AR Opinion No. 2016-0063 January 12, 2017

Can an Arkansas county attorney petition the State Auditor for abandoned mineral lease proceeds, or only the original holder before transfer to the Auditor?

Short answer: AG Rutledge concluded that the Auditor of State is not a 'holder' under Ark. Code Ann. § 18-28-403(a)(2)(A). A county attorney's petition for abandoned mineral proceeds held under court-receiver leases must go to the original holder before transfer to the Auditor, not to the Auditor afterward. The AG also concluded county attorneys cannot petition for any abandoned mineral proceeds beyond the narrow court-receiver-lease category. The AG flagged that the petition procedure is unclear and recommended legislative clarification.

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This page answers the general question as of 2017. Ezel answers yours: what it means for your facts, under current Arkansas law, with citations.

Currency note: this opinion is from 2017
Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: This is an official Arkansas Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Arkansas attorney for advice on your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Arkansas Auditor of State Andrea Lea asked AG Leslie Rutledge to clarify how the petition process under Ark. Code Ann. § 18-28-403(a)(2)(A) works for abandoned mineral proceeds held under court-appointed receiver leases. Four questions in total, all answered "no."

The statutory framework: When mineral proceeds (oil, gas, etc., royalties) go unclaimed for three years, they are presumed abandoned. The "holder" must turn them over to the Auditor of State, who deposits them in the Abandoned Mineral Proceeds Trust Fund. The Auditor pays valid ownership claims and transfers any excess annually to the County Aid Fund for equal distribution among all 75 counties.

But Section 18-28-403(a)(2)(A) creates a narrow exception: for mineral proceeds "held pursuant to leases executed by receivers or their successors appointed by a court of proper jurisdiction," the county attorney of the county where the minerals were produced or severed can petition for those proceeds, which must then be remitted to that county's general fund.

The AG concluded:

  1. The Auditor is not a "holder" under § 18-28-403(a)(2)(A). The statute clearly contemplates a petition addressed to the original holder before transfer to the Auditor, not to the Auditor afterward.
  2. County attorneys cannot petition the Auditor under that statute. Once proceeds are with the Auditor, they're subject to the trust-fund distribution scheme, not the county-attorney petition exception.
  3. Question 3 is moot given the answer to Question 2.
  4. County attorneys cannot petition for any abandoned mineral proceeds outside the narrow receiver-lease category. The plain language of § 18-28-403(a)(2)(A) limits the petition power to that specific category.

The AG also flagged that the petition procedure (whom to petition, how, what form) is unclear in the statute and recommended legislative clarification.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The AG specifically recommended legislative clarification of the petition process. If a clarifying amendment was enacted, the procedural details below may have changed. Verify the current text of Ark. Code Ann. § 18-28-403 before relying on this opinion.

How the AG read the statutory architecture

The two key acts:

  • Unclaimed Property Act (UPA), Ark. Code Ann. § 18-28-201 et seq.: General framework for unclaimed property, deposit into Unclaimed Property Proceeds Trust Fund, owner claims, and (after 3 years held) annual transfer to the reporting county's general fund via § 18-28-213(c)(1)(A).
  • Mineral Proceeds Act, Ark. Code Ann. § 18-28-401 et seq.: Special framework for abandoned mineral proceeds, separate Abandoned Mineral Proceeds Trust Fund, with funds eventually distributed equally among all 75 counties (not just the source county) via the County Aid Fund.

The differences matter because:

  • The UPA "holder" definition is circular (someone "obligated to hold for the account of, or deliver and pay to" the owner).
  • The Mineral Proceeds Act has a clearer holder definition (§ 18-28-401(1)): possession of property belonging to another, a trustee, or someone indebted on an obligation.

Why the Auditor cannot be a "holder" here

Section 18-28-403(a)(2)(A)'s text says proceeds "are held pursuant to leases executed by receivers." That present-tense "are held" describes the original holder, not the Auditor. Once the proceeds are transferred to the Auditor:

  • They go into the Abandoned Mineral Proceeds Trust Fund.
  • The Auditor's only authorized disbursements are to (1) apparent owners establishing claims and (2) the County Aid Fund for equal distribution among all counties.
  • There is no statutory mechanism for the Auditor to disburse to a single source county based on a county attorney petition.

The AG's conclusion is structural: if the Auditor were a "holder" subject to county-attorney petition, the statute would have to provide a mechanism for the Auditor to disburse, and it doesn't.

