McKenzie County, North Dakota v. United States of America

Filing 36

ORDER by Chief Judge Daniel L. Hovland denying 18 United States' Motion to Dismiss and Granting Plaintiff's Motion to Amend Complaint. (RLB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
McKenzie County, North Dakota,
Plaintiff,
vs.
United States of America,
Defendant.

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ORDER DENYING UNITED STATES’
MOTION TO DISMISS AND
GRANTING PLAINTIFF’S MOTION
TO AMEND THE COMPLAINT
Case No. 1:16-cv-001

Before the Court is the “United States’ Motion to Dismiss” filed on December 20, 2016.
See Doc. No. 18. Plaintiff McKenzie County, North Dakota (“McKenzie County” or “County”),
filed a response in opposition to the motion on January 31, 2017. See Doc. No. 24. The United
States then filed a reply brief on February 27, 2017. See Doc. No. 29. McKenzie County filed a
surreply on March 17, 2017, and the United States filed a response to the surreply on March 31,
2017. See Doc. Nos. 32 and 33. For the reasons set forth below, the Defendant United States’
motion to dismiss for lack of jurisdiction is denied.

I.

PROCEDURAL & FACTUAL BACKGROUND

McKenzie County, North Dakota, filed a complaint against the United States on January
11, 2016. See Doc. No. 1. In its complaint, McKenzie County seeks to quiet title to the 6 ¼
percent royalty interest in the mineral estate granted to the County in condemnation judgments
entered by this Court in the 1930’s and 1940’s. McKenzie County filed an amended complaint on
April 12, 2016. See Doc. No. 7. On December 20, 2016, the United States filed this motion to
dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter
jurisdiction because McKenzie County’s complaint is untimely pursuant to the Quiet Title Act, 28
U.S.C. § 2409a (“Quiet Title Act”). The United States contends McKenzie County’s complaint is

untimely because the County knew or should have known of the United States’ claim to the 6 ¼
percent royalty interest in the mineral estate of “public domain” lands described in the
condemnation judgment more than twelve (12) years before McKenzie County initiated this action.
Much of the present controversy stems from legal proceedings spanning more than seventy-five
(75) years and relating to mineral interests in land in McKenzie County. To provide context for
the current manifestation of a long-standing squabble, a discussion of the legal history of lands in
McKenzie County is necessary.

A. Early Condemnation Actions
In the late 1800’s through the 1920’s, settlers acquired federal lands for agricultural
purposes under the Homestead Acts or through purchasing land granted to railroad companies.
These homestead patents granted to settlers title to 640 acres, but reserved to the United States the
mineral interest in those lands. By the 1930’s, extensive drought, along with plowing of submarginal farm land, caused the loss of the lands’ protective cover. The lands quickly lost fertility
and the soil blew, causing “dustbowl” conditions and significant crop failure. As a result, many
farms in McKenzie County failed and farmers were unable to pay their property taxes.
Consequently, McKenzie County acquired title to significant acreage throughout the County
through foreclosures. See McKenzie County v. Hodel, 467 N.W.2d 701, 702 (N.D. 1991).
Through these tax foreclosures, McKenzie County acquired both the surface estate and the mineral
estate for foreclosed land, except McKenzie County acquired only the surface estate for those lands
in which the United States had reserved the mineral interest in the original patent. McKenzie
County formalized its ownership of the foreclosed land by quit claim or Sheriff’s deed, whether it
was both the surface and mineral estates or the surface estate alone.

