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Amy Mall’s Blog

It's time to eliminate hurdles for split estate landowners to buy federal oil and gas rights

Amy Mall

Posted May 9, 2014 in Health and the Environment

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The unfortunate consequences of “split estate” are a reality that more and more Americans are facing when oil and gas development comes to their community. It occurs when someone owns the surface (the land) of his or her property, but does not own the rights to the oil and gas (or other minerals) beneath the surface. In these circumstances, the oil and gas rights take precedence over the surface owner's rights, meaning that drilling and fracking can occur right in someone's backyard or on their ranch or farmland without the landowner’s consent.  The practice of splitting estates began way back in the early 1900s, well before the invention of modern fracking, which is why some property owners who have been on the same land for generations are now getting an unexpected (and unwanted) visit from the oil and gas industry.

While some of these “split estate” situations involve private surface owners and private mineral owners, in many case the minerals are owned by the American people and managed on our behalf by the federal government. The federal government manages almost 60 million acres of oil and gas resources nationwide that are beneath private property.

And that is something that we can change. Many of the private landowners who have experienced development of federal oil and gas resources beneath their land have had terrible experiences. They have suffered contamination of their water and pollution that lingers for years.

Neither federal nor state laws do enough to protect split estate landowners. It’s time to change that. Landowners should be able to purchase the oil and gas resources beneath their land—at fair market value--and “reunify” their estate.

The Bureau of Land Management (BLM) manages the mineral rights owned by the federal government. Under existing law and regulations, BLM is already allowed to convey the mineral ownership to the surface owner, but only under narrow circumstances that prioritize oil and gas development over other uses of the land. The law is biased against a landowner and in favor of the oil and gas industry (just one of many examples where this happens).

Currently, a landowner can only buy the minerals beneath his or her land from the federal government by proving that either there are no minerals of value or that the land will be put to another use that is “more beneficial” than oil and gas development – but the agency can decide what’s beneficial, putting an unreasonable burden of proof on the landowner. 

Congress should change the law and eliminate obstacles to surface owners who want to purchase the minerals beneath their land, so that landowners can control what happens on their own property. It is possible that a private mineral owner who purchases the oil and gas rights could then lease them for development; this proposal is not anti-oil or anti-gas. It is pro-landowner.

There should be public notice of proposed conveyances, and an opportunity for the public to comment, so that any unique circumstances are taken into account by the agency (e.g., endangered species habitat where the federal government would never lease even if it could may need to be kept in the public trust). And any conveyance should be at fair market value. The Department of the Interior already has an Office of Valuation Services that conducts these types of appraisals, as well as an Office of Minerals Evaluation.

The details would need to be ironed out, but Congress should eliminate language that makes landowners jump through unnecessary hoops before they can buy the minerals beneath their own land at fair market value.

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Comments

Shirley McNallMay 9 2014 05:33 PM

I think it is fair and just that split estate owners be able to purchase mineral rights under their property in the same manner that industry can purchase those same mineral rights. Why should the split estate property owner have to jump thru more hoops?

JakeMay 10 2014 03:14 PM

Once an area is know to have recoverable reserves, few homeowners would even be able to afford to buy the mineral rights at "fair value". And when there are no know recoverable reserves, few landowners would even care.

Your proposal doesn't really make sense.

JakeMay 10 2014 03:16 PM

Shirley, you are mistaken. The oil industry can't produce mineral rights any easier than a landowner. You are confusing mineral rights with development rights.

Amy MallMay 12 2014 03:54 PM

Hi Jake: There are areas now being developed that in the recent past were not thought to have economically recoverable reserves. Landowners are aware of that and want to be able to determine the fate of their own land.

JakeMay 12 2014 05:00 PM

You missed my point entirely. When they bought their land, the fair value if the mineral rights was insignificant. Once there is interest in oil production, the fair value could be hundreds of thousands or millions. Few landowners could even afford the fair value. And those that could, probably wouldn't pay that kind of sum just to keep the minerals in the ground. Your whole idea is flawed.

In any case, they bought the land knowing full well that mineral rights were not included. It's a risk they chose to take.

Comments are closed for this post.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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