NOV 2015 Legal Update by Amy Gautreaux and David Rogers

by: Martha Mills at 11/2/2015 1:44:24 PM | Viewed 6802 times.

LOUISIANA LEGAL UPDATE 

Amy Duplantis Gautreaux and David J. Rogers 

Gordon Arata, LLC 

 

Louisiana Water Bottoms and the “Freeze Statute” 

Those of us that have enjoyed the Sportsman’s Paradise that is Louisiana by hunting, fishing and exploring the great outdoors and those of us who have had the pleasure and good fortune to work as landmen running title in our great state have likely confronted the issue of determining whether a waterway is privately owned or public and/or who owns the bed or bottom and the banks of these waterways.  The changing course and/or widening of waterways in Louisiana, be it the Red River in Bossier and Caddo Parishes, Calcasieu Lake in Cameron Parish, Grand Lake-Six Mile Lake in St. Martin and St. Mary Parishes and even the Mississippi River present unique title issues to private landowners, the state of Louisiana, and oil and gas industry folks, including oil and gas landmen and title attorneys. In addition, coastal erosion has a similar effect on title and, therefore, mineral ownership.  These questions of ownership can create a nightmare for an exploration and production company trying to take leases near a waterbody in Louisiana and/or pay royalties on oil and gas leases covering the land in question. Therefore, we will address the basics associated with classification of ownership of a waterway in Louisiana and how that ownership, including mineral rights therein can change over time.   


In Louisiana, it is well settled that the state owns the beds or bottoms of all navigable waters in the state, whether lakes, rivers or streams, by virtue of its inherent sovereignty (See State v. Capdeville, 146 La. 94, 83 So. 421 (1919). The state of Louisiana owns only the land that is covered by water at its ordinary low water mark; the land lying between the ordinary low water mark and the ordinary high water mark is called the bank and belongs to the owner of the adjacent land.  Specifically, under Louisiana Civil Code Article 450, the waters and bottoms of natural navigable water bodies are declared to be public things owned by the state. But, the banks of navigable rivers and streams are private things subject to public use (See La. Civ. Code art. 456). Louisiana Code articles 499 and 500 discuss accretion and dereliction. Accretion formed successively and imperceptibly on the bank of a river or stream, whether navigable or not, is called alluvion. The alluvion belongs to the owner of the bank, who is bound to leave public that portion of the bank which is required for the public use. Alluvion and accretion can be used synonymously. However, accretion is defined as the act of growing to a thing; usually applied to the gradual and imperceptible accumulation of land by natural causes, as out of the sea or river. Accretion is the addition of portions of soil, by gradual deposition through the operation of natural causes. The term alluvion is applied to the deposit itself, while accretion denotes the act. (See Walker Lands v. E. Carroll Parish Police Jury, 38-376, p.8 n.13 (La. App. 2 Cir. 4/14/04).  Alternatively, dereliction is formed by water receding imperceptibly from a bank of a river or stream. The owner of the land situated at the edge of the bank left dry owns the dereliction (See La. Civ. Code art. 499). However, there is no right to alluvion or dereliction on the shore of the sea or of lakes (See La. Civ. Code art.  500). 

Water bodies that were navigable in 1812, when the state of Louisiana was admitted into the Union, and continue to be navigable are public things (See La. Civ. Code art. 450).  Conversely, water bodies that were non-navigable in 1812 and continue to be non-navigable are private things. Questions then arise as to the status of water bodies that have become navigable after 1812 or that have ceased to be navigable after that date (See 2 La. Civ. L. Treatise, Property § 4:2 (5th ed.)). Since the state (in its public capacity) generally owns only navigable bodies of water, and non-navigable waterbodies are privately owned, resolution of many of the issues raised with regard to the above hinge on navigability.  Generally speaking, a body of water is navigable in law if it is navigable in fact, and a body of water is navigable in fact if it is capable of being used for commercial purposes over which trade and travel are or may be conducted in the customary modes of trade and travel (See Walker Land, Inc., v. East Carroll Parish Police Jury, 871 So. 2d 1258; and Ramsey River Road Property Owners Association, Imc. V. Reeves, 396 So. 2d 873). Hence, navigability must be proven.  


Navigability is a question of fact that may require substantial evidence. Moreover, the peculiar geophysical conditions that prevail at the Gulf coast prevent the drawing of a bright line of demarcation between the sea, rivers, lakes, and other inland non-navigable bodies of water. Thousands of acres of marshlands are traversed by innumerable bayous that empty into lakes, bays, and inlets. Fresh water mixes with salt water on the way to the open Gulf and tides cause salt water to enter into bodies of water further inland and render them brackish. Salinity alone can hardly furnish the criterion for the classification of a body of water as sea or as an inland water body. Moreover, the rather frequent absence of a perceptible current renders difficult the classification of a body of water as a river rather than sea or a lake (See Judith PerhayLouisiana Coastal Restoration: Challenges and Controversies, 27 S.U. L. Rev. 149, 165 (2000). 


