CHAPTER 3 EXAMINATION OF TITLE TO FEDERAL AND STATE LANDS
| Jurisdiction | United States |
(Apr 1982)
EXAMINATION OF TITLE TO FEDERAL AND STATE LANDS
Burns, Wall, Smith and Mueller
Denver, Colorado
INTRODUCTION
The importance of examination of title to state and federal lands in the western states is undoubtedly clear to most attorneys, landmen and others involved in title aspects of the oil, gas and minerals business. It is the purpose of this paper to review current title examination practices with respect to state and federal lands in the Rocky Mountain region with primary emphasis on federal lands. Except for a brief discussion of some special title questions and practices, the focus of the paper will be on describing and discussing the federal and state records that must be examined and considered in connection with the preparation of any title opinion, rather than upon the substantive law and issues that constitute the body of oil and gas, mining and public land law which have been given comprehensive treatment at prior institutes and in other publications.1
As pointed out by Mr. Haughey at the very first Rocky Mountain Mineral Law Foundation Annual Institute "the field of public land titles is a difficult one to survey"2 and that "the fields of public land law are littered with the bones of cancelled leases."3 However, substantial strides
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have been made in the past 26 years with respect to more certainty in the law and improvements of the federal records which, if properly utilized, can afford a title examiner a reasonable degree of comfort with respect to federal oil and gas lease titles.
The subject matter of this paper has been dealt with by a number of experienced title attorneys and much of what appears here comes from these valuable sources.4 As previously indicated the emphasis here will be on federal oil and gas titles, since the subject of examination of title to mining claims will be addressed in another paper presented at this institute.5 It is intended that this paper complement these prior articles and particularly the paper delivered by Mr. Schultz at the 1977 Title Examination Institute.
LEGAL BACKGROUND
Federal
Before beginning a title examination the examiner will need to have a working knowledge of the laws and regulations governing federal and state oil and gas leasing. In the case of title examination of federal oil and gas leases it is important to have familiarity with the Mineral Leasing Act,6 the Right-of-Way Leasing Act,7 the Multiple Mineral
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Development Act8 (the "Multiple Use Act"), the Acquired Lands Leasing Act9 and related regulations10 and decisions.11 An important source of selected laws, regulations and decisions relating to federal oil and gas rights is Gower Federal Service12 and no examiner's library can be considered adequate without the Law of Federal Oil and Gas Leases (1964) published by the Foundation.13 In addition, a copy of Hoffman, Federal Oil and Gas Leases (Rev. 1957) can be found in the offices of most oil and gas attorneys.
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State
Similarly, in the case of examination of title to state lands, it is essential that the examiner have an understanding of the applicable enabling act legislation,14 the law relating to the issuance of state oil and gas leases15 and related regulations16 prior to commencing examination of title to state owned lands. The enabling acts typically provided for the grant of sections 16 and 36 of each township to the western states for the support of their schools subject to the exception in the legislation or in decisions interpreting the grants that mineral lands were excluded.17 Title to the grants did not vest in the states until the
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later of the admission of the state or the approval of the survey and did not vest at all if at the time for vesting the lands were known to be of mineral character, or had previously been withdrawn, sold or otherwise disposed of. Provision was also made for the selection of indemnity or in lieu lands in cases where the designated sections were not available to the states at the time for vesting.
SCOPE OF EXAMINATION
The nature and scope of the title examination of federal and state lands and the resultant report or opinion to the client will vary depending upon the type of lease involved and the purpose for which the examination is made. However, the examiner should always be mindful that an assignee of a federal oil and gas lease who seeks to qualify as a bona fide purchaser under the Mineral Leasing Act is deemed to have constructive notice of all Bureau of Land Management records pertaining to the lease at the time of the assignment.18
The recipient of a status report will generally want virtually all information regarding the lands examined summarized and set forth much in the nature of an abstract. On the other hand, the oil and gas operator who has requested a drilling title opinion ordinarily will not wish it to be burdened with a long list of terminated or relinquished oil and gas leases or other terminated or cancelled surface and mineral entries. The examiner must call upon his legal ability and experience in determining the relevance and ultimate impact of various matters revealed in the status report or abstract covering the governmental records. A crude oil or gas purchaser who needs to be instructed how to pay the proceeds resulting from the sale of oil or gas production or a lender who desires to have a first, prior and paramount lien and security interest upon a federal or state oil and gas lease will be even less interested in historical details which are not relevant to the purposes of these types of opinions. An examination for the purpose of acquiring a large number of non-producing federal oil and gas leases covering substantial acreage will be different yet and probably more limited in its scope than the status report, drilling title opinion, division order opinion or security opinion. Although this paper cannot cover every situation which may arise, it is intended that it will
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impart a basic understanding of what state and federal records are to be examined, how to examine them and some of the problems which may arise.
FEDERAL LANDS RECORDS
State Land Office, Bureau of Land Management19
The records to be discussed in this section are the so-called "new records" which are maintained in the various state land offices of the Bureau of Land Management as a result of a modernization program that was commenced in 1955.20 Fortunately for all of us, the master title plats, the use plats and the historical index have replaced the old plat books and tract books and other improvements through the use of microfilm systems have made the examination of these records an easier task. As stated by Mr. Meek in his 1971 survey of the land office records and the modernization program:21
"Those who have worked with land office records over the years are well aware of the illegible, brittle and generally poor condition of the older records. Repair has often been impossible. Also, the old methods are antiquated, and the entire reference system is inadequate to cope with the present and future requirements. Consequently the need for a new system has arisen."
The new master title plats, the use plats and the historical indexes incorporate information from the old plat and tract books, the patent records, the serial register records and the survey plat records.
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Before reviewing the various records to be examined in the Bureau of Land Management state land offices, it is important to recognize and remember that these records are primarily designed to assist the Bureau of Land Management in its record keeping responsibilities and that the service to the public is to be considered only incidental to these management functions.22 Although the local offices of the Bureau of Land Management contain a great deal of title information that is generally well maintained in an accurate and orderly manner, the Mineral Leasing Act and other federal statutes governing oil and gas leasing are not recording statutes and there are other inherent limitations in the system.23
With some exceptions depending upon the problems which are encountered, the title examiner should always examine the following records in the local office of the Bureau of Land Management: master title plat, use plat, historical index, survey plat, serial register pages, patent records, posting of availability records, mining claim indexes and case file. All of the records described are available for examination in the public area of each state land office during posted business hours of each weekday.
Master Title Plat
The master title plat, together with the use plat and the historical index, constitute the basic elements of the land records of the state land offices of the Bureau of Land Management. The master title plat covers a single township on a scale of 30 chains to the inch and is based upon the official survey (the survey plat), although it is not itself considered the official survey plat. If more than one survey has been made for the township, the master title plat is a composite of all current surveys. Normally, the scale of 30 chains to the inch is adequate to enable the presentation of information in areas as small as 40 acres. In areas of unusual activity, supplemental plats at a scale of 10 chains to the inch are used to accommodate entries of information on smaller areas.
The master title plat conveys information utilizing lines of varying weights, symbols and written data. Each state land
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office has a sample "explanatory township", bearing a descriptive legend and narrative description of the master title plat, use plat and historical index. A sample of this useful tool is attached as Appendix B and a typical master title plat is attached as Appendix C.
The master title plat, the use plat and historical index pages are on...
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