The State of Louisiana is undoubtedly the largest landowner in the state, and therefore is likely the largest mineral owner as well. Just like any other party, the State often acts aggressively to protect and establish its ownership of mineral rights throughout Louisiana. This blog post is meant to give a summary of some of the legal issues surrounding ownership of mineral rights when the State of Louisiana is involved. This post is for educational purposes only, and is certainly no substitute for legal advice, so please don't take it as such.
The majority of the mineral interests owned by the State are held by virtue of the State's ownership of the surface. Therefore, some aspects of property law governing state ownership of land are relevant and will be included in this discussion.
The Louisiana Constitution of 1921
The most important thing to realize in this discussion is that, since 1921, the State of Louisiana cannot divest itself of mineral rights in any manner whatsoever. According to LA Const. art. IX, sec. 4 (A), the sale of state lands will automatically effect a reservation of mineral rights. Subsection (B) goes on to state that "lands and mineral interests of the state, of a school board, or of a levee district shall not be lost by prescription." This provision was first adopted by in the Louisiana Constitution in 1921, so as a general rule any mineral interest ever owned by the state after 1921, no matter how it was acquired, will belong to the State forever. This is true even if the state sells the property and fails to reserve the minerals.
In the Beginning...there were Patents and Land Grants
As with any state, all land in Louisiana was once owned by a sovereign government before it became privately owned. In our case, ownership of any particular tract of land in Louisiana can be traced back to either France, Spain, the United States, or the State of Louisiana. Land was sold by the various sovereigns to settlers over time. The grants from the United States or the State of Louisiana, as recent as 1812, were typically effected by issuance of a patent from the state or federal government.
What is the significance of patents on mineral rights? After the turn of the 20th century, federal and state governments started reserving the mineral rights in new patents. As of 1921, all land patented by Louisiana reserved the mineral rights by operation of law. Because prescription doesn't run against the state, any minerals under lands patented by the state after 1921 are owned perpetually by the state.
A Lake Bed Worth Arguing Over - Water Bodies and the Equal Footing Doctrine
Under what has come to be known as the equal footing doctrine, the US Supreme Court has held that all states admitted to the union, no matter when, are given complete ownership of all navigable waters, their shores, and the lands under them at the time of their admission. Since Louisiana became a state in 1812, this means that the lands under all waterways that were navigable in 1812 belonged to the state, along with the mineral rights attached to them.
The upshot of this is that the bed of any natural lake or river that was navigable in 1812 is owned by the state, even if it is no longer navigable today. Unless the state sold the lake bed or riverbed before 1921, the mineral rights underneath every such lake or riverbed still belong to the state. This means, land that is near the shore of a lake or river very well may be owned by the state if that land was part of the lake or river in 1921. Even if one holds title and possession to that land for over 100 years, the state will not lose ownership by acquisitive prescription.
The majority of the litigation involving ownership of lake and river beds have been driven by the desire to determine who owns the mineral rights under those beds. One example is the recent litigation over the ownership of Lake Bistenau.
As previously mentioned, if the State of Louisiana owned mineral rights after 1921, they will own them forever as prescription will run against the state. The opposite situation, when the state acquires land without the mineral rights, presents another exception to the typical prescriptive regime for mineral servitudes, where 10 years of non-use will extinguish the servitude and the mineral rights will revert to the owner of the land.
Article 149 of the Louisiana Mineral Code governs the prescriptibility of mineral servitudes that burden land owned by the state. This post will conclude by posting the text of the actual statute, but I will provide some high points first.
I will reference "the state," but this statute applies to any entity with the power to expropriate or condemn property using eminent domain power: the United States, the state of Louisiana, subdivision and departments of the state and federal government (including parishes and levee districts), public utilities (only if they acquire the land through condemnation, not sale), and charitable conservation organizations certified by the state.
If the state acquires land by sale, transfer, condemnation or expropriation, and the conveying document reserves the mineral rights, prescription is suspended as long as title is held by the state. This means that the 10-year period where the servitude holder has to "use it or lose it" does not elapse as long as the state holds the land burdened by the servitude. If the state subsequently sells the land to an entity not covered by the statute, prescription will begin to run again right where it left off.
If the land acquired by the state was already burdened by a servitude, meaning the seller or transferor did not own the mineral rights at the time of sale, another situation arises. If the transferor reserves the mineral rights in the sale to the state, prescription will continue to run on the existing servitude. When that prescriptive period expires, the landowner who sold to the state will get the mineral rights. For example: A sells land to B in 2000 and reserves the mineral rights. In 2005, B sells the land to State and reserves all mineral rights. There is no exploration activity between 2000 and 2010. In 2010, A's servitude will prescribe for non-use, and the mineral rights will revert to B. Prescription will not run against B as long as the state holds title to the land.
