II. Montana Courts Face an Unprecedented Legal Issue
From 2016 to 2020, the District Court for the District of Montana, the Ninth Circuit, and the Montana Supreme Court were faced with a question of first impression under Montana law in Murray v. BEJ Minerals, LLC—do fossils minerals belong to the mineral estate, or are they separate from minerals, therefore belonging to the surface estate?
A. Murray I: The District Court’s Determination
In 2005, Mary Ann and Lige Murray purchased surface ownership rights in property they had previously leased in Montana. The mineral and surface estates were thereby severed, and the mineral rights allocated through a mineral deed. Under this deed, the Murrays and the Seversons, the previous property owners, would own as tenants in common “all right title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [property].” The district court set out to determine whether the dinosaur fossils the Murrays discovered in 2016 were “minerals” under this deed.
The court used an “ordinary and natural meaning” test first employed in Heinatz v. Allenand subsequently employed by the Montana Supreme Court in several cases, such as Farley v. Booth Brothers Land & Livestock Co. and Hart v. Craig. The Heinatz court held that a substance which is comprised of minerals and therefore technically a “mineral” is not a “mineral” in its ordinary and natural meaning unless it is “rare and exceptional in character or possesses a peculiar property giving [it] special value.” A material’s classification as a “mineral” under a scientific definition is therefore irrelevant for purposes of a mineral deed. In order to determine whether dinosaur fossils are “minerals” as that term is ordinarily understood in Murray, the district court looked at both dictionary and statutory definitions of the term “mineral.” The court found that a “common understanding” of mineral could be discerned from these definitions under which a “mineral” is a “hard compound or oil and gas for refinement and economic exploitation” that is mined. Because fossils are not refined, mined, or made valuable by virtue of their physical properties, the court held that the dinosaur fossils belonged to the surface estate.
B. Murray II: The Ninth Circuit’s Reversal
The Seversons appealed the district court’s decision to the Ninth Circuit. The Ninth Circuit also used the “ordinary and natural meaning” test, but unlike the lower court, found that the dictionary definitions of “mineral” were not dispositive. Because such definitions depend upon context, both broad and narrow interpretations of the word “mineral” exist. The Ninth Circuit concluded that because fossils were explicitly included in one dictionary definition of “mineral,” this definition was sufficient to establish that fossils were minerals for purposes of a mineral deed.
The Ninth Circuit then turned to Montana law to determine if the mineral deed could be interpreted the same way under Montana law. It found that the statutory definitions of “mineral” were “inconclusive” and agreed with the district court that the Heinatz test should be applied due to the Montana Supreme Court’s past reliance on thattest. The Ninth Circuit adopted the view that the Heinatz test is non-categorical and therefore rejected the argument that because not all fossils have value, they cannot categorically be considered minerals. The fossils at issue here, the court reasoned, were clearly “rare and exceptional” and thus met the ordinary and natural meaning of “mineral” under Heinatz. Therefore, a divided three-judge panel sitting for the Ninth Circuit reversed the judgment of the district court and held that the fossils belonged to the mineral estate. However, the dissent argued that “the district court correctly concluded that dinosaur fossils do not fall within the ordinary and natural meaning of the term ‘minerals,’ as that term [was] used in the mineral deed” between the Seversons and Murrays.
C. Certifying the Question to the Montana Supreme Court
On rehearing en banc, the Ninth Circuit, certified the question of whether “dinosaur fossils constitute ‘minerals’ for the purpose of a mineral reservation” to the Montana Supreme Court. The circuit court determined that this question was better left to the Montana Supreme Court because it “present[ed] important public policy ramifications” and was a “substantial” issue of “broad application” given the frequency with which mineral and surface estates are divided in Montana and Montana’s abundance of fossils. The Supreme Court of Montana accepted the certified question to clarify the “ordinary and natural meaning of ‘mineral’” as used in mineral deeds.
The Supreme Court of Montana endorsed the district and circuit courts’ use of the Heinatz test for determining the “ordinary and natural meaning of ‘mineral’”; however, the court altered its application of that test. The court concluded the best means to determine whether a substance or material constitutes a mineral under an ordinary and natural meaning is to consider (1) the use of the term in the instrument being analyzed, such as a mineral deed; (2) the mineral contents of the substance and if that mineral content gives it value and rarity; and (3) the substance’s relation to the surface of the land and how its removal impacts the surface. The court made clear that this was a non-exhaustive list of factors that should be viewed with an eye towards the overall intent of the parties in drafting the instrument. The court applied this three factor test to the facts in Murray.
