Mining Law

• 1. Coal
• 2. Hard rock (iron ore, stone, etc.)
• 3. Uranium

LAB

• Lignite;
• Anthracite;
• Lignite

Private ownership; ad coelum

• Ownership in place: owner of mineral rights owner right to serach, develope, and produce––in addition, has a possessory right to the min in place beneath the owner's tract (Tex., Colo. NM, Mich., ND)
• Nonownership: Profit a prendre: No ownership (possessory right) in substances themselves, only a right to develop them
• NB: The effect of both theories is that the rights are proeprty, no contract (that is: conveyances, not Ks)

Owner of mineral rights owns right to search, develop, and produce––in addition, has a possessory right to the min in place beneath tract (Tex., Colo., NM, Mich., ND)

No ownership in substances themselves, only a right to develop them

Assumer minerals are severed (original --> current owner --> lessee)

Mineras are conveyed, leases are signed

• In conflicts between surface owners and mineral owners, use test to determine who owns the minerals
• NB: Some jx. say that surface mining must be the only reasonable method of obtaining them inerals (rather than any reasonable method that destroys the land)
• NB: Often, in a conveyance of "all the ogm in and under that may be produced" the surface owner is said to own the minerals that must be acquired through strip mining

Surface owners owns the surface minerals (in many cases), ogm owner owns the deep minerals

Matters in determining contract intent (e.g., strip mining wasn't around for a long time, so it could affect Ks regarding near-surface minerals

Farmer A and B. A has no near surface lignite. B does. A's grantee gets all lignite, B's grantee does not.

"Minerals" does not include substances that are remoed by methods that will consumer or destroy the surface estate

"Minerals" includes all substance w/in the ordinary and natural meaning of the word at the time of the severance, whether or not their presence or value are known

"Minerals" includes all substances valuable in themselves apart from the soil (Seen in somes states other than Texas)

"Minerals," when use w/ spcifically-IDd substance, means other substances of like kind

A substance is not a "mineral" if: Substantial quantities lie at or near the surface (200ft?) so that one of the reasonabe methods of its removal as of the date the insrument is decided by the court would be by strip or open pit mining.

If a substance is not a mineral, surface owner owns it at whatever depth it's found

Seeking the court to change a deed to remedy a mutual mistake

If deposit lies near surface, the substance won't be granted or retained as a mineral if it is shown that any reasonable method of production would destroy/deplete the surface

Date of the opinion

If a portion of the mineral is at the surface, it belongs to surface owners (up to 200 ft)

• Surface:
• Mountaintop (take off mountain top, fill in lower area next to it w/ "valley fill")
• Contour ("contour bench" made at one level (like a topo map) al the way around the mountain)
• Auger (cut into the side fo the mountain)
• Area (dragline across prospective horizon)
• Open pit (seam too thick to replace, leaves pit)

• Deep/underground (70%):
• Drift: horizontal shaft
• Slope: sub-horizontal shaft
• Shaft: vertical shaft

• Substance will be a mineral if it was generally regarded as a mineral:
• 1. By the community;
• 2. At the time of severance

• - If mineral is expressly stated: No recovery for reasonable, non-negligent use of the surface
• - If mienral is not expressly stated: Recovery of damages by surface owner, whether negligent or not

• 1. Is intent clear from the 4 corners? Yes, instrument controls. No...
• 2. Any substance previously held as a matter of law to be "surface" belongs to the surface owner (nine matter of law surface minerals)
• 3. If not in the nine:
• - Pre June 8, 1983 severance: Surface destruction test
• - Post June 8, 1983 severance: ordinary and natural meaning rule

Mineral estate

• 1. Building stone
• 2. Limestone
• 3. Caliche
• 4. Surface shale
• 5. Sand
• 6. Gravel
• 7. Water
• 8. Near surface lignite
• 9. Irone

GW BLINCSS

• 1. Estate can be separated
• 2. Reasonable surface access as needed for development (correlative rights)
• 3. Does not need to be expresed in deed or lease

