Surface vs. Mineral: A Collision of Legal Rights

by Thomas A. Daily  on Monday, Aug. 27, 2007 12:00 am  

The legal conflicts that sometimes pit surface and mineral owners against one another derive from ancient rules known as "real property" law. Arkansas' real property law comes from the English Common Law and can be traced back at least to the 13th century.

Unlike citizens in some other nations, we Americans value our legal right to own real property. Indeed, under our system, different real property interests in the same piece of land may be owned by different people. Consider the simple example of my home. I own the place, but not entirely. Out front is a public street, often called "right of way." My backyard contains the neighborhood's sewer main, plus virtually every manner of modern convenience: running water, electricity, natural gas, telephone, even cable HDTV. All are delivered to me on demand, via easement.

Most of us understand that these easements give our city or county and power, phone and cable companies the right to accomplish the intended purposes of the easements.  For example, should my home's gas line need inspection or repair, the gas company has the right to come onto my property, dig, inspect and repair as, in the gas company's reasonable judgment, is appropriate.

There is something else that I, and many other landowners, do not own. I own no mineral rights. Those mineral rights are owned by people who once owned the land where my home sits and, when they sold off my lot and others, reserved the minerals.  We call those reserved interests "severed mineral interests." As we will see, severed mineral owners have easements as well.

Severing ownership of the surface from the minerals beneath that surface can cause unhappiness. Surface owners who own no minerals would prefer their surface be left alone. On the other hand, the severed minerals are not much good if their owner has no way to extract them.

Every method of mining or drilling requires some use of surface. That surface use may well be aesthetically offensive to the surface owner. It may even cause a reduction of value. Still, the law has always honored a mineral owner's right, in the form of an easement, to use as much of the surface as is reasonably needed for mineral exploration and production. The mineral owner has no duty to pay separately for that surface use because it is incidental to his ownership.

Oil and gas leases also grant the same kind of surface use rights to the lessee/exploration company. Those companies cannot be expected to pay lucrative lease bonuses without getting the right to drill and produce wells. Either way, severed mineral owners and mineral lessees must have the right to use the surface to get to and produce the minerals.

The mineral owner/lessee's right to surface use is not without limits. It must be exercised with due regard for the interests of the surface owner, a kind of forced cooperation. The two owners are encouraged to cooperate to accomplish the mineral owner/lessee's objective without needless injury to the surface owner's interests. Some are better than others at that cooperation.     

Owning Mineral Rights

Sometimes, the surface owner simply wants to become the mineral owner.  Unfortunately, if someone else already is the mineral owner, we have a problem. It is an obvious and often overlooked truth that all of this is a zero-sum game. Anything that gives mineral rights to someone new takes them away from someone old. That almost certainly violates the constitutions of both our state and nation, for very good reason.  Still, it is hard to watch your gas-money-rich neighbor tooling around in his new roadster without a little bit of envy.

One way a surface owner might try to become a mineral owner is to buy the severed mineral interest beneath his surface at a tax sale, if property taxes on the severed minerals have not been paid. Unfortunately, that will almost never work. Constitutional and statutory deficiencies in assessment, taxation and forfeiture procedures have caused almost every such forfeiture and sale to be void. You can, perhaps, obtain a tax deed from the state, but the state cannot sell you what the state never had in the first place. Many surface owners are now learning, unhappily, that the tax deed that they bought is worthless.

Collision of surface and mineral rights is nothing new. It is as old as mineral exploration itself. It is, however, new to central Arkansas. Perhaps a better understanding of relevant legal principles will help.

(Thomas A. Daily is a member of the Fort Smith law firm of Daily & Woods PLLC and specializes in natural resources, estate planning and commercial law.)



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