Why county attorneys are limited to receiver-lease proceeds

Section 18-28-403(a)(2)(A) reads: "upon petition of the county attorney of the county in which the abandoned minerals were produced or severed, abandoned mineral proceeds that are held pursuant to leases executed by receivers or their successors appointed by a court of proper jurisdiction ... shall be remitted by the holder to the county in which the minerals were produced or severed and deposited into the county general fund."

The narrow scope (only receiver-lease proceeds) reflects an unusual chain of legal title: when a receiver is appointed for an oil or gas operation, the receiver enters new mineral leases that don't have the normal lessor / lessee chain. The receiver-lease proceeds present specific identification challenges that the legislature chose to address by giving the source county a direct petition route, separate from the general distribution scheme.

Common questions

What kinds of mineral proceeds does this affect?
Royalties from oil, gas, uranium, sulphur, lignite, coal, and any other substance "ordinarily and naturally considered a mineral" in Arkansas. § 18-28-401(2)-(3). The Mineral Proceeds Act applies regardless of mineral depth.

When does the 3-year abandonment clock start?
When the mineral proceeds become "payable or distributable" to the owner. § 18-28-403(a)(1)(A).

What's the practical effect for source counties?
A county where minerals were produced gets two streams of money: (1) any successful petition for receiver-lease proceeds (limited window before transfer to Auditor), and (2) an equal share with all 74 other counties of the trust-fund excess via the County Aid Fund. The narrow petition exception is a small carveout, not the primary distribution mechanism.

Why is this different from regular unclaimed property?
Under the UPA, all funds collected from a particular reporting county that go unclaimed for 3 years return to that county's treasurer for deposit in the general fund (§ 18-28-213(c)(1)). Under the Mineral Proceeds Act, the Auditor's distribution rule is equal among all 75 counties, not back to the source county. The receiver-lease petition exception is the only route for source-county-specific recovery.

What did the AG mean by "legislative clarification is warranted"?
The statute does not specify whom the county attorney petitions, what form the petition takes, what documentation is required, or how disputes are resolved. The AG was telling the legislature that this gap should be filled before the petition process can function reliably.

Background and statutory framework

The UPA traces back to the Uniform Unclaimed Property Act framework adopted in many states. The Mineral Proceeds Act sits as a special-purpose subchapter dealing with mineral royalties separately because of their unique chain-of-title issues. Both are administered by the Arkansas Auditor of State.

The statutory construction principles the AG applied: ordinary meaning, give effect to every word, no strained construction, no unstated legislative intent. Weiss v. McFadden, 353 Ark. 868 (2003), and Ozark Gas Pipeline are the workhorse Arkansas Supreme Court statutory-construction citations.

Citations

  • Ark. Code Ann. § 18-28-201 (UPA holder definition)
  • Ark. Code Ann. § 18-28-202 (UPA presumption of abandonment)
  • Ark. Code Ann. § 18-28-210(c) (UPA holder reimbursement after payment to owner)
  • Ark. Code Ann. § 18-28-213 (UPA Unclaimed Property Proceeds Trust Fund and county distribution)
  • Ark. Code Ann. § 18-28-401 (Mineral Proceeds Act definitions)
  • Ark. Code Ann. § 18-28-402 (Mineral Proceeds Act holder duties)
  • Ark. Code Ann. § 18-28-403 (Mineral Proceeds Act trust fund, county-attorney petition, distribution)
  • Weiss v. McFadden, 353 Ark. 868, 120 S.W.3d 545 (2003)
  • Ozark Gas Pipeline Corp. v. Arkansas Pub. Serv. Comm'n, 342 Ark. 591, 29 S.W.3d 730 (2000)
  • Thompson v. Younts, 282 Ark. 524, 669 S.W.2d 471 (1984)
  • State ex rel. Sargent v. Lewis, 335 Ark. 188, 969 S.W.2d 894 (1998)

Source

Original opinion text

Opinion No. 2016-063
January 12, 2017
The Honorable Andrea Lea
Arkansas Auditor of State
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
500 Woodlane Street, Suite 230
Little Rock, AR 72201
Dear Auditor Lea:
This is in response to your request for an opinion regarding abandoned mineral
proceeds. Your questions appear to be prompted by a concern regarding the effect
of amendments made to Ark. Code Ann. § 18-28-401 et seq., governing the
disposition of abandoned mineral proceeds. Your specific questions are as
follows:

  1. Is the Auditor of State a holder under Arkansas Code § 18-28-
    403(a)(2)(A)?
  2. May the county attorney of the county in which the abandoned
    minerals were produced or severed petition the Auditor of State
    for the abandoned mineral proceeds that are held pursuant to
    leases executed by receivers or their successors appointed by a
    court of proper jurisdiction under Arkansas Code § l 8-28-
    403(a)(2)(A)?
  3. If the answer to Question 2 is "yes" and the county receives the
    abandoned mineral proceeds, is the county also entitled to a share
    of the funds distributed from the County Aid Fund under
    Arkansas Code § 18-28-403(b) and ( c )?
  4. May the county attorney petition for abandoned mineral proceeds
    other than abandoned mineral proceeds that are held pursuant to
    323 CENTER. STREET, SUITE 200' LITTLE ROCK, AR.KANSAS 72201
    TELEPHONE (501) 682-2007 · FAX (501) 682-8084
    ARKANSASAG.GOV The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 2
    leases executed by receivers or their successors appointed by a
    court of proper jurisdiction?
    RESPONSE
    In my opinion, the answer to your first question is "no." Section l 8-28-
    403(a)(2)(A) does not contemplate the Auditor of State possessing mineral
    proceeds that are subject to petition by the county attorney, based on the plain
    language of the statute. Moreover, the statute only permits the Auditor of State to
    disburse mineral proceeds on two specific occasions, neither of which includes
    disbursement to county attorneys upon petition for abandoned mineral proceeds
    held pursuant to leases. The answer to your second question, in my opinion, is
    also "no." Because the statute does not elaborate on the petition process
    contemplated by section l 8-28-403(a)(2)(A), however, it is my opinion that
    legislative clarification is warranted. The answer to your second question renders
    your third question moot. Finally, the answer to your fourth question is also "no,"
    in my opinion. The plain language of section 18-28-403(a)(2)(A) permits county
    attorneys to petition only for abandoned mineral proceeds that are held pursuant to
    leases executed by receivers or their court-appointed successors.
    DISCUSSION
    The Unclaimed Property Act ("UP A"), codified at Ark. Code Ann. § 18-28-20 I et
    seq., creates a legal presumption that property is considered abandoned if the
    apparent owner has failed to claim it within a certain period of time, with the
    applicable time period dependent upon the type of property at issue. 1 Once
    property becomes abandoned, the abandoned property's holder2 is responsible for
    transferring it to the Auditor of State, who then takes custody of and responsibility
    for the property, and deposits any funds received, including the proceeds from the
    sale of the property, into a trust fund known as the "Unclaimed Property Proceeds
    Trust Fund."3
    1 See Ark. Code Ann. § 18-28-202 (Rep I. 2015).
    2 A "holder" under the UPA is somewhat circularly defined as "a person obligated to hold for the
    account of, or deliver and pay to" the prope11y's owner. Ark. Code Ann. § 18-28-201.
    3 Ark. Code Ann. § 18-28-213(a). The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 3
    Another subchapter of the Code pertains specifically to abandoned mineral
    proceeds.4 This part of the Code establishes a separate, special trust fund-known
    as the "Abandoned Mineral Proceeds Trust Fund"-to hold abandoned mineral
    proceeds. 5 As a general rule, abandoned mineral proceeds are subject to the
    unclaimed property provisions of the UPA.6 But the Mineral Proceeds Act
    provides, in part, that abandoned mineral proceeds received by the Auditor are to
    be deposited into this special trust fund. 7
    Unlike the UP A, the Mineral Proceeds Act defines a "holder" as· "a person,
    wherever organized or domiciled, who is (I) [i]n possession of property that
    belongs to another; (2) [a] trustee; or (3) [i]ndebted to another on an obligation."8
    Under this Act, holders owe certain duties to the Auditor of State both during the
    period in which mineral proceeds are held, and upon transfer of the proceeds to the
    Auditor.9
    The presumption of abandonment for mineral proceeds is found in section l 8-28-
    403(a)(l )(A):
    All mineral proceeds that are held or owing by the holder and that
    have remained unclaimed by the owner for longer than three (3)
    years after the mineral proceeds became payable or distributable are
    presumed abandoned.
    4 Ark. Code Ann. § 18-28-401 et seq. (Repl. 2015) (hereinafter referred to as the "Mineral
    Proceeds Act").
    5 Ark. Code Ann. § l 8-28-403(a)(l )(B).
    6 Id.