Pour space reverts back to surface owner after mineral owner is finished

If pour space is w/in salt dome, pour space is mineral owner's

Trespass quare clausum frigit v. trespss on the case: Strict liability if proven

pg. 42

• Bad faith: market val of min. w/o deduction for production costs
• Good faith: market val of min. w/ production costs deducted
• Intent is key: Difference is usually a question of law

If author is astute in one portion and changes wording in a second portion, the second portion means something different

Reservations are strictly construed against grantor

When there are two or more antecedents before a "said land" clause, "that" speaks to the closes

The "top of bank" is the lower level mark, not the high water mark

• "1/2 of what I own" vs.
• "1/2 of the whole"

Grantee who gave the lease is the "executive right holder; he makes the lease for both parties and splits money down the middle

• "I have 50% undivided mineral interst in 100% of the land described."
• v.
• If whole land being conveyed, no prob., you have 50%, but if less, your interest is lessened, e.g., 1/2 of land conveyed = 1/4 interest in entire land

No physical entrance to one's land by using thumpers, etc., but shooting acress unpermitted land is interference w/ a prospective advantage and is possibly unlawful apprpriation of a trade secret (seismic; setting off a charge off premises and seeing what is on premises)

Assumpsit. Sue for what you could have gotten had trespass not placed them in a better position.

• Reservatoin of minerals may get implied surface easment, if at time of conveyance:
• 1. Such a necessity exists in the particular case to develop the minerals; and
• 2. Such an easement would not conflict w/ the intended future uses of the whole property bein conveyed
• NB: Tex. doesn't care about element 2, Tex. has accommodation doctrine

Old law: Canonly take those min's which will not require injury to the surface to get, unless K or law says so

• A mineral owner has an implied easement of ingres/egress over the surface owner of the land if "reasonable necessary" in a case where the mineral rights owner contracted for broad surface rights in order to facilitate exploration and production of the minerals
• Texas: Only from permitted tract
• WV: Mineral owner has right to "Reasonable enter"
• Williams and Meyers: If ingress/egress rights are not stipulated, they will be implied

Mineral owners are usu. private and can't mine minerals themselves; thus, they K out in return for royalty, bonus, or other benefits

• 1. Reformation v. finding a meaning for every word
• 2. Parol ev. /intent v. 4 corners
• 3. SoF: use to avoid K application; must be plead
• Texas: Every word has a meaning/four corners state

Tex: RP interest

Filed on public record to give notice of encumbrance, but not to give specifics of lease

Lesses; cts interpret ambiguities against the lessee's interest; source of implied Ks

• 1. Conveyance and K
• 2. Option, not obligation to develop
• 3. Right to maintain development in all coal, etc.
• 4. BUT, more like a deed than a lease
• 5. States classify differently

• Tex: Fee simple determinable in the minerals
• OK: Prefit a prendre subject ot equitable determination
• KS: License that may become irrevocable
• Many others: Uncertain or inconsistent

• 1. Right to take substances as well as use the land
• 2. Lessee's rights could be perpetual
• 3. Lessor and lessee share the land

• 1. Is the estate bifurcated?
• 2. Does the mineral developer need permission from the surface owner to develope? (e.g. strip miing)
• 3. What permissions/permits are needed from gov't authorities?
• NB: Generaly, mineral estate is said to be dominant

Original land conveyance from the gov't. Sometimes must go to look at these to see if someone granted a right they didn't have (e.g., right to strip mine)

Moving coal thru someone's land, breaking the plane, and up thru your land

A destruction or material alteration or deterioration of the freehold, or of the improvements forming a meterial part thereof by any person rightfully in possession, but who has not the fee fee title or the full estate (e.g., covenant)

