This post is the first in a series of three articles examining ownership of minerals located under bodies of water, railroads and roads.
Who owns the minerals under bodies of water? When oil and gas were being produced in meager quantities, not many people cared. But the story is different when lease bonuses are thousands of dollars per acre and royalties could be worth millions. Now, every acre in eastern Ohio is cast in a different light and suddenly there is enormous interest in figuring out who owns the minerals beneath Ohio’s lakes, rivers, ponds, streams and reservoirs. The following press release helps drive home the point about what is at stake:
The Muskingum Watershed Conservancy District today approved a $40.3 million natural gas lease for 6,500 acres at Seneca Lake in Guernsey and Noble counties.
The lease with Colorado-based Antero Resources was approved 5-0 by the district’s commissioners, despite continued protests from a grassroots group, the Southeast Ohio Alliance to Save Our Water.
The district will be paid a leasing bonus of $6,200 per acre plus a royalty of 20 percent on natural gas, oil and natural gas liquids from Antero wells under district-owned land, said district spokesman Mark Swiger.
That makes the district that stretches from southern Akron to the Ohio River one of the biggest beneficiaries of the Utica shale boom in eastern Ohio. It will get $77.4 million for the Antero lease and two earlier leases at other lakes. Additional and significant royalty income is also expected from the wells at the three sites.1
Though it is clear that there is much at stake, figuring out who owns mineral rights under bodies of water has sometimes proven difficult.
Ohio Law: Background
The Ohio Department of Natural Resources (ODNR) has explained riparian rights as follows:
There are two components to a stream, the water flowing in it and the land beneath the water. Water is a “public good” and not ownable as private property. Landowners do have rights to make use of the water flowing through their property including the right to withdraw it and otherwise control it to the extent that nature permits, so long as the rights of others are not infringed upon. Such rights are known as “riparian rights,” meaning they are derived through the ownership of streamside property.2
English Common Law — “… to the middle of the stream”
Regarding ownership of land under a stream, English common law provided that the soil beneath tidal waters, the seashores and banks thereof, was vested in the crown. The soil beneath the non-tidal rivers and streams was vested in the adjacent landowners if the land had been granted. It is noted that even non-navigable tidal waters such as tidal marshes were owned by the crown. All non-tidal rivers that were navigable in fact were subject to a right of public passage, but could be owned privately. See Saffer, Ownership of Minerals Underlying Rivers and Streams, Railroads and Public Roads in Marcellus and Utica Share Development States (hereafter “Saffer”), 1, presented to the Energy and Mineral Law Foundation (2012).
Ohio Has Adopted the English Common Law Rule.
The Ohio Supreme Court applied English common law more than 180 years ago in a case arising from the construction of a dam on the Sandusky River. Faced with an argument that the riverbed was owned by the government — not an abutting property owner — the court responded:
We do not believe that it was the intention of the United States to reserve an interest in the bed, banks, or water of the rivers in the state, other than the use for navigation to the public, which is distinctly in the nature of an easement, and all grants of land upon such waters, we hold to have been made subject to the rule of the common law, which, in this case, is the plain rule of common sense. And it is this: He who owns the lands upon both banks, owns the entire river, subject only to the easement of navigation, and he who owns the land upon one bank only, owns to the middle of the river, subject to the same easement. This is the rule, recognized not only in England, but in our sister states.
(Emphasis added.) Admr’s. of Gavit v. Chambers, 3 Ohio 496, 498 (1828).
The Gavit holding has been applied consistently in modern times. For example, in a case involving construction in the Little Miami River, an Ohio appellate court held that the title of lands bordering on a navigable stream extends to the middle of the stream. State ex rel. Brown v. Newport Concrete Co., 44 Ohio App. 2d 121, 123-124, 336 N.E.2d 453(1st Dist.1975).
Later, in a 2001 quiet title action, there was a ditch, now a depression, used in an 1854 deed to describe the boundaries of abutting property. While the ditch as a monument to effect the boundary may have been unclear, the law was not:
Under Ohio law, as well as under the common law, “owners of lands situated on the banks of navigable streams running through [Ohio], are also owners of the beds of the rivers to the middle of the stream.” Of course, this rule applies where there is no express reference or grant beyond the boundary of the near bank. Where there is an express grant that goes beyond the near bank, the unambiguous language of the deed must be given effect, absent some other rule of law being applicable.
Here the appellees’ deed conforms to the common law rule and expressly grants title to the middle of the stream. However, the appellant’s deed expressly grants title to the low water mark of the far bank, i.e. the west bank. This express grant creates a conflict that cannot be resolved by simply applying the common law rule of Admr’s of Gavit, supra, to render that grant nugatory.
(Citations omitted.) Haynes v. Markel, 4th Dist. No. 01CA2587, 2001 Ohio App. LEXIS 5599, *10 (Dec.10, 2001).
Lakes, Ponds and Reservoirs
The subsurface ownership question has arisen less frequently with regard to lakes, ponds and reservoirs. This could be because the principles for streams are thought to apply, because there are relatively few inland lakes in Ohio, or because the issue simply has not presented itself in conjunction with conventional wells — which may change given the advent of horizontal drilling. But the Supreme Court of Ohio did provide some indication of how the issue would be addressed in a case decided in 1890. See Lembeck v. Nye, 47 Ohio St. 336, 24 N.E. 686 (1890). The plaintiff in Lembeck claimed that he owned the land under Chippewa Lake in Medina County, Ohio, as well as a narrow strip of land that surrounded the lake. The plaintiff brought a trespass action against the defendants, who operated resort-type buildings on the premises, constructed piers extending into the lake and rented boats. The Court found that the title to the lake and the lands enclosing it were susceptible of private ownership and that the plaintiff’s title stemmed from the title acquired by the land’s original owners. Id. at 347, 353.
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Because the deed to the plaintiff did not describe the boundary of the lake as a limitation on the property conveyed, the Lembeck court applied the common law theory applicable to streams to determine who owned the lake. But, what makes the Lembeck case complicated, and instructive, is that the deeds from the original property owners fell into three classes:
- Those in which the lake itself (but not the edge of the lake) is described in the deed as a boundary;
- Those in which the “margin” of Chippewa lake is included in the description as a boundary; and
- Those in which the lands conveyed are described by metes and bounds only with no reference to the lake.
For the first class of deeds, the court applied the common law rule applicable to steams, i.e., to the center of the water body: “[P]ublic policy and the presumed intention of the parties will extend the line [to that point].” Id. at 351.
As for the second class of deeds, the court found that, “by the use of these words [expressing that the margin of the lake is a boundary] the parties have declared their intention to make, not the middle, but another part of the lake — the edge of the water — the boundary line.” Id. The Court stated that “[n]o other construction can be given to the words the parties themselves have chosen, without doing violence to their meaning; and an intention contrary to the one expressed by the very words selected by the parties themselves cannot be presumed.” Id.
The defendants in Lembeck held deeds in the third class described above — those that contained only a metes and bounds description with no mention of the lake. As to those deeds, the court held, “[i]n descriptions of this class only the lands within the bounds pass.” Id. at 352. “Indeed, where the parties have by their deed enclosed the land by agreed lines, without any reference whatever to adjacent natural objects, it is difficult to conceive of a principle that would extend those lines to include those natural objects, however convenient they might be to the enjoyment of the land actually conveyed.” Id.
Thus, with the exception of the first class of deeds, where title to abutting land was found to extend to the middle of the lake, the original property owners, and the plaintiff as their successor in title, owned the lakebed. Therefore, the court said:
There should be a decree, therefore, finding, that as against the defendants herein, the plaintiff … is the owner in fee simple and entitled to the exclusive possession of all the lands underlying the waters of Chippewa Lake except those parts thereof that … were conveyed by the [original property owners] to [purchasers whose deeds did not include the lake as a boundary], and restraining the defendants from letting to hire either boats or fishing tackle, to be used on the water overlying the lands so found to belong to him. Id. at 355.
This 1890 case has not been distinguished, embellished upon or even cited in the last 120 years and, therefore, remains good law. The court went out of its way to give effect to the words in the deeds and, when adopting the common law of streams, relented to symmetry and pragmatism.
The lesson learned with regard to lakes and ponds, say, in the case of a residential subdivision that includes a pond, is that one will have to pay special attention to documents that describe the subdivision — especially when the water body is surrounded by privately owned lots. Ownership of a body of water may have been vested in an owners’ association as a common area or may have been retained by the developer. In the absence of either scenario, and absent a deed falling within either class 2 or 3 described above, the lakebed and its mineral interest would be owned by the abutting lot owners, and ownership for each would extend to the center of the water body.