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Coal-Bed Methane Mineral Rights Ownership - A Brief Overview

By David J. Kreher

Part Three: The Southern Ute Decision

On June 7, 1999 the United States Supreme Court ruled that coalbed methane was not a part of coal in the case of Amoco Production Co. v. Southern Ute Indian Tribe ("Southern Ute").1 Hopefully, this decision will not conclude the discussion concerning coalbed methane ownership.

The Southern Ute Indian Nation possesses coal rights in land in Wyoming. In the Southern Ute case, the tribe sought to have the coalbed methane contained in the coal declared as part of the coal itself, so that the tribe could extract it for a profit. The district court ruled the gas was not part of the coal, based on a 1981 Department of the Interior Solicitor's Opinion.2 The Tenth Circuit Court of Appeals reversed the lower court decision in its own eloquently crafted and reasoned decision. The U.S. Supreme Court reversed.

The basis for the Supreme Court decision revolved around the Congressional intent in creating the Coal Lands Acts of 1909 and 1910. The Coal Lands Acts reserved to the United States coal interests in land which was later returned to the Southern Ute Nation.  The coal reservation is distinct from the remaining interest in land, which may or may not be owned by the Southern Ute Nation. In the Supreme Court decision, the Court held that Congress did not consider coalbed methane gas part of coal; and therefore, based on Congressional intent, only the coal was reserved to the United States (later returned to the Southern Ute Nation), not the coalbed methane.

A positive part of this decision involves the technical discussion on the relatively inseparable nature of coalbed methane gas from the associated coal. This discussion leaves open the possibility that, under different circumstances, coalbed methane would be considered part of the coal from which it originates. Such an interrelationship would be consistent with decisions from Pennsylvania and Alabama,4 as well as the 10th Circuit Court of Appeals decision in this case,5 a State District Court opinion out of Montana,6 and the new position of the Department of the Interior.7

Although the Southern Ute decision may dramatically impact coalbed methane gas ownership associated the Coal Lands Acts of 1909 and 1910, hopefully this decision will not define coalbed methane gas ownership in other circumstances.

    Coming Next: Federal and State Statutes and Regulations

 

1Amoco Production Co. v. Southern Ute Tribe, No. 98-830, (https://supct.law.cornell.edu/supct/html/98-830.ZO.html).

2Southern Ute Tribe v. Amoco Production Co., 874 F. Supp. 1142 (D. Colo. 1995). The Solicitor's Opinion recently was withdrawn by an Interior Department Order.

3Southern Ute Indian Tribe v. Amoco Production Co., 119 F.3d 816 (10th Cir. 1998).

4See Vines v. McKenzie Methane Corp., 619 So.2d 1305 (Ala. 1993); NCCB Texas Nat. Bank v. West, 631 So.2d 212 (Ala. 1993); and U. S. Steel v. Hoge, 468 A.2d 1380 (Penn. 1983).

5Southern Ute Indian Tribe v. Amoco Production Co., op. cit. n. 3.

6Carbon County v. Baird, 1992 WL 464786 (Dist. Ct. Carbon County Mont. Dec. 14, 1992)

7As referenced in Southern Ute, op. cit. n. 1.

 

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