Sand Ownership in Texas: Mineral or Surface Estate
“Frac sand,” commonly a particular kind of crystalline silica sand used to hold open fractures created in reservoir rock that allow easier capture of oil and gas, presents an opportunity for clarification of the difference between the two estates recognized by Texas law: mineral and surface estates. Mineral reservations in Texas are often accomplished by specifying the mineral estate as consisting of “oil, gas and other minerals.” The pertinent question is thus whether sand used in fracking falls into the category of “other minerals.”
In Texas, minerals include “all substances within the ordinary and natural meaning of that word, whether [or not] their presence or value is known at the time of severance,” with the exception of “certain substances” that “belong to the surface estate as a matter of law.” Sand is one such substance that the Texas Supreme Court has identified to be part of the surface estate as a matter of law.
But the reasoning behind this definition of minerals provides potential for certain kinds of sand to be exceptional to the rule. The Texas Supreme Court noted that the definition of mineral should focus on the general intent of the parties, and that this general intent is “presumed” to include an intent to “convey all valuable substances,” regardless of whether the parties had pre-existing knowledge of the presence of the substances in the grant.
In part because frac sand is so important to the fracking process, the estimated value of industrial sand has significantly increased; experts estimated prices to have doubled on average between the second half of 2016 and the first part of 2017. As a result of increased demand, some countries have banned or restricted the export or mining of many kinds of sand, resulting in the development of some black markets and money-making opportunities for organized crime. While it is possible to crush rocks into artificial sand to meet demand, the quality of this sand is not as high and processing costs make artificial sand more expensive. In Texas, sand mining has recently “exploded,” including mining operations in the Permian Basin and at locations near San Antonio and between Austin and Dallas.
The contemporary rise in the value of and demand for industrial sand may warrant a revisiting of which substances are as a matter of law part of the mineral estate. If judicial focus is trained on the intent of the parties at the time of the grant, it indeed makes little sense to interpret a grant of minerals to include the “top soil, which, under conditions arising subsequently to the grant, should become commercially valuable.” On the other hand, a grant of minerals for lands “valuable solely or chiefly” because of the presence of a certain kind of substance may fairly be construed to include such substance in the definition of mineral.
Within these two extremes, the test might be whether the substance “at the time of the grant” was sufficiently “exceptional in use or value.” Exceptional use or value logically plays a critical part in the whether the parties considered such substance as ordinarily and naturally part of the valuable mineral estate at the time of the grant. While one might argue that the frac sand cannot be exceptional in use or value because its demand is solely derivative from demand for other minerals, such a requirement is unworkable where the intent of the parties, or market forces more generally, require otherwise, particularly where such sand is also used in other end-user products.
The increased value of crystalline silica and other industrial sands may thus warrant an exception from general Texas precedent. But Texas law imbues some “magic” in the word mineral that allow drafters to rely on its “talismanic power to create certainty in their instruments.” The Court may thus be justifiably “loathe” to change the definition of mineral as relied upon by the contracting parties. Ironically, such reluctance may have unnaturally frozen the ordinary and natural meaning of minerals in time.
 Steven Greenhouse, New Rules Could Cut Silica Dust Exposure, NY Times (Aug. 23, 2013), http://www.nytimes.com/2013/08/24/business/new-rules-would-cut-silica-dust-exposure.html.
 Michael C. Haines, Michigan Oil and Gas Update, 19 Tex. Wesleyan L. Rev. 379, 381 (Spring 2013).
 See, e.g., Plainsman Trading Co. v. Crews, 898 S.W.2d 786, 788–89 (Tex. 1995).
 Moser v. U.S. Steel Corp., 676 S.W.2d 99, 101 (Tex. 1984).
 See, e.g., Eric L. Martin, Ownership, Acquisition, and Leasing Issues for Frac Sand Owners and Developers, Stoel Rives LLP (Dec. 10, 2013), https://www.stoel.com/getattachment/People/M/Eric-L-Martin/Ownership,-Acquisition,-and-Leasing-Issues.pdf.
 Moser v. U.S. Steel Corp., 676 S.W.2d 99, 102 (Tex. 1984).
 Id. (citing Praeletorian Diamond Oil Ass’n v. Garvey, 15 S.W.2d 698 (Tex. Civ. App.—Beaumont 1929, writ ref’d) (regarding sand and gravel)); but see U.S. v. Kosanke Sand Corp., 12 IBLA 282 (1973) (subjecting silica sand to location as a mineral under the federal General Mining Law of 1872).
