ACCESS TO MINERAL RIGHTS IN THE UNITED STATES: CONSIDERATION OF THE "NOT IN MY BASEMENT" PROBLEM

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2013)
CHAPTER 7B
ACCESS TO MINERAL RIGHTS IN THE UNITED STATES: CONSIDERATION OF THE "NOT IN MY BASEMENT" PROBLEM
John C. Lacy
Partner, DeConcini McDonald Yetwin & Lacy, P.C.
Tucson, Arizona

JOHN C. LACY is a partner of DeConcini McDonald Yetwin & Lacy, P.C. in Tucson. He has practiced mineral law for 45 years and has taught mining and public land law at The University of Arizona since 1972. His practice began by performing stand-up title searches and his current work frequently includes title and land status due diligence examination. John's early title work stimulated an interest in history and he has written numerous articles and given speeches on topics of mining and mineral law history as well as serving as president of the Society of Mining Law Antiquarians. His is a past president of the Rocky Mountain Mineral Law Foundation and is on the faculty and steering committee of the Foundation's Mining Law Short Course.

The watchword in the United States to resolve rights of access to minerals through a separately owned surface is becoming "accommodation." This presentation will examine rights of access to non-hydrocarbon minerals with particular emphasis on circumstances where mineral development must consider surface rights. Essentially, there are two parts of the basic issue in the United States. First: the mineral estate has been historically considered "dominant," usually to the detriment of the owner of the surface, and second, there is no universal method to resolve the nature and extent of the rights between surface and mineral owners. This paper will summarize the various situations in which the legal title to mineral deposits in the United States diverges from surface rights. These circumstances present a good forum for analysis of the issue because mineral title in the United States can include public ownership, private ownership, and ownership by Indian tribes or by the individual states. In each of these instances examples can be found where the surface and mineral rights are either in separate ownership or are managed by separate public agencies. Here, although the legal origins diverge considerably, the path to resolution is becoming more consistent.

I. Public Ownership

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Acquisition of rights to minerals on the public lands of the United States is governed principally by the "General Mining Law" originally passed in 1872,¹ but which has been modified extensively by congressional action over the years.² This law allows citizens to explore for, mine and purchase fee simple title to a specified property including the surface and an extensive mineral estate.³ Once a government title (or "patent") has been issued, the owner has absolute ownership of the mineral and surface estate of the patented mining claim and can mine without payment of royalty⁴ or governmental permission apart from compliance with environmental controls directed principally at protection of the atmosphere and water resources⁵ and the potential liability resulting from environmental contamination⁶ and common law actions for nuisance⁷ or subjacent support.⁸

The absence of a grant into private ownership, however, does not preclude exploration, development and mining of an "unpatented mining claim."⁹ This activity by mineral claimants prior to the issuance of patent, however, in addition to the same environmental compliance as might be required for patented ground, is also restricted by requirements of the agencies managing the surface estate which, in the case of the Bureau of Land Management, is charged with the responsibility of preventing "unnecessary or undue degradation"¹⁰ of the public land or, in the case of the Forest Service, to ensure that the mining is conducted in a way to "minimize adverse environmental impact."¹¹ The surface values are protected under similar permitting systems with increasing complexity depending on the amount of disturbance.¹²

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A significant amount of the public land, however, has been patented (that is, sold) with a retention of the mineral estate in the public domain, which mineral estate remains subject to the continued application of the federal mineral land laws. This situation resulted because the initial homestead and other laws disposing of the public land precluded the disposal of land that was classified as "mineral" in character,¹³ As the United States expanded westward during the 19th Century, increased pressure was placed on the government to allow private acquisition of farmsteads and livestock grazing lands that had been classified as being mineral in character. Thus, as much of the remaining available land contained potential value for coal and other minerals, a solution was crafted whereby the land was transferred into private ownership but retaining mineral rights in the public domain and allowing the possibility of exercise of mineral development rights under the mineral land laws.¹⁴

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The primary laws authorizing such transfers and retention include the Agricultural Homestead Act of 1914,¹⁵ the Stock Raising Homestead Act of 1916,¹⁶ and the exchange authority under the Taylor Grazing Act of 1934.¹⁷ These acts contemplate the use of the surface for either agricultural or livestock purposes. As such, the surface owner was provided rights to be compensated for only growing crops and agricultural or stock raising improvements.¹⁸ As rural lands became part of expanding cities substantial conflicts developed, particularly in Arizona, as the population chasing the "sunbelt" moved into the copper-rich areas around Tucson and real estate development placed itself squarely in the path of mineral exploration. Under the laws that allowed entry to these severed mineral estates, as least as originally enacted, the mineral claimant had free access to the land to initiate claims to the reserved minerals in the public domain. At the time the claimant reentered the property to undertake exploration and mining, however, the claimant was required to make arrangements with the surface owner to protect agricultural or stock raising values or to post a bond as security for potential damages to these limited values with the federal surface management agency. The principal problem, however, was that the surface owner was not part of any collaborative process until after mineral rights had been initiated. The ultimate result has been either the prohibition of further mineral exploration in some areas of urban development¹⁹ or the passage of legislation aimed to provide surface owners with additional protection.²⁰

The primary legal development to protect surface values where the mineral estate is in the public domain, and therefore subject to the application of the mineral land laws, has been the enactment of the 1993 amendments to the Stock Raising Homestead Act.²¹ These amendments establish a procedure whereby a mineral claimant must notify the surface owner before initiating mining claims upon the surface owner's property and thereafter the mineral claimant is required to provide assurance for compensation for any damage to any improvements, including "agricultural, residential and commercial improvements, including improvements made by residential subdivides."²²

In spite of these protections, however, most land owners are unaware of the status of their land and certainly do not understand the cycle of mineral development where land, whose mineral values were once rejected, are now the subject of renewed interest resulting from changes in commodity prices. As a partial remedy to this situation, the laws of the United States currently permit the owner of the surface to purchase the reserved mineral estate where it can be shown that the development of the reserved minerals will interfere with development of the surface and that the minerals have no significant value.²³ Ultimately, however, mining companies frequently have to deal with extremely unhappy landowners during the exploration process and will likely see no practical alternative to ultimately buying these surface rights from the affected owners if surface mining operations are undertaken.²⁴

II. Private Mineral Rights

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Private mineral rights in the United States are obtained either through mineral patents issued under the authority of the General Mining Law or by a patent to land under the homestead and similar laws that had ostensibly been considered to be not "mineral in character." This "non-mineral" determination, however, is not affected by the subsequent identification of mineral values and the landowner is legally vested with title to both the mineral and the surface estate.²⁵ Thus, when initial mining activities cease on patented mining claims or presumptively non-mineral land is considered potentially valuable for its mineral estate, it is not uncommon for the owner to sell the surface and retain mineral rights. In such instances, the document that creates the mineral and surface severance will frequently define the mineral estate as being a certain distance beneath the surface, typically between forty and 500 feet,²⁶ but more often the document is silent. When these separately owned mineral rights are later exercised, the surface owner is likely to question the extent of mineral development rights - particularly where bulk mining is being considered and subjacent support cannot be assured. In the case of non-mineral patents thereafter found to contain minerals, the problems tend to be more acute as the lands have no history of mining and are more likely to have been the subject of surface development.

The result of mineral severance on private lands in the United States has frequently led to litigation and the courts have been active in defining the extent of rights held by the various estates. The general rule in most states has been that (1) the mineral estate is considered "dominant" and...