Kartch et al v. EOG Resources, Inc.

Filing 73

ORDER by Magistrate Judge Charles S. Miller, Jr. granting in part, denying in part, and deferring in part plaintiffs' 58 Motion to Compel. (BG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
NORTHWESTERN DIVISION
Frankie and Kristin Kartch,

)
)
ORDER GRANTING IN PART,
Plaintiffs,
)
DEFERRING IN PART,
)
AND DENYING IN PART
vs.
)
PLAINTIFFS’ MOTION TO
)
COMPEL
EOG Resources, Inc.,
)
)
Case No. 4:10-cv-014
Defendant.
)
______________________________________________________________________________

I.

BACKGROUND
Plaintiffs are surface owners of land located in Mountrail County that includes parts of

Sections 7 & 8 and all of Section 17 in T158N, R89W. Plaintiffs purchased Section 17 in 2004. The
sellers, however, retained the mineral interests and subsequently entered into an oil and gas lease
with a company based in Williston, North Dakota. This company, in turn, assigned its lease to
defendant EOG Resources, Inc. (“EOG”).
In 2008, EOG entered Section 17 and began drilling an oil well that was completed in 2009
and that is still producing today. After EOG had drilled the well, plaintiffs purchased the land in
Sections 7 and 8, which is a 520-acre tract located north of and adjacent to Section 17 and upon
which sits a rural residence that is approximately ½ mile from the well site in Section 17. The
Section 17 property has been used only for agricultural or recreational purposes and has not been
otherwise developed. Plaintiffs do not permanently reside on their Mountrail County property and
live in Duluth, Minnesota.

1

N.D.C.C. ch. 38-11.1 requires mineral developers to provide a modicum of compensation to
surface owners for damages caused by oil and gas production, thereby alleviating, at least to some
degree, the harsh results flowing from the mineral estate being dominant, including the fact that the
mineral developer at common law was likely not required to pay any compensation for use of the
surface. Prior to commencement of drilling, EOG tendered an offer to pay the anticipated damages
for use of the surface as required by ch. 38-11.1. The amount it offered was $8,000. Plaintiffs
rejected the offer, contending it was inadequate, and instituted this action.
In their Second Amended Complaint, plaintiffs assert claims for compensation pursuant to
ch. 38-11.1 for EOG’s lawful use of their surface estate. In addition, they seek damages and
injunctive relief for uses of the surface estate that they claim were improper, either because the uses
exceeded EOG’s property rights or because the uses created a nuisance or were negligent.
One of the primary items of disagreement between the parties relates to EOG’s use of a
“reserve pit” during drilling to hold drilling mud and deposit well cuttings - material that typically
contains some environmentally-hazardous compounds, which, if allowed to escape, could cause
pollution - particularly to nearby surface and ground waters. In constructing the reserve pit, EOG
used a synthetic liner, but states this was simply a precautionary measure and not required because
of the relatively impervious clay soils in which the pit was constructed. When drilling was
completed, EOG removed the liquid waste from the pit, but left the well cuttings and other solid
wastes in place as permitted by state regulations. EOG then covered the pit, leaving it and the waste
contained therein buried slightly more than four feet below a recontoured surface.
Plaintiffs contend that EOG’s use of a reserve pit was in excess of its property rights and
amounted to a trespass. They also claim that use of the pit, and later leaving it in place filled with

2

waste, created a nuisance and was negligent. Plaintiffs argue that, instead of a reserve pit, EOG
should have used an alternative, such as a “closed loop” system, which recycles part of the drilling
mud and captures the remainder along with the well cuttings in tanks for later disposal offsite at
permitted disposal locations.1

Plaintiffs also contend that, at the very least, EOG should have

completely reclaimed the reserve pit by excavating the wastes and the pit liner and trucking them to
a permitted waste disposal area.

