One of the most anticipated North Dakota Supreme Court decisions of 2013 was filed Dec. 26. The case of Reep v. State centered around the issue of who owns the minerals in North Dakota between the high and low watermark on the Missouri River. The court, in a unanimous decision, found in favor of the state of North Dakota, leaving adjacent upland owners high and dry.
The Reep case involved two lawsuits consolidated to obtain a decision by the high court on this unresolved issue. The state of North Dakota owns all navigable waterways in the state. Private landowners could own adjacent land. The unresolved issue was who owns the shore zone between the low and high watermarks. The contested acreage along the river could be large or small tracts. North Dakota Mineral Title Standard 7-01.4 indicates that the ownership between the high and low watermark is such an unsettled area of law that an examiner should not offer an opinion as to who owns those minerals.
One of the actions was commenced by Stanford Reep and other upland owners who had sued the state of North Dakota, the North Dakota Board of University and School Lands and the North Dakota Department of Trust Lands Commissioner Lance Gaebe in a class action suit alleging that the state had taken private property by claiming the minerals in the shore zone above the low watermark. In the other case, Brigham Oil & Gas L.P. now Statoil Oil & Gas L.P. named the state of North Dakota and several upland owners in an interpleader action to answer the question of who owns the minerals between the high and low watermark.
District Court ruling
In February 2013, District Court Judge David Nelson found that the state of North Dakota owned the contested minerals. After appeal of the order, the North Dakota Supreme Court heard oral argument in September 2013.
In 1889, North Dakota took title to the Missouri River between the high watermarks. The state can do with those minerals as they wish. States, such as Alaska, Arkansas, Florida, Kansas, and Utah, kept ownership between the high watermarks. Other states like California, Delaware, Minnesota, Montana, Missouri and South Dakota, decided that their states would own only to the low watermark.
The conflict came when reading the state constitution and North Dakota Century Code Section 47-01-15, the latter of which states that, except if the grant of the land has a different intent, the upland owner takes to the edge of a lake or river at the low watermark. A 1994 North Dakota Supreme Court case made passing reference that the upland owners have “full interests” in the shore zone without determining what that meant. However, the anti-gift clause of the North Dakota Constitution prohibits the state from gifting its property. The legislature could not enact a statute that violates the state constitution.
A similar conflict of law was resolved by the Arizona Supreme Court. Arizona’s constitutional anti-gift clause and public trust doctrine prohibited the gift of the land between the high and low watermark unless there was a public purpose and fair consideration for the transfer of the public trust property. The Justices found the rationale is similar to North Dakota and found that the state of North Dakota owns the riverbed and its minerals to the high watermark.
Answered and unanswered questions
The end of the Supreme Court opinion provided the biggest surprise for many. The court found that the “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.”
A brief review of deeds from the state of North Dakota uncovered that it conveyed title in many different forms: “State of North Dakota,” “State of North Dakota, acting through the Board of University and School Lands” and “State of North Dakota doing business as the Bank of North Dakota.” Any operator with a unit on the Missouri River should have their title attorneys review the chain of title to ensure that there is no deed from the state of North Dakota to the adjacent land owner that may fall within the exception in this opinion.
While it is heartening to have one question answered regarding navigable water ownership, there are still many questions left unanswered, such as which survey should be used and how to have a continuing correct ownership in units on the river, as the river will undoubtedly move during the life span of a Bakken or Three Forks well. All of these issues and many more will need to be resolved for lands within the boundaries of the Three Affiliated Tribes’ Reservation and on Lake Sakakawea, too.
The parties will have the right to petition within 90 days for the United States Supreme Court to review the case. Presumably it will take that long for operators to attempt to clarify the chain of title in units adjacent to the river. The court opinion likely dampened the enthusiasm of adjacent upland owners, but at least a partial resolution will provide more certainty for operators.