    7 Ark. Code Ann.§ 18-28-403(a)(l)(B) (emphasis added). "Mineral proceeds" are defined as "all
    obligations [t]o pay resulting from the production and sale of minerals from this state; and [f]or
    the acquisition and retention of a mineral lease to produce minerals located in this state." Ark.
    Code Ann. § 18-28-401 (3). "Minerals" are defined as "oil, gas, uranium, Sulphur, lignite, coal,
    and any other substance that is ordinarily and naturally considered a mineral in this state,
    regardless of the depth at which the substance is found." Id. at section 18-28-401(2).
    8 Ark. Code Ann.§ 18-28-401(1).
    9 See Ark. Code Ann. §§ 18-28-402 and -403(a)(3). The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 4
    Once the mineral proceeds are presumed abandoned, the holder is required to turn
    over the abandoned mineral proceeds to the Auditor, while simultaneously
    providing certain required information.10 The Auditor is then responsible for
    maintaining the Abandoned Mineral Proceeds Trust Fund, including paying claims
    of those claiming ownership of the abandoned mineral proceeds 11 and disbursing
    excess proceeds to the County Aid Fund for equal disbursement to every Arkansas
    county.12
    With this general overview of the law in mind, I now turn to your questions.
    Question 1: Is the Auditor of State a holder under Arkansas Code § 18-28-
    403(a)(2)(A)?
    In my opinion, the answer to this question is "no," based upon the plain meaning
    of section l 8-28-403(a)(2)(A).
    The first rule of statutory interpretation is to construe the statute just as it reads,
    giving the words their ordinary and usually accepted meaning in common
    language.13 Courts will construe the statute so that no word is left void,
    superfluous, or insignificant; and meaning and effect will be given to every word
    in the statute if possible. 14 When the statutory language is plain and unambiguous,
    the meaning of the statute must be determined from the plain meaning of the
    language used. Our courts will not resort to a strained construction of statutory
    language for the purpose of restricting or expanding the plain meaning of a
    statute.15 Finally, nothing is taken as intended by the legislature that is not clearly
    expressed.16
    10 See Ark. Code Ann. § 18-28-403(a)(3)(A)-(D) (listing the types of information the holder must
    provide to the Auditor when remitting the abandoned mineral proceeds).
    11 See Ark. Code Ann. § 18-28-403(b ).
    12 See Ark. Code Ann.§ 18-28-403(b)-(c).
    13 Weiss v. McFadden, 353 Ark. 868, 120 S.W.3d 545 (2003).
    14 Ozark Gas Pipeline Corp. v. Arkansas Pub. Serv. Comm 'n, 342 Ark. 591, 29 S. W .3d 730
    (2000).
    15 Thompson v. Younts, 282 Ark. 524, 669 S.W.2d 471 (1984).
    16 State ex rel. Sargent v. Lewis, 335 Ark. 188, 969 S.W.2d 894 (1998). The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 5
    Section l 8-28-403(a)(2)(A) plainly states that a petition may be made by a county
    attorney of the county where the abandoned minerals were produced or severed for
    "mineral proceeds that are held pursuant to leases executed by receivers or their
    successors appointed by a court of proper jurisdiction," and upon such a petition,
    those specific mineral proceeds must be remitted by the holder to the county
    where the minerals were produced or severed. 17
    It is clear under section l 8-28-403(a)(2)(A) that the mineral proceeds for which a
    county attorney may petition "are held" by a person who is a "holder"-that is,
    they are currently held by the holder prior to the mineral proceeds' transfer to the
    Auditor. As such, that language does not contemplate the Auditor yet possessing
    the mineral proceeds that are subject to petition by county attorneys.
    Furthermore, under section l 8-28-403(b )-( c ), it is clear that the Auditor may only
    disburse funds on two distinct occasions: 1) when paying the claims of those
    establishing ownership of the mineral proceeds that the Auditor possesses, and 2)
    when transferring excess mineral proceeds trust funds to the County Aid Fund for
    equal disbursement to all Arkansas counties. The statute, therefore, does not
    contemplate the Auditor disbursing abandoned mineral proceeds that are held
    pursuant to leases. It necessarily follows, in my opinion, that the Auditor is not a
    holder under section l 8-28-403(a)(2)(A).
    Question 2: May the county attorney of the county in which the abandoned
    minerals were produced or severed petition the Auditor of State for the
    abandoned mineral proceeds that are held pursuant to leases executed by
    receivers or their successors appointed by a court of proper jurisdiction under
    Arkansas Code§ 18-28-403(a)(2)(A)?
    As discussed in my answer to your first question, section l 8-28-403(a)(2)(A)