Plaintiffs argue that leaving the drilling wastes buried on their

property near the surface is unreasonable because it diminishes the value of their property, limits its
future use, creates a risk of damage if there is a future leakage or leaching of toxic chemicals from
the buried wastes, and exposes them to the possibility of financial responsibility for any cleanup if
EOG is not around to answer for the consequences because it has gone bankrupt or is otherwise out
of business.
In addition to contending that EOG’s use of the reserve pit was per se unreasonable, plaintiffs
also contend that the pit and wastes should have been completely removed in this case because a tear
was discovered in the liner while the pit was still open. EOG acknowledges there was a tear, but
claims there is no evidence that any material actually leaked from the pit. EOG states that it removed
soil from either side of the tear and trucked it out as a precautionary measure when it covered the pit.
EOG states this was done under state regulatory supervision and that there is no reason to believe
now that the dry wastes remaining in the pit pose any significant risk of future environmental harm at least so long as they remain undisturbed.

1

The “closed loop” system contemplated here is one that does away with the use of a reserve pit altogether.
There are also “semi-closed loop” systems that use portable tanks to handle the drilling fluids but still use a pit for
handling the well cuttings.

3

Another primary area of disagreement between the parties is the amount of damages that
plaintiffs are entitled to receive as result of EOG’s use of plaintiffs’ surface estate. EOG claims that
the $8,000 it offered is significantly in excess of what is recoverable as a matter of law. Plaintiffs
disagree and claim that the recoverable damages exceed that amount.
II.

DISCUSSION
A.

Introduction

Now before the court is plaintiffs’ motion to compel discovery. Plaintiffs claim that part of
the discovery they seek is relevant to the reserve pit issues and the remainder to the amount of
compensation that they are entitled to receive for the use of their surface estate. EOG disagrees,
contending that the information being sought is irrelevant and that the discovery requests are unduly
burdensome.
Also before the court is the question of the timing of the disputed discovery. EOG has filed
a motion for summary judgment that it contends should be ruled on before the court allows any of
the disputed discovery. EOG claims a ruling in its favor, particularly on the issue of whether the use
of the reserve pit was within its property rights, would alleviate the need for most, if not all, of the
disputed discovery. Plaintiffs disagree. They contend that EOG is not entitled to judgment as a
matter of law and that they need the disputed discovery to be able to properly respond to EOG’s
motion. Until these matters could be sorted out, the court temporarily extended plaintiffs’ time to
respond to the summary judgment motion.

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B.

The discovery that plaintiffs claim is necessary to demonstrate that EOG’s use
of a reserve pit was in excess of its property rights, negligent, and/or a nuisance

EOG contends that the fact that state regulations allow use of reserve pits as a general matter
is dispostive in terms of its right to use a reserve pit here. EOG also contends that, as the lessee of
an oil and gas lease from the owner of the dominant mineral estate, it has the right to use the
plaintiffs’ surface estate for any reasonable purpose in support of the exercise of its rights and that
a reserve pit is a reasonable use both as a matter of law and undisputed fact. According to EOG, any
discovery regarding whether the use of a reserve pit was reasonable under the circumstances is
simply irrelevant.
In many cases, the staggering of discovery to allow one party to litigate issues piecemeal is
inefficient and simply adds to the time required to resolve the case. However, there are times when
resolving some issues in advance will conserve party or court resources and makes sense. To
determine whether this is such a case, an assessment of whether the issues claimed by EOG as being
dispositive are realistically capable of being resolved by summary judgment without first affording
plaintiffs the discovery they claim they need, as well as whether resolving these issues first is likely
to conserve party or judicial resources, is appropriate. However, before considering these points,
some discussion of North Dakota law regarding the relative rights of the mineral estate versus the
surface estate, as well as the state regulations governing the use of reserve pits, is helpful.
Under North Dakota law, a severed mineral interest is dominant and carries with it the
“inherent surface rights to find and develop the minerals.” Hunt Oil Co. v. Kerbaugh, 283 N.W.2d
131, 135 (N.D. 1979) (“Hunt Oil”) (“[T]he surface estate is servient in the sense it is charged with
the servitude for those essential rights of the mineral estate.”); see Christina v. Emineth, 212 N.W.2d
543, 550 (N.D. 1973); see also Slaaten v. Cliff’s Drilling Co., 748 F.2d 1275, 1278 (8th Cir. 1984)

