Northern Natural Gas Company v. Tract No. 1062710 et al

Filing 488

MEMORANDUM AND ORDER denying 473 Motion for Reconsideration. Signed by District Judge Monti L. Belot on 5/7/2012. (alm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

NORTHERN NATURAL GAS COMPANY,

)
)
Plaintiff,
)
)
v.
)
)
Approximately 9117.53 acres in
)
Pratt, Kingman, and Reno Counties, )
Kansas, and as further described
)
herein;
)
)
Tract No. 1062710 containing 80.00 )
acres more or less, located in
)
Kingman County, Kansas, and as
)
further described herein; et al., )
)
Defendants.
)
)

Civil ACTION
No.

10-1232

MEMORANDUM AND ORDER
This case comes before the court on a Motion for Reconsideration
and Clarification by L.D. Drilling, Inc. and other defendants.1 (Doc.
473). The motion asks the court to modify or clarify three points from
its Memorandum and Order filed March 13, 2012. (Doc. 464). Plaintiff
has responded to the motion. (Doc. 481).
I. GENERAL STANDARDS OF LAW
Motions to reconsider are governed by Local Rule 7.3(b), which
states in pertinent part, “A motion to reconsider shall be based on
(1) an intervening change in controlling law, (2) the availability of
new evidence, or (3) the need to correct clear error or prevent
manifest injustice.” As this court noted in Comeau v. Rupp, 810

1

The movants are well operator L.D. Drilling, Inc. and other
working-interest operators represented by the same counsel. Doc. 473,
n.1.

F.Supp. 1172 (D. Kan. 1992):
A motion to reconsider is appropriate where the
court has obviously misapprehended a party's
position or the facts or applicable law, or where
the party produces new evidence that could not
have been obtained through the exercise of due
diligence.
Revisiting
the
issues
already
addressed is not the purpose of a motion to
reconsider, and advancing new arguments or
supporting facts which were otherwise available
for presentation when the original summary
judgment
motion
was
briefed
is
likewise
inappropriate.
Id. at 1174-75.
II. DISCUSSION
1. Removal of well fixtures. Defendants first ask the court to
clarify that they are entitled to remove and salvage well fixtures
from the Brown A1 and Geesling 1 wells, provided doing so does not
interfere with Northern’s intended use of these wellbores. Northern’s
response states that the parties have reached a tentative agreement
on the issue. (Doc. 481 at 2).2

Northern does not object to L.D.

Drilling’s removal and retention of the equipment provided it is done
in a timely fashion. Id. In view of the parties’ apparent agreement,
the court denies as moot the request to clarify this issue.
2. Excess draw down of cash deposits. Defendants next ask the
court to rule that L.D. Drilling is not obligated to return any cash
deposits it draws down to fund replacement wells unless, in drilling
those wells, L.D. Drilling fails to act as a reasonably prudent
operator.

L.D. Drilling argues that the purpose of the $400,000

deposits is to provide it with the means to drill

2

substitute wells

The agreement has not been provided but the court sees no
reason to wait for it in view of counsels’ representation.
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and to put it in the same position it would have been in had Northern
not condemned the current wells. It argues that the just compensation
for each wellbore is the cost of drilling a replacement well, such
that in no event should it be required to repay any draw down of the
$400,000 well deposits.
Northern opposes the request, arguing defendant is asking the
court to improperly apply the “substitute facilities doctrine.” That
doctrine allows just compensation for condemnation of some public
facilities to be based on the cost of providing an adequate substitute
for the property. See e.g., Whitewater Riv. Watershed Joint Dist. No.
22 v. Butler Rur. Elec. Co-op Ass’n., 6 Kan.App.2d 8, 12, 626 P.2d 228
(1981). The rationale for it is based on the unusual character of
property such as a public school, which may have no market value in
the usually accepted sense of the term. City of Wichita v. Unif.
School Dist. No. 259 (Wichita), Sedgwick Co., 201 Kan. 110, 439 P.2d
162, 165-66 (1968). Northern contends the doctrine is not a valid
measure of just compensation for non-public property.
The court’s prior Memorandum and Order provided unambiguously:
“The deposit can be drawn down by the appropriate defendant(s) in full
or in part, but if the ultimate award of just compensation is less
than the amount withdrawn, the defendant which drew down such funds
will be liable for any excess, plus interest.” (Doc. 464 at 22). The
court also made clear that the $400,000 deposits represented the
security necessary to protect defendants against damages from a
wrongful restraint rather than the amount of just compensation to
which defendants were entitled for the taking of the wells. (Doc. 464
at 24). As for the taking of their wells, defendants are entitled to
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just compensation – nothing more and nothing less – and the amount of
compensation

due

will

be

determined

by

the

Commission

under

instructions from the court. As the court stated previously, these
deposits “may be used by the owners for any purpose they see fit,” but
if defendant draws down funds in excess of the Commission’s ultimate
award of just compensation, defendant will be liable for the excess
plus

interest.

This

type

of

draw-down

arrangement

is

expressly

supported by case law, including East Tennessee Nat. Gas Co. v. Sage,
361 F.3d 808 (4th Cir. 2004). It provides the property owner with
immediate compensation for the condemnor’s use of its property but
also provides a disincentive to draw more than the fair market value
of the property. Defendant has shown no clear error or other grounds
for reconsideration of this ruling.
3. Landowner consent. Defendants’ final request is that the
court modify the requirement that before drawing upon a well deposit,
defendants

must first obtain the consent of any landowners, royalty

owners, working interest owners and lienholders who have an interest
in the tract upon which the well is located. Defendants characterize
this as a “veto power” and argue the landowners “should not be allowed
to hold [the] well deposits hostage.” Defendants further argue that
the interests of the landowners and others are protected by the other
deposits and bonds posted by Northern.
The Huff Landowner Group3 has entered a stipulation with L.D.
Drilling, Inc. (See Doc. 480). Under that stipulation, the Huff Group
does not object to the removal of the requirement for their consent

3

The group of landowners identified in Doc. 477.
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for L.D. Drilling to draw down the well deposits. At the same time,
L.D. Drilling acknowledges that the stipulation does not prejudice any
present or future claim by the Huff Group that an oil and gas lease
on their lands expired or may expire. Id.
L.D. Drilling’s argument is basically a restatement of its
original objection to Judge Bostwick’s Report and Recommendation. See
Doc. 428 at 13-14. That argument failed to persuade the court then and
fails to persuade it now that the interests of the landowners and
others in these tracts will necessarily be unaffected by any draw down
of the well deposit funds. The rights of the landowners and the
producers are clearly not identical, but they are interrelated, and
the court sees no clear error or manifest injustice in the requirement
for the landowners’ consent.
III. CONCLUSION
L.D.

Drilling

Defendants’

Motion

Clarification (Doc. 473) is denied.

for

Reconsideration

and

All counsel are reminded of the

clear purpose of a legitimate motion to reconsider. Unnecessary
motions to reconsider waste this court’s time, cause delay in the
progress of this case and extra expense to other parties.
IT IS SO ORDERED.
Dated this

7th

day of May 2012, at Wichita, Kansas.

s/ Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE

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