 Moser v. U.S. Steel Corp., 676 S.W.2d 99, 102 (Tex. 1984) (emphasis added).
 Christopher M. Matthews and Erin Ailworth, Latest Threat to U.S. Oil Drillers: The Rocketing Price of Sand, Wall Street Journal (Mar. 23, 2017), https://www.wsj.com/articles/latest-threat-to-u-s-oil-drillers-the-rocketing-price-of-sand-1490266800 (“Some [energy companies] are concerned sand supplies, diminished during a two-year oil-price downturn, could stall the drilling renaissance. . . . The tightening market has already sent prices marching toward $40 a ton or more, by some estimates, up from $15 to $20 a ton in the second half of 2016.”).
 World Faces Global Sand Shortage, Nat’l Public Radio (July 21, 2017), https://www.npr.org/2017/07/21/538472671/world-faces-global-sand-shortage. (“The world is running out of sand. So much so that some countries have banned exports of sand, and there is a thriving black market for it. . . . India is the worst, but in many other countries as well – in Kenya, in Indonesia. There’s been violence in China, in Vietnam, in a lot of places.”).
 Id. (“As a result of that [mining], organized crime has taken over the sand business. And they do what mafias do everywhere. They bribe police. They bribe cops. And if you really get in their way, they will kill you.”)
 Id. (“You can crush up rocks to make more sand. Two problems with that – one is the sand you get is not as good as naturally created sand. Also, it’s a lot more expensive.”).
 Jordan Blum, Sand mining industry grows in Texas amid drilling needs, Houst. Chron. (Apr. 12, 2017), http://www.gosanangelo.com/story/news/local/texas/2017/04/12/sand-mining-industry-grows-texas-amid-drilling-needs/100382098/.
 U.S. Silica Holdings, Inc., U.S. Silica to Build Second Frac Sand Mine and Plant in the Permian, Cision PR Newswire (Sept. 27, 2017), https://www.prnewswire.com/news-releases/us-silica-to-build-second-frac-sand-mine-and-plant-in-the-permian-300526704.html.
 Blum, supra note 13.
 Psencik v. Wessels, 205 S.W.2d 658, 662 (Tex. Civ. App.—Austin 1947, writ ref’d) (emphasis added).
 Id. (citing Northern Pac. R. Co. v. Soderberg, 188 U.S. 526 (discussing granite quarries as withheld from a grant of land to the railroads by an act of Congress)).
 See Psencik v. Wessels, 205 S.W.2d 658, 661 (Tex. Civ. App.—Austin 1947, writ ref’d) (citing Waring v. Foden, 1 Ch. 276, 86 A.L.R. 969 (Eng.1932) (“[I]n deciding whether or not in a particular case exceptional substances are ‘minerals’ the true test is what that word means in the vernacular of the mining world, the commercial world, and land owners at the time of the grant, and whether the particular subject was so regarded as a mineral. . . . Further, the sand and gravel are not substances which are exceptional in use or value; they are used mainly if not wholly for building and road-making purposes, and their commercial value depends entirely on local requirements and facilities for transportation.”) (internal quotations omitted)).
 See, e.g., id.
 David Owen, The World is Running out of Sand, The New Yorker (May 29, 2017), https://www.newyorker.com/magazine/2017/05/29/the-world-is-running-out-of-sand (“Windowpanes, wineglasses, and cell-phone screens are made from melted sand. Sand is used for filtration in water-treatment facilities, septic systems, and swimming pools. . . . Foundries use sand to form the molds for iron bolts, manhole covers, engine blocks, and other cast-metal objects.”); How the beach could help power your mobile: Sand found to help batteries used in phones last three times longer, Daily Mail (July 9, 2014), http://www.dailymail.co.uk/sciencetech/article-2686695/How-beach-help-power-mobile-Sand-help-batteries-used-phones-three-times-longer.html (discussing the potential for sand use in cell phone batteries).
 Wenske v. Ealy, 521 S.W.3d 791, 803–04 (Tex. 2017) (citing Moser v. U.S. Steel Corp., 676 S.W.2d 99, 102 (Tex. 1984) (for “changing the default definition of ‘minerals’”) (Boyd, J., dissenting)).
 Wenske v. Ealy, 521 S.W.3d 791, 804 (Tex. 2017) (Boyd, J., dissenting) (internal citations omitted).