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(observing that North Dakota’s position is in accord with the general rule in the oil and gas industry).
“Without such rights the mineral estate would be meaningless and worthless.” Hunt Oil, 283 N.W.2d
at 135.2
While the severed mineral estate is dominant, the North Dakota Supreme Court has made
clear that there are limits on the right of the mineral estate to use the surface estate for oil and gas
development. The controlling case is Hunt Oil, supra.

In that case, the North Dakota Supreme

Court discussed these limits at some length and also what is commonly referred to as the
“accommodation doctrine” - or at least one version of it. And, because both parties are relying on
the court’s language in that case, it is best to simply quote from it at length:
In the absence of other rights expressly granted or reserved, the rights of the
owner of the mineral estate are limited to so much of the surface and such use thereof
as are Reasonably necessary to explore, develop, and transport the minerals. See,
Union Producing Co. v. Pittman, 245 Miss. 427, 146 So.2d 553 (1962); 58 C.J.S.
Mines and Minerals s 159c; Annot., 53 A.L.R.3d 16 s 3(a). In addition to, or
underlying the question of what constitutes reasonable use of the surface in the
development of oil and gas rights, is the concept that the owner of the mineral estate
must have Due regard for the rights of the surface owner and is required to exercise
that degree of care and use which is a just consideration for the rights of the surface
owner. Getty Oil Co. v. Jones, 470 S.W.2d 618, 621, 53 A.L.R.3d 1 (Tex.1971).
Union Producing Co. v. Pittman, supra; 58 C.J.S. Mines and Minerals s 159c; Annot.,
59 A.L.R.3d 16 s 3(c). Therefore, the mineral estate owner has no right to use more

2

In this case, EOG acquired its right to develop the oil and gas underlying plaintiffs’ property by way of a lease
from the owner of the severed mineral estate. Notably, EOG’s lease is not specific in terms of the right of EOG to use
waste pits, and, perhaps more importantly in this case, the right to leave the drilling wastes on the property buried a few
feet below the surface after drilling is completed. The relevant language of the lease states the following:
. . . the exclusive right for the purpose of mining, exploring by geophysical and other methods, and operating
for and producing therefrom oil and all gas of whatsoever nature or kind, with rights of way and easements for
laying pipe lines and erection of structures thereon to produce, save and take of said products, all that certain
tract of land . . . .
(Doc. No. 13-2). W hile this language by itself might create an issue as to the scope of the rights acquired by EOG, North
Dakota law governing oil and gas leases is that the absence of specific language in the lease is not fatal with respect to
a particular use of the surface estate. That is, “[w]hether the express uses are set out or not, the mere granting of the lease
creates and vests in the lessee the dominant estate in the surface of the land for the purposes of the lease; by implication
it grants the lessee the use of the surface to the extent necessary to a full enjoyment of the grant.” Hunt Oil, 283 N.W .2d
at 135; see also Feland v. Placid Oil Co., 171 N.W .2d 829, 834 (N.D. 1969).