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Due to the economic conditions in the United States, Congress directed the United States
Department of Agriculture (“USDA”) to acquire failed farmland for conservation and public use
purposes. Lands were the subject of the condemnation actions through tax forfeiture proceedings
and McKenzie County deeded the forfeited property to the United States with a reservation of a
6¼ royalty interest in oil and gas production. See Doc. No. 20, ¶ 3. In an effort to avoid the claim
to a right of redemption under state law by a party who originally forfeited the property and to
ensure clear title to the lands, the United States initiated condemnation actions in this Court. Id.
The condemnation actions are identified as follows:
1. United States v. 10,683.00 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1000 (D.N.D. June 30, 1937);
2. United States v. 12,344.54 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1001 (D.N.D. Feb. 6, 1938);
3. United States v. 17,463.13 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1002 (D.N.D. Oct. 5, 1938);
4. United States v. 11,994.84 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1006 (D.N.D. Feb. 25, 1938);
5. United States v. 9,914.53 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1007 (D.N.D. Oct. 11, 1939); and,
6. United States v. 11,626.49 Acres of Land, More or Less, in McKenzie County, State of
North Dakota, At Law No. 1028 (D.N.D. June 15, 1938).
Id.
Following an agreement by the parties, a judgment was entered in each condemnation
action. See Doc. No. 20-1. Each of the judgments identified the lands to be condemned and used
language similar to the language found in judgment No. 1000:
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All the above tracts or parcels of land, with the exception of Tracts 872 and 873,
are subject to a 6 ¼% percent royalty reservation in favor of McKenzie County,
North Dakota, in the minerals which exist or may be developed therein by said
McKenzie County. And subject, also, to and excepting all existing public roads,
public utilities, easements and rights of way, is therefore taken for said public use.
See Doc. No. 20-1, p. 6. However, when the United States did not grant a 6 ¼ percent royalty in
favor of McKenzie County for tracts, the judgments specifically excluded those tracts from the
grant.
The United States Department of Interior (“DOI”), through the Bureau of Land
Management (“BLM”), is tasked with the responsibility to monitor and manage the royalty
payments owed to landowners and monitored the royalty interest reservation to McKenzie County
following the judgments entered in the condemnation cases. See Doc. No. 20 at ¶ 4. The United
States admits that upon entry of the condemnation judgments, BLM annotated its records to
recognize the 6¼ percent royalty interest in favor of McKenzie County for those lands that the
previous owner held both the surface and mineral estates and were foreclosed by the County prior
to the condemnation proceedings. See id. These minerals received from McKenzie County
through tax foreclosure are referred to as “acquired minerals.” However, BLM did not annotate
its records to reflect the 6 ¼ percent mineral interest reserved in favor of McKenzie County for
those lands in which the United States had reserved the mineral interest in the original patent. Id.
at ¶ 6. These mineral interests are referred to as “public domain minerals.” Id. at ¶ 7. The parties
agree lands subject to the condemnation judgments included both lands with acquired minerals
and with public domain minerals.
After entry of the condemnation judgments, McKenzie County received payments from
operators as a result of the 6 ¼ percent mineral interest reservation annotation in BLM’s records.
These payments ended in 1985 when BLM directed operators to pay the 6 ¼ percent interest to the
United States. The BLM’s decision to stop payments to McKenzie County was based wholly on
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the North Dakota Supreme Court’s decision of DeShaw v. McKenzie County, decided more than
20 years earlier.

B. DeShaw v. McKenzie County
In 1962, in DeShaw v. McKenzie County, the North Dakota Supreme Court concluded
McKenzie County is precluded under North Dakota law from retaining a mineral interest and
conveying less than all of its rights, title, and interest to property acquired through tax foreclosure.
114 N.W.2d 263, 265 (N.D. 1962). As a consequence of the North Dakota Supreme Court’s
DeShaw decision, more than twenty (20) years later, on June 7,1985, the United States notified
McKenzie County that “royalty payments formerly made to the counties [Billings, Golden Valley,
and McKenzie] based on the invalid 6 ¼ royalty reservation are payable to the United States.” See
Doc. No. 20-4 at 1. BLM’s letter to McKenzie County included an attachment, referenced in the
letter as “Enclosure 1,” which purported to identify lands that were acquired by Billings,
McKenzie, or Golden Valley Counties through tax proceedings, and were later acquired by the
United States through condemnation actions. The letter specifically informed McKenzie County:
Effective at 12:01 A.M., July 1, 1985, royalty payments formerly made to the
counties based on the invalid 6 ¼ percent royalty reservation are payable to the
United States. The lease terms of each of the leases listed on Enclosure 1 are
amended accordingly and lessees, approved operators, or designated operators are
responsible for compliance with the amended lease terms.
Id. at 1. The letter then identifies Enclosure 1 as “Lands Containing Invalid 6 ¼ Percent Royalty
Reservation (Producing Leases).” Id. Enclosure 1 is a tract summary, which identifies the legal
description and acquisition number for each tract and lists the serial numbers of leases, unit
agreement numbers, and the names of lessees and unit operators. See Doc. No. 20-4, pp. 6-18.
McKenzie County appealed the BLM’s letter decision to the Board of Land Appeals, which
affirmed the invalidation of the 6 ¼ percent mineral interest reservation in light of DeShaw. See
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Doc. No. 20-5. In its opinion, the Board of Land Appeals stated McKenzie County, along with
Billings County and an oil company, were appealing BLM’s decision “declaring invalid royalty
reservations . . . in lands acquired by those counties through tax proceedings and subsequently
acquired by the United States as the result of condemnation proceedings.” See Doc. No. 20-5, p.
2. The Board of Land Appeals describes the scope of BLM’s June 7, 1985 decision to cover “119
tracts in McKenzie County, 10 tracts in Billings County, and 2 tracts in Golden Valley County.”
Id. After the Board of Land Appeals issued its decision on October 20, 1987, affirming the BLM’s
invalidation of the 6 ¼ percent mineral interest, McKenzie County filed suit in federal court against
Donald Hodel, then-Secretary of the Interior, and others on December 16, 1987.