Not at old common law, but has been changed by statute

Material injury, continuing, no other adequate remedy at law

• 1. Majority: One co-tenant can develop, but must acct to the nonconsenting co-tenant(s) for gross profits
• - Cost of  production may be deducted (unlike royalty)
• 2. If development is not possible, seek partition (by law or ct.; sell all interests and split cash OR you get portion of real property)

• - 15% owners get 15% of gross profits (production deducted); first mine car grants no money
• - 1% royalty owner does not have production costs deducted; first mine car = 1% profits made on coal

• 1. Leasing & development (both must approve development unless creating instrument says otherwise)
• 2. Division of income (as creating instrument dictates)

• Where property is bein developed for minerals or isunder lease for mineral development when LE is created, then all benefits go to LT
• NB: Based on intention of creator; can be changed by conveyance; doesn't generally allow LR to lease unilaterally if prior lease htat's covered by open mine doctrine expires due to non-development

• 1. As creating instrument specifies; otherwise
• 2. Delay rentals and stoppage royalties go to LT; bonus goes to Remainderman in an account as corpus; LT gets income from bonus during LT's life
• NB: Special rules for trust:
• As trust specifies;
• As trust law specifies

Grant or conveyance

"So long as minerals are being mined"

• Present in every lease––mining leases are made for long terms, but cannot be thought that lessor intended that there could be no development w/in a reasonable time and no recompense
• NB: Lease becomes an option

Not real propety; not assignable and are revocable

• 1. Terms
• 2. Exclusivity
• 3. Time
• 4. Irrevocability
• 5. Appearance of abandonment

Drill test cores, have an office on site, minimum royalties, rental payments, show market wasn't good for coal, paying property taxes on minerals

When there's no express duty to mine, it's hard to say that co. abandoned

Only applies if there is no minimum royalty. If min. is paid, lease isn't abandoned.

Physical departure and intent

• 1. Abandonment
• 2. Forfeiture
• 3. Expiration
• 4. Cancellation
• 5. Surrender

• 1. RP interest; or
• 2. Exclusive right of access to explore for and develop minerals

If there was intent to pass the entire usufruct of disposal of the coal, title passes

• 1. Exclusive right;
• 2. To mine all coal;
• 3. For either:
• - consideration up front OR
• - be compelled to mine OR
• - pay delay rentals
• NB: This makes a lease a severance

RP; can't be abandoned––Adv. Poss. might work, though

• Mineral owner given "reasonable" access to the surface
• NB: Rights exist, even if not in severance
• NB: Mineral estate is dominant––right to make reasonable use w/o having to pay surface dmgs

• 1. Alternatives available: mineral owner could have done it another, less destructive way and not destroyed surface
• 2. Industry std: If mineral owner is "doing something weird" it mightn't be reasonable
• 3. Extent of Interference: How much is min. owner using?

• Surface owners are granted protection (as opposed to, "Sorry, sucker" days)
• Must prove:
• 1. Distrupted surface use must have existed before the mineral development;
• 2. Surface use must have been actually disrupted by the mineral development; and
• 3. Another reasonable alternative existed

Min. owner can use your tract to service any tract (e.g., you could be the middle tract and they could have a processing station on your land)

• 1. Reasonable, non-neg., non-excessive
• 2. For benefit of mineral interst on that leasehold
• 3. In accord w/ terms of the lease
• 4. In compliance w/ accommodation doctrine
• 5. In compliance w/ stat. and reg. law

• Some say yes; general conveyances allow more "reading into things"
• From Case: “It would appear from the foregoing cases that where the severance deed contains broad rights for utilization of the surface in connection w/ underground mining, and these broad rights are coupled w/ a number of specific surface uses, courts will be inclined to imply compatible surface uses that are needed to the underground mining activity.”

