CHAPTER 11 ACCESS AND RIGHTS-OF-WAY: OVERCOMING THE DIFFICULTY IN THE DETAILS 1

• Jurisdiction: United States

Land and Permitting II
(Jan 1996)
CHAPTER 11
ACCESS AND RIGHTS-OF-WAY: OVERCOMING THE DIFFICULTY IN THE DETAILS ¹


Mark D. Bingham ¹
Davis, Graham & Stubbs, L.L.C.
Denver, Colorado

TABLE OF CONTENTS

SYNOPSIS Page

I. INTRODUCTION

II. PRIVATE ACCESS AND SURFACE USE AGREEMENTS

A. Surface and Mineral Owner Relationship

B. Seismic Permits

C. Oil, Gas and Other Mineral Leases

D. Surface Use Agreements

III. PRIVATE RIGHT-OF-WAY GRANTS

A. Agreements

1. Drafting Considerations

2. Document Forms

B. ROW Implementation

C. Eminent Domain

IV. FEDERAL RIGHTS-OF-WAY AND EASEMENTS

A. Federal Right-of-Way Grants

1. Federal Land Policy and Management Act

a. Right-of-Way Application and Limitations

b. NEPA Evaluation

c. National Historic Preservation Act

2. Mineral Leasing Act

a. Application Requirements

b. ROW Limitations

c. ROW Grant

d. Continuing Obligations and ROW Rehabilitation

e. Common Carrier Obligations

f. Federal Lease Terms

3. Access Across Private Lands to Federal Leaseholds

4. Temporary Use Permits

5. Agency Coordination

a. Water Discharge Permits

b. Air Emissions Permits

c. Spill Response Plans

d. Additional Compliance Coordination

6. Abandonment of Federal ROWs

V. STATE AND LOCAL GOVERNMENT RIGHTS-OF-WAY AND EASEMENTS

A. State ROW Grants

B. Permits and Notice Requirements

C. Recent Legislative Changes

VI. RIGHTS-OF-WAY AND EASEMENTS ON INDIAN LANDS

A. Statutes Not Involving Mineral Activity

1. General Right-of-Way Act of 1948

2. Surface Leasing Act of 1955

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B. Statutes Involving Mineral Activity

1. Indian Mineral Leasing Act of 1938

2. Indian Mineral Development Act of 1982

C. Environmental and Safety Issues

D. Sovereignty

E. Jurisdiction

VII. CONCLUSION

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I. INTRODUCTION

The exploration for and development of minerals is simply impossible without rights of access. Exploration requires access for geophysical equipment, drilling rigs, excavation, production and transportation equipment. In order to get this equipment onto a leasehold, roads are required. Once exploration activities prove successful, development will require rights-of-way ("ROWs") for power lines, pipelines, communication equipment, facilities, product transportation systems and other equipment.

Similar to the concept of royalty to the crown, modern concepts of access and ROW for mineral development derive in part from the English. The English crown, much like our federal government, was faced with the problem of capitalizing on the benefit of the royalty it placed on minerals if those minerals could not be transported across lands. To resolve this problem, English courts decided that the royal mining privilege included the "liberty to dig and carry away the ores thereof, and with other such incidents thereto as are necessary to be used for getting of the ore."² For over a century, mineral operators have been required to obtain permits and authorizations before commencing construction and operation activities within ROWs on federal lands in the United States.³

In another case very similar to modern access problems, the Court of King's Bench dealt with surface owners complaining about the "trespass" by mineral owners on their property to conduct mining which resulted in the surface owner effectively losing the use of his land. Mineral owners claimed a manorial custom allowing such activities. The Court held that the custom was too broad and uncertain and it "laid such a great burden upon the tenant's land, without any consideration or advantage to him, as tended to destroy his estate, and defeat him of the whole profits of his land, and savours much of

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arbitrary power."⁴ Today we deal with concepts of reasonable use⁵ and the "accommodation doctrine"⁶ with respect to the use of surface lands in the development of the underlying minerals.

As history often repeats itself for new generations to reinvent solutions to old problems, we, too, find it necessary to deal with the same access and ROW problems that our forefathers dealt with. As was the case for them, "the Devil is in the details." Thoreau aptly stated, "Our life is frittered away by detail...Simplify, simplify."