    makes clear that a county attorney may petition the person who holds the
    abandoned mineral proceeds prior to their transfer to the Auditor. This statute
    does not contemplate the Auditor being the "holder" at the time of petition.
    Therefore, in my opinion, county attorneys may not petition the Auditor under
    section 18-28-403(a)(2)(A).
    Arkansas law permits county attorneys to petition for only a narrow category of
    abandoned mineral proceeds, stating that:
    17 Ark. Code Ann.§ I 8-28-403(a)(2)(A) (emphasis added). The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 6
    [U]pon petition of the county attorney of the county in which the
    abandoned minerals were produced or severed, abandoned mineral
    proceeds that are held pursuant to leases executed by receivers or
    their successors appointed by a court of proper jurisdiction ... shall
    be remitted by the holder to the county in which the minerals were
    produced or severed and deposited into the county general fund. 18
    The statute offers only the following with regard to requirements for executing this
    petition process:
    The county attorney shall publish notice of his or her petition in a
    legal newspaper having general circulation in the county, and the
    notice shall be published at least one (1) time.19
    The statute does not provide any guidance as to precisely whom the petition must
    be submitted, or what this petition process exactly entails. I consequently cannot
    opine further in this regard. I believe legislative clarification is warranted with
    respect to the petition process contemplated by section 18-28-403(a)(2)(A).
    Question 3: If the answer to Question 2 is 'yes" and the county receives the
    abandoned mineral proceeds, is the county also entitled to a share of the funds
    distributed from the County Aid Fund under Arkansas Code§ 18-28-403(b) and
    (c)?
    Beca~se,. in my ~?inion, the answer to your second question is "no," your third
    question is moot.
    18 Ark. Code Ann. § 18-28-403(a)(2)(A).
    19 Id. at § l 8-28-403(a)(2)(B).
    20 As explained above, excess funds in the Abandoned Mineral Proceeds Trust Fund, i.e., funds in
    excess of anticipated expenses and claims of persons establishing ownership, are transferred by
    the Auditor at least once yearly to the County Aid Fund in the State Treasury for equal
    distribution among all Arkansas counties. Ark. Code Ann. § 18-28-403(b )-( c ). In contrast, under
    the UPA, the Auditor, at least once each fiscal year, transfers to the treasurer of the reporting
    county all funds out of the Unclaimed Property Proceeds Trust Fund that have been collected
    from that county and have not been claimed after being held for a full three years. See Ark. Code
    Ann. § 18-28-213( c)( 1 )(A)(i). The county treasurer then deposits these excess funds into that
    county's general fund. Id. at§ 18-28-213(c)(l)(A)(ii). The Honorable Andrea Lea
    Auditor of State
    Opinion No. 2016-063
    Page 7
    Question 4: May the county attorney petition for abandoned mineral proceeds
    other than abandoned mineral proceeds that are held pursuant to leases
    executed by receivers or their successors appointed by a court of proper
    jurisdiction?
    In my opinion, the answer to this question is "no."
    The plain language of section l 8-28-403(a)(2)(A) permits a county attorney to
    petition only for any abandoned mineral proceeds "that are held pursuant to leases
    executed by receivers or their successors appointed by a court of proper
    jurisdiction .... " To conclude that a county attorney can petition for abandoned
    mineral proceeds outside of this narrow scope would negate the plain meaning of
    section l 8-28-403(a)(2)(A).
    Sincerely,
    ~/72__~
    LESLIE ~U;LQ
    Attorney General
    Unlike this latter procedure under the UPA, nothing within the Mineral Proceeds Act provides for
    the Auditor's disbursement of abandoned mineral proceeds to the county in which the mineral
    proceeds were produced or severed. Additionally, unlike the UPA, the Mineral Proceeds Act
    contains no procedure for a holder to receive reimbursement from the Auditor upon making a
    payment to an apparent owner after having already transferred the abandoned proceeds to the
    Auditor. See Ark. Code Ann. § 18-28-21 O(c). There simply is no similar provision to this effect
    in the Mineral Proceeds Act. Once the Auditor has deposited mineral proceeds into the
    Abandoned Mineral Proceeds Trust Fund, the proceeds are not subject to disbursement to anyone
    or any entity aside from an apparent owner or the counties through the annual equal distribution.
    I

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