C. McKenzie County II
In the 1987 suit, McKenzie County alleged DeShaw was inapplicable to the 6 1/4 percent
mineral royalty reservation in the condemnation judgements and requested the U.S. District Court
for the District of North Dakota declare the 6 ¼ percent mineral interest belonged to McKenzie
County, quiet title in favor of McKenzie County to the 6 ¼ percent mineral interest, and order the
defendants to reimburse and pay to McKenzie County the monies due pursuant to the valid 6 ¼
percent mineral interest. See Doc. No. 20-6. McKenzie County’s claims were not brought
pursuant to the Quiet Title Act. In McKenzie County v. Hodel (“McKenzie County II”), upon
Plaintiff’s motion, the Honorable Judge Patrick Conmy certified the question presented in
McKenzie County II to the North Dakota Supreme Court as follows:
The question of law can have a different appearance from the ‘spin’ put on its
presentation.
Does a condemnation judgment, pursuant to a stipulation between the
parties, recognizing an otherwise invalid reservation of a mineral interest, operate
as a conveyance, so as to give validity to the conveyance as between the parties to
the stipulation?
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Does a condemnation judgment, brought for the purpose of quieting title in
the Federal Government to lands acquired from the County, insulating the federal
government from any claims of former owners who lost the land to the County
through tax title proceedings, which recognizes an invalid mineral interest
reservation, operate as a conveyance back to the county of the mineral interest
covered so as to make no longer applicable North Dakota statutory provisions
declaring the reservation invalid?
McKenzie County v. Hodel, 467 N.W.2d 701, 703 (N.D. 1991). The North Dakota Supreme Court
noted the questions posed by the federal district court could be taken as asking the North Dakota
Supreme Court to “construe a federal court judgment and determine its legal effect.” Id. Leaving
the construction of a federal court judgment to the federal district court, the North Dakota Supreme
Court narrowed the questions presented for its consideration to:
I.

Under North Dakota law, may title to real property be transferred through a
judgment without compliance with the conveyancing statute?

II.

Do Chapter 288, 1931 N.D. Sess. Laws, and the North Dakota Supreme Court’s
decision in DeShaw prohibit the County from acquiring title to a mineral
interest through operation of a condemnation judgment under the facts
presented?

