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North Dakota Supreme Court: State Wins Mineral Rights Case

The state, not private landowners, owns the bulk of certain disputed mineral rights in the Bakken Shale oil/natural gas production fields, according to a North Dakota Supreme Court ruling released the day after Christmas. The ruling affects disputed stretches between high- and low-water marks of the Missouri River.

While the state can now begin allocating some of the more than $140 million in bonuses and royalties set aside by producers while the legal action made its way to the state's high court, landowners still have the chance to challenge state ownership of the disputed parcels in some circumstances.

The state Supreme Court said that individual landowners can still claim ownership if they can show that the state sold or granted them some of the so-called shore zone in the past.

North Dakota's high court ruled on the short zone lands along the river, upholding Williams County District Court Judge David Nelson's earlier decision on three consolidated cases involving lawsuits against North Dakota by private landowners and industry operator Brigham Oil regarding which has title to minerals under the shore zone (see Daily GPI, Feb. 6, 2013).

"We affirm [the lower court determination], but our decision does not preclude an upland owner from taking to the low watermark if the chain of title establishes the state has granted its equal footing interest to an upland owner," said the high court ruling (Reep v. State).

Eleven landowners owning property next to navigable waters sued the state, the North Dakota Board of University and School Lands and the North Dakota Trust Lands Commissioner Lance Gaebe, seeking a declaration that the upland landowners own the mineral interests under the shore zone of the navigable waters.

In a separate action, producer Brigham Oil and Gas, now known as Statoil Oil & Gas, named several upland owners as defendants in a cross-filing (interpleader filing) to determine "adverse claims to proceeds from mineral interests under the shore zone of navigable waters in North Dakota," the state high court said.

Industry news reports indicated the private landowners, whose individual court filings had been consolidated into one case at the high court, as a group have not decided whether they would appeal their case to the U.S. Supreme Court.

The combined lawsuits involved about 25,000 acres used mostly for pasture or crops clustered along the Missouri River's flood plain between the Montana border and Williston, ND.

Some of the landowners earlier tried to lease their mineral rights for oil development in the shore zone, but they found out the state already had done so to the same companies, such as Statoil.

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