Is coal covered under mineral rights ?
Coal is a mineral if that is what you are asking.
As Mr. Kennedy said, Coal is definitely a mineral; however, before leasing, that is something that should or IMO, must be covered very clearly in the lease. If your property is indeed around Groesbeck, Texas, IMO, this even becomes more important since there is a lot of lignite strip mining in that area which is a real downer for the surface. Again, IMO, if a mineral owner wants to lease the property for coal/lignite mining and understands the down side, then that is well and good. The big push of mineral leasing from the past 10 years until now has been for oil and gas, "only" and that needs to be spelled out clearly. The lease needs to clearly spell out which or what minerals are being leased and the limitations that the lease covers.
Good luck and make sure you get some expert help before signing a lease. A few extra short term dollars can really be a big cost down the road if not done properly.
- Groesbeck, Texas
Shirley,
I see you live in Texas. That state has a unique set of rules for mineral ownership that goes something like this"
If the surface is moved or destroyed in the mining of a mineral, it belongs to the surface owner (layman language)
In my past, I have been responsible for the management of all minerals of major railroad companies across the Texas Panhandle including your area. I can tell you first hand that Bigfoot is right, be very careful about how and when minerals are leased. It is akin to walking a tight-rope. One false step can ruin a bright future.
I'll send you a pm in case you have more specific question.s
Gary L Hutchinson
Minerals Managment
I own 50% mineral rights on 120 acres in McClean County ND, and am being offered 16 cents per ton of coal mined. How does that math work, and is it a fair offer? The land is currently leased by Falkirk Mining Co. I’m totally new to this, having inherited the Mineral rights recently.
John,
It is impossible to tell if the price is fair without knowing the plan for mining. This may be lignite, a very low grade coal that can not me moved very far. Measurement and payment is also a huge question. Moreover, the other minerals associated with the coal or below the coal could be of significant value so you must protect them in any deal. I'm confused about the status of the lease. Usually the mineral owner has no choice about price or royalty payment unless your minerals are unleaaseld.
Send me a personal message if you like. Coal is a whole different animal from oil and gas especially in North Dakota.
John, I would recommend that you start a new thread and give some specifics. Is your interest leased or only the other 50%.
My Deed states "...Grantor (Grandma) does herein you grant, bargain, sell, convey, transfer, assign, and deliver to (my Mom) hereinafter called Grantee (whether one or more) and undivided 50% interest in and to all the oil, gas, and all other minerals in and under and that may be produced from the following described lands situated in ..McClean County, State of North Dakota to wit:
Township 146 North, Range 82 West
Section 12: South Half of Northeast Quarter (S1/2NE1/4) and Northeast Quarter of Northwest Quarter (NE1/4NE1/4)
Together with the right of ingress at all times for the purpose of mining, drilling, exploring, operating and developing said lands for oil, gas, and all other minerals, and storing, handling, transporting and marketing the same therefrom with the right to remove from said land all of Grantee's property and improvements.
This sale is made subject to any rights now existing to any lessee or assigns under any valid and subsisting oil, gas, or mineral lease of record heretofore executed; it being understood and agreed that said Granted shall have, receive, and enjoy the herein granted undivided interest in and to all bonuses, rents, royalties and other benefits which may accrue under the terms of said lease insofar as it covered the above described land from and after the date hereof, precisely as if the Grantor herein had been at the date of the making of said lease the owner of a similar undivided interest in and to this lands described and Grantee one of the lessors therein, (May, 1974)
Here is the Mining Co. offer ((1st two pages of 7):
THIS COAL LEASE AGREEMENT (“Agreement”) is made and entered into as of the _____ day of December 2016, Effective January 30th, 2008, by and between John F. McNeely Jr., individually and as Executor of The Estate of Mary Lois McNeely, Deceased, whose address is 1792 Skyline Drive, Santa Ana, California 92705, hereinafter (whether one or more) called “Lessor”, and The Falkirk Mining Company, an Ohio corporation, with offices at 2000 Schafer Street, Suite D, Bismarck, North Dakota 58501-1204, hereinafter called “Lessee”.
W I T N E S S E T H :
1. Lessor, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration in hand paid, the receipt of which is hereby acknowledged, and in further consideration of the premises, covenants, terms and conditions herein contained, does hereby GRANT, LEASE and LET exclusively unto Lessee, all of the coal, lignite, sub-bituminous coal and their constituent products, and all other mineral substances contained therein or found in association therewith (all of which are hereinafter referred to collectively as “coal”) encountered in mining operations conducted hereunder for the production of coal upon, in and underlying the following described lands (hereinafter called the “Leased Premises”), containing 120.00 acres, more or less, located in the County of McLean, and State of North Dakota:
Township 146 North, Range 82 West
Section 12: S2NE4, NE4NE4
This Agreement covers and includes all of Lessor's present interest in the coal in, upon and underlying the Leased Premises, together with all mining rights and privileges appurtenant to the aforesaid coal and incident to the ownership thereof, and, by way of enlargement and not by way of restriction, the following rights and privileges:
The exclusive right, power and authority to explore for, test, work, mine, produce, develop, clean, process and sell or otherwise utilize all coal and other coal now or hereafter owned, leased or otherwise controlled by Lessee (hereinafter referred to as “other coal”) in, upon or underlying the Leased Premises by any method or machinery (whether now or hereafter known), including but not limited to underground mining and auger mining methods, strip, open pit or other surface mining methods, and all such other rights, powers and privileges as may be necessary, useful or incidental thereto, including, without limitation, the right to excavate test pits or other pits, sink shafts, make and use openings, tunnels and underground passages, and use, occupy and/or disturb so much of the surface and subsurface of the Leased Premises as may be necessary, useful or incidental in carrying out the purposes of this Agreement in accordance with the methods adopted by Lessee; the right to mine such coal and such other coal without any liability to Lessor for any damage which may result either to the surface of or any strata in, on and under the Leased Premises or to any surface or underground water supplies or sources located thereon or therein except as provided for in applicable federal or state laws, rules or regulations; the right to excavate, drill, remove and displace any or all of the earth, rock and other strata or materials in, upon or about such coal and such other coal and the horizons thereof and to deposit the same in, upon or off the Leased Premises; the right to construct, erect, use and maintain on, in or under the Leased Premises, roads, conveyor systems, buildings, tipples, structures, preparation plants, engines, machinery, railroad tracks, shops, ditches, dams, wells, lakes, levees, streams, ponds, diversions, power and communication lines and other equipment and facilities, all being hereinafter called “Improvements”, and, from time to time, to operate, maintain, repair, replace, move, remove or relocate all or any part of the same, as Lessee may deem desirable or necessary, with the right, in Lessee's sole discretion, to remove any and all Improvements at any time before or within six (6) months after the termination or expiration of this Agreement; the right to have free use of both surface and underground water from the Leased Premises for all mining operations and activities and for reclamation and restoration of the Leased Premises; the right to discharge water from lands other than the Leased Premises across the Leased Premises to the extent necessary or convenient for Lessee to conduct mining operations on the Leased Premises or on other lands; the right to transport personnel, supplies, equipment, coal, other coal and other materials into, upon, over, through, under and across the Leased Premises and the free and uninterrupted right and right of way into, upon, over, through, under and across the Leased Premises at such points, and in such manner, as may be incidental, useful or necessary for the purpose of all operations and activities in connection with the exercise of any and all of the aforesaid rights; and with the right on the part of Lessee to enjoy and exercise any and/or all of such rights, powers and privileges in connection with its operations and activities on other lands.
2. Subject to the other provisions herein contained, this Agreement shall remain in effect for a term of five (5) years from the date of this Agreement (the “Primary Term”) and as long thereafter as (a) mining operations (as hereinafter defined) are taking place on the Leased Premises; or (b) any portion of the Leased Premises are subject to a valid mining permit. For purposes of this Agreement, “mining operations” shall mean, but not be limited to, all operations or activities in connection with the development of a mine for the production of coal from the Leased Premises, the actual production of coal, removal of overburden, opening, reworking or extending a mine, or the reclamation of mined lands.
3. Lessee shall pay to Lessor a tonnage royalty for each ton of two thousand (2,000) pounds of coal mined and removed from the Leased Premises in each calendar quarter at the rate of Sixteen Cents ($0.16) per ton of coal, where Lessor owns and has the right to lease and does hereby lease such coal together with the mining rights in connection therewith.
All royalties due to Lessor hereunder shall be paid to Lessor on or before each April 30, July 31, October 31 and January 31 for all coal mined and removed from the Leased Premises during the immediately preceding calendar quarter.