According to well-settled Louisiana jurisprudence, land that becomes part of the bed of a navigable river ceases to be susceptible of private ownership; it thus becomes a public thing, owned by the state in its capacity as a public person.  It is the same when lands are eroded by the waters of the sea or of a navigable lake and become sea-bottom or lake-bottom (See A.N. Yiannopoulos, Louisiana Civil Law Treatise, Property § 75, at 151-152 (3d ed. 1991); See also, La. Civil Code art. 500).  Thus, as private lands erode into navigable water bodies, that new water bottom becomes the property of the state. The state of Louisiana's interest in this eroded land is articulated in the Louisiana Constitution. (See Ryan M. SeidemannCurious Corners of Louisiana Mineral Law: Cemeteries, School Lands, Erosion, Accretion, and Other Oddities, 23 TulEnvtl. L.J. 93, 119 (2009).  As a result of the foregoing, it is pertinent to note that this change in ownership includes the mineral rights therein.  This is significant to oil and gas exploration and development in our state as it affects large amounts of valuable resources.  


In response to this transfer to the state of Louisiana of previously privately owned lands, the legislature enacted what is commonly referred to as the “Freeze Statue”.  Under Louisiana Revised Statute 9:1151 (hereinafter, the “Freeze Statute”), certain mineral rights in lands transferred to the state of Louisiana by the occurrence of erosion, accretion, dereliction, or subsidence may be protected, in that the mineral owner of said lands (prior to the change) and his lessee will retain those rights that are subject to a valid and outstanding mineral lease for as long as that lease is in effect. The Freeze Statute provides, in full, as follows: 


In all cases where a change occurs in the ownership of land or water bottoms as a result of the action of a navigable stream, bay, lake, sea, or arm of the sea, in the change of its course, bed, or bottom, or as a result of accretion, dereliction, erosion, subsidence, or other condition resulting from the action of a navigable stream, bay, lake, sea, or arm of the sea, the new owner of such lands or water bottoms, including the state of Louisiana, shall take the same subject to and encumbered with any oil, gas, or mineral lease covering and affecting such lands or water bottoms, and subject to the mineral and royalty rights of the lessors in such lease, their heirs, successors, and assigns; the right of the lessee or owners of such lease and the right of the mineral and royalty owners thereunder shall be in no manner abrogated or affected by such change in ownership. 

 
 

The Freeze Statute was first enacted by the legislature in 1952 and was later amended by Act No. 963 in 2001 to specifically include erosion and subsidence and the words sea or an arm of the sea.  The effect of the Freeze Statute is that (i) where a change of ownership occurs as a result of accretion, dereliction, erosion or subsidence, and (ii) a mineral lease is being maintained as to that land, said land is acquired subject to and encumbered by any oil, gas or mineral leases covering the property, and subject to the mineral and royalty rights of the lessor, lessee and royalty owners in said lease as long as the lease is maintained.  


The question of the constitutionality of the Freeze Statute is well settled. In State v. Placid Oil Co., 300 So.2d 154 (1973), the Supreme Court of Louisiana  plainly stated that the Freeze Statute is constitutional and rejected arguments that it is a deprivation of property without due process and an impairment of the obligations of a contract.  Additionally, in Cities Services Oil and Gas Corp. v. State (574 So.2d 455 (La. App. 2d Cir. 1991), writs denied, 578 So.2d 132 (La. 1991), reconsideration denied, 580 So.2d 663 (La. 1991), cert. denied, 502 U.S. 863 (1991), the Louisiana 2nd Circuit Court of Appeal, citing Placid and LSU Law Professor Lee Hargrave’s, “Statutory and Horatory” Provisions of the Louisiana Constitution of 1974 (43 La. Law Review  647, 661-662 (1983) explained: 


Nothing is taken from the riparian landowner who has gained land by accretion if he obtains the land without the mineral rights; he had no vested interest in the land to begin with.  Article IX, section 3 does not prohibit the state, which obtains land by dereliction, from obtaining less than full ownership, as no alienation or authorization of alienation [sic] has occurred.   