In answering the first question, the North Dakota Supreme Court held “North Dakota
conveyancing statutes do not affect the validity or enforceability” of federal condemnation
judgments because under Rule 70 of the North Dakota Rules of Civil Procedure, as well as its
federal counterpart, a judgment may divest the title of a party and vest it in another, having the
effect of conveying real property. Id. at 704; see also N.D. R. Civ. P. 70. Therefore, “North
Dakota law does not impede the transfer of title to real property by operation of a judgment.” Id.
at 705.
The North Dakota Supreme Court then turned to the question of whether Chapter 288, 1931
N.D. Session Laws, and its decision in DeShaw prohibit the County from “acquiring title to the
disputed mineral rights through operation of the condemnation judgment.” Id. The North Dakota
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Supreme Court concluded nothing in DeShaw or Chapter 288 “limits the County’s authority to
reacquire title to property formerly held by tax title,” and more specifically neither DeShaw nor
Chapter 288 “prohibit the County from acquiring title to mineral interests through operation of a
condemnation judgment.” Id. at 707.
After the North Dakota Supreme Court issued its order addressing the certified questions,
McKenzie County filed a motion for summary judgment in the federal district court case,
requesting the Court enter judgment in its favor by confirming McKenzie County’s ownership of
the 6 ¼ percent mineral interest “in the lands in question” and setting aside the decisions of the
BLM and the Board of Land Appeals. Judge Conmy granted the motion, holding “the recognition
of a mineral reservation in the County in the federal condemnation judgments operates as a
conveyance of that mineral interest to the County.” See Doc. No. 20-7 at 2. In the judgment
entered, the Court again articulated “a mineral reservation in favor of McKenzie County in the
federal condemnation judgments operates as a conveyance of that mineral interest to McKenzie
County” and ordered “title to the disputed minerals (6 ¼% royalty) is quieted in McKenzie County;
and, the Defendants are barred from any claim in regard to the same or proceeds from the same;
that McKenzie County is the owner of the disputed minerals (6 ¼% royalty) free and clear of any
claim of the above named defendants.” See Doc. No. 20-8 at 3. The judgment was entered June
24, 1991. See id.

D. Events After McKenzie County II
The United States represents to the Court that after Judge Conmy’s decision quieting title
to the 6 ¼ percent mineral interest in favor of McKenzie County, the BLM “resumed annotating
its records to recognize the 6 ¼ percent royalty interest to McKenzie County for those lands
described in its 1987 Complaint, which were the lands described in the condemnation Judgements
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that contained acquired minerals.” See Doc. No. 20, ¶ 11 (emphasis added). While the BLM
directed well operators to resume payment of a 6 ¼ percent mineral interest to McKenzie County,
the record reveals as late as 1993, the BLM was still identifying “additional oil and gas leases
subject to the 6 ¼% royalty rate reservation” because “lands were not identified on [BLM’s]
records during [its] initial review.” See Doc. Nos. 24-11 and 24-12. McKenzie County represents
that the BLM’s application of Judge Conmy’s decision was not limited to those lands enumerated
on Enclosure 1, attached to the BLM’s decision letter in 1985, but extended to other lands.
Consequently, after the 1991 Judgment, McKenzie County, along with companion counties, made
efforts to ascertain what lands within the counties were burdened by the 6 ¼ percent mineral
interest in favor of the counties in light of the 1991 Judgment. By at least 1998, McKenzie County
had initiated a “Natural Resource Inventory” project to review legal records and condemnation
judgments, with State’s Attorney Dennis Johnson traveling to Kansas City, Missouri, to retrieve
legal records of the 1930’s condemnation actions. See Doc. No. 24-2, pp. 5, 36. During this
process, on November 17, 2003, Karen Johnson, Chief of the Fluids Adjudication Section in the
BLM Billings Field Office, sent a fax to Dennis Johnson and Keith Winter that stated, in part:
“Our records show only the acquired minerals in the Judgments/Partial Judgments of Declarations
of Taking At Law Nos. 1000, 1001, 1002, 1006, 1007, 1028, 1036 and 1042 are subject to a 6 ¼%
royalty reservations.” See Doc. No. 24-4, p. 13.
On December 19, 2003, McKenzie County Commissioner Roger Chinn and Billings
County Commissioner Jim Arthaud met with Elaine Kaufman, Karen Johnson, and Joan Seibert
from the BLM Fluids Adjudication Section in Billings, Montana, to compare the tracts of lands
the records obtained by the Counties of the commendation judgments subject to a 6 ¼ percent
royalty reservation and the BLM records. Chinn and Arthaud provided the BLM with copies of
the condemnation judgments and documents from the condemnation proceeding, as well as a list
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of the legal descriptions of the tracts of land in McKenzie, Golden Valley, and Billings Counties
that were tied to a specific paragraph in the At Law Judgments recognizing the 6¼ percent royalty
interest grant to the Counties. After the meeting, Karen Johnson sent an email to individuals within
the BLM indicating the Counties provided the BLM with “a list of legal descriptions which
provides reference to the At Law #s and the Tract #s” and “[BLM] will review the information
they provided to ensure our records accurately reflect the 6 ¼% outstanding royalty reservation in
Slope, Golden Valley, McKenzie, and Billings Counties.” See Doc. No. 24-2, p. 84.
On January 27, 2004, Roger Chinn, as McKenzie County Commissioner, received a letter
from Karen Johnson from the BLM informing the Counties of the result of the BLM’s audit of
lands subject to a 6 ¼ percent mineral interest in favor of the Counties. See Doc. No. 24-2, pp.
92-93. In the letter, Johnson indicated McKenzie County claimed 74,032.81 acres are subject to a
6 ¼ percent royalty reservation, but the BLM’s records show only 58,368.94 acres are subject to
the reservation; Golden Valley County claimed 5,925.27 acres are subject to a 6 ¼ percent royalty
reservation, but the BLM’s records show only 3,845.27 acres are subject to the reservation; and
Billings County claimed 14,921.63 acres are subject to a 6 ¼ percent reservation, but the BLM’s
records show only 13,990.94 acres are subject to the reservation. Johnson explains the discrepancy
between the Counties’ records and the BLM’s records: “the acreage differences between our
records and yours are primarily because your records included lands with Public Domain minerals.
Only lands acquired by the United States in the condemnations are subject to a 6 ¼ percent royalty
reservation.” Id. The letter also included attachments enumerating lands in McKenzie, Golden
Valley, and Billings County in which the BLM does not recognize a 6 ¼ percent mineral
reservation in favor of the Counties because those minerals are either public domain minerals or
were specifically excluded from the reservation in the original condemnation judgments.