• Both:
• If expressed, no problem;
• If implied, only allowed if, at the time of the grant, surface mining was a common practice in the area

Axn beyond the scope of easement could = nuisance; e.g., not moving pipeline

• No use allowed on such leased tracts
• NB: Be careful; "other tracts" language may be sufficient

• Even thought something isn't mentioned in lease, necessary and reasonable uses will be allowed
• NB: Reasonablenes expands w/ technology

Express rights discount unexpressed rights

Not strict liability––must show actual damage

Yes. But "mere surface subsidence" allowed (if no buildings, hard to get damages)

Surface, so long as water stays on/in tract

• Surface, unless severed, BUT vengint of CBM is always allowed!
• NB: In old leases, using the "when written" canon of construction, CBM was waste an no one reserves waste; CBM goes to mineral owner

• Surface owner
• BUT, Tex. has  salt dome pour space exception

Surface owner, but if pour space is in a mineral, mineral owner

• Some say surface owner gets it (because it's a separate mineral)
• Others give to mineral owner
• Others give to surface owner, w/ mineral owner right to vent

Strict––no neg. required; injury = damages

• Strict: Actual direct result of blast (e.g., thrown rock)
• Neg. for indirect results: concussion, smells, vibrations, loss of springs, etc.

• Used to prove vibrations from blast cause damage
• Generally: Prove neg occurred, then prove all other causes; Facts must be weighed and can be rebutted

There is an implied duty to develop minerals w/in a reasonable time period (unless parties have contracted otherwise––usually a covenant, not a condition!)

Covenant: A promie that, when broken = suing for damages (but not necessarily lease forfeiture)

• 1. Has the duty been K'd around?
• 2. Has the duty been breached?
• 3. What is the remedy?

• 1. Is there an obligation to reasonbly develop? (Usu., case law requires)
• 2. Will the annual payment of royalty fulfill the reasonable development requirement, if it exists? (Royalty credited upon production is not consideration––expected consideration is return from development)
• 3. Does breach of an implied covenant cause forfeiture? (Not usually)

If coal co. pay "rental" but it's considered part of consideration for production, it does not help the issue of lease requiring development. The consideration is supposed to come from development, i.e., it's not a rental payment

Can void lease

Leases have implied promise of reasonable work; notice od default not required––when no consideration present, duty to develop is a condition, not a covenant

• 1. Is K ambiguous?
• 2. If ambiguous, use parol ev.
• 3. If not, four corners

Not the same. Diligence largely depends upon the circumstances (demand for coal, quality of mienrals, etc.)

• 1. Quantity requirements?
• 2. Particular operations required?
• 3. Particular type of equipment required?
• 4. Diligent or continuous activity? Diligent ≠ continuous

If there's an argument about how much is owed, POP keeps money in separate bank acct until dispute is settled

Purchaser of Production: An agent of the lessee who pays the lessor (the lessee is not the payor)

• All tracts leased are viewed as one, even if leased by different lessors (e.g., mining "in the vicinity" triggers start on all land)
• NB: Unitization works best when "block of coal" is defined; otherwise it doesn't apply

If cts see redundancy, they'll try to read meaning into all of the words

• Method of aboiding mineral royalties; only works if there is "iffy" quality minerals
• NB: Doesn't work if substantial good quality coal, known about a leasing remains

Lessor not liable until workable seam found

• 1. Income stream makes lease attractive;
• 2. Helps w/ consideration arguments

Royalty is based upon gross proceeds of minerals; mineral co bears the cost of getting product to market

Instead of cash, lessor gets mineral in natural form

• If it's uranium: Gov't comes knocking
• POP problems: lessee's POP made a pipeline so that all minerals would be sold to POP, if lessor wants in kind, lessee can't provide all minerals and they'll break K

The latter: Clay doesn't have to by sold, thus potentially requiring payment before sale

Removed from ground or taken over the lease boundary?

• Right to grant leases––100% right to elase the entire tract (but all eget same deal)
• NB: Makes lease more valuable than a fractionalized interest

Yes. Executive has a duty to the other mineral owners to develop

Tex: Nope. Non-execs can't self-develop.

• Fiduciary: Not anymore.
• Utmost good faith and fair dealing: Prevailing view.
• Good faith w/o bad faith: Viewed in equity.

