The Effect Of A Reservation Of “Oil, Gas And Other Minerals” On Mining

In Texas, as in other states, ownership of the surface of land is often separated from ownership of substances that lie beneath it. For years, it has been common for sellers to reserve all or part of the "oil, gas and other minerals" that lie under land they are selling, thus retaining a mineral estate that is distinct from the surface estate being sold. Countless deeds in Texas contain similar reservation language. Although the concept of reserving the ownership of "oil, gas and other minerals" seems straightforward, from a mining perspective in Texas it unfortunately is not.

To put it simply, Texas courts have had a very difficult time establishing the meaning of the words "other minerals". The difficulty has stemmed from attempts by courts to balance the positions of the owner of the surface, and the owner of a subterranean asset who may be required to destroy the surface to enjoy it. The Texas Supreme Court has issued a number of opinions over the past forty years regarding the meaning of "other minerals" but has failed to arrive at a consistent definitional framework that produces predictable results. One Justice has described the law in this area as a "quagmirish fog".

Although it may not be possible to say exactly what the words "other minerals" mean in Texas, it is possible to say that certain materials that are extracted by surface mining methods have consistently been held not to be "other minerals" and thus are not reserved by the phrase "oil, gas and other minerals". Limestone, caliche, and sand and gravel are within this category. The Supreme Court repeatedly has held that these substances belong to the surface owner, unless it is clear from the wording of the reservation that a different result was intended by the original parties.

The Supreme Court has also ruled, and reaffirmed in later cases, that coal and iron ore which are located near the surface are likewise not "other minerals" and are owned by the surface owner unless it is clear from the wording of the reservation that a different result was originally intended. It should be mentioned that the decisions regarding coal and iron ore have been criticized by some legal scholars but it seems fairly doubtful that the Court will reverse its course in the future and treat surface coal and iron ore differently than it has treated stone, sand and gravel.

Uranium, however, is treated differently. The Supreme Court has ruled that uranium falls within the "ordinary and natural" meaning of the word "minerals" and is retained by the mineral owner in all reservations of "oil, gas and other minerals" occurring after June, 1983. Unfortunately, while the Court resolved the status of uranium, its reliance on the meaning of the word "minerals" provides little guidance with respect to a number of other materials. The word has an amorphous definition and it is impossible to predict whether the Court will rule that a particular material falls within the meaning of "minerals" or not.

The difficulty with the Court’s approach is seen in a 2001 Court of Appeals holding that granite is a "mineral" and supporting that finding with evidence that when the granite in question was severed from the surface, in the 1890s, it had a special economic value due to the construction of the State Capitol; indicating that if it had not had such value, it may not be a "mineral". With deference to the Court, when reading its opinion one is reminded of Humpty Dumpty as he spoke to Alice in Through the Looking Glass: "When I use a word," he said, "it means just what I choose it to mean—neither more nor less."

Because the Texas Supreme Court has failed to establish a predictable framework to determine the types of materials that will, or will not, be included within the reservation of "oil, gas and other minerals", the owners of surface and mineral estates in many cases can only guess at the ownership of materials that have not yet been the subject of a Supreme Court ruling. With that fact in mind, parties who are contemplating the sale or lease of mining lands in the face of such a reservation should proceed with the utmost caution, obtaining the advice of a knowledgeable professional if there is any question regarding their legal positions.