Continental Resources, Inc. v. North Dakota Board of University and School Lands et al
Filing
114
ORDER by Judge Daniel L. Hovland granting 105 Motion for Partial Summary Judgment; denying 107 Motion for Partial Summary Judgment (MM)
Case 1:17-cv-00014-DLH-CRH Document 114 Filed 03/21/23 Page 1 of 15
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
Continental Resources, Inc.
an Oklahoma corporation,
)
)
)
Plaintiff,
)
ORDER GRANTING THE LAND
)
BOARD’S’ MOTION FOR PARTIAL
vs.
)
SUMMARY JUDGMENT
)
North Dakota Board of University
)
and School Lands and the United
)
States of America,
)
Case No. 1:17-cv-014
)
Defendants.
)
______________________________________________________________________________
Before the Court are motions for partial summary judgment filed by both defendants on
May 2, 2022, and May 23, 2022. See Doc. Nos. 105 and 107. The motions have been fully
briefed and are ripe for consideration. See Doc. Nos. 106, 108, 110, and 112. For the reasons
set forth below, the Land Board’s motion for partial summary judgment is granted and the
United States’ motion for partial summary judgment is denied.
I.
BACKGROUND
This dispute stems from competing claims of mineral ownership due to a 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
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North Dakota Governor, Secretary of State, Superintendent of Public Instruction, Treasurer, and
Attorney General. The Land Board 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. Millions of 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 Rule 22 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 but not a state boundary. 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.
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Rivers, especially large navigable rivers, such as the Missouri River, are dynamic. They
change course through erosion, accretion, and avulsion, and when they do the OHWM changes
as well. Rivers also flood and Missouri River flooding was particularly bad in the first half of
the twentieth century. So 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 Garrison 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 the Garrison Dam got underway, many of the uplands (lands
above the OHWM) 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. However, where the Corps was
forced to rely on the power of eminent domain, it acquired both the surface estate and the
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associated mineral estate. These lands which were acquired by the United States from private
parties are referred to as “acquired lands.”
Not all of 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” or “non-patented public domain lands” or simply “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. The State of North Dakota retains all the mineral interests
underlying the riverbed up to the historic OHWM.
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 equal 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.
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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 to reflect the OHWM 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 address acquired lands. 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 and the best evidence of the
historic OHWM relative to acquired lands. 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
1
The Bartlett & West report is available at:
https://www.land.nd.gov/sites/www/files/documents/Minerals/OHWM2/ohwm%20report.pdf.
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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 (“IBLA”) 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 retained 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 Missouri River. In litigation with private mineral owners
regarding lands whose surface estate had previously been sold to the United States to construct
the Garrison Dam, the Land Board claimed “title to the bed of the Missouri River up to the
current ordinary high water mark.” See Wilkinson v. Bd. of Univ. & School Lands, 903 N.W.2d
51, 54 (N.D. 2017) (“Wilkinson I”) (emphasis added). Chapter 61-33.1 rejected this view and
made clear that “state sovereign land mineral ownership of the riverbed segments subject to
inundation by Pick-Sloan Missouri Basin project dams extends only to the historical Missouri
riverbed channel up to the ordinary high water mark.” N.D.C.C. § 61-33.1-02 (emphasis added);
see also N.D.C.C. § 61-33.1-01 (defining “[h]istorical Missouri riverbed channel” as the riverbed
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as it existed when the Pick-Sloan Plan dams were closed to begin impounding the Missouri
River).
Section 61-33.1-03(1) provided that, for lands other than non-patented public domain
lands, including the disputed acquired lands, the “Corps survey must be considered the
presumptive determination of the ordinary high water mark of the historical Missouri riverbed
channel,” subject to a review process set forth in the statute. N.D.C.C. § 61-33.1-03(1); see also
N.D.C.C. § 61.33.1-01 (“‘Corps survey’ means the last known survey conducted by the army
corps of engineers in connection with the corps’ determination of the amount of land acquired by
the corps for the impoundment of Lake Sakakawea and Lake Oahe, as supplemented by the
supplemental plats created by the branch of cadastral survey of the United States bureau of land
management”).
