MINERAL TITLE UNDER SUBMERGED LANDS AND CEMETARIES

• Jurisdiction: United States

Oil & Gas Mineral Title Examination (Sep 2019)
CHAPTER 9B
MINERAL TITLE UNDER SUBMERGED LANDS AND CEMETARIES
Scott L. Turner
Welborn Sullivan Meck & Tooley, P.C.
Denver, CO

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SCOTT L. TURNER is a shareholder in the Denver, Colorado office of Welborn Sullivan Meck & Tooley, P.C. Scott is a transactional and title attorney who focuses his practice on real property and oil and gas matters, including mineral title, transactions and royalty issues. He has extensive experience drafting acquisition, due diligence, drilling and division order title opinions covering lands and transactions from the Powder River to the Permian basins. In addition, Scott represents clients in real property transactions, including drafting, negotiating agreements, due diligence and curative. He speaks frequently at local oil and gas organizations and has been involved with the Rocky Mountain Mineral Law Foundation throughout his career. Scott received his B.A. with distinction from Indiana University in 1998. After a seven-year career as a management information systems consult, he attended the University of Colorado Law School and received his Juris Doctor in 2008. Scott is licensed to practice law in Colorado, Texas and Wyoming.

* This paper is based upon and updates the corresponding sections in the following paper: Amy Mowry and Heidi Hande, "Mineral Title Under Water Bodies, Railroads, Streets and Highways," Nuts & Bolts of Mineral Title Examination, Chapter 14, (Rocky Mt. Min. L. Fdn., April, 2015). I would like to extend a special thanks to both Heidi and Amy in allowing me to expand and expound upon their prior scholarship.

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TABLE OF CONTENTS

I. Navigable Rivers

A. Federal Test for Navigability

B. The Segment-by-Segment Approach: PPL Montana, LLC v. Montana

C. Navigable Rivers on Established Reservations

D. The Missouri River Underlying the Fort Berthoud Reservation in North Dakota

E. The Bathtub Ring, Generally

F. The North Dakota Bathtub Ring

II. Non-Navigable Rivers

A. Movement by Accretion and Reliction or Avulsion

B. Effect of Movement by Accretion and Reliction or Avulsion on Severed Minerals

C. Case Study: Royalty Rates on the Arkansas River

III. Lakes

IV. Islands

V. Cemeteries

VI. Managing Completing Claims

A. Navigable Rivers

B. Non-Navigable Rivers

C. A Red Herring: The Right to Float Upon the Water Itself

D. Cemeteries

VII. Curative Requirements for Boundary Line Disputes

VIII. Curative Options between Contractual Parties

IX. Conclusion

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As a part of oil, gas, and mineral exploration throughout the Rocky Mountain West, landmen and mineral title examiners frequently encounter challenges when examining title to lands under submerged waters and cemeteries. This paper provides an overview of the legal framework relevant to title defects related to these distinct surface features and suggests curative options for key leasing, drilling and division order issues in mineral title examination.¹

As discussed herein, the language in instruments affecting mineral title, including leases and deeds, together with prevailing case and statutory law, can complicate ownership determinations and may result in title defects requiring curative actions. Avoiding the pitfalls set by peculiar surface features requires a title examiner's careful analysis of the particular issue and its legal framework. These defects could result in wrongful leasing, pooling or payment. As a result, the royalty owner could argue trespass or seek payment on a full lease basis, as opposed to diluted payment based upon his or her pro-rata share of the well. Further, the royalty owner may bring an action under the state's royalty payment act for additional interest and attorneys' fees. A rich fabric of resources is available to landmen and mineral title examiners seeking to protect their company or client in resolving uncertain mineral ownership issues, many of which are referenced in this paper and are used in practice.²

I. Navigable Rivers

A. Federal Test for Navigability

The first question in determining ownership of lands riparian to or underlying a river or stream is to ascertain whether the river or stream is "navigable". The United States Supreme Court has determined "navigability" by examining whether a lake or river was "used or susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water" at the time the state in which it is located was admitted to the Union.³ However, courts have been inconsistent in applying the definition of commerce, and navigability case law has required increasingly less trade and

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travel activities necessary for a river to be navigable. For example, the Ninth Circuit found a river to be navigable based solely on the intermittent transportation of logs.⁴ Nonetheless, absent a legislative or judicial determination of navigability, the presumption is in favor of non-navigability.⁵

As the United States expanded in the late nineteenth and early twentieth centuries, navigability determined whether title to lands riparian to or underlying rivers vested in the state government or if ownership remained with the federal government. In 1935, the Court, in U.S. v. Oregon, explained that"[s]ince the effect upon such lands is the result of a federal action in admitting a state to the Union, the question whether the waters within the state under which the lands lie are navigable or non-navigable is a federal, not a local, one."⁶ If the river was "navigable in fact" at the time of admission of the state into the Union, then title passed to the state.⁷ As a general principal, the federal government held lands underlying submerged bodies of water in trust for future states to be granted to those states when they entered the Union and assumed sovereignty on an "equal footing" with the established States.⁸

Under the Equal Footing Doctrine, when territories obtained statehood, they acquired title to lands beneath riverbeds and lakebeds. The Court traditionally relied upon a "navigability in fact" test to determine the navigability of lakes and rivers for title purposes.⁹ Note that the test for title purposes is different from the test used to determine navigability for admiralty and regulatory purposes under the Commerce Clause. Under the "navigability in fact" test, the river or lake does not need to have actually been used for "trade or travel" purposes; it merely must have been "susceptible for use" in its natural condition for commercial navigation at the time of statehood.¹⁰ After admission to the Union, title to lands underlying riverbeds and lakebeds is not affected by subsequent changes in navigability.¹¹ The Court further determined that the navigability of a river at the time of statehood should be considered on a segment-by-segment basis.¹² For example, in United States v. Utah, the Court concluded that the Colorado River was navigable for a four-mile stretch, non-navigable for the next roughly 36-mile stretch, and navigable for its remaining 149 miles.¹³ The Court examined the segment-by-segment approach further in PPL Montana, as discussed below.

After a state enters the Union, state law governs title to the land underlying navigable waters for title purposes.¹⁴ Many states granted title to lands under navigable waters to private

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adjacent riparian owners.¹⁵ The Court later established that Congress might occasionally convey lands below the high watermark of a navigable river in order to perform international obligations, improve the land for foreign commerce or between States, or to carry out "other public purposes."¹⁶ As to non-navigable rivers, the Court held that "if the waters [were] not navigable in fact, the title of the United States to land underlying them remains unaffected by the creation of the new State."¹⁷ As a result, the federal government continued to own rights to lands riparian to or underlying non-navigable rivers until the land was conveyed or patented to a fee owner, as discussed in Section II below.

States can and do flip-flop on their positions of navigability for title purposes.¹⁸ Reliance on an attorney general's opinion, Interior Board of Land Appeals ("IBLA") decision, years of industry custom, or dicta does not prohibit a State from later asserting title to riverbeds based on navigability claims.¹⁹ For the most expedient determination of whether or not a river is considered navigable, landmen and mineral examiners should inquire of the state land board as to whether they claim the riverbed lands.²⁰ Conservative landmen or mineral title examiners should also consult with the company or client before deciding to make such contact as there may be a larger business strategy at play. Additionally and as discussed below in greater detail, unless thorough research reveals that the segment of the river under examination at the point it traverses the lands under examination has been judicially determined to be navigable or non-navigable, landmen and mineral title examiners should seek protective leases covering the riverbed and the lands underlying the river.

B. The Segment-by-Segment Approach: PPL Montana, LLC v. Montana

In 2012, the United States Supreme Court, in PPL Montana, further clarified the navigability rule, unanimously holding that the State of Montana did not own the riverbeds under certain segments of the Missouri, Madison, and Clark Fork rivers, thereby reversing and remanding the Montana Supreme Court.²¹ While the Court agreed that Montana held title to the beds of the segments of these rivers that were navigable in fact at the time of statehood, the Court found that the segments of the rivers that were owned by PPL Montana, a power company, were not navigable and title remained in the company as successor to the United States.²²

PPL Montana operated 10 hydroelectric projects permitted by the Federal Energy...