The Supreme Court of Montana, like the district and circuit courts, first looked at the use of the term “mineral” generally, but went a step further and looked at the use of the term in the mineral deed between the Murrays and the Seversons. The court concluded that “[the] use of the term ‘minerals’ in the phrase ‘oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [property]’” and the deed’s assignment of the right to mine, drill, and further develop the land “for oil, gas, hydrocarbons, and minerals” suggested that the Murrays and Seversons did not intend “minerals” to include fossils. The deed could be interpreted as referring to the “mining of hard compounds or oil and gas for refinement and economic exploitation.”
The court also considered dictionary and statutory definitions, which supported the conclusion that fossils are not ordinarily thought of as “minerals.” For example, an examination of several Montana statutes revealed no definitions of or references to “minerals” that included fossils. The court concluded that absent explicit evidence of the parties’ intent to include fossils as part of the mineral estate, fossils are not ordinarily and naturally considered “minerals” as that term is used in mineral deeds.
Next, the Supreme Court of Montana considered the question of value and rarity. The court rejected the contention that only the value of the material as a whole should be considered. Instead, the court determined that a consideration of the value of the mineral composition of the material is necessary. In the case of fossils, value is determined based on how well the fossil has been preserved, how complete the fossil is, and what species of dinosaur has been fossilized. In some instances, a fossil may have little or no value even though it has the same or a similar mineral composition as a fossil worth millions of dollars. As a result, value and rarity in the case of fossils do not come from the minerals that comprise it. The court concluded that fossils “are valuable because of their very existence.”
Finally, the court looked at the relationship between fossils and the surface, specifically how removal of the fossils impacted the surface. Although such an analysis is not considered part of the Heinatz test, the court in Heinatz considered limestone’s location relative to the surface, as well as the effect on the surface upon its removal, in determining that the limestone at issue belonged to the surface estate. Like limestone, dinosaur fossils are found “lying [on] or sticking out of the ground.” Fossils become exposed to the surface due to years of erosion and “other natural events,” which the court viewed as strengthening the relationship between fossils and the surface. The court also analogized the discussion of limestone removal in Heinatz to the excavation of the fossils in Murray. Limestone removal, like excavation, requires disrupting normal uses of the surface estate. Taking these three factors into consideration, the court, in a four-to-three decision, concluded that dinosaur fossils are not “minerals” for purposes of mineral deeds under Montana law.
The Ninth Circuit en banc adopted the Montana Supreme Court’s conclusion that fossils are part of the surface estate and not “minerals” for purposes of a mineral deed. The Ninth Circuit therefore affirmed the district court’s holding, which granted the Murrays sole ownership of the fossils.
III. Fossils: What Are They?
The biggest contention in the Murray litigation was the correct classification of fossils—are they minerals or something different? To determine whether the court correctly concluded that fossils are not minerals, it is helpful to understand what fossils are. For an organism’s remains to become fossilized, several conditions must exist. Typically, this process begins when sediment buries the organism shortly after it dies. This sediment serves as a protective layer preventing the organism’s bones from eroding; it also prevents oxygen from reaching the bone, which decelerates the decomposition process. As this sediment builds up, the pressure transforms lower layers of sediment into sedimentary rock. Water permeates the bones, and minerals in the water are deposited into and slowly replace the bone. This process of fossilization occurs over millions of years.
In Murray I, both parties relied on expert testimony to explain the fossilization process, and each sides’ experts agreed that the process described above occurred. Specifically, both sides’ experts concluded that the dinosaur bones the Murrays found had been recrystallized. However, the Seversons’ expert testified that open spaces in the dinosaur bones had been filled by francolite, a mineral belonging to the apatite group and most frequently found in fossilized bone. He opined “that the fossil dinosaur bones in question were recrystallized to the mineral francolite during fossilization” and therefore the fossils were now minerals. According to his testimony, the fossils should be a part of the mineral estate. The Murrays’ experts agreed with the Seversons’ expert in terms of the fossilization process, but characterized francolite different-ly. One of the Murrays’ experts posited that francolite is not recognized as a “valid mineral species” and testified that an x-ray of the T-Rex fossil revealed that the fossils were composed of hydroxylapatite, which makes up bone in living organisms. The Murrays’ expert concluded that minerals had not replaced the fossil “in any way, shape, or form”; the mineral fill was distinct from the fossil, so the fossils were not minerals. Therefore, according to his testimony, the fossils should be considered part of the surface estate.