For non-patented public domain lands owned by the United States, on the other hand, the
OHWM of the historic Missouri River on these lands “must be determined by the branch of
cadastral study of the United States bureau of land management in accordance with federal law.”
N.D.C.C. § 61-33.1-06. Chapter 61-33.1 is retroactive to the date of the closure of the PickSloan dams save for the OHWM determination which is retroactive to all oil and gas wells spud
after January 1, 2006, for purposes of oil and gas mineral and royalty ownership. 2017 N.D.
Sess. Laws Ch. 426, § 4.
In Chapter 61-33.1, the North Dakota Legislature commissioned an additional study. See
N.D.C.C. § 61-33.1-03(2). The study was completed by Wenck Associates, Inc. in 2018.2 The
Wenck Report determination of the OHWM was made in accordance with the parameters set
2
The Wenck Report is available at:
https://www.dmr.nd.gov/OrdinaryHighWaterMark/docs/2018-10-03_Amended_Final_OHWM_Report.pdf
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forth in the enabling legislation. See N.D.C.C. § 61-33.1-03(3). The Bartlett & West Report
OHWM determination is favorable to North Dakota, while the OHWM determination in the
Supplemental Plats and Corps Segment Maps favors the United States. The Wenck Report
occupies the middle ground between the Bartlett & West Report and the Supplemental Plats and
Corps Segment Maps in its determination of the OHWM.
Suffice it to say Chapter 61-33.1 proved controversial. In January of 2018, a group of
North Dakota taxpayers challenged the law, contending it was unconstitutional. The plaintiffs’
complaint alleged that Chapter 61-33.1 “unconstitutionally gives away State-owned mineral
interests to 108,000 acres underneath the OHWM of the Missouri River/Lake Sakakawea, and
above the Historic OHWM and gives away over $205 million in payments, in violation of the
Constitution of the State of North Dakota.” Sorum v. State, 947 N.W.2d 382, 388 (N.D. 2020).
On July 30, 2020, the North Dakota Supreme Court issued an opinion finding Chapter 61-33.1
did not violate the North Dakota constitution’s gift clause, watercourses clause, privileges or
immunities clause, the local and special laws prohibition, and the public trust doctrine. Id. at
390-400 (noting the State recognized in Chapter 61-33.1 that it had an obligation to pay its debts
and deal fairly with its citizens). On August 27, 2020, the North Dakota Supreme Court in
Wilkinson v. Bd. of Univ. & School Lands, 947 N.W.2d 910, 920-21 (N.D. 2020) (“Wilkinson
II”) found Chapter 61-33.1 was not ambiguous and applied to the land in question which was
above the OHWM of the historical Missouri riverbed channel and was not state sovereign lands.
The case was remanded to the state district court for a determination of damages on the royalties
the state had unfairly claimed. Id. at 920.
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The partial motions for summary judgment now before the Court pertain only to the
“acquired lands” which are those lands that left federal ownership and were later reacquired by
the United States from private parties. The Court previously issued a ruling pertaining to the
non-patented public domain lands finding that while federal law governed, federal law borrowed
state law as the rule of decision, and the relevant State law adopted the BLM’s Supplemental
Plats as delineating the historical OHWM. See Doc. No. 92.
II.
STANDARD OF REVIEW
Summary judgment is appropriate when the evidence, viewed in a light most favorable to
the non-moving party, indicates that no genuine issues of material fact exist and that the moving
party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, 490 F.3d 648,
654 (8th Cir. 2007); see Fed. R. Civ. P. 56(a). Summary judgment is not appropriate if there are
factual disputes that may affect the outcome of the case under the applicable substantive law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is genuine
if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Id.
The purpose of summary judgment is to assess the evidence and determine if a trial is genuinely
necessary. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The Court must inquire whether the evidence presents a sufficient disagreement to
require the submission of the case to a jury or whether the evidence is so one-sided that one
party must prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820,
832 (8th Cir. 2005). The moving party bears the responsibility of informing the court of the
basis for the motion and identifying the portions of the record which demonstrate the absence of
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a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.