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After McKenzie County received Johnson’s January 27, 2004 letter, McKenzie and
Billings Counties exchanged several letters with the BLM to clarify the status of certain lands. In
this correspondence, the Billings Field Office of the BLM indicated it would direct the Counties’
request for recognition of the 6 ¼ percent mineral reservation in all lands acquired through
condemnation judgements to BLM’s Rock Mountain Field Solicitor “for an opinion regarding
[their] claim to a 6 ¼ percent royalty in lands with public domain minerals acquired through
condemnation.” See Doc. No. 24-2, p. 116. On December 16, 2004, Johnson sent a letter to Chinn
and Arthaud indicating BLM’s Rocky Mountain Region Field Solicitor reviewed the Counties’
claim to a 6 ¼ percent in all lands in the condemnation judgments, and determined “the Bureau of
Land Management’s decision to issue public domain mineral leases without a royalty reservation
to the counties is defensible.” See Doc. No. 24-2, p. 118. McKenzie County sent a letter to the
United States Department of the Interior, Office of the Solicitor, on March 7, 2005, requesting the
office review the opinion of the Rocky Mountain Region Field Solicitor and direct the BLM to
recognize a 6 ¼ percent royalty reservation in favor of the Counties for all lands acquired by the
United States in the condemnation judgments. See Doc. No. 24-4, pp. 15, 20. According to the
record, the Department of the Interior did not respond to McKenzie County’s letter.
McKenzie County initiated this action on January 11, 2016, and filed an amended
complaint on April 12, 2016. See Doc. Nos. 1 and 7. The sole cause of action in the amended
complaint is to quiet title to the 6 ¼ percent mineral interest in favor of McKenzie County for
specific tracts of lands. On December 20, 2016, the United States filed a motion to dismiss the
County’s amended complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure
for lack of subject matter jurisdiction. See Doc. No. 18. The United States contends McKenzie
County’s complaint is barred by the twelve (12) year statute of limitations in the Quiet Title Act.

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II.

STANDARD OF REVIEW
The United States requests the Court dismiss McKenzie County’s amended complaint

pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. When considering a motion to
dismiss, the Court must generally construe the complaint liberally and assume all factual
allegations to be true. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). Dismissal
will not be granted unless it appears beyond a reasonable doubt that the plaintiff can prove no set
of facts that would entitle plaintiff to relief.
Rule 12(b)(1) of the Federal Rules of Civil Procedure governs challenges to subject matter
jurisdiction. Fed. R. Civ. P. 12(b)(1). Here, the United States asserts a factual challenge to the
Court’s jurisdiction. In such a factual 12(b)(1) motion, the trial court’s jurisdiction – its very
power to hear the case – is at issue, and the trial court is “free to weigh the evidence and satisfy
itself as to the existence of its power to hear the case.” Osborn v. United States, 918 F.2d 724, 730
(8th Cir. 1990). As a result, “no presumptive truthfulness attaches to the plaintiff’s allegations”
and the existence of disputed material facts will not preclude the trial court from evaluating for
itself the merits of jurisdictional claims. Spirit Lake Tribe v. North Dakota, 262 F.3d 732, 744
(8th Cir. 2001). The burden is on the plaintiff to demonstrate jurisdiction exists. Id.

III.

LEGAL ANALYSIS
McKenzie County brought this action to “quiet title to the 6 ¼ percent royalty interest in

the mineral estate granted to the County as part of the condemnation of the lands by the United
States.” See Doc. No. 7, p. 18. The United States requests the Court dismiss the County’s amended
complaint pursuant to Rule 12(b)(1) of the Federal Rule of Civil Procedure because the Plaintiff’s
claim is untimely pursuant to the Quiet Title Act and, consequently, this Court lacks jurisdiction
over the matter. McKenzie County contends its claim is timely as its complaint was filed within
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the twelve (12) year statute of limitations of the Quiet Title Act and the Court has jurisdiction over
the matter.

In the alternative, McKenzie County requests leave to file a second amended

complaint.
The United States is immune from suit absent a waiver of sovereign immunity. Hart v.
United States, 630 F.3d 1085, 1088 (8th Cir. 2011). The Quiet Title Act (“QTA”) provides a
limited waiver of sovereign immunity:
The United States may be named as a party defendant in a civil action under this
section to adjudicate a disputed title to real property in which the United States
claims an interest, other than a security interest or water rights.
28 U.S.C. § 2409a(a). The QTA is the exclusive means by which an adverse claimant can
challenge the United States’ title to real property. Block v. North Dakota ex rel. Bd. of Univ. &
Sch. Lands, 461 U.S. 273, 286 (1983). “Because the QTA waives the government’s sovereign
immunity from suit, a plaintiff must comply with the limitations period to effectuate that waiver.
Hence the QTA statute of limitations acts as a jurisdictional bar unlike most statutes of limitations,
which are affirmative defenses.” Spirit Lake Tribe, 262 F.3d at 737-38 (internal citations
omitted).1
Subsection (g) of 28 U.S.C. § 2409a, describes the statute of limitations applicable to
claims brought by persons or entities, such as a county:
Any civil action under this section, except for an action brought by a State, shall be
barred unless it is commenced within twelve years of the date upon which it
accrued. Such action shall be deemed to have accrued on the date the plaintiff or
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Some circuit courts of appeal have questioned whether the QTA’s limitations period serves as a jurisdictional bar.
In Irwin v. Dep’t of Veteran Affairs, the United States Supreme Court concluded the statute of limitations in an
employment discrimination action against the United States was subject to equitable tolling. 498 U.S. 89, 95-96
(1990). Courts have interpreted Irwin to imply a statute of limitations does not function as a jurisdictional bar for
claims against the United States. See, e.g., Wisconsin Valley Improvement Co. v. United States, 569 F.3d 331, 334
(7th Cir. 2009). For example, in Schmidt v. United States, the Eighth Circuit concluded the statute of limitations in
the Federal Tort Claims Act is not jurisdictional pursuant to the Supreme Court’s holding in Irwin. 933 F.2d 639, 640
(8th Cir. 1991). Nonetheless, absent an express contrary manifestation by the Eighth Circuit or the United States
Supreme Court, this Court follows the Eighth Circuit’s determination in Spirit Lake Tribe that the QTA’s statute of
limitations serves as a bar to the district court’s jurisdiction. See 262 F.3d at 737-38.
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his predecessor in interest knew or should have known of the claim of the United
States.
28 U.S.C. § 2409a(g). In Spirit Lake Tribe, the Eighth Circuit discussed the operation of the statute
of limitations of subsection (g). Specifically the Eighth Circuit stated that subsection (g) does not
require the government to provide explicit notice of its claim. Spirit Lake Tribe, 262 F.3d at 738.
In fact, the government’s claim need not be “clear and unambiguous.” Id. (citing North Dakota ex
rel. Bd. of Univ. & Sch. Lands v. Block, 789 F.2d 1308, 1313 (8th Cir. 1986). “Knowledge of the
claim’s full contours is not required. All that is necessary is a reasonable awareness that the
Government claims some interest adverse to the plaintiff’s.” Id. (quoting Knapp v. United States,
636 F.2d 279, 283 (10th Cir. 1980)). Courts have consistently held that to trigger the QTA general
limitation period in subsection (g) a plaintiff must have a “reasonable awareness that the
Government claims some interest adverse to the plaintiff’s.” Knapp, 636 F.2d at 283 (emphasis
added); see, e.g., Kane Cnty v. United States., 772 F.3d 1205, 1215 (10th Cir. 2014); Michel v.
United States, 65 F.3d 130, 131-32 (9th Cir. 1995); and North Dakota ex rel Bd. of Univ. & Sch.
Lands v. Block, 789 F.2d 1308, 1313 (8th Cir. 1986). The only notice sufficient to trigger the
limitation period is notice of an adverse claim, San Juan Cnty. v. United States, 754 F.3d at 787,
795-96 (10th Cir. 2014), because when the plaintiff claims a non-possessory interest in property,
such as a mineral royalty, “knowledge of a government claim of ownership may be entirely
consistent” with the plaintiff’s claim. Michel, 65 F.3d at 132.
In the present motion, the Court has been asked to determine whether McKenzie County
complied with the limitations period of the Quiet Title Act to effectuate a waiver of sovereign
immunity by the United States. Because McKenzie County instituted its action on January 11,
2016, its attempt to quiet title is barred if the County “knew or should have known” of the United

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States’ claim to the 6 ¼ percent mineral interest for public domain minerals on lands within the
condemnation judgments by January 10, 2004. See Doc. No. 1.
In its motion, the United States contends the limitations period of the QTA bars McKenzie
County’s claim because the United States has consistently maintained the 6 ¼ percent mineral
reservation in the commendation judgment applies only to those minerals acquired by McKenzie
County through tax proceedings and does not apply to public domain minerals. Specifically, the
United States directs the Court to several events that occurred prior to January 10, 2004, to
demonstrate McKenzie County knew or should have known of the United States’ claim to the 6 ¼
percent mineral interest in public domain minerals on those lands included in the condemnation
judgments; namely: (1) A 1981 Letter from the BLM to McKenzie County; (2) the BLM’s historic
non-payment of royalties for public domain minerals on those lands included in condemnation
judgments; (3) McKenzie County’s initiation of its a “Natural Resource Inventory” project to
review legal records and condemnation judgments; (4) Minutes for County Commission meetings
in McKenzie, Golden Valley, and Billings Counties; (5) the correspondence between McKenzie
County and the BLM after entry of judgment in McKenzie County II.
In its response to the United States’ motion, McKenzie County contends not only did it
timely bring this action, but this Court’s holding in McKenzie County II already quieted title to the
6 ¼ percent mineral interest in favor of McKenzie County for both acquired and public domain
minerals in those lands described in 1930’s-1940’s condemnation judgments. McKenzie County
also contends the doctrines of collateral estoppel and res judicata preclude the United States from
denying and relitigating McKenzie County’s ownership of the 6 ¼ percent mineral interest in any
lands conveyed to the United States in the condemnation judgments.
Before addressing whether those specific events or communications described above
triggered the QTA limitation period, the Court first turns to consider whether the judgment entered
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in McKenzie County II or the condemnation judgments preclude the parties from relitigating title
to the 6 ¼ percent mineral interest in favor of McKenzie County in this matter. Assuming,
arguendo, that the Court were to conclude those actions already quieted title to the 6 ¼ percent
mineral interest for public domain minerals, such conclusion would certainly alter the landscape
of this action.
The Court has carefully and thoroughly reviewed the record in this case, particularly the
materials submitted by the parties related to the litigation of McKenzie County II in this Court and
the condemnation judgments. In McKenzie County II, this Court specifically held “the recognition
of a mineral reservation in the County in the federal condemnation judgments operates as a
conveyance of that mineral interest to the County.” See Doc. No. 20-7. In the judgment entered
upon Judge Conmy’s grant of summary judgment, the Court again articulated “a mineral
reservation in favor of McKenzie County in the federal condemnation judgments operates as a
conveyance of that mineral interest to McKenzie County” and ordered “title to the disputed
minerals (6 ¼% royalty) is quieted in McKenzie County; and, the Defendants are barred from any
claim in regard to the same or proceeds from the same; that McKenzie County is the owner of the
disputed minerals (6 ¼% royalty) free and clear of any claim of the above named defendants.”
See Doc. No. 20-8 (emphasis added). The condemnation judgments referred to in the McKenzie
County II judgment, plainly state: “All the above tracts or parcels of land . . . are subject to a 6 ¼%
percent royalty reservation in favor of McKenzie County, North Dakota, in the minerals which
exist or may be developed therein by said McKenzie County.” See Doc. No. 20-1, p. 6. Whether
the McKenzie County II judgment, along with the earlier condemnation judgments, has quieted
title to the mineral interest in dispute here (i.e. public domain minerals) turns on the breadth of
Judge Conmy’s decision and the scope of the phrase “disputed minerals” as used in the McKenzie
County II judgment. The Court combed the records from McKenzie County II submitted by the
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parties to help provide context for the phrase “disputed minerals.”

The Court looked to the

complaint in McKenzie County II, in which the County described the dispute as follows:
2. This lawsuit consists of a dispute over ownership of a 6 ¼% interest under certain
lands located in McKenzie County (said lands are described in Enclosure 1 of
Exhibit A attached hereto and made a part hereof, and will be herein referred to as
“subject lands”). All of the subject lands were patented by the United States
Government into private ownership. McKenzie County acquired the lands by tax
sale proceedings.
Doc. No. 20-6. Neither this allegation or other allegations of the complaint, or any other pleading
from McKenzie County II submitted by the parties, define the scope of the lawsuit in terms of
“disputed minerals,” and the United States’ answer to the complaint in McKenzie County II is not
part of the record before the Court. Although there is reference in the McKenzie County II
complaint to “Enclosure I” (originating from the BLM’s 1985 letter to McKenzie County), nothing
in the record defines the “disputed minerals.” With these considerations, the Court is convinced
that title to the 6 ¼ percent mineral interest in the lands identified in the complaint filed in this
action was already quieted by this Court in the 1991 judgment or the condemnation judgments. In
fact, based upon the plain language of the condemnation judgments (stating “[a]ll the above tracts
or parcels of land . . . are subject to a 6¼% percent royalty reservation in favor of McKenzie
County, North Dakota, in the minerals which exist or may be developed therein by said McKenzie
County.”) and the holding of the North Dakota Supreme Court in DeShaw and McKenezie County,
the Court is left with the clear impression the 6 ¼ percent mineral interest in dispute in this case
may have already been quieted. If such is the case, the Court’s jurisdictional inquiry changes
substantially because the actions of the BLM since the 1930’s described in the United States’
motion to dismiss have forced the County to relitigate an issue already decided and seek relief
from this Court to enforce judgments previously entered against the United States. Therefore,
under these circumstances, the Court concludes it is in the interests of justice to grant McKenzie
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County leave to file a second amended complaint to assert additional claims supported by the
record.

IV.

CONCLUSION
The Court has carefully scrutinized, considered, and weighed each of the hundreds of

documents in the record. Based on the foregoing, the Court DENIES the United States’ motion to
dismiss McKenzie County’s amended complaint (Doc. No. 18) and GRANTS McKenzie County
leave to file a second amended complaint. McKenzie County is to file its second amended
complaint on or before August 30, 2019.
IT IS SO ORDERED.
Dated this 6th day of August, 2019.
/s/ Daniel L. Hovland
Daniel L. Hovland, Chief Judge
United States District Court

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