6

of, or do more to, the surface estate than is reasonably necessary to explore, develop,
and transport the minerals. Union Producing Co. v. Pittman, supra; 58 C.J.S. Mines
and Minerals s 159c. Nor does the mineral estate owner have the right to negligently
or wantonly use the surface owner's estate.4 See, Union Producing Co. v. Pittman,
supra; 4 Summers, Oil and Gas, s 652.
The requirement that due regard be given to the rights of the surface owner,
defines, to a certain extent, a consideration in determining if the mineral owner's use
of the surface is reasonably necessary. In Getty Oil Co. v. Jones, supra, the Texas
Supreme Court set forth what has become known as the “accommodation doctrine”:
“There may be only one manner of use of the surface whereby the minerals
can be produced. The lessee has the right to pursue this use, regardless of
surface damage. (Citations omitted.) And there may be necessitous temporary
use governed by the same principle. But under the circumstances indicated
here; i. e., where there is an existing use by the surface owner which would
otherwise be precluded or impaired, and where under the established
practices in the industry there are alternatives available to the lessee whereby
the minerals can be recovered, the rules of reasonable usage of the surface
may require the adoption of an alternative by the lessee.” 470 S.W.2d at 622.
The Utah Supreme Court adopted the opinion of the Texas court in Flying Diamond
Corporation v. Rust, 551 P.2d 509 (Utah 1976), where it said, at page 511:
“. . . wherever there exist separate ownerships of interests in the same land,
each should have the right to the use and enjoyment of his interest in the
property to the highest degree possible not inconsistent with the rights of the
other. We do not mean to be understood as saying that such a lessee must use
any possible alternative. But he is obliged to pursue one which is reasonable
and practical under the circumstances.”
We join with the Utah court in adopting the accommodation doctrine set forth
in Getty:
“The reasonableness of a surface use by the lessee is to be determined by a
consideration of the circumstances of both and, as stated, the surface owner
is under the burden of establishing the unreasonableness of the lessee's
surface use in this light. The reasonableness of the method and manner of
using the dominant mineral estate may be measured by what are usual,
customary and reasonable practices in the industry under like circumstances
of time, place and servient estate uses. What may be a reasonable use of the
surface by the mineral lessee on a bald prairie used only for grazing by the
servient surface owner could be unreasonable within an existing residential
area of the City of Houston, or on the campus of the University of Texas, or
in the middle of an irrigated farm. What we have said is that in determining
the issue of whether a particular manner of use in the dominant estate is
reasonable or unreasonable, we cannot ignore the condition of the surface
itself and the uses then being made by the servient surface owner. . . . (I)f the
manner of use selected by the dominant mineral lessee is the only reasonable,
usual and customary method that is available for developing and producing

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the minerals on the particular land then the owner of the servient estate must
yield. However, if there are other usual, customary and reasonable methods
practiced in the industry on similar lands put to similar uses which would not
interfere with the existing uses being made by the servient surface owner, it
could be unreasonable for the lessee to employ an interfering method or
manner of use. These (conditions) involve questions to be resolved by the
trier of the facts.” 470 S.W.2d at 627-628.
In this case the Kerbaughs sought to prevent the oil companies from
conducting seismic exploration activities on their property. The oil companies, on the
other hand, sought an injunction prohibiting the Kerbaughs from interfering with such
exploration.
The Kerbaughs, in support of their argument for denial of injunctive relief,
offered affidavits and testimony indicating the damages they had sustained as the
result of prior seismic exploration; that the present seismic activity was causing
damage to their grain crop, pasture, and other farmland; and that they fear additional
damage to property from further seismic activity.
Whether or not the use of the surface estate by the mineral estate owner is
reasonably necessary is a question of fact for the trier of facts. Slope County Board
of County Commissioners v. Consolidation Coal Co., 277 N.W.2d 124 (N.D.1979);
Getty Oil Co. v. Jones, supra. In addition, the burden of proof in such a determination
is upon the servient estate owner. Getty Oil Co. v. Jones, supra.
The Kerbaughs presented evidence establishing the damage to their property
that arose or was likely to arise as a result of seismic activity. They offered, however,
no evidence of reasonable alternatives available to the oil companies to explore the
properties. They offered no evidence that the same information could be obtained
from the prior geophysical exploration; they offered no evidence that the same
information could be obtained without transversing over cropland; and the record
does not indicate that they offered evidence that the tests could be conducted in
another manner which would cause less damage to the Kerbaughs. Although the
Kerbaughs did offer evidence suggesting some damage could have been avoided by
having the oil companies conduct the operations a few weeks later, the affidavits filed
by the oil companies indicate this was not a reasonable alternative. On the basis of
the evidence presented by the parties, the Kerbaughs failed to meet their burden of
proof that the proposed activities of the oil companies were not reasonably necessary
for the exploration of the leased mineral estate. Accordingly, the conclusion by the
district court that the oil companies were entitled to injunctive relief was not in error.
It is important to note that the Texas Supreme Court in Getty concluded the
accommodation doctrine is not a balancing type test weighing the harm or
inconvenience to the owner of one type of interest against the benefit to the other.
Rather the court said the test is the availability of alternative non-conflicting uses of
the two types of owners. Inconvenience to the surface owner is not the controlling
element where no reasonable alternatives are available to the mineral owner or lessee.
The surface owner must show that under the circumstances, the use of the surface
under attack is not reasonably necessary. Getty Oil Co. v. Jones, supra at 623.

