CHAPTER 7 ZONING AND LAND USE AFFECTING OIL AND GAS LEASE TITLE EXAMINATIONS
| Jurisdiction | United States |
(Nov 1977)
ZONING AND LAND USE AFFECTING OIL AND GAS LEASE TITLE EXAMINATIONS
Gorsuch, Kirgis, Campbell, Walker & Grover
Denver, Colorado
INTRODUCTION
Ten years ago few oil and gas attorneys or petroleum land men ever had occasion to concern themselves with questions involving zoning and land use controls. At that time the topic assigned for consideration in this paper probably would have aroused little interest simply because zoning was the only land control mechanism then being utilized and it presented no major obstacle to the conduct of oil and gas operations except in urban areas. But, as we have since discovered, it was probably too much to expect that this situation would remain static for any extended period of time. Now we are faced with an almost entirely new set of facts and circumstances which form the basis for our present discussion. Before proceeding further, however, perhaps some clarification of the general subject matter can be provided by first disposing of certain background considerations.
Previous speakers at this Institute have already given the benefits of their knowledge, expertise and experience in the examination of titles to federal and other public lands, Indian lands and lands held in private ownership. As the topic of this paper embraces all three categories, some overlapping and duplication of effort was probably inevitable. However, it is hoped that the discussion which follows will serve to illustrate some of the problems which may be expected to arise in any oil and gas title examination; problems which will have to be dealt with regardless of the source of the oil and gas leasehold title.
During the course of preparing this article it was not surprising to find a seemingly unlimited amount of literature and research material on environmental law and the general subject of zoning and land use controls. Within the past five years several excellent papers dealing with these matters have appeared in published proceedings of annual institutes sponsored by the Rocky Mountain Mineral Law Foundation.1 From a careful reading of these informative articles it should become abundantly clear that the underlying legislation and the legal aspects of this subject have already been explored exhaustively. Thus, it is believed no useful purpose would be served by attempting to add to or elaborate upon the efforts of these authors. As the primary purpose of this article is to consider the practical aspects of the subject matter assigned, only general references will be made to papers heretofore presented.
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Anyone who has ventured to explore the area probably would have to agree that concern for the environment has produced the fastest growing body of law generated in this century. If this entire institute were devoted to the subject it would not be possible to do more than scratch the surface and for this reason, the scope of this paper is limited to consideration of the general purpose and content of oil and gas title opinions and the relevance of zoning and land use controls and problems arising as the result of restrictions and limitations which they impose. Included, of course, is the matter of determining the extent to which a title examiner can and should go in alerting the lessee-operator to problems which must be resolved before exploratory as well as drilling and development operations can be commenced. This presentation is not intended to be a review or updating of substantive environmental law or a detailed analysis of every form of land use control being utilized. Neither does it purport to deal, except in general terms, with constitutional issues, administrative law problems, procedural questions or jurisdictional conflicts. No pretext is made that it represents a compilation of all pertinent legislation concerned with environmental questions nor will it be a catalogue of all regulations promulgated by agencies having lawful authority to control, restrain or prohibit oil and gas operations.
GENERAL OBJECTIVES OF OIL AND GAS TITLE OPINIONS
One factor which had to be considered in the preparation of this paper was the fact that, in a technical sense, federal, state and local zoning and land use laws and regulations do not affect land titles as such. Yet the limitations which they impose on the landowner are extremely important and their impact on his right to utilize his land in whatever manner he deems most beneficial is clear and unmistakable. Land being a critical resource to any extractive industry it necessarily follows that the lessee or operator under an oil and gas lease must share in the fate of the landowner to the extent that his otherwise lawful right to explore, drill for, mine and remove oil and gas deposits is impaired or prohibited by land use controls. Even if there were such a thing as a perfect title free from defects, such fact would afford no consolation to the lessee-operator, and his lease would be of little or no value, if his application for a permit to drill were conclusively denied by the zoning authority having jurisdiction in the premises.
Essentially, a title examination consists of tracing the recorded history of ownership of a tract of land as reflected by patents, deeds, a variety of conveyances,
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estate proceedings and other documents which have been made matters of public record. More often than not this involves examination of an abstract prepared from such records by persons qualified through training and experience to do so. However, many title examiners have also had the dubious pleasure of preparing their written opinions on the basis of a personal visual inspection of such public records as maintained by local county clerks and recorders or registers of deeds. With respect to public lands or Indian lands, of course, the examiner must recognize also the necessity for examining pertinent records of the Department of the Interior, Bureau of Land Management, State Boards of Land Commissioners and records of the appropriate Indian agency and the Bureau of Indian Affairs. A working knowledge of applicable statutes and regulations of the authority having jurisdiction over such lands, of course, is an indispensable prerequisite.
Essentially, an oil and gas title examination is made for the following purposes:
(1) To determine ownership of the surface and mineral estates in the lands under search.
(2) To determine ownership of the oil and gas leasehold estate and to identify and disclose to the client all burdens on production and all encumbrances and contractual obligations to which the same may be subject.
(3) To discover and evaluate all defects of title and determine which of those defects may seriously affect the validity of the landowner's title and/or the rights of the lessee under an oil and gas lease or leases.
(4) To determine whether under applicable statutes, title standards or reported decisions any sound basis exists which would warrant the examiner in waiving a defect or defects disclosed by the title search and, if not, to recommend to the client alternative courses of action which should be taken to cure the title defects.
(5) To advise the client as to the magnitude of any risks involved if the title defects are not cured or if action to do so is impossible or impractical under the circumstances.
As to matters not of record, in the past, and for obvious reasons, it has been an almost universal custom of title examiners to specifically except from coverage in
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their opinions all matters which could not be determined on the basis of an abstract examination or a personal search of public records. In general, these have included matters of possession, discrepancies of survey, unrecorded easements and rights of way the existence of which might be disclosed by a physical inspection of the premises, mechanic's liens and other statutory liens and zoning and land use restrictions not disclosed by the materials examined. It is assumed that, for the most part, the practice of title examiners to refrain from expressing any opinion on questions of this nature will, and, of necessity, must continue. Nevertheless, it seems the time has probably arrived when the examiner should assume some degree of responsibility for alerting the lessee-operator as to zoning and land use problems with which he may be confronted.
An examiner of titles might be justified in concluding that questions of zoning and land use restrictions need not be considered in an opinion on title since they have no bearing on the matter of determining who the record owner is or what he owns. Although these are not really title questions, problems continue to arise, and with greater frequency, concerning the extent to which the landowner's rights to the use of his land...
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