§ 6.6 - Definition of "Minerals"

• Jurisdiction: Washington

§6.6 DEFINITION OF "MINERALS"

Counsel must make their peace with the fact that courts (and laymen) do not use the widespread scientific definition of "minerals." Rather, courts liberally confuse minerals with rocks, ores, and other substances.

Washington courts have determined that, as a matter of law, the term "minerals" cannot be defined precisely. Rather, under Washington law, the term "minerals" in a general mineral reservation (e.g., a mineral reservation reserving oil, gas, and all other minerals) is deemed to be ambiguous. Kunkel v. Meridian Oil, Inc., 114 Wn.2d 896, 792 P.2d 1254 (1990); Weyerhaeuser Co. v. Burlington N., Inc., 15 Wn.App. 314, 549 P.2d 54 (1976); Puget Mill Co. v. Duecy, 1 Wn.2d 421, 96 P.2d 571 (1939). In fact, the one thing that the phrase "all minerals" does not mean is, incredibly enough, all minerals. Rather, the Washington Supreme Court has stated: "Under Washington law, 'all minerals of any nature whatsoever upon or in [the] land,' does not mean what it appears to say. It is capable of more than one interpretation. A reservation of 'all minerals...' is therefore ambiguous." Kunkel, 114 Wn.2d at 906.

To further complicate things, courts across the country have not developed a uniform approach to determining what minerals are included in a general mineral reservation. This creates opportunities and problems. Clearly, when some or all of the mineral estate is severed—via deed, patent, statute, or otherwise—there will be occasions when the mineral owner and the surface owner cannot agree as to the scope of their respective ownership.

Practice Tip: For an overview of this important and increasingly contentious issue, see Greg Tolbert, Severed Mineral Rights &amp Split Estates: Uncommonly Practical Advice for Understanding Drafting, and Dealing With Mineral Reservations, in 2008 REAL PROPERTY, PROBATE & TRUST SECTION MIDYEAR Ch. 15 (Wash. St. Bar Assoc. 2008).

In almost all situations in which there has been an attempted severance of minerals by grant or reservation, the term "minerals" appears as part of the granting or reserving language. In attempting to analyze the widely diverse case results, it is important to recognize that although cases deal in definitions of the term, the principal consideration is defining the right to take and remove minerals, the common law profit àprendre.

A typical statement of the problem is contained in Northern Pacific Railway Co. v. Soderberg, 188 U.S. 526, 23 S.Ct. 365, 47 L.Ed. 575 (1903), in which the issue was whether a deposit of granite made lands mineral lands for purposes of exclusion from the lands granted to the Northern Pacific Railway Company. The court stated as follows:

The word "mineral" is used in so many senses, dependent upon the context, that the ordinary definitions of the dictionary throw but little light upon its signification in a given case. Thus, the scientific division of all matter into the animal, vegetable, or mineral kingdom would be absurd as applied to a grant of lands, since all lands belong to the mineral kingdom, and therefore could not be excepted from the grant without being destructive of it. Upon the other hand, a definition which would confine it to the precious metals—gold and silver—would so limit its application as to destroy at once half the value of the exception.

N. P. Ry. Co. v. Soderberg, 188 U.S. at 530.

The general rule in construing words establishing a mineral reservation, or grant, is that each case must be decided upon the language of the grant or reservation, the circumstances prevailing at the time the grant or reservation was made, and the intention of the parties. See Puget Mill Co. v. Duecy, 1 Wn.2d 421, 96 P.2d 571 (1939).

(1) Federal mineral reservations

In reservations and grants created by the federal government by legislative action, and presumably reservations and grants acquired by state legislative action, the inquiry regarding the intention of the parties is limited to the question of legislative intent. This creates all of the problems that normally arise out of construing statutes and can produce conflicting results.

Practice Tip: The proper inquiry in interpreting mineral reservations in land grant statutes focuses on the ordinary meaning of the reservation at the time such statutes were enacted by Congress. Bedroc Ltd L.L.C. v. United States, 541 U.S. 176, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004). Accordingly, in interpreting statutory mineral reservations, the Supreme Court has emphasized that Congress was dealing with a practical subject in a practical way, and that it intended the terms of the reservation to be understood in their ordinary and popular sense. Amoco Prod. Co. v. S. Ute Indian Tribe, 526 U.S. 865, 119 S.Ct. 1719, 144 L.Ed.2d 22 (1999).

An example of this is the judicial construction of the reservation required by the Stock-Raising Homestead Act, reserving to the United States "all the coal and other minerals in the lands...." This particular reservation affects 70 million acres in the United States, including approximately 250,000 acres in Washington. In Watt v. Western Nuclear, Inc., 462 U.S. 36, 103 S.Ct. 2218, 76 L.Ed.2d 400 (1983), the Court concluded that common gravel for paving purposes was a mineral within the meaning of the reservation in a stock-raising homestead patent. See also United States v. Union Oil Co. of Cal., 549 F.2d 1271 (9th Cir. 1977) (federal government reserved geothermal resources under Stock-Raising Homestead Act).

In Bedroc Ltd. L.L.C. v. United States, 541 U.S. 176, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004), a case addressing whether a statutory reservation of coal and other valuable minerals under the Pittman Act (which was a 1919 homestead law applying only in Nevada) included a valuable sand and gravel deposit that was being sold for construction use in nearby Las Vegas, the controlling opinion held that the Pittman Act did not reserve sand and gravel with its reservation of valuable minerals. The plurality distinguished the Pittman Act from the Stock-Raising Homestead Act of 1916, and thereby distinguished this decision from the otherwise controlling precedent of Watt v. Western Nuclear, Inc., 462 U.S. 36, 103 S.Ct. 2218, 76 L.Ed.2d 400 (1983).

(2) General mineral reservations

In litigation over private mineral reservations, the language used in establishing the reservation probably is not as important as the surrounding circumstances and the abstract "intention" of the parties, making it clear that the considerations that normally would apply in construing a mining right, or profit à prendre, really control, rather than any intention regarding specific minerals. Pragmatically, much litigation arises at times that advantage or disadvantage particular parties and in regard to mineral values that were not known to exist at the date of the reservation (creating what may appear to be a financial windfall), so that the question of what was really intended has become obscured in a number of judicially created rules. The attempt to construe the language of a specific reservation standing alone may well lead to a determination that the reservation is ambiguous, even though on its face the language appears clear. In Puget Mill Co. v. Duecy, the reservation included a "full, complete and absolute right to all oils, gases, coal, minerals, metals and fossils of every name and nature...