The North Dakota Supreme Court has ruled in favor of the state over a law intended to clarify long-disputed ownership of minerals under a Missouri River reservoir.
The court's opinion released Thursday centers around a law signed by Gov. Doug Burgum in 2017 that limited state mineral claims under Lake Sakakawea to a smaller area than it had previously claimed. The move has been estimated to cost the state nearly $187 million it already had collected in oil-drilling royalty payments that must be returned.
Democratic Rep. Marvin Nelson, former gubernatorial candidate Paul Sorum and others challenged the law and sought to prevent the state Board of University and School Lands from “giving away” up to $2 billion in oil and gas mineral rights in coming years.
State attorneys argued the law is not a giveaway but a way to define the boundary of the state’s mineral interests.
East Central Judicial District Judge John Irby last year ruled that the majority of the law was constitutional but it violated the state’s “gifting” clause that prohibits the state from making gifts of money or loans to businesses or individuals.
The state’s high court disagreed with the lower court, saying in its opinion that the state “cannot give away that which it does not own.” The decision means the state will have to return the royalty money, but that the legislation intended to end longstanding disputes will accomplish its purpose.
Oil companies lease drilling rights from mineral owners that get a share of the income from oil the well produces. At issue was whether mineral rights under the state’s biggest lake should be determined by a 1950s federal survey of the pre-dammed river channel or a broader 2009 North Dakota survey that backers of the legislation believed was used to improperly obtain minerals for the state.
The Supreme Court also reversed Irby’s award of nearly $800,000 in attorney fees and other costs to the state lawmaker and others. The high court said the lower court "did not cite legal authority for the award, but instead cited Quaker Oats pitchman Wilford Brimley, stating “it’s the right thing to do.’”
Nelson, the state lawmaker from Rolla, did not immediately return messages Thursday afternoon.
Attorney General Wayne Stenehjem said in a statement the high court’s ruling should “resolve various disputes over mineral ownership under the lake, and mineral royalties that have been held in suspense by companies for years now can be distributed to their rightful owners.”
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