8

We agree a pure balancing test is not involved under the accommodation
doctrine where no reasonable alternatives are available. Where alternatives do exist,
however, the concepts of due regard and reasonable necessity do require a weighing
of the different alternatives against the inconveniences to the surface owner.
Therefore, once alternatives are shown to exist a balancing of the mineral and surface
owner's interest does occur.
Kerbaugh argued and urged this court to adopt a rule of correlative rights and
reasonableness, as discussed in Pennington v. Colonial Pipeline Company, 260
F.Supp. 643, 25 Oil and Gas Rptr. 514 (E.D.La.1966) affirmed 5 Cir., 387 F.2d 903.
In that case the district court said the rights of the holder of a mineral lease, and the
rights of the owner of the surface “are correlative rights, neither being superior to nor
inferior to the other, and the rights of each party can only be exercised in such a
manner as not to unreasonably interfere with the rights of the other. (Citations
omitted.)” Be that as it may, it does not change the basic rule that a servitude exists
in favor of the oil and gas estate and thus it is the dominant estate and the surface the
servient estate. Although the rights implied in favor of the mineral estate can be
exercised only by giving due regard to the rights of the surface owner, the mineral
estate still remains dominant in the traditional real property sense. The district court
in Pennington, although applying the right test of reasonableness, made an
unfortunate use of the term “correlative rights” which is more appropriately used in
referring to rights among various owners of mineral interests. See, Arnstad v. North
Dakota State Industrial Commission, 122 N.W.2d 857 (N.D.1963); 1 Kuntz, Oil and
Gas s 43.
****
The oil companies were not required to show their proposed activities were
the most reasonable or even that other alternatives were unreasonable in the absence
of the Kerbaughs' bringing the reasonableness of other alternatives into issue. The oil
companies had the right to use the surface in exploring for their minerals. They also
had the right to seek an injunction preventing the Kerbaughs from interfering with the
right of exploration. It was the Kerbaughs' burden to show the proposed activities
were unreasonable by reason of the existence of other alternatives.
Hunt Oil, 283 N.W.2d at 136-139.
Also relevant to the reserve pit dispute is the fact that the Industrial Commission, which is
the state agency charged with regulating the development of oil and gas in North Dakota, has for
decades permitted the use of reserve pits. (Doc. No. 47-3). At the time of the drilling in this case,
the most pertinent regulation read, in relevant part, as follows:
In order to assure a supply of proper material or mud-laden fluid to confine
oil, gas, or water to its native strata during the drilling of any well, each operator shall

9

provide, before drilling is commenced, a container or reserve pit of sufficient size to
contain said material or fluid, and the accumulation of drill cuttings. A reserve pit
may be utilized to contain solids and fluids used and generated during well drilling
and completion operations, providing the pit can be constructed, used, and reclaimed
in a manner that will prevent pollution of the land and surface and freshwaters. In
special circumstances, the director may prohibit the construction of a reserve pit or
may impose more stringