Cont'l Res., Inc. v. N.D. Bd. of Univ. & Sch. Lands

505 F.Supp.3d 908

CONTINENTAL RESOURCES, INC. an Oklahoma corporation, Plaintiff,

v.NORTH DAKOTA BOARD OF UNIVERSITY AND SCHOOL LANDS and the United States of America, Defendants,

Case No. 1:17-cv-014

United States District Court, D. North Dakota.

Signed December 8, 2020

Lawrence Bender, Fredrikson & Byron, PA (Bismarck), Bismarck, ND, David W. Ogden, Pro Hac Vice, Nathaniel B. Custer, Pro Hac Vice, Paul R.Q. Wolfson, Pro Hac Vice, Wilmer Cutler Pickering Hale and Dorr LLP, for Plaintiff.

Charles M. Carvell, Pearce & Durick, David Paul Garner, Jennifer L. Verleger, Office of the Attorney General, Bismarck, ND, for Defendants.

ORDER GRANTING THE UNITED STATES’ MOTION FOR PARTIAL SUMMARY JUDGMENT

Daniel L. Hovland, District Judge

Before the Court are motions for partial summary judgment filed by both defendants on May 7, 2020. See Doc. Nos. 81 and 83. The motions have been fully briefed and are ripe for consideration. See Doc. Nos. 82, 84, 85, 87, 88, and 89. For the reasons set forth below, the United States’ motion for partial summary judgment is granted and the Land Board's motion for partial summary judgment is denied.

I. BACKGROUND

This dispute stems from competing claims of mineral ownership due to disagreement as to where the historic ordinary high-water mark ("OHWM") of the Missouri River is located. In late 2016, Continental Resources Inc. ("Continental Resources") brought this interpleader action against the North Dakota Board of University and School Lands ("Land Board") and the United States in the District Court of McKenzie County, Northwest Judicial District, North Dakota. Continental Resources is an oil and gas production company that leases minerals in western North Dakota from both North Dakota and the United States. The Land Board consists of the North Dakota Governor, Secretary of State, Superintendent of Public Instruction, Treasurer, and Attorney General. It is charged with, among other things, managing North Dakota's minerals underlying sovereign lands. Continental Resources requested the state court order North Dakota and the United States to interplead their respective claims to royalties from the production of minerals on lands which each claim to own and have issued leases with overlapping acreage. The disputed minerals are described in an exhibit attached to Continental Resources’ amended complaint. See Doc. No. 27-1. The United States removed the action to this Court on January 11, 2017. More than three (3) million dollars in royalties are at stake and the royalties continue to accrue. Continental Resources does not claim an interest in any of the royalties. It brings this interpleader action simply to avoid being subject to duplicate liability for royalty obligations attributable to the disputed lands. Continental Resources is holding the disputed royalties in escrow at the direction of the Court, pending a final determination on the merits.

The Missouri River in North Dakota is a navigable river. In 1889, North Dakota was admitted to the Union and acquired title, pursuant to the equal footing doctrine, to the bed of the Missouri River, including the underlying minerals, up to the OHWM. To document the location of the Missouri River's OHWM, and thus delineate the boundary between state-owned riverbed and federally-owned uplands, the General Land Office (predecessor to the Bureau of Land Management "BLM") prepared and filed cadastral surveys between 1891 and 1901, using the Manual of Surveying Instructions in effect at the time. The meander line identified in these surveys marked the OHWM at the time.

Rivers, especially large navigable rivers, such as the Missouri, are dynamic. They change course through erosion, accretion, and avulsion, and when they do, the OHWM changes as well. Rivers also flood. Missouri River flooding was particularly bad in the first half of the twentieth century. So it was that Congress passed the Flood Control Act of 1944, which authorized the United States Army Corps of Engineers ("Corps") to construct the Garrison Dam on the main stem of the Missouri River in North Dakota as part of the Pick-Sloan Missouri basin project dams. Several other dams along the Missouri River were constructed as well. The waters impounded by the Garrison Dam created Lake Sakakawea, one of the largest reservoirs in the United States. Garrison Dam was completed in 1953. Once the dam was completed and Lake Sakakawea began to form, the portion of the Missouri River underlying Lake Sakakawea ceased its wanderings and the OHWM became fixed. This fixed, but hotly contested, OHWM is known as the historic OHWM.