§ 149. Mineral rights reserved from acquisitions of land by governments or agencies thereof imprescriptible
A. “Acquiring authority” for the purposes of this Section means (1) the United States, the state of Louisiana, and a subdivision, department, or agency of either the United States or the state of Louisiana; (2) any legal entity with authority to expropriate or condemn, except an electric public utility acquiring land without expropriation. An electric public utility acquiring land through expropriation shall be considered as an acquiring authority; and (3) a nonprofit entity, recognized under Sections 501(c)(3) and 170 of the Internal Revenue Code as being organized and operated as a public charitable organization, that is certified by the secretary of the Department of Natural Resources to be a state or national land conservation organization. The certification shall be in writing and shall be a public record. Such certification shall not for that reason alone be construed to authorize the nonprofit entity to exercise expropriation powers. With respect to certifications occurring on and after August 1, 2004, an entity’s certification shall require approval by official action of both the Senate Committee on Natural Resources and the House Committee on Natural Resources and Environment.
B. When land is acquired from any person by an acquiring authority through act of sale, exchange, donation, or other contract, or by condemnation or expropriation, and a mineral right subject to the prescription of nonuse is reserved in the instrument or judgment by which the land is acquired, prescription of the mineral right is interrupted as long as title to the land remains with the acquiring authority, or any successor that is also an acquiring authority. The instrument or judgment shall reflect the intent to reserve or exclude the mineral rights from the acquisition and their imprescriptibility as authorized under the provisions of this Section and shall be recorded in the conveyance records of the parish in which the land is located.
C. If part of the land subject to the mineral right as set forth in Subsection B is divested by the acquiring authority to another who is not an acquiring authority, the mineral right is not divided. However, prescription of the mineral right as to the land divested shall commence and accrue unless it is interrupted by use of the mineral right.
D. If a mineral right subject to prescription has already been established over land at the time it is acquired by an acquiring authority, the mineral right shall continue to be subject to the prescription of nonuse to the same extent as if the acquiring authority had not acquired the land. Upon the prescription or other extinction of such mineral right, the transferor of the land shall without further action or agreement become vested with a mineral right identical to that extinguished, if (1) the instrument or judgment by which the land was acquired expressly reserves or purports to reserve the mineral right to the transferor, whether or not the transferor then actually owns the mineral right that is reserved, and (2) the land is still owned by an acquiring authority at the time of extinguishment.
E. Rights or interests in land originally acquired by an acquiring authority through expropriation and subject to a mineral reservation shall not be transferred by the same or subsequent acquiring authority to another who is not an acquiring authority, unless prior to the transfer:
(1) The acquiring authority first offers to sell or transfer the same right or interest back to the person or entity, or his heirs or successors, from whom such right or interest was originally acquired, if such person or entity still retains the mineral rights reserved.
(2) The offer shall be in writing and shall be based upon the fair market value of the right or interest.
(3) The offer shall be delivered by certified mail, return receipt requested, to the last known address of the grantor. The grantor shall have thirty calendar days from the date of receipt to accept or reject the offer in writing. Failure to respond timely shall create a presumption of rejection of the offer.
(4) If the last known address of the grantor cannot be determined, or if there has been no written response from the grantor to the acquiring authority accepting or rejecting the offer after thirty calendar days from date of receipt, the acquiring authority may institute a civil action by summary proceeding to show cause why the offer should not be considered rejected. A grantor whose last known address cannot be determined shall be treated as an absentee defendant.
F. The provisions of Subsection E shall not apply to any property acquired or disposed of by the Department of Transportation and Development pursuant to Part XII or Part XVIII of Chapter 1 of Title 48 of the Louisiana Revised Statutes of 1950.
G. The provisions of this Chapter shall not apply to:
(1) A transfer to an acquiring authority arising from the nonpayment of ad valorem taxes, or by enforcement of privileges, mortgages, judgments or other obligations for money.
(2) A transfer in which the acquiring authority neither expressly reserves or excludes nor conveys to the transferor a mineral right otherwise subject to prescription.
(3) A transfer to an acquiring authority of land with an existing mineral right subject to prescription in which the instrument or judgment transferring the land does not expressly purport to reserve the mineral right to the transferor or otherwise exclude the mineral right from the acquisition.
(4) Any lands or mineral rights that are the subject of agreements made pursuant to R.S. 41:1702.
H. (1) Notwithstanding any provision of law to the contrary, when land within the Atchafalaya Basin Floodway is acquired from any person by an acquiring authority by conventional deed, donation, or other contract or by condemnation or expropriation proceedings and by the act of acquisition, order, or judgment, a mineral right otherwise subject to the prescription of nonuse is reserved, the prescription of nonuse shall thereafter not run against the right whether the title to the land remains in the acquiring authority, or is subsequently transferred to a third person, public or private.
(2) For purposes of this Section, “Atchafalaya Basin Floodway” means that area bounded by U.S. Highway 190 on the north, U.S. Highway 90 on the south, the East Atchafalaya Basin Protection levee on the east, and the West Atchafalaya Basin Protection levee on the west.