17.5 Percent Clause
An outdated clause that stated that overriding royalties aggregate in excess of 17.5% should be deemed a violation of terms in a federal oil and gas lease. Despite its expiration, it may still appear in an overriding royalty assignment.
Coal leases have had many acts and court cases pass about them. The examiner needs to be up to date on current statutes to prevent potential conflicts.
Instruments Not Filed
Any instrument that affects record title, working interest, or operating rights to a federal oil and gas be filed with a BLM. Every file should be in the county. If an examiner finds a document in the county and it is not in the BLM it is unfiled.
Instruments Not Recorded
Many times, records filed with the BLM will not be recorded in the county because the owners of interests in federal cases assume that the BLM will handle it. The documents affecting the title are to be placed in the county in which the land is located.
Known Geologic Structures
The USGS determines where a known geologic structure(KGS) is leased competitively and outside of the KGS leased noncompetitively. The lease will have a USGS stamp but it may outdated.
Meandered Water Bodies
Surveying meandering bodies of water such as lakes and rivers are difficult to keep up with. A river may meander into a leased area but since the lease was signed before the river and the minerals underneath intruded onto the land it is not included in the lease.
If a body of water was navigable at the time it entered the union then the state owns those minerals underneath the water. Determining if an inland body of water was navigable at the time of admittance the client needs to order a consultation with the BLM.
Oil Shale Mining Claims
The examiner must ensure that the dates and status of the patents or unpatented claims are in line with the legal status under current laws and regulations.
Operating Rights, Working Interests, and Record Title
When a severance of any of the three operating rights, working interests, or record title, the severance following is jumbled.
Parallel Chains of Title
The problems above can create parallel chains of title in both the BLM and county but each chain will have gaps.
The federal title examination includes a requirement that the client determines who is in the possession of the lands being searched. It is possible that there are documents not in the BLM or county records that are not entered that affect leasehold coverage.
Rights of Way
Some rights of way are ambiguous. The owner of the the right of way has preference to obtain an oil and gas lease, but the BLM can say the land is public interest and bid for compensatory royalty. This can cause confusion for the examiner.
Transferred Lease Account
When a federal lease is producing it is then transferred from the BLM to the MMS. Now, it is impossible to see from BLM records if the proper rentals and royalties were paid. MMS needs to be contacted about good standing.
All assignments of record title, working interest, or operating rights must be approved by the BLM. If a document is found unapproved the BLM must be contacted.