Mineral Remoteness Reports for Conservation Easements

1. Mineral Remoteness Reports forConservation Easements Presented by Gretchen L. Hurley, P.G. Hurley Geological Consulting University of Wyoming College of Law Conservation Easement Conference Laramie, Wyoming June 2, 2011

2. What is a “Mineral Remoteness Report” and why is it needed for a conservation easement?

3. A Minerals Assessment Report (“Remoteness Letter”) is prepared by the Geologist who: • Researches general mineral estate ownership on the property (Is Split Estate Present? Private? State? Federal?) • Determines/analyzes geologic conditions and known or potential presence of solid and fluid mineral resources/deposits • Provides a Professional Opinion on the potential for solid and fluid mineral development based on the potential for economic mineral reserves (resources having economic quality, quantity, and conditions of accessibility). • The “Remoteness” opinion is driven by sound science and professional opinion based on these factors. Potential for development typically must be “so remote as to be negligible” on the lands for a conservation easement to move forward.

4. WHAT IS “SPLIT ESTATE”? • THE SURFACE ESTATE IS OWNED BY ONE OWNER OR OWNERS, AND • THE MINERAL (SUBSURFACE) ESTATE IS OWNED BY A DIFFERENT OWNER/OWNERS • NOTE: • In Wyoming, 66% of the subsurface mineral estate (and 49% of the surface estate) is owned by the federal government

5. “Split Estate” can be configured as follows: • Private surface – Federal minerals* • Federal surface – Private minerals • Federal surface – State minerals • Private surface – State minerals • State surface – Private minerals • Private surface - Private minerals (Two or more separate owners) • * most common situation seen with proposed conservation easements

6. When they own (or buy) land, a lot of folks think they own (or will own) this:

7. But they are actually getting this: the Surface Estate only: Includes all surface uses of the land such as roads, grazing, recreation, rights-of-way, stream and river channels, wetlands, etc. and not the Mineral Estate: Which includes ownership of and rights to explore for and/or remove mineral resources such as coal, oil and gas, hard rock minerals, other solid minerals, or sand and gravel

8. Federal acts affecting (or not affecting) mineral reservations to the US at the time of patent: • Homestead Act of 1862 • Stock Raising Homestead Act of 1916: Section 299 provides that patents issued are subject to and contain reservations of all minerals to the US together with the right to prospect for and remove the same • Includes oil, gas, coal, hard rock minerals, all other solid minerals, and common varieties of sand, stone, gravel, pumice, pumicite, cinders and clay • Taylor Grazing Act of 1934 some land exchanges under section 8 of this act affect mineral interests

9. The Geologist analyses stratigraphy and geologic structures present on the property to determine potential for multiple categories of minerals, and their development:

10. Federal Mineral Categories 1. Locatable Minerals (Mining Law of 1872) “…whatever is recognized as a mineral by the standard authorities, whether metallic or other substance, when found in public lands in quantity and quality sufficient to render the lands valuable on account thereof. ” Mining claims can be “located” on private land with a federal mineral estate if a locatable mineral discovery has been made.

11. Locatable Minerals include: • Gold (lode or placer), copper, silver and other metalliferous minerals; • Minerals used as gemstones; • Bentonite clay; • Uranium, thorium and other fissionable minerals; Titanium minerals • Gypsum (calcium sulfate) • Uncommon varieties of sand, stone, gravel, pumice, pumicite, cinders and clay

12. 2. LeaseableMinerals (Mineral Leasing Act of 1920): • Oil and gas, coalbed natural gas, coal, potassium, sodium, phosphate, oil shale, native asphalt, solid and semi-solid bitumen, and bituminous rock(including oil-impregnated rock/sands from which oil is recoverable only by special treatment after the deposit is mined or quarried) • Chloride minerals, trona, sulfates, carbonates, borates, silicates or nitrates of potassium and sodium • Allows for collection of a royalty from the mineral producer paid to the U.S.

13. 3. Saleable Minerals (Mineral Materials Act of 1947 & others): • Common varieties of sand, stone, gravel, pumice, pumicite, cinders and clay • Have a normal quality, and a value for ordinary uses such as road building and construction, and include ordinary deposits of clay, limestone, and sand & gravel • Dimension and decorative stone resources such as common varieties of granite, gneiss, or limestone, and boulders of varying common variety rock materials

14. Wyoming is one of 17 “minority” states that does not recognize common variety materials such as sand & gravel, sandstone, limestone, dolomite, granite, gneiss, or scoria as “minerals” that can be reserved in a deed for private or state lands. • To be a “mineral”, the material must be “rare and exceptional in character and value”. • Case law that has helped to establish this in Wyoming includes: • Miller Land and Mineral Co. v. Highway Commission (Wyo., 1988); • Cumberland Mineral Co. v. U.S. (513 F. 2d 1399 (1975) 206 cl. ct. 797 (1975); and • Watt v. Western Nuclear Inc. 462 U.S. 36 (1983).

15. Typical Split Estate Example: Private surface/ Federal Minerals SENW Sec. 10 T.52N., R.104W.: • Surface estate owned by Mr. and Mrs. Cody 2)“All minerals” were reserved to the United States at time of patenting, under the Stock Raising Homestead Act (1916) 3) Oil & gas estate is leased to Wyoming Oil Co. by the U.S. (Bureau of Land Management) 4) Mr. Lander locates two 20-acre mining claims on the locatable minerals beneath the surface estate, for both placer gold and uranium, after notifying Mr. and Mrs. Cody. • The U.S. owns any sand and gravel on the property (as per Watt vs. Western Nuclear), and can sell it to Wapiti Construction Company under contract • Should this land be included within a conservation easement? Most likely not.

16. Options for land owners & land trusts when mineral development potential exists • Delineate portions of the potential conservation easement having mineral potential and remoteness if findings are mixed. • Delineate portions of the potential conservation easement having surface mining potential from subsurface mining potential. • Carve out problem areas from CE boundary. • Purchase or acquire severed mineral rights from mineral estate owner(s). • Negotiate a “donation” of mineral rights to the land trust from the mineral estate owner(s). • Consider effects on specific conservation values. • Source: www.bio-geo.com

17. Thank you for listening!