Guest Opinion: The real gold of the prairie — gravel |

Guest Opinion: The real gold of the prairie — gravel

David Ganje
Ganje Law Offices
A gravel road across the South Dakota prairie.
Getty Images/iStockphoto | iStockphoto

The extraction and sale of minerals are regulated activities in all the states. In the natural resources, mining and geological fields experts are reluctant to call gravel a mineral. Even the folks over at the U. S. Supreme Court can’t quite get their arms around it. The Court stated the word `minerals’ is used in so many senses that the ordinary definitions of the dictionary throw but little light upon its signification in a given case. But I set aside this game of semantics. Let us deal with the practical use of gravel. Gravel is a non-metal, non-fuel resource. It is what I call a commercial mineral.

Please now consider the wisdom of my grandfather who was a farmer. He said, “Don’t look for the gold, look for the gravel.” What common mineral has an immediate, practical and economic benefit? Gravel. Gravel can be a nice little annuity to a landowner.

The law and families, it is said, may be considered from time to time to be dysfunctional. One need only look at the regulation of gravel. In South Dakota gravel and arguably its first cousins shale, quartzite rock, sand and construction aggregate are regulated like a mineral. But under state law they are not deemed a mineral.

Gravel is everywhere. Different jurisdictions have different interpretations on whether gravel should be considered a ‘mineral’ requiring mining permits. As a result, the term ‘mineral’ will include gravel, and other times to exclude gravel. In South Dakota, in non-Indian Country, gravel – whether mineral or not – is regulated and a permit (technically a license) is required. In Indian Country gravel is treated under federal law and usually administered by each reservation according to their codes.

Mineral rights refers to one’s right to explore, extract or sell surface and subsurface minerals. In certain South Dakota specialty statutes ‘mineral’ is defined expansively as “any substance with economic value, whether organic or inorganic, that can be extracted from the earth, including oil and gas, but excluding water” and in some cases, uranium.

The SD Supreme Court has ruled that gravel and its cousins cannot be automatically considered a mineral. The Court stated that gravel remains with the surface estate. In other words gravel runs with the title to the deed and cannot be reserved out or excluded by a grantor or seller unless he specifically identifies gravel as a reserved mineral right in a written deed or other legal document. The curious problem of ‘gravel rights’ is further compounded by federal law under which some original grants (called patents) reserve gravel rights in favor of the federal government. And federal case law has likewise complicated the gravel-as-a-mineral problem.

Back to my grandfather’s advice. Gravel is ubiquitous. Gravel is valuable. Gravel as a mineral interest is overlooked by many landowners, sellers of land, buyers of land and lessees of land. In the course of deciding to sell or buy land, parties should always (but in my experience often don’t) research gravel rights or for that matter other mineral rights. Gravel can be God’s annuity to a well advised landowner. I have run into situations however where parties to a real estate deal do not properly search for mineral rights, and as importantly fail to properly direct how to keep, reserve or sell mineral rights when putting together sale or lease paperwork.

For those interested in declaring, reserving or selling gravel and mineral interests, the remedy is clear. It is the careful drafting of documents or sale closing papers. When mineral reservations and interests are written to correctly include gravel, or when there is compelling evidence that the grantor intended to include gravel or similar aggregate within the grant of land or other legal document, then courts will uphold such properly drafted language. Parties should not let gravel or minerals become a grantee interpretation versus grantor legal interpretation. No sense in paying lawyers later to fix a problem that could have been avoided. That road is a little rocky.