A majority of the state’s new law regarding Lake Sakakawea mineral rights is still moving forward, according to the state’s top oil and gas regulator.
Director of the Department of Mineral Resources Lynn Helms said an injunction issued by a judge last week only concerned one part of the state’s statute, the part that dealt with issuing payments and refunding bonuses and royalties. That doesn’t mean, however, that the judge thought the case challenging the constitutionality of the legislature’s solution to disputed mineral rights in the area would necessarily succeed on the merits.
“When the judge spoke from the bench at the end, he said there were very interesting legal arguments in the case and that he anticipated whatever his decision was that it would get appealed to the Supreme Court,” Helms said. “He also said that he thought that the plaintiffs would have a difficult time winning on the merits of the case, so he limited his injunction to just the payment of the $125 million the Land Department estimated they had collected prior to last April. So everything else continues to move forward.”
Helms said the judge’s instructions were to keep the public comments going on the map of the historical high water mark his consultants have prepared, and to continue with a planned public hearing on the map June 26.
“He just doesn’t want the state to pay out or refund any bonuses or royalties until the court case has made its way to a Supreme Court decision,” Helms said, pointing out it would be difficult to re-collect royalties that have been paid out already.
Helms said they had received a number of comments on the map prior to the court case, which was filed by state Rep. Marvin Nelson, D-Rolla and former governor Paul Sorum. But since the judge's recent ruling in the case, not many comments have been received.
“We think maybe what was said in newspaper articles about the ruling has confused people,” Helms said. “And that’s what phone calls and emails have indicated as well, so we decided to issue a press release.”
The judge’s actual ruling has not yet been officially filed, so is not available to reporters yet. Subsequent media stories have so far been based on interviews with one or another parties to the suit.
Terrance Moore, who represents Nelson and Sorum, had told reporters outside the courtroom after the hearing that the judge’s decision to prohibit payment of royalties was a “huge win.”
The state legislature, in an attempt to resolve disputed mineral rights that are hampering development of minerals in the Lake Sakakawea area, had commissioned a study of the historical, high water mark of the Missouri River prior to building Garrison Dam, which created Lake Sakakawea. Their legislation would also restrict the state’s mineral rights to that historical ordinary high water mark.
The study completed by the consultants would reduce the amount of acres that the Department of Trust Lands can claim mineral rights on by half from what it is claiming now.
The report has been presented to the North Dakota Industrial Commission, which is accepting public comments on it through June 20.
The study of the riparian river acreage was completed by Wenck and Associates, and begins at New Town and extends to about 9 river miles upstream of Williston. It excludes the Fort Berthold Reservation. The completed study map is available in its entirety at www.dmr.nd.gov.
Helms has said the report, which his department oversaw, does include a lot of information that was missing from a study the Department of Trust Lands did in 2009. That study had concluded that the state could claim an additional 25,000 mineral acres than it had been, even though many of those acres were already being claimed by private landowners.
Members of the legislature were not convinced that the 2009 Trust Land study was done properly, and decided to direct a new study be done to determine where the historical river channel lies.
The lawsuit filed by Nelson and Sorum challenges the constitutionality of that legislation, arguing that it gives away nearly $2 billion in mineral rights that the state should claim. Their proposal, now working its way through the court system, would quadruple what the Department of Trust lands has so far claimed.
Helms said the river study he was directed to conduct does include additional, relevant data for determining who should own what minerals in the disputed area.
“For example, starting in 1948 and running through 1954, the Corps sent land appraisers out to walk the entire river valley, and they appraised every parcel and made hand-drawn maps with colored pencils laying out what the land use was,” Helms said.
One parcel might say it had been brushed and prepped for farming, while another might say it was hayland or cropland.
“We incorporated all that into this review,” Helms said. “That was not used in the Phase 1 and 2 studies.”
The Corps of Engineer’s office also did a detailed land elevation survey every 3 miles along the river prior to building Garrison Dam. Wenck and Associates was able to use that data to create a computer model of river behavior at the time. The model wasn’t used to define the ordinary high water mark itself, but served as an additional check, to ensure that obvious errors weren’t being made as the engineering firm mapped out the historical, ordinary high water mark.
Aerial photos from 1943 and 1951 were used to determine which lands should be considered below the original river channel’s ordinary high water mark.
“Basically, it’s any land that is flooded so frequently that it’s not usable for agriculture,” Helms said. “When my consultant went back to look at the history of the river out there, it exceeds its banks and floods a significant amount of land about every two years. So what we said was if a parcel of land is flooded every two years or more often, it’s not usable for agriculture.”
Helms said they have also tried to make it easy for people to look at how the study will affect their mineral rights.
“We built a table that relates the land description back to which map you need to look at and which appraisal documents you need to look at,” he said. “Once you find the land description in the table, it tells you where to find the other documents you need so you can see how this affects your ownership.”
Helms estimates that the 83 miles of river studied affects some 650 working interest owners, and at least 12,500 royalty owners with an interest in either an oil or gas well or lease.
After the public comments close June 20, there will be a public hearing June 26 in the Heritage Center in Bismarck Auditorium, where people can present additional comments. The event is going to be livestreamed.
“The reason we are doing it this way is that someone might submit comments about a parcel of land and that affects your interest, so you can look at anything that was said up through June 20, and then you have an opportunity to show up to oppose or dispute that,” Helms said.
Once the public hearing is completed, the Industrial Commission will decide whether to adopt the river study, and what, if any, changes should be made before doing so.
After that, there will be a two-year timeframe for lawsuits to appeal the Industrial Commission’s decision.
“This takes a lot of time,” Helms said. “But it took a lot of time for it to get messed up like this. This at least provides a clear, relatively short path forward to get all of the litigation into the court system based on a consistent starting point and a consistent two-year statute of limitations, so we are not having lawsuits being filed over a 10, 15-year time period disputing all sorts of different facts.”