• Exec. must obtain for non-exects:
• 1. Every benefit that exect gets
• 2. Must get what executive would have negotiated for itself as if there were no nonexecutive interst

• Objected std: reasonable and prudent under the circumstances
• Sup. Ct. views in equity

• GA: Change does not materially alter the consideration
• NB: Common law = strict compliance

• 1. If you still a royalty owner, they can get significant compensation
• 2. Payee is lessor
• 3. Allows treble damages in worst cases (and insane interst rates and atty fees)
• 4. Can be suspended if title quandary or such is present
• NB: Note 2, pg.183

• 1. Termination (expires on its own terms, no notice of default)
• 2. Surrender
• 3. Forfeiture provision (w/o notice of default)
• 4. Abandonment
• 5. Equity (no other remedy at law)

• States abhor
• Not enforceable for lack of consideration

Some states passed law requiring 1/8 royalty minimum for valid leases; what about costs? (e..g, if costs were deducted, was <1/8); SC said leases valid, costs were allowed

Failure to give release = cause of action for slander of title

LEssee can't interfere w/ mining operations and then sue mining co. for not operating

Lessor can'tbe the one to stop production (and then sue for no production); e.g., lessor sues lessee, lessee must stop and mine accumulates water and slate

No forfeiture unless clearly shown that opponent didn't behave like a reasonably prudent operator

Can't damage 3d party's mining through lessee's meg

• 1. Joint ownership
• 2. Joint operation
• 3. Express or implied agreement to share profits and losses

• OK: Actively joining in promotion, conduct, mgmt, giving orders, buying equip, hiring people
• Policy: Stops huge coal cos from setting up shell corps to avoid liability

Any movement of the soil from natural position

• Only need to provide support for surface as contemplated at the time of separation of mineral estate
• KY: Must leave surface in "natrual state"; absolute right, neg. not considered

The condition of the surface, including reasonable and foreseeable improvements thereupon, at the time the coal is severed, not from the fee, but from the earth

Condition of sruface, including reasonable and contemplatable improvements when coal is mined

• Permanent dmg: Change in FMV
• Non-permanent: Reasonably cost to repair
• NB: Punitives are available for malice or reckless acts

Generalized deed; usu. allows coal owner to do anything "deemed necessary"

• 1. Reasonable, non neg., non excessive
• 2. For benefit of mineral interest
• 3. In accord w/ terms of the lease
• 4. In compliance w/ accommodation doctrine
• 5. In compliance w/ stat and reg law

• 1. Right to use and operate on the surface
• 2. Release of liability for surfae dmg
• 3. Detailed description of access easements

• 1. Surface estate
• 2. Mineral estate
• 3. Right of support

• If lesor or surface owner obstructs lessee's title or lessee's quiet enjoyment of use, then:
• 1. Equity may toll running of time under lease (e.g., lessor's axns delay activity for  ayear, lease is extended a year)
• 2. Lessor or surface owner may be enjoined and be liable for dmgs

• Goal: Protect surface owners from sruface disruption
• Requires: Permit from Public Service Comm'n to mine; may go to ct. if surface owner goes "nonconsent"
• NB: Requires a mineral owner (not developer) to get a hearing and you must own the entire leasehold (even 1/16 non-ownership = no hearding)

None. Enactment of the Act counted.

• 1. DP? Nope. Act has legit purpose
• 2. Taking? Nope. No notice needed, enactment of Act was notice enough
• 3. Exception for multiple tract owners =P Q? Nope. Rational basis for singling out multiple tract owners.
• NB: It was the failure to use the property that cause the lapse, not state action

Rights are created subj. to "Reasoanble conditions"; state can thus use its police power to abrogate some of those rights

Exercising arbitrarily

• 1. State needs to just pass and publish law. Owners charged w/ notice (A grace period helpd)
• 2. There is a difference between self-acting lapse laws and judicial proceedings––the former ends no notice
• E.g., 20 year lapse statute

Can't abandon RP; BUT, in states like OK, mineral rights are more like profit a prendre, so you can abandon them

• Exec brance can prohibit a major fuel burning stationary source from using fuels other than locally or regionally available coal when needed to prevent or minimize significant local or regional economic disruption or unempoyment
• NB: EPA didn't enforce this

• 1. Low sulphur coal; or
• 2. Install scrubbers

• 1. Is regulated activity in the stream of commerce?
• 2. Are means adopted by Cong. appropriate?

