Michigan Landowner Rights

A substantial increase in the amount of mineral exploration in Michigan is creating numerous conflicts between surface owners and their adjacent mineral right owner(s) or leaseholder(s). Statutory law in Michigan leaves the question of severed estates largely unaddressed. Enacting a new law will help protect the surface owner from Michigan’s current outdated and imbalanced system.

Current Michigan Law

History

As with much of U.S. law, the law of severed estates began in English Common Law. The concept of the “Royal Mine” arose as an exception to the general rule that the owner of a fee estate owned all interests in that estate from the center of the earth to the heavens.

The concept of mineral/surface split estates is recognized throughout the United States. Traditionally, the mineral estate is considered the dominant estate and the surface estate servient. The rationale is plain – enjoyment (use) of the mineral estate is not possible without access to the minerals via the surface. Though parties are generally free to contract as they desire with regard to surface access and use by the mineral owner/lessee (e.g. “no surface occupancy within 300 feet of an existing structure”), absent any express contractual restriction or prohibition, the mineral owner has been historically entitled to utilize so much of the surface as is reasonably necessary to access the mineral estate. This dominance has been affirmed even when surface mining of coal deposits totally destroyed the surface estate. Payment of surface damages was not required though it is the practice of industry to compensate surface owners.

While the dominance of the mineral estate, as a concept, still exists, the reality is that the tug of war of the split estate is clearly moving toward parity. Erosion of the complete dominance of the mineral estate began with a trickle and is now approaching a torrent.

Exploration and Mining

There is no indication that Michigan courts have adopted the accommodation doctrine which has been adopted by some other states. Statutory law in Michigan leaves the question of severed estates largely unaddressed, which would seem to indicate that the common law Mineral Dominance doctrine is still in effect.

The owner or lessee of the mineral rights, whether severed or not, has the right to reasonable use of the land to extract minerals from the property. However, the owner of the surface rights to a parcel may be entitled to compensation for use of the land, such as for damage to crops or trees.

Mining for metal ores in the State of Michigan is controlled by MCLS § 324.63103 et seq, which requires that a mine operator have a permit from the MDNR, which has the authority to set permit conditions and supervise the operation of the mine. The MDNR is given authority to regulate some aspects of the operation of a mine, but accommodation of surface use is not included; a new statute might be required before the MDNR could even act to protect surface use.

Michigan Marketable Record Title Act and Dormant Minerals Act

A Michigan statute that might be of use to surface owners is the Marketable Record Title Act, MCL 565.101 et seq. This act can serve to quiet title (meaning to effectively extinguish other claims to the property) in a landowner with an unbroken chain of title going back, for mineral interests, 20 years. Thus, unless at some point in the 20 years preceding the act, the mineral interest was leased or sold, or some steps taken to develop it, or other action taken that would indicate a current claim to it, it effectively reverted to the surface owner. This act explicitly does not apply to oil and gas interests. However, the Dormant Minerals Act of 1963, MCL 554.291 et seq, does apply to oil and gas, prescribing a 20 year period in which the mineral owner can sell the interest, undertake development, or file a notice indicating his intent to develop. Failing this, the mineral interest belongs to the surface owner.

A New Michigan Law

What Other States Have Done

Several states have enacted statutes which are designed to protect the surface owner from harm caused by the development of underlying oil, gas, or coal deposits. These include North Dakota, Oklahoma, Montana, South Dakota, West Virginia, Tennessee, Illinois, Indiana, Kentucky, and in 2007, New Mexico and Colorado. Surface Owner Protection Acts have, thus far, addressed only oil and gas or coal development; should Michigan enact a surface owner protection act that explicitly encompasses mining or ore bodies it would be the first of its kind in the United States. These statutes will typically (but not in every case) require some kind of notice to the landowner (including the type and location of proposed operations), a requirement that the parties enter negotiations regarding the placement of facilities, roads, or other uses of the surface, and some means of determining what damages the surface owner will receive.

Courts in some states have adopted an “accommodation” doctrine, which in a general sense imposes an obligation on a mineral developer to conduct operations in a way which poses the least interference with ongoing surface use. This does not give the surface owner the right to enjoin or otherwise to prevent the mineral development; it merely imposes a duty to take the landowner’s existing uses into account in determining how the development operations will be conducted.

What Can Michigan Do?

Below is an example of how Michigan could change with the times and help landowners to protect their valuable assets through a new statute:

  • To employ alternative means of operations that prevent, reduce, or mitigate the impacts of mining operations on the surface, where such alternatives are technologically sound, economically practicable, and reasonably available to the operator.
  • To require notice to the surface owner of mining and exploration operations.
  • To require a bond or other surety in certain circumstances.
  • To provide for the award of treble damages in certain circumstances.
  • To give private surface owners the option to purchase and reunite severed mineral rights (right of first refusal) in alignment of their parcel before a sale or lease of the mineral rights to a third party.