Monthly Archives: November 2020

Public Trust Doctrine – a Ticking Time Bomb for Mineral Owners

The Public Trust Doctrine was an issue the Nevada Supreme Court recently adjudicated. Had it succeeded every mineral owner and every person who holds water rights or even has a water well, could have been at risk.   But it can be expected in the future that we see more legal challenges to the ownership of water rights, mineral rights, and other rights we thought were secure. The public trust doctrine predates even the Magna Carta and is part of what is known as common law.

What is common law? It is based on the old English laws that are a result from long standing custom and judicial precedent rather than statutes passed by a legislature. The latter is known as statutory law. All states except Louisiana adopted the English laws as a basis for legal proceedings. Louisiana is based on the Napoleonic laws of France.

Environmentalists view the public trust doctrine as a means to give greater protections for the environment. It may become a method the environmentalists use to stop fracking, withhold federal leasing for oil and gas, and to challenge the use of any public land for exploiting minerals, oil and gas, as well as impacting farmers and ranchers.

The public trust principle was developed with the idea that certain things did not belong to the crown, rather were for the use of everyone. That included the oceans, navigable rivers, lakes, etc. The natural extension of that is to apply to minerals, water rights, and things subsurface. The environmentalist want these items to be held by the public and since the public trust doctrine predates the laws regarding mineral and water rights, and even predates fifth amendment protections, “…nor shall private property be taken for public use without just compensation.”  But taken to its limit, public trust therefore means you really never owned mineral rights, water rights, etc. as those were reserved hundreds of years ago for “public use.”

The Nevada case was where environmentalists argued the public trust principle to extinguish the water rights that impacted Walker Lake. Since water used by others in the watershed competed with the water needed for Walker Lake, the environmentalists argue that the other users should not be allowed to exploit the water rights they had held for nearly two centuries.

The good news was that the Nevada Supreme Court ruled against the environmentalist while recognizing that water rights impacted the lake. Justice Lidia Stiglich wrote. “But while we are sympathetic to the plight of Walker…we cannot use the public trust doctrine as a tool to uproot an entire water system, particularly where finality is firmly rooted in our statutes.” The bad news was that the same court didn’t moth-ball the public trust principle, rather affirmed it. The court explicitly said that the public trust principle is recognized in existing law.

The energy and agricultural industries likely will face court challenges to the very ownership of minerals, mines, and water in the future. The potential impact upon the nations energy and agricultural industry is devastating. Just compensation is out the window if the courts decide that the public trust doctrine, which clearly predates the constitution, is applicable. That would mean you never owned minerals in the first place, therefore have no right to expect payment for the taking.

The Green New Deal is Coming & You Will Pay For It

The Green New Deal (GND) is coming and with it the poorest in the nation will suffer. Simple fact. Market forces rule. They always rule. Stifle competition and pick winners and losers and everyone suffers. The GND will pick electric vehicles over gas driven ones without recognizing the problems it creates and it will, once again, be blamed on “big oil.”

What is “bad” about electric cars (E cars)? Nothing intrinsically but the fact they are more expensive to buy therefore, most people can’t do so, even if it means driving a 20 or 30 year old gasoline vehicle. But the cost of the car is not the issue. In reality, an E car is the closest you will come to owning a car that will last for decades with minimal maintenance. Outside the electronic components, which can fail, it has fewer moving parts to worry about.

The rub as they say is that the E car requires a battery. The battery requires two elements usually at this time. Lithium and cobalt. Even the newer proposed, unproven and pie-in-the-sky proposals still rely upon rare earths and cobalt. And where are we going to get sufficient lithium and cobalt to expand production by the proposed 100 times? That’s not 100%, that is 100 times the current production level. Telsa sells about 368,000 cars. Annual car sales are about 30 million…

How do you ramp up the production of lithium to that scale? Lithium is called a rare earth but is not so rare as it is so dispersed in the environment that it takes tons of material to process in order to produce a few pounds of lithium. That is not only expensive but it is also energy intensive requiring fossil fueled vehicles to transport the ore to processing plants. And it also is found mostly in countries who have no vested interest in providing us this material on the cheap. We will pay dearly for it.

Cobalt is more concentrated but 90% of the world’s supply is from the middle of Africa where it is mining mostly by hand, using child labor and the death toll there is horrendous. Do we want to buy such cobalt and other such items as “conflict diamonds”? I don’t think it is the policy the state wants to take.

Finally, the battery lasts a few hundred miles in a small automobile and takes an hour or so to recharge, if you can find a charging station. Further, it is a fire hazard and a hazard to first responders in an accident. Worst of all, it cannot serve as the powerplant in the trucks, farm machinery, industrial machinery and other similar high performance equipment. It simply won’t work. Outside a few interior warehouse forklifts that use multiple conventional wet cell batteries as much for ballast as for power, E power has limited utility in the real world of commerce. It is a town and short trip commuter vehicle, nothing more.

Let the market work. As energy prices increase (which is a given under a new administration bent upon stopping leasing and fracking on Federal lands) the market will figure out the best course of action.  What do I expect? The oil patch will suffer for a while but when production plunges and we start importing huge amounts of oil, guess what?  Filling up at the pump will be very expensive. I don’t think $5-10 a gallon to be out of the question by the end of the Harris Administration…and yes, I am convinced that Biden will not be able to complete four years as president.