• 1. CAn subsidize local interest and incidentally burden interstate commerce unless burden exceeds local interest
• 2. State is an active participant, such as an active buyer/seller. Can favor local merchants!

• Fe(III) precipitates as Fe(OH)3, a yellow-orange slurry known as yellow boy when mine waters comes into contact w/ fresh water
• NB: Considered public nuisance

Yes.

• 1. Are means adopted reasonably needed fro abatement of nuisance?
• 2. Are the means not undul oppressive to policed party?

• 1. Public interest requires such an interference (ends)
• 2. Means used are reasonably needed and related
• NB: Police power must reasonably be adapted to its purpose and only inhibit property rights to the extent needed to preserve public welfare

• 5th amendment: "nor shall priv property be taken for public use w/o just compensation"
• NB: Not const right to property BIT no Const. disregard of the right of property

• PA law preventing mining of antracite if mining results in subsidence
• Exception: Where surface is owned by coal owners; and
• 2. Development is more than 150 ft from sturcture owned by someone else
• UNCONST: Wipes out property rights––different from room and pillar requirements because coal co could still make money, they couldn't under Kohler

• Only if denies owner economically viable use of the land.
• Reasons it may not:
• 1. Doesn't categorically stop mining on its face, only regulates conditions under which mining can occur
• 2. Doesn't stop other available uses (e.g., gold)
• 3. Ripeness: No injury; no seeking administrative relief

Only does if it denies an owner all economically viable use of the land

Only public interests are allowed to uphold a taking

Does not mitigate––many acts are preventative; insurance is palliative after damage has been incurred

Dress laws up as "for the public safety" to get law passed

Dividing cleverly could result in takings of entire property (leaning toward a taking), rather than a piece of peoperty (which mitigates against a taking)

Has no real value, just part of the bundle––a party can lose one part of the bundle and not by subjected to a compensation-required taking

Public use is just a threshold question, states can invoke nuisance exception to avoid a taking (dispute as to the breadth of this technique, however)

• 1. Takings in which there is not a 100% takings of right
• 2. More complete takings

• 1. APA
• 2. Admin.; then

3. Dist. Ct.

• Weigh private and public interests
• e.g., preserving swamps is a public interest, preventing pollution is too––however weighed against complete loss of private right would probably fail, especially when pollution is minimal/non-existent

Start administrative axn and then sue? This delays actions greatly.

• The court must consider:
• 1. Economic impact of the restirciton on property;
• 2. Restriction interference w/ investment-bacekd expectations;
• 3. Character o the gov't axn
• Result: If these three things are found to cause a takings, next:
• 1. Determine date of takings
• 2. Valuation method; and
• 3. Legal effect of the compensation (e.g., exchange provision)

• 1. Determine date of takings
• 2. Determine valuation method (e.g., coal was x at the takings and a lower price y later: which one?)
• 3. Legal effect of the compensation (e.g., "exchange provision"––is the legal effect adequate?)

• 1. Weigh public and private interests
• 2. Gov't can prevent nuisance w/o taking

• Normally when permit is denied, unless the statute is very specifically designed to prevent the axn and denies all possible use of the land
• e.g., "No mining in the Tongue River."

Can be. Difficult to win.

• Designation imposes no surface mining zones:
• 1. Incompatible w/ state/local use
• 2. Affect certain "Fragile" lands
• 3. Affect renewable resources and/or aquifers
• 4. Areas prone to natural hazards like flooding