Mineral rights

Mineral rights are property rights to exploit an area for the minerals it harbors. Mineral rights can be separate from property ownership (see Split estate). Mineral rights can refer to sedentary minerals that do not move below the Earth's surface or fluid minerals such as oil or natural gas. There are three major types of mineral property; unified estate, severed or split estate, and fractional ownership of minerals. Mineral rights are property rights to exploit an area for the minerals it harbors. Mineral rights can be separate from property ownership (see Split estate). Mineral rights can refer to sedentary minerals that do not move below the Earth's surface or fluid minerals such as oil or natural gas. There are three major types of mineral property; unified estate, severed or split estate, and fractional ownership of minerals. Owning mineral rights (often referred to as a 'mineral interest' or a 'mineral estate') gives the owner the right to exploit, mine, and/or produce any or all minerals they own. Minerals can refer to oil, gas, coal, metal ores, stones, sands, or salts. An owner of mineral rights may sell, lease, or donate those minerals to any person or company as they see fit. Mineral interests can be owned by private landowners, private companies, or federal, state or local governments. Sorting these rights are a large part of mineral exploration. A brief outline of rights and responsibilities of parties involved can be found here. Unified estates, sometimes referred to as 'fee simple' or 'unified tenure' mean that the surface and mineral rights are not severed. This type of estate occurs when mineral and surface ownership are separated. This can occur from prior ownership of mineral rights or is commonly performed when land is passed between family generations. Today corporations own a significant portion of mineral rights beneath private individuals. Here a percentage of the mineral property is owned by two or more entities. This can occur when owners leave fractions of the rights to multiple children or grandchildren. Mineral estates can be severed, or separated, from surface estates. There are two main avenues to mineral rights severance: the surface property may be sold and the minerals retained, or the minerals may be sold and the surface property retained, though the former is more common. When mineral rights have been severed from the surface rights (or property rights), it is referred to as a 'split estate.' In a split estate, the owner of the mineral rights has the right to develop those minerals, regardless of who owns the surface rights. This is because in United States law, mineral rights trump surface rights. The U.S. historical precedent for this severance roots from western expansion and The Land Ordinance Act of 1785 and The Northwest Ordinance Act of 1789 at the cost of dispossessed Natives. Severability was further reinforced by the Homestead Act of 1862 (OHA) and the 1862 Railroad Act. Agricultural patents and the California gold rush of 1848 began placing lands that were mineral abundant into private hands and furthered the precedent of mineral rights outweighing surface rights. This was a crucial step in the development of an economic system based largely on private incentives and market transactions. An early case involving a property dispute between a father and son involving ownership of coal veins in Pennsylvania is cited stating; “One who has the exclusive right to mine coal upon a tract of land has the right of possession even as against the owner of the soil, so far as it is necessary to carry on mining operations.” (Turner v. Reynolds, 1854). A later case in Texas in 1862 set precedent by stating “it is a well-established doctrine from the earliest days of the common law, that the right to the minerals thus reserved carries with it the right to enter, dig and carry them away.' (Cowan v. Hardeman, 1862). Some may argue that the U.S. justice system's enabling of this precedent is further exacerbated by industry lobbying which enables the status quo of favoring oil and gas development vs other innovations. This severability can create tension between mineral rights owners and surface rights owners if the surface rights owners do not want to allow the mineral rights owners to use their property to access their minerals. This is becoming ever more present in the light of recent unconventional oil and gas development (UOGD) such as hydraulic fracturing due to technological advancement. Problems include water pollution, fluid storage issues and surface damages. These are especially common in the West Virginia gas wells of the Marcellus Shale. Often, companies will offer a surface rights owner a surface use agreement, which can provide financial compensation to the surface owner, or more commonly, offer some concessions on how the minerals are accessed. For example, some surface use agreements require the company to access the property from specific roads or points on the property. A major issue that involves fluid mineral rights include the 'rule of capture' where minerals that can migrate beneath the Earth's surface can be extracted, even if the source was another person's mineral property. This claim is protected by the Board of Oil and Gas Conservation (BOGC) whose broader mandate is to promote conservation and prevent conflicts between mineral owners. The five elements of a mineral right are: