applying the American ruleSummary of this case from City of Kenai v. Cook Inlet Natural Gas Storage Alaska, LLC
Dec. 27, 1996
Submitted July 18, 1996, at Lansing.
Released for Publication March 18, 1997.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, Marc G. Whitefield, Assistant Attorney General, for plaintiff-appellee.
Eric G. Flinn, Sterling Heights, for defendants-appellants.
Circuit judge, sitting on the Court of Appeals by assignment.
SAWYER, Presiding Judge.
Defendants appeal from a judgment of the circuit court in favor of plaintiff in this mineral rights dispute. We affirm.
Defendants are the former owners of certain real property located in Washington Township in Macomb County. Plaintiff acquired the property in order to improve Highway M-53 and was granted title in fee simple. However, it is undisputed that, pursuant to M.C.L. § 213.53; M.S.A. § 8.265(3), defendants retained the "fluid mineral and gas rights" in the property.
The issue on appeal is, once the fluid minerals and gas have been extracted from the property, does the resulting underground storage space that held those fluid minerals and gas belong to the surface owner or to the owner of the mineral rights. We agree with the trial court that the storage space, once it has been evacuated of the minerals and gas, belongs to the surface owner.
Section 3 of the Uniform Condemnation Procedures Act, M.C.L. § 213.53; M.S.A. § 8.265(3), provides that fluid mineral and gas rights are considered excluded when a government agency acquires an interest in land unless the instrument granting the land to the agency specifically includes those rights. It is undisputed that defendants retained the fluid mineral and gas rights when plaintiff acquired the property for the highway improvement project. At issue is whether the storage space is part of the mineral and gas rights. We conclude that it is not.
The statute does not define "fluid mineral and gas rights." Accordingly, we are to give the phrase its plain and ordinary meaning. Great Lakes Sales, Inc. v. State Tax. Comm., 194 Mich.App. 271, 486 N.W.2d 367 (1992). Black's Law Dictionary (6th ed), p 995, defines "mineral right" as "[a]n interest in minerals in land, with or without ownership of the surface of the land. A right to take minerals or a right to receive a royalty." Therefore, a mineral right is a right to the minerals themselves, not to the land surrounding the minerals. That is, defendants retained only a right to the fluid minerals and gas themselves.
This is consistent with the decisions in other states. In United States v. 43.42 Acres of Land, 520 F.Supp. 1042 (W.D.La., 1981), the court considered the rights to profits from the storage of oil in caverns created from the mining of salt. The court concluded that the mineral owner possesses no ownership interest in the subsurface strata containing the spaces where the minerals were found. Id. at 1046. Similarly, in Southern Natural Gas Co. v. Sutton, 406 So.2d 669, 671 (La.App., 1981), the court held that surface ownership includes the right to use the reservoir underlying the surface for storage purposes.
In Emeny v. United States, 412 F.2d 1319 (Ct.Cl., 1969), the defendant had obtained the gas rights to the plaintiffs' property. The land contained an underground dome that, in its natural state, had contained a deposit of natural gas. The defendant was using the dome for the storage of helium gas. The court concluded that the defendant had only the right to explore for and extract the minerals for which it had rights and that the plaintiffs retained all other rights, including the use of underground structures for use to store "foreign" or "extraneous" gas produced elsewhere. Id. at 1323.
In Ellis v. Arkansas Louisiana Gas Co., 450 F.Supp. 412 (E.D.Okla., 1978), aff'd 609 F.2d 436 (C.A.10, 1979), the court noted that although the English and Canadian rule is that the owner of the mineral rights retains an interest in the cavern that remains after the extraction of underground minerals, the American view is that the cavern is owned by the surface owners.
Accordingly, we conclude that a surface owner possesses the right to the storage space created after the evacuation of underground minerals or gas. While defendants may, of course, "store" any fluid minerals or gas native to the chamber that has not yet been extracted, they cannot introduce any foreign or extraneous minerals or gas into the chamber. Only the surface owner, in this case plaintiff, possesses the right to use the cavern for storage of foreign minerals or gas, and then only after defendants have extracted the native gas from the cavern.
Plaintiff acknowledges that, as long as native fluid minerals or gas remain, it could not inject its own foreign minerals or gas into the chamber because it would be impossible to segregate plaintiff's gas from defendants' gas.
Affirmed. Plaintiff may tax costs.