By the time construction of Garrison Dam got underway, many of the uplands that would be inundated by Lake Sakakawea had been patented and passed from the federal public domain to private landowners. Before the dam was constructed, the Corps surveyed the privately-owned land which was expected to be inundated and would need to be acquired by the United States. The resulting survey maps are known as the "Corps Segment Maps." The Corps Segment Maps depict the riverbed and OHWM as it existed in 1952.

Where the Corps was able to acquire the privately-owned lands that it needed through a voluntary sale, it allowed the landowners to reserve the underlying minerals. Where the Corps was forced to rely on the power of eminent domain, however, it acquired both the surface estate and the associated mineral estate. These lands which were acquired by the United States from private parties are referred to as "acquired lands."

Not all the land inundated by Lake Sakakawea was owned by private parties. Some of the land was owned by the United States. At the time, the United States still held title to public domain uplands above the historic OHWM of the Missouri River that had never left the possession of the United States since they were acquired from France in 1803. These lands, which have never been patented or left federal ownership, are referred to as "retained public domain lands." As a result, the surface estate of the former uplands now submerged by Lake Sakakawea is owned by the United States and consists of a mix of "retained public domain lands" and "acquired lands." The mineral estate in those former uplands consists of a mix of retained public domain mineral interests and acquired mineral interests which belong to the United States and mineral interests that remain in private ownership.

Prior to the Bakken oil boom which began around 2005, the exact location of the submerged riverbed was a question of only historical significance. However, with the advent of modern oil and gas drilling technology, and Lake Sakakawea's location in the Bakken oil fields, the submerged riverbed's historic OHWM has taken on new importance. The United States owns now submerged lands upland of the historic OHWM of the Missouri River. Its interests extend down to the historic OHWM. Pursuant to the eqaul footing doctrine, North Dakota owns the riverbed, including the mineral estate, up to the historic OHWM. With the United States and North Dakota at odds over the location of the historic OHWM, more surveys were conducted.

In 2010, the Land Board hired a private engineering firm, Bartlett & West, to conduct a survey of the Missouri River. The final report was completed in 2011.¹ Bartlett & West conducted its analysis in compliance with Ordinary High Water Mark Delineation Guidelines issued by the North Dakota State Engineer in 2007. The study did not utilize the Corps Segment Maps. Since completion of the Bartlett & West study, the Land Board has leased North Dakota's mineral interests underlying the bed of the Missouri River consistent with the study's determination of the historic OHWM. Prior to the Bartlett & West study, North Dakota's minerals were leased based upon aerial photographs and ground surveys.

In 2013, the BLM prepared Supplemental Plats of the retained public domain lands in the vicinity of Lake Sakakawea to account for the movement of the Missouri River between the original cadastral surveys conducted in the late nineteenth and early twentieth centuries and the impoundment of Lake Sakakawea in the 1950s. The Supplemental Plats do not show the boundary between state-owned riverbed and any other riparian property, whether privately held or federally acquired. The BLM determined the Corps Segment Maps were the most comprehensive evidence of the Missouri River's location just prior to impoundment. The Supplemental Plats were created by overlaying the Corps Segment Maps on the original turn of the century surveys. The Supplemental Plats show the official position of the United States as to the historic OHWM of the Missouri River prior to the formation of Lake Sakakawea. The Supplemental Plats show the boundary between the now submerged federal public domain uplands and State riverbed along portions of the Missouri River in North Dakota. The BLM published the Supplemental Plats in late 2013 and early 2014. North Dakota protested the Supplemental Plats because the BLM applied federal law rather than state law in making its OHWM determination. The State contended the application of federal law led to an inaccurate OHWM boundary in the Supplemental Plats which resulted in some lands being shown as federally-owned uplands above the OHWM rather than state-owned riverbed below the OHWM. The BLM rejected the protest. North Dakota appealed. The Interior Board of Land Appeals rejected North Dakota's appeal, finding "[f]ederal law applies to BLM's determination of the OHWM along retained Federal riparian property, and state law should not be borrowed." 195 IBLA 194, 216 (March 25, 2020). This determination meant the boundary between state and federal lands would be determined as shown in the Supplemental Plats.

In April 2017, following the filing of this action and while the IBLA proceeding was pending, North Dakota enacted Chapter 61-33.1 of the North Dakota Century Code to address state ownership of the bed of the...