4. On or before each annual anniversary date of this Agreement, Lessee shall pay Lessor the sum of Five Dollars ($5.00) per net coal acre owned and leased by Lessor and subject to this Agreement on such annual anniversary date.
All such sums shall not be treated as advance royalties and shall not be applied toward, credited against or deducted from any tonnage royalties payable or to become payable to Lessor under this Agreement.
I wouldn't sign that as written under any circumstances. For one thing it gives them permission to just leave the land torn up with no remediation of any damage they have done. The lessee gets free use of surface water and subsurface water. The water is more valuable than the coal. If they have been mining since 2008 (or longer), I doubt you are going to kick them out but terms need to be negotiated. Think of it this way. They may need you to sign that lease so they are not responsible for millions of dollars worth of remediation?
I believe that if you don't own the surface you wouldn't own the water.
Two questions: a) What wording would be advisable for water rights, and b) what fees/ royalties are expected for this type of lease agreement?
John,
The royalty described could be worth anywhere from zero to $3,000,000 at 0.16/ton mined. Coal or any other mechanically mined solid commodity isn't like oil and gas that can come out of the ground by remote control. Once it is bypassed and not a part of a mine plan that costs over $200 million to mine the first ton, it may never be mined. Since you find yourself in an all or nothing saturation, don't dwell on wording for band aides and externalities that many or may not exist. First you must understand what is planned for your coal then negotiate the measurement and payment of royalties.
There are both mining engineering consultants mineral attorneys who can help located in Chicago, Denver, Portland, Montana and Wyoming. Answer my pm request and I'll give you some names.
Having put a few mines into production, I can tell you that you should feel fortunate to have been asked to lease. What you do with that good fortune it up to you. You may not get another chance so make the most of it. The externalities will take care of themselves if you have expert help.
I have a hunch you may be talking about Luminant. Watch out, they're real crafty, especially their landman. I won't mention his name. They act like they're your long-lost buddy, but all that's for "show." Don't be taken in my those bottom scum-suckers.
I'm in the Robertson/Limestone county area and their water line easement runs across my land. It feeds from Lake Limestone to Oak Grove Power Plant.
I have nothing kind to say about these scoundrels. Except they don't pay for damages and their crews venture off the ROW, use my private gate and cross over my private land.
Good luck,
Pat
If you own only mineral rights does that include coal rights ?? In Limestone they strip mine. Dig down to coal, get it and reclaim land.
Ok so it sounds like in my area the coal rights will go to surface owner.
Shirley,
Read my earlier response about Texas minerals and how they are mined as it relates to ownership.
So, if if you sold surface and retained mineral rights, check the deed reservation language then check the Texas laws about ownership of minerals mined from the surface when minerals are severed. My previous involvement with Texas Lignite, involved that very question. My clients were co-owners of railroad land and the mining company had to get a complicated lease from the surface owners to extend its permit onto railroad land.
It is complicated but seems fair.
Gary L Hutchinson
Minerals Managment
As per a minerals surface rights article by Judon Fambrough 2009 - Reed v. Wylie - The court held the term minerals means the following when no express intent appears to the contrary. (1) Any coal or lignite found at the surface is not a mineral and thus belongs to the surface owner. The term "at the surface" means "on the surface" (2) Any coal or lignite found near the surface is not a mineral and belongs to the surface owner if any reasonable method of production will destroy, consume or deplete the surface. The terms near the surface means within 200 feet of the surface. (3) Any coal or lignite situated both within and below 200 feet of the surface again belongs to the surface owner if production will destroy, consume or deplete the surface. (4) Reclamation or restoration of the surface after production is immaterial. (5) The value of the substance being removed in irrelevant.
Good luck,
Pat
Re: groundwater
Texas Water Code Section 36.002 as Amended by State Bill 332 - OWNERSHIP OF GROUNDWATER (a) The legislature recognizes that a landowner owns the groundwater below the surface of the landowner's land as real property.
As for what to charge for the sale of your groundwater, consult a Mineral Manager for the going rate. Last I negotiated was $.50/gallon plus added provisions that served to protect the groundwater from contamination. Of course, there are many other issues to consider when a company wants to "suck" up your groundwater.
Good luck,
Pat
Pat:
I started to give this post a shot; but, felt someone would do a better job and you just did it. Thanks for an excellent answer and from an excellent source. IMO, one of the best and most reliable sources around.
Thank you Pat !!
Thanks to all for all the info !