IV. Determining Ownership in Property and Admiralty Law
Areas of property law and admiralty law have developed to determine the ownership of property that has intrinsic and monetary value due to the rarity of the property, such as in the case of found property and the discovery of sunken ships. An examination of how ownership is deter-mined in these areas may serve as models for determining ownership of fossils found on private property and reveal an alternative approach or supplement to the Heinatz and Murray tests.
A. Found and Discovered Property
Found and discovered property consists of mislaid, lost, or abandoned property, property embedded in the soil, and treasure trove. The owner’s intent in displacing his property differentiates lost property from mislaid or abandoned property. Lost property is unintentionally mislaid through “carelessness or neglect,” while property is abandoned when its owner “voluntarily” leaves it behind and mislaid when the owner forgets the location of the property. An individual who finds lost or abandoned property is granted a possessory interest in the property; however, this interest is void if the rightful owner returns for the property, no matter where the property is found. This principle is long established under the common law. A finder of mislaid property, on the other hand, does not acquire a possessory interest in the property and must give the found property to the owner of the premises on which it was discovered. The property must then be “safeguard[ed]” until the original owner returns.
The common law regarding lost, mislaid, and abandoned property fails to offer a workable framework for fossil ownership when there has been a severance of the mineral and surface estates for several reasons. First, fossils are not lost, mislaid, or abandoned. Second, title cannot be said to be good against all others except the rightful owner because the organism that became fossilized cannot return to claim title in itself. It could be argued that fossils are abandoned property and the finder is the rightful owner; however, if the finder of a fossil could claim a possessory interest no matter where the fossil was found, trespass would be encouraged.
Like lost, abandoned, and mislaid property, treasure trove fails to offer a workable model for the circumstance at issue in this Article; however, it is more comparable to the Murray fossils in terms of monetary value. Treasure trove includes valuables, typically silver or gold, found buried on private property, the owner of which cannot be determined or is assumed dead. The intent of the trove owner differs from that of the owner of found property discussed above. The trove owner’s intent is assumed to be the safekeeping of valuables. However, like lost, mislaid, or aban-doned property, the finder of treasure trove has a possessory interest good against everyone, except the owner of the treasure trove. The finder of treasure trove, however, will not be awarded title where the found property is embedded in the soil and the finder trespasses in more than a trivial or merely technical manner to obtain the treasure trove. In these instances, the owner of the locus in quo has title to the property.
Another form of property, property embedded in the soil, is distinguished from treasure trove in terms of definition and who is granted a possessory interest. Property embedded in the soil includes “anything other than gold or silver which is so buried.” Under this form of found property, the finder does not receive a possessory interest; rather, the owner of the real property on which the property was found is considered the owner. This grant of ownership is the same when fossils are found on private property where there is not a division of the mineral and surface estates. Real property is understood to include land and immovable property situated on the land. If this area of found property law were applied to situations in which a mineral deed severs the surface and mineral estates, it is likely that the owner of the surface estate would be granted ownership of fossils found on that property. This is arguably the correct result; however, it ignores the interest of the owner of the mineral estate and fails to address the fundamental issue—what is considered a mineral for purposes of a mineral deed? As a result, this area of property law fails to provide a useable model for the issue discussed in this Article.
B. Sunken Ships and Salvage Law
The law of salvage is like that of found property to the extent that an individual who finds a lost ship or its cargo, a salvor, usually gets the full value of the property unless the original owner comes forward, at which point the original owner regains his ownership interest. However, even if the original owner comes forward, the salvor is still entitled to a monetary award. A possessory interest is granted to a salvor only where the property has been abandoned. The definition of “abandoned” property discussed above, which can be summarized as a relinquishment of ownership or title, is vastly different from the definition of “abandoned” in admiralty law. Under admiralty law, the amount of time that the property has been “lost” or the inability of the salvor to find the owner are not solely determinative for a finding of abandonment. Rather, a salvor claiming a possessory interest in the property must establish through clear and convincing evidence that the owner of the property repudiated ownership through an affirmative act or expressly abandoned title.
