22 Apr Who Owns the Minerals Under a Railroad Right-of-Way… by Ian M. Nelson

Like all of History’s great philosophical conundrums, the answer to the title question is, it depends. In the 19th Century, primarily to create the quintessential definition for the newly invented term “robber baron,” with a secondary goal of connecting the states with the vast western territories of the United States via railway, the US government granted tracts of land totaling more than 186 million acres to the companies and men endeavoring to build the rail lines and capture quantities of wealth previously reserved to nobility.

Pacific Railroad Act of 1862      

Congress’ railroad land grant scheme first began to assume a distinct form with the passage of the Pacific Railroad Act of 1862 and continued through a succession of related acts extending over a decade and crossing most of the West, collectively known as the “Pacific Acts.” After the Civil War, Congress’ policy of subsidizing railroad companies and their owners, men like Stanford, Vanderbilt, and Huntington who were well on their way to creating the Gilded Age, lost favor with the public. In 1872, the House of Representatives passed a resolution stating that “the policy of granting subsidies in public lands to railroads and other corporations ought to be discontinued, and… that the public lands should be held for the purpose of securing homesteads to actual settlers, and for educational purposes, as may be provided by law.” Later, the 1922 Abandonment Act was passed as a means to claw back some of the lands granted prior to 1871 which were no longer being used for the purposes of a railroad, while the 1930 Railroad Right-of-Way Act provided a method for leasing the minerals under the rights-of-way.

Under the 1862 Act, railroad companies were given construction loans and a right-of-way of 200-feet on each side of the railway center line, together with the railroad’s choice of 20 odd-numbered sections on either side of the right-of-way for every mile of railroad built. The 1864 Act amended the 1862 Act and allowed a railroad to select sections within 20 miles on each side of the center line. The Pacific Acts established rights-of-way which were single swaths through certain sections, covering the constructed track and a buffer between the track and the adjacent lands on each side of the track. The railroad rights-of-way, when located on the ground, were commonly referred to as “Charter rights-of-way,” and traversed both even and odd sections of public survey lands. The Charter rights-of-way were originally characterized by the Supreme Court as an unrestricted easement and held that title to the odd sections did not merge with the rights-of-way granted.

Great Northern Ry. v. U.S. and United States v. Union Pacific Railroad Co.

In Great Northern Ry. v. U.S. and United States v. Union Pacific Railroad Co., the United States Supreme Court essentially established that railroad rights-of-way acquired under the Pacific Acts were limited fee estates, and in any subsequent patent of those lands the minerals under the rights-of-way would not pass to the patentee and would remain owned by the railroad. Further, in Union Pacific the Supreme Court held that mineral exception language in the July 1, 1862 Act (“all mineral lands shall be excepted from the operation of this act”) effectively reserved to the United States the mineral rights under the right-of-way granted to the railroad. As a result, mineral rights under similar rights-of-way are presently owned by the United States and are leasable under the Right-of-Way Leasing Act of 1930.

Right-of-Way Leasing Act of 1930

The 1930 Act allows the right-of-way owner either to lease its oil and gas or to enter into a compensatory royalty agreement with adjoining landowners. Where a Charter right-of-way is abandoned for railroad purposes, ownership of the underlying minerals reverts to the United States with the oil and gas in the abandoned tract being leasable under the Mineral Leasing Act of 1920. The minerals in the other portions of the peripheral sections that were patented separately from the railroad grant are owned according to the language in those patents. If no oil and gas mineral reservation is made in a patent covering peripheral lands, the minerals not under the right-of-way are owned by the patentee. Minerals in the alternate section lands patented to the railroad are owned by the railroad.

1875 General Right-of-Way Act

The 1875 General Right-of-Way Act discontinued the policy of enacting individual grants of a right-of-way across public lands, instead establishing grants of only limited rights-of-way to the railroads. However, confusion as to the mineral title still occurs under the 1875 Right-of-Way Act where subsequently issued patents do not contain any reference to an existing right-of-way. Such rights-of-way do not, however, confer any mineral ownership on the railroads. Great Northern Railway established that the interest granted under 1875 Act was an easement across the public lands which conferred no right or title to the underlying minerals. The public’s disfavor of railroad grants at the time of the act’s passage helped to influence the court’s decision along with the Congressional policy shift of 1871.

The transcontinental railroads tied the broad reaches of the young United States together, but the ownership of oil, gas, and other minerals underlying railroad rights-of-way can still be a complicated matter despite the length of time that has elapsed since their grant. When determining the ownership of the minerals, consideration needs to be made as to when and which act the right-of-way was granted pursuant to, the section it runs through, whether it is still being used as a railroad, as well as the laws of the state in which it is located. If you are considering leasing the minerals under land you own crossed by a railroad right-of-way, it is important to determine its ownership, as you could own more mineral acreage than you think.

References:

The Union Pacific Charter Act of July 1, 1862 (5 Act of July 1, 1862, ch. 120, 12 Stat. 489, amended by Act of July 2, 1864, ch. 216, 13 Stat. 356)

General Right-of-Way Act of 1875, 43 U.S.C. § 934

Act of March 8, 1922, ch. 94, 42 Stat. 414

Act of May 21, 1930 (30 U.S.C. §§ 301-306)

Great Northern Ry. v. U.S., 315 U.S. 262 (1941).

United States v. Union Pacific Railroad Co., 353 U.S. 112 (1956)

Cong. Globe, 42d Cong. 2d Sess.1585 (1872)

Written by Ian M. Nelson, Senior Attorney at KMD Law