Public Trust Doctrine – a Ticking Time Bomb for Mineral Owners

By | November 10, 2020

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.