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What does the construction industry mine? Some courts say rocks; geologists say minerals.

The difference is important to the largest segment of the mining industry in the United States. Its takes on its greatest legal import in determining ownership of the common construction minerals. Important questions are:

* Has there been a separation of mineral ownership from the surface estate?

* Are rocks included in the term "minerals" as used in mineral estate severances and deeds?

Title to the construction minerals brings on subsequent questions concerning the mining rights, proper parties for mining leases, and paying royalties. When the question as to the ownership of certain unnamed "minerals" arises, it usually involves construction minerals and the party who own them. Where there is no separation of the mineral estate from the surface estate, there is no question of ownership of all minerals and rocks on, in, or under the property.

Construction minerals are the common "rocks" of the earth. They are the sandstones, sand and gravel, limestones, dolomites, marls, granites, gneisses, and other igneous, metamorphic, and sedimentary rocks so commonly found exposed at or near the surface of the earth. They are principally used as rock aggregates in highway construction and, hence, called road-building materials. Enormous daily volumes are mined for construction - limestone for the production of the omnipresent building material, cement, and clay for brick.

Are construction minerals part of the mineral kingdom? Actually, a rock is composed of minerals, but is not a single mineral itself. Rocks are an aggregate of different minerals. However, for purposes of mineral deeds in a slowly growing minority of approximately 17 states, when a mineral reservation states "... and all other minerals," the phrase will not include granites, sand and gravel, and clay and possibly not limestone or other construction minerals, particularly where they occur at the surface of a property. Conversely, the majority of the United States includes common construction minerals in mineral reservations with the large exception of the federal government's claim to all sand and gravel, and occasionally limestone, on public domain lands.

While the majority of states in the United States interpret the word "minerals" to include construction minerals, the minority-state courts have developed case law that uses the following criterion: To be a mineral, the material must be "rare and exceptional" in character and value. When the minerals are useful only for building and road-making purposes, they do not qualify as minerals in the ordinary and accepted meaning of the word. Minority-state case law has, thus, determined that the common road-building minerals are not a part of the mineral estate but instead belong to the surface estate owner.

The usual dispute in which these common road-building minerals are encountered in litigation is in deeded mineral rights where the mineral reservation states, for example, that "all gold, iron, coal, and all other minerals are reserved." An issue before a court generally is: "Are sand, gravel, and stone to be included in the phrase 'all other minerals'?"

The minority states are attempting to protect the surface owner's estate from mining damage without consent of, or compensation to, the surface owner. Where the common building minerals are found by the court to be included in the phrase "all other minerals," i.e., part of the mineral estate, surface mining of the building minerals can occur without the surface owner's consent. The surface may be largely laid waste by the mineral estate owner, and the surface owner is denied the quiet enjoyment and use of the property without compensation.

However, where a mineral reservation has been separated from the surface estate, it should be noted that the surface owner had prior warning (caveat emptor = buyer beware) by a title search before the land was purchased. The mineral reservation was recorded as a public notice in the land's chain of title. Buyers who purchase land with knowledge of a mineral reservation on it and the potential use of the land's surface should not be allowed to complain later about the dominant mineral estate exercising the purchased and publicly recorded rights. If surface mining is found to be a "nuisance," then the surface owner knowingly came to the potential "nuisance" with forewarning in the chain of title.

The 17 minority states whose courts refuse to give such a broad meaning to the word "minerals" as to include the common rocks of the earth are Alabama, California, Colorado, Kentucky, Kansas, Louisiana, Michigan, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, West Virginia, and Wyoming. Montana became the 17th state when its Supreme Court held that scoria was not a "mineral" for the purposes of land transfers and that common rocks used as "road materials" are not minerals for the purposes of mineral reservations in deeds. Montana and New Mexico are states that do not take a clear stand on whether all construction minerals are "minerals" or not. For purposes of reserving them to the state on state lands they are minerals reserved to the state. In private deed mineral reservations, they may belong to the surface estate.

The federal government's position on public domain lands as to whether construction minerals are "minerals" within the meaning in deed reservations has been of no help in answering the question in state jurisdictions. On public lands, construction minerals are not "locatable" minerals, yet, they are "minerals" that are "leasable" under the Material Act of 1947.

Although many jurisdictions in the United States still recognize that the mineral estate is dominant to the servient surface estate, the doctrine of caveat emptor is rarely supported by the courts to vindicate the mineral estate owner in making use of the servient surface estate. The mineral estate owner is now generally left by the courts in the untenable position that there is no justifiable reason for the mineral owner to deny the surface owner the total quiet enjoyment of his estate. The courts largely support this position despite the warning to the surface buyer by public record of a mineral reservation that could affect the surface.

The fact that the surface owner knew, or should have known, that he was buying a tract of land where his "quiet enjoyment" could be potentially disrupted as the servient estate is rarely supported in law. The land buyer is no longer held responsible for his or her decision even if it be foolhardy and unwise.

With court decisions protecting the foolish land buyer, aggregate mining companies should exercise caution in buying or leasing private mineral rights.

In view of the growing court decisions, mining companies on severed mineral estates can expect to pay damages for the use or destruction of the servient surface estate.

Proper attention to the construction of new deeds containing mineral reservations to include use and damage moneys to be paid to the surface owner when mining occurs could prevent later conflicts between mineral and surface estate owners.
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Title Annotation:Assays from the Legal Vein
Author:Aston, R. Lee
Publication:E&MJ - Engineering & Mining Journal
Article Type:Column
Date:Oct 1, 1998
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