2011). The non-moving party may not rely merely on allegations or denials in its own pleading;
rather, its response must set out specific facts showing a genuine issue for trial. Id.; Fed. R. Civ.
P. 56(c)(1).
If the record taken as a whole and viewed in a light most favorable to the
non-moving party could not lead a rational trier of fact to find for the non-moving party, there is
no genuine issue for trial and summary judgment is appropriate. Matsushita, 475 U.S. at 587.
III.
LEGAL DISCUSSION
The pending motions for partial summary judgment present three closely related issues as
to the disputed acquired lands: (1) the first issue is whether state law or federal law governs the
determination of the historical OHWM; (2) if the answer to the first question is that federal law
applies then the second question that must be addressed is whether federal law borrows state law
as the rule of decision; and (3) the third issue is the applicability of N.D.C.C. Ch. 61-33.1 to the
disputed acquired lands. The Court previously addressed the status of the public domain lands
which are not at issue in the current motions. See Doc. No. 92. The Court will address each
question in turn.
A.
CHOICE OF LAW
The United States contends federal law must be applied in order to determine the OHWM
of the historic Missouri River abutting the disputed acquired lands. The Land Board contends
state law governs the determination.
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Under the equal footing doctrine, upon statehood, States acquire absolute title “to the
beds of waters then navigable” within their borders. See PPL Montana, LLC v. Montana, 565
U.S. 576, 591 (2012). Such was the rule for the thirteen original States and all subsequent States
as coequals under the Constitution. Id. All States hold “absolute right to all their navigable
waters and the soils under them.” Id. at 590. State title to these lands is “conferred not by
Congress but by the Constitution itself.” Id. at 591. Since title is conferred to the States by the
Constitution itself, no Congressional land grant to a third party can defeat State title. Oregon ex
rel. State Land Board v. Corvallis Sand & Gravel Co., 429 U.S. 363, 374 (1977). In Corvallis,
the Supreme Court held that state law should be applied to determine whether Oregon or an
Oregon corporation owned certain portions of the riverbed of the Williamette River. Id. at 365.
The United States Supreme Court explained that the initial boundary between the riverbed and
the uplands is determined by federal law. Id. at 370-71. But “thereafter the role of the equalfooting doctrine is ended, and the land is subject to the laws of the State” “unless there were
present some other principle of federal law requiring state law to be displaced.” Id. at 376, 371.
This general rule from Corvallis does not apply where the “United States has never yielded title
or terminated its interest.” Wilson v. Omaha Indian Tribe, 442 U.S. 653, 670 (1979). The
Supreme Court rejected the idea that because land had originally been patented by the United
States federal law continued to apply. Corvallis, 429 U.S. at 372.
In this case, there is no dispute that title to the acquired lands has passed out of federal
hands and into private hands and then was reacquired by the United States. Whenever “title
shall have passed, then that property, like all other property in the state, is subject to state
legislation.” Corvallis, 429 U.S. at 377. Once title passes under the equal footing doctrine,
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“state law governs subsequent dispositions.” Id. at 378. Thus, State law must be applied in this
case to determine the historical OHWM as to the acquired lands in question.
The contention of the United States that federal law should govern this determination
relies upon the Supreme Court’s opinion in California ex rel. State Lands Comm’n v. United
States, 457 U.S. 273, 283 (1982). California ex rel. State Lands Comm’n, involved a suit by
California to quiet title in oceanfront land created by accretion to land owned by the United
States.
Id. at 275.
The central issue was whether state law or federal law governed the
determination. The construction of two jetties and resulting accretion had caused one hundred
eighty-four acres of upland to be created by the seaward movement of the OHWM of the Pacific
Ocean. Id. at 275-76. Citing Wilson, the Supreme Court found federal law applied because the
case involved “a dispute over accretions to oceanfront land where title rests with or was derived
from the Federal Government.” Id. at 283. The Supreme Court went on to hold that the case
was not one where state law should be borrowed as the rule of decision because a federal statute
controlled the determination. Id. at 283. The Supreme Court explained that a provision of the
federal Submerged Lands Act withholding accretions to coastal lands from grants to the States
meant “borrowing for federal-law purposes a state rule that would divest federal ownership is
foreclosed.” Id. at 283-84. Wilson was distinguished because that case involved “no special
federal concerns, let alone a statutory directive,” which required a federal common-law rule. Id.
at 284.
