems, and lands shall be assessed as are other properties and shall be subject to ad valorem tax. However, no additional assessment shall be added to the surface value of such lands by reason of the presence of oil thereunder or its production therefrom. The exemption herein granted shall apply to all ad valorem taxes levied in the year 1944 and each year thereafter.

(2) The exemption from ad valorem taxes granted in this section shall not apply to the ad valorem taxes that the owner or holder of a nonproducing oil interest in real estate, which is owned or held separately and apart from and independently of the rights owned in the surface of such real estate, must pay on the land under which the oil interest is located, pursuant to the provisions of Section 1 of this act.

SECTION 5. Section 27-25-721, Mississippi Code of 1972, is amended as follows:

27-25-721. (1) All gas produced or under the ground on producing properties within the State of Mississippi and all producing gas equipment, including wells, connections, pumps, derricks and other appurtenances actually owned by and belonging to the producer, and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any other taxing district within this state. This exemption shall not apply to drilling equipment, including derricks, machinery, and other materials necessary to drilling, nor to gas gathering systems, nor to the surface of lands leased for gas production or upon which gas producing properties are situated, but all such drilling equipment, gathering systems, and lands shall be assessed as are other properties and shall be subject to ad valorem tax. However, no additional assessment shall be added to the surface value of such lands by reason of the presence of gas thereunder or its production therefrom. The exemption herein granted shall apply to all ad valorem taxes levied in the year 1948 and each year thereafter.

(2) The exemption from ad valorem taxes granted in this section shall not apply to the ad valorem taxes that the owner or holder of a nonproducing gas interest in real estate, which is owned or held separately and apart from and independently of the rights owned in the surface of such real estate, must pay on the land under which the gas interest is located, under the provisions of Section 1 of this act.

SECTION 6. Section 27-25-307, Mississippi Code of 1972, is amended as follows:

27-25-307. (1) All salt under the ground or salt produced or processed on producing properties and owned by the producer and all leases in production, including mineral rights in producing properties, shall be exempt from all ad valorem taxes now levied or hereafter levied by the State of Mississippi, or any county, or any other taxing district within this state.

(2) The exemption from ad valorem taxes granted in this section shall not apply to the ad valorem taxes that the owner or holder of a nonproducing salt interest in real estate, which is owned or held separately and apart from and independently of the rights owned in the surface of such real estate, must pay on the land under which the salt interest is located, pursuant to the provisions of Section 1 of this act.

SECTION 7. Section 27-35-51, Mississippi Code of 1972, is amended as follows:

27-35-51. Whenever any buildings, improvements or structures, mineral, gas, oil, timber or similar interests in real estate, including building permits or reservations, are owned separately and apart from and independently of the rights and interests owned in the surface of such real estate, or when any person reserves any right or interest, or has any leasehold in the elements above enumerated, all of such interests shall be assessed and taxed separately from such surface rights and interests in said real estate, and shall be sold for taxes in the same manner and with the same effect as other interests in real estate are sold for taxes. Whenever the owner or holder of any separately owned or held nonproducing oil, gas or other mineral interest does not pay the ad valorem taxes that he or she is required to pay on the surface of the land under which the oil, gas or other mineral interest is located, the provisions of Section 2 of this act apply. All interests in real estate herein enumerated shall be returned to the tax assessor within the same time and in the same manner as the owners of land are now required by law to list lands for assessment and taxation and under like penalties. The tax assessor shall enter the assessment of the interests herein enumerated upon the assessment roll by entering the same upon the next succeeding line or lines of the roll following the assessment of the surface owner, the name of the owner and the name of the interest, and by placing the value in the appropriate column or columns on the roll; or the assessor may enter the assessment of any or all of such interests upon a page or pages in the land roll following the assessment of the lands of the county, and the value of all such interests shall be included in the recapitulation of the roll. And the value of said interest or interests shall be determined and fixed in the same manner and by the same officials now required by law to value and assess property for taxation.

SECTION 8. Section 27-31-73, Mississippi Code of 1972, which exempts nonproducing oil, gas and other mineral interests that are owned separately, apart and independently from the rights owned in the surface estate from all ad valorem taxes, is repealed.

SECTION 9. This act shall take effect and be in force from and after July 1, 2002.