Cities Services Oil and Gas Corp. v. State dealt with the changing course of the Red River near the boundaries between Caddo and Bossier Parishes between 1966 and 1978.  The state of Louisiana asserted claims to ownership of land acquired by accretion in the Red River, and since the state had granted a lease on the former river bed (“State Lease 6002”), the state argued that the new bed was covered by this lease.  Two issues were present in this matter: (i) did the coverage of State Lease 6002 remain with the old river bed, change and provide coverage to the new river bed, or did it provide coverage to the old and new riverbed, along with the land formed between the two, and (ii) did the owner of the land formed by accretion have a right to the minerals underlying same under the Freeze Statute.   


On the first issue, the Cities court found that State Lease 6002 remained with the former riverbed and did not move to the new bed. The State Lease at issue contained language stating it covered land “now or formerly” constituting the riverbed owned by the state as of a specific date. Due to this language, the court found that State Lease 6002 did not follow the movement of the river.  On the second issue, the court (in agreement with the trial court) found the owners of the accretion formed due to the movement of the river were entitled to the mineral rights therein not subject to lease. Thus, the Cities court held that the Freeze Statute “clearly and unambiguously applies only when there is a change of ownership of land or water bottoms caused by the action of a navigable stream and there is in effect a mineral lease covering and affecting the lands or water bottoms.”  Furthermore, the Cities court explained “the statute does not require that there be actual mineral production from the leased land in order for the statute to be effective.” As such, under the Freeze Statute and the ruling in Cities, full ownership of land can be transferred as a result of accretion in the absence of a lease. However, if the relevant land is subject to an outstanding lease, then the rights of the lessee(s) and lessor(s) are protected as long as the lease is maintained. Upon termination of the lease, mineral ownership devolves to the owner of the land.  Note, just as the state can acquire land with less than full ownership as a result of accretion, dereliction, erosion, or subsidence by application of the Freeze Statute, a riparian (private) land owner can also take advantage of the benefits of the Freeze Statute. 

It is important to note that in order for the state to make a claim under the Freeze Statute, the alluvion or accretion formed would have to have formed after the relevant state lease was granted covering a water bottom at the time of the lease (See State v. Cockrell, 162 So.2d 361 (La. App. 1st Cir. 1964). 


Waterbodies throughout Louisiana and the Louisiana coast remain some of the most unique areas of the world.  These places bounding with beauty and abundant resources are our namesake.  We would all do well to understand the challenges involved in development and application of permanent legal rules for the management of these lands where constant physical change can lead to what is land today becoming open water tomorrow.  

 

 

 

 

 

Amy Duplantis Gautreaux is an attorney in the Lafayette office ofGordon, Arata, McCollam, Duplantis & Eagan LLC. Her practice is focused on oil and gas title examination and oil and gas transactions. Her experience encompasses drafting numerous curative and other legal documents, examination of land, mineral and leasehold title (including abstracts of surface, mineral, royalty, executive right, overriding royalty and leasehold titles and mineral history information), and writing legal opinions including drilling, division order and leasehold title opinions. Aiding her ability to provide an insightful and logical approach to title examination, Amy also worked as an abstractor and landman in South Louisiana after law school. Through her experience, she has developed and maintains great working relationships with many members of the local legal and oil and gas community.After graduating with honors from Catholic High School in New Iberia, Amy attended the University of Louisiana, Lafayette where she earned a Bachelor of Arts in Political Science Pre-Law, magna cum laude and was named Outstanding Graduate in Political Science in 2002.  In 2005, she earned her J.D. and B.C.L. from the Paul M. Hebert Law Center at Louisiana State University.  She is admitted to practice law in Louisiana.


Professional Affiliations: 


 Louisiana State Bar Association


 American Association of Professional Landmen (AAPL)


 Lafayette Association of Professional Landmen (LAPL)


 Houston Association of Professional Landmen (HAPL)


 Lafayette Parish Bar Association (LBA) 


 Baton Rouge Association of Professional Landmen (BRAPL) 


 Women’s Energy Network (WEN)- Board Member 


David John Rogers is an associate attorney in the Lafayette office of the firm Gordon, Arata, McCollam, Duplantis & Eagan LLC who focuses his practice in the oil and gas section focusing primarily on title examinations, oil and gas transactions and litigation involving oil and gas issues. He is a Registered Professional Landman (RPL) and has extensive experience as a project manager handling title opinions, abstracts, due diligence and mineral lease acquisitions in seven states, including Louisiana, Texas, Mississippi, Pennsylvania, Ohio, Colorado and Utah.

 

Professional Affiliations:


American Association of Professional Landmen (AAPL) 


Baton Rouge Association of Professional Landmen (BRAPL) 


Lafayette Association of Professional Landmen (LAPL) 


Houston Association of Professional Landmen (HAPL) 


Young Professionals of LAGCOE

 
 
 
 
 

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