The Court finds California ex rel. State Lands Comm’n is easily distinguishable and of
little precedential value to the present case. The dispute involved the accretion of oceanfront
property to which the United States had never yielded title, application of a relevant federal
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statute (the Submerged Lands Act), and the special nature of a coastal boundary. The present
case does not involve any of these circumstances. California ex rel. State Lands Comm’n did not
involve land to which the United States yielded title and then reacquired, the equal footing
doctrine, or the historical OHWM of a submerged riverbed of a navigable river. The Court
concludes as a matter of law that Corvallis, rather California ex rel. State Lands Comm’n,
controls the determination of whether state law or federal law applies to the acquired lands at
issue in this case. Even if the Court agreed with the United States that federal law controls, the
Court would find, for all of the reasons set forth in the Court’s prior order relating to the nonpatented public domain lands, that state law supplies the rule of decision. See Doc. No. 92, pp.
13-16; see also Wilson, 442 U.S. at 672 (finding state law should be borrowed as the federal rule
of decision and questions of land ownership within or adjacent to the Missouri River are best
settled by reference to state law “even where Indian trust land, a creature of federal law, is
involved”).
B.
STATE LAW
This case is an interpleader action related to a boundary dispute. The United States and
North Dakota have made competing demands against Continental Resources to the royalties
from certain tracts of land described in an attachment to Continental’s amended complaint. See
Doc. No. 27-1. This boundary dispute can only be settled by deciding whether state law or
federal law applies to determine the historic OHWM of the Missouri River relative to the
disputed tracts of land. The Court has determined state law applies as to the “acquired lands.”
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The more pressing question is exactly what state law applies?
The United States
contends that any application of State law should be limited to state substantive law. The Land
Board contends state substantive law applies, including the judicial and administrative processes
described in Chapter 61-33.1 of the North Dakota Century Code. This is not a Quiet Title action
or declaratory judgment action. The federal court would clearly have jurisdiction over any such
dispute. Wilson, 442 U.S. at 673-74. The Court’s determination in this interpleader action is
limited to the disputed lands and royalties as listed in the amended complaint and the competing
liens claimed by the United States and the State of North Dakota. See Doc. No. 27. The
competing determinations as to the disputed royalties have already been made. Under state law,
that determination was made by the Wenck Report. Had the Court determined federal law
applied, the royalties would be allocated based upon the Corps Segment Maps.3 There has been
no suggestion by the United States in this interpleader action that the application of state
substantive law as reflected in the Wenck Report was incorrect or unfair. The Court finds as a
matter of law that state substantive law applies to determine the historical OHWM relative to the
acquired lands as set forth in the Wenck Report.
IV.
CONCLUSION
Accordingly, the Land Board’s motion for partial summary judgment (Doc No. 105) is
GRANTED and the United States’ motion for partial summary judgment (Doc. No. 107) is
3
It is important to remember that the 2013 Supplemental Plats only address the non-patented public domain lands
and do not address the acquired lands. This leaves the 1952 Corps Segment Maps as the best federal evidence of the
historical OHWM as to the acquired lands. North Dakota law in Ch. 61-33.1 adopted the Supplemental Plats as the
historical OHWM in relation to the non-patented public domain lands while commissioning the Wenck Report for a
determination relevant to the acquired lands. The curious failure of both the United States and North Dakota to file a
Quiet Title action leaves us where we are today.
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DENIED. The Court ORDERS and DECLARES the royalties on the acquired lands in dispute
must be distributed based upon the determination of the historic OHWM of the Missouri River
as determined by the substantive law of the State of North Dakota as set forth in the Wenck
Report.
IT IS SO ORDERED.
Dated this 21st day of March, 2023.
/s/ Daniel L. Hovland
Daniel L. Hovland, District Judge
United States District Court
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