The monetary award available to salvors encourages individuals to “assist distressed or endangered vessels.” In determining an award under salvage law, a court considers a variety of factors, such as (1) the amount of labor the salvors expend in salvaging the property; (2) the risk to the salvors of saving the property from harm; (3) the promptness and skill of the salvors in saving the property; (4) the value of the property used by the salvors and its exposure to the risk of being damaged; (5) the value of the property saved; (6) the danger the property was saved from; and (7) the efforts the salvors undertook to protect the archeological and historical value of the property saved. For example, in Klein v. Unidentified Wrecked & Abandoned Sailing Vessel, Klein discovered a sunken eight-eenth century sailing vessel while sport diving in the Biscayne National Park. Klein sought to assert a possessory interest in the shipwreck or entitlement to a salvage award. The court applied the law of finds, and because the ship was buried in the soil, which belonged to the United States as a national park, Klein was not awarded title to the shipwreck. The U.S. Court of Appeals for the Eleventh Circuit also declined to award Klein a salvage award because the shipwreck was not lost or in peril and Klein’s removal of articles from the shipwreck was not done in accordance with archeological practices.
The dissenting opinion disagreed with the majority’s determination that Klein was not entitled to a salvage award. The dissent cited Treasure Salvors, Inc. v. Wrecked & Abandoned Sailing Vessel, which stated that a sunken vessel is in peril of being lost to the elements and is therefore in danger even after it has been found, to argue that Klein saved the shipwreck from peril. The dissent also argued that the mere fact that Klein located the shipwreck entitled her to a salvage award that could be reduced by any damages caused by her failure to employ archeological techniques in the removal of artifacts from the wreck.
Although the law of salvage does not provide an answer to the question of whether fossils belong to the owner of the surface or mineral estate, it provides a compensation scheme that could supplement current legal tests to increase fairness to the parties in the situation this Article contemplates. Suppose that the owner of the surface estate discovers a fossil protruding from the soil and uses the proper means to excavate the fossil to preserve its paleontological value, but it is determined later that the owner of the mineral estate is entitled to ownership of the fossil. The owner of the mineral estate proceeds to sell the fossil for millions of dollars. The owner of the surface estate not only expended considerable resources to properly excavate the fossil, but also arguably rescued it from potential erosion, which would have decreased its value. The principles of fairness and justice would be served if the finder and excavator of the fossil were compensated. However, this could result in individuals trespassing on private property in hopes to receive a monetary award for making a paleontological discovery. Such compensation could be awarded by the courts on a theory of unjust enrichment or a scheme similar to that in salvage law. However, if such a situation were to arise it would ultimately be up to the courts to balance inequity with the potential inadvertent promotion of trespassing on private property. A proper balance may be achieved if good-faith finders and excavators are compensated, while trespassers and bad-faith actors are prevented from receiving a monetary award.
V. Critiquing the Heinatz and Murray Tests
A. Criticisms of the Heinatz Test
The primary criticism of the Heinatz test is uncertainty over whether the test is a categorical or noncategorical one. This uncertainty is what led to two different outcomes in the Murray litigation. The U.S. District Court for the District of Montana viewed the Heinatz test as categorical and concluded that because not all fossils are “rare and exceptional,” all fossils cannot be considered minerals. The U.S. Court of Appeals for the Ninth Circuit, on the other hand, viewed the Heinatz test as noncategorical. This led to its determination that the Murray fossils are minerals. The Ninth Circuit admitted that if the Heinatz test is indeed noncategorical, it leads to uncertainty and a lack of predictability. If Heinatz is indeed noncategorical, the courts are essentially deciding which substances are rare and valuable enough to be considered minerals without any real standard for that determination. This would inevitably lead to inconsistent outcomes regarding the same substance in different courts across the country.
The Heinatz test can also be criticized for its departure from the traditional, ordinary meaning rule. Under Heinatz, a substance is a mineral in its ordinary and natural meaning if it is rare and valuable in nature. The Ninth Circuit defended the Heinatz court’s ordinary and natural meaning test on the grounds that the purpose of acquiring mineral rights through a mineral deed is to extract valuable substances. Other courts have instead determined whether a substance is a mineral for purposes of a mineral deed by considering the “ordinary usage” or “popular sense” of the word mineral. In 1837, the Supreme Court of Pennsylvania decided Schuylkill Navigation, Co. v. Moore. Chief Justice Gibson stated “the best construction is that which is made by viewing the subject of the contract, as the mass of mankind would view it; for it may be safely assumed that such was the aspect in which the parties themselves viewed it.” The Heinatz test essentially ignores what mineral rights the parties intended to be granted to the mineral estate.
B. Criticisms of the Murray Test
The most obvious criticism of the Murray test is its departure from precedent. The Heinatz test has existed for over sixty years and has been applied in controversies over mineral rights and deeds in Montana. The second part of the test has also received criticism. Under this part of the test the mineral composition of the substance must be rare and valuable for the substance to be considered a mineral. Justice Gustafson, in her dissent, pointed out that carbon is not rare due to its abundance. Carbon makes up diamonds, which are unarguably valuable. Gustafson took issue with the fact that under the Murray test, diamonds would not be considered rare and valuable. The criticism of this part of the test is essentially that it has the potential to lead to absurd results.
Lastly, the third part of the Murray test has been criticized for being vague and leading to confusion in its application. The test calls for a consideration of the effect of a substance’s removal on the surface, but the Montana Supreme Court failed to explain how much destruction is required for a substance to be considered a part of the surface estate versus the mineral estate. It is also not clear under this part of the test where the surface estate ends and the mineral estate begins in terms of depth.
VI. Applying the Most Appropriate Test
Despite criticisms of the Murray test, it is more appropriate than the Heinatz test in terms of not only determining fossil ownership in the niche situation encountered in the Murray litigation, but also in determining what constitutes a mineral in other contexts.
A. The Murray Test Ensures Fairness to the Parties
The first part of the Murray test, the “ordinary and natural meaning” factor, gives more weight to the intent and understanding of the parties involved in the formation of the mineral deed than does the Heinatz test, which equates “ordinary and natural meaning” with the rare and exceptional character of the substance as opposed to the general understanding of the term “mineral.” However, the Montana Supreme Court acknowledged that whether a mineral is “rare and valuable” is a factor that should be considered when determining if the substance would be considered a mineral in its ordinary meaning. As a result, the Murray test cannot be considered a complete departure from Heinatz, thus defeating the departure from precedent criticism. However, by focusing on the intent and understanding of the parties at the time they executed the deed, fairness to the parties increases and a just result is more likely. The Montana Supreme Court’s interpretation of the mineral deed was arguably correct because it was extremely unlikely that the Murrays or Seversons would have contemplated the potential that lucrative fossils existed on the land, and it is unreasonable to expect parties to a mineral deed to make such a consideration when drafting the deed.
The second part of the Murray test, which examines whether the substance’s mineral content is what makes it rare and valuable, leads to the correct outcome in terms of classifying fossils, but also remains consistent with holdings made under the Heinatz test as to which materials constitute minerals. In terms of fossils, as the Seversons’ expert stated, most fossils contain the mineral francolite; however, not all fossils have value. Some fossils, deemed “junkasour[s],” have no value while the majority of fossils are valued at less than $1,000. Finding fossils with monetary value in the millions of dollar range, such as the Murray fossils, is a rare occurrence. As a result, the Montana Supreme Court correctly concluded that the mineral composition is not what makes fossils valuable. Rather the monetary value of fossils is determined by the species of dinosaur, how preserved the fossil is, and the completeness of the fossil. In addition to monetary value, fossils have scientific and public value that is not impacted or determined by the fossil’s mineral composition.
Under Heinatz, substances such as limestone, gravel, and sand were not considered minerals when they are useful only for “building and road-making purposes.” Limestone consists of calcium carbonate, which is not rare or valuable, and it is used for industrial purposes, such as paper and plastic making, and for health purposes as a calcium supplement. Sand consists of the two most common elements in Earth’s crust, silica and oxygen. Its mineral composition is therefore not rare or valuable. The Murray test therefore does not conflict with past determinations made under Heinatz.
This part of the Murray test, as noted above, was criticized because a substance that is arguably valuable, such as a diamond, is composed of carbon, which is not rare or valuable. However, this does not make the Murray test unworkable or absurd because a diamond would clearly be understood to be a mineral for purposes of a mineral deed under the ordinary and natural meaning prong of the Murray test. In addition, the typical language of mineral deeds would also be understood to include diamonds.
The third part of the Murray test, which considers the effect of removing the substance on the surface, increases the fairness to the parties in terms of cost, specifically when the surface estate is faced with destruction by a substance’s removal. The Heinatz court also considered the destruction of the surface through quarrying when it determined whether limestone, sand, and gravel are minerals. The Heinatz court found that limestone is considered a part of the soil and thus the surface estate because of its close relation to the soil. Fossils are comparable to limestone in this regard as they are typically found lying on, or protruding from, the soil and their excavation affects the integrity of the surface.
Almost thirty years after Heinatz, in Acker v. Guinn, the Texas Supreme Court created a “surface destruction” test and stated that unless the parties to a mineral deed explicitly state to the contrary, a grant of mineral rights “should not be construed to include a substance that must be removed by methods that will, in effect, consume or deplete the surface estate.” The Texas Supreme Court adopted this test out of concern that if materials that needed to be strip mined were a part of the mineral estate, the surface estate would be destroyed and the owner of the surface estate would not be entitled to any of the value of the substance removed or for damages to the surface. This unarguably creates an inequitable and un-just result.
The Murray test is also not limited to the consideration of the three factors discussed above and is nonexhaustive. This grants the courts permission to analyze the facts of the case in depth and other factors to determine who is the rightful owner of the fossils and ensure the fairness of the outcome.
B. Consistency with Federal Law
The application of the Murray test to fossils is consistent with the federal government’s classification of fossils. In 1915, the Department of the Interior held that fossilized remains of prehistoric animals are not subject to mining laws of the United States and are not minerals. The Department of the Interior reasoned that authorities on the subject do not consider fossils minerals and fossils lack economic value in terms of “trade, manufacture, the sciences, [and] in the mechanical or ornamental arts.”
More recently, what constitutes a paleontological resource under the Paleontological Resources Preservation Act was clarified. The relevant regulation states that individuals who have been delegated authority by the Secretary of the Agriculture may determine what resources meet the definition of “paleontological resource” at the written recommendation of a paleontologist with the requisite expertise on the resource under consideration. The regulation also explicitly states that “mineral re-sources, including coal, oil, natural gas, and other economic minerals that are subject to the mining and mineral laws” are not paleontological resources under the Paleontological Resources Preservation Act. Geo-logical units, such as limestones, are also not considered paleontological resources under the Act. Federal law clearly distinguishes paleon-tological resources, which includes fossils, from minerals. Given the pervasive differences between mineral resources subject to mining laws and paleontological resources, such as their utility, economic and social value, and the process of removal, this federal distinction is persuasive. It follows that state common law should also distinguish between the two.
The wording of the regulation under the Paleontological Resources Preservation Act is also similar to language typically used in mineral deeds that sever the surface and mineral estates. For example, the mineral deed between the Murrays and the Seversons stated that the parties would own as tenants in common “all right title and interest in and to all of the oil, gas, hydrocarbons, and minerals in, on and under, and that may be produced from the [property].” As a result, it appears to be a common understanding that “mineral” means those geological resources that have economic value and are subject to mineral and mining laws.
VII. Conclusion
Fossils are an invaluable cultural, historic, and scientific paleontological resource. It is not surprising that litigation is likely when the ownership of lucrative fossils is contested and uncertain under state law. Although Montana has passed a statute classifying fossils as part of the surface estate, the existence of two different legal tests for determining what classifies as a mineral for purposes of mineral deeds increases the confusion that already exists in terms of defining “mineral” in mineral law litigation. States that have not dealt with the unprecedented issue presented in the Murray litigation are thus faced with a choice between the Heinatz test and the Murray test. The Murray test should prevail as the predominant test employed by the courts in determining ownership because it is the most equitable and is consistent with the federal understanding of fossils and other paleontological resources.