This paper is designed to help practitioners and landmen overcome the difficulties associated with the details of obtaining access and ROWs for mineral development, and to provide an overview of the types of access and ROWs that may be required in the exploration and development of minerals. The goal is to simplify your life so that it is not frittered away by unnecessary details.

Incorporated within the paper area number of example documents that have been used by various oil and gas companies. These documents are examples only and are not meant or intended to be endorsements of documents that are legally sufficient for any specific purpose. They are, however, intended to be used as instructional aides.

II. PRIVATE ACCESS AND SURFACE USE AGREEMENTS

A. Surface and Mineral Owner Relationship

An understanding of the nature of rights of ownership between surface owners and mineral owners is essential to understanding the relationship of the owners with respect to the various types of access and ROWs. As this relationship has been covered exhaustively by other authors, it will not be repeated here.⁷

Set forth below is a discussion of the certain types of access rights that may be required to develop minerals below or adjacent to the surface lands of another. Right-of-way grants are treated below in a separate section.

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B. Seismic Permits

One mineral exploration tool which has been around for decades, but which now is experiencing tremendous use due to advances in technology, is geophysical seismic surveys. Although seismic surveys do not actually disclose the presence of minerals, they depict the geologic structure and stratigraphy underlying the earth's surface. Details of the geophysical seismic process will be given by others at this Special Institute; however, to be complete, a brief description of the process, its associated risks, and required permits is set forth below.

Historically, two-dimensional "slices" of the earth's geology were obtained through acoustic shot hole or vibroseis surveys along a straight line. If the seismic line did not cross the geologic feature, locating the feature fell to vagaries of art rather than the precision of science. Recent innovations in computer technology and data processing have allowed seismic data which is gathered along grid patterns to be presented in a three-dimensional ("3-D") picture. These 3-D seismic techniques have substantially increased the success of locating potential mineral-bearing geologic structures. Along with these technical advances, however, concerns regarding mineral trespass and surface trespass have advanced.

The mineral owner has a property interest in the proprietary information which can be gathered by way of geophysical exploration of land.⁸ Much of the value of an unexplored mineral lease is that information regarding the mineral is unknown. A mineral owner, who does not have the financial or technical resources to explore or develop the minerals, may be able to make a substantial profit by selling an option or a lease of the minerals to someone who has such resources. Thus, if an adjacent owner obtains seismic data which wrongfully includes information regarding the unexplored mineral lease, the mineral owner may have a legal claim for damages resulting from mineral trespass if the value of the mineral estate is reduced by the publication of the wrongfully-obtained seismic information.

The severance of certain formations within the mineral estate brings a potential claim for mineral trespass by the mineral owner who owns only certain formations, but who is not a party to a seismic program. The author of a recent article on this subject states that

it is logical to conclude that the owner of the deep rights has the implied right to grant permission to shoot seismic through the shallower formations, just as the owner of deep rights has an implied right to drill through shallower formations to produce his minerals. Obviously, however, the owner of the deep rights cannot produce minerals from the shallower formations and, by analogy, it would appear to be prudent not to retain geophysical data respecting the shallower rights, but instead to "purge" such data concurrent with its collection.⁹

This logic appears sound for avoiding claims of mineral trespass, but the practicality of purging data upon collection, rather than after some associated data is obtained and reviewed, will be played out in future seismic projects.

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It is a long-accepted legal principle that the mineral owner, not the surface owner, has the right to conduct geological and geophysical operations.¹⁰ It is this juxtaposed relationship which gives rise to the access problem commonly faced. Generally, the surface owner receives no remuneration for mineral development below his lands, but, rather, receives a single payment for the inconvenience occasioned by crop loss and surface use associated with survey crews, geophone crews, seismic crews and trucks. The surface owner has no apparent personal incentive to allow these activities to take place on his lands. The mineral owner, on the other hand, will generally not conduct geological and geophysical activities without some form of surface owner access permission.

There are at least four types of seismic permits commonly obtained by mineral developers: (i) a simple seismic permit from a landowner, (ii) a seismic permit with an option to acquire a mineral lease from a landowner, (iii) a seismic permit obtained from a leasehold owner, and (iv) a seismic permit granted by a company as a leasehold owner. Set forth in Exhibits A-1, A-2, A-3 and A-4 are examples of each of these types of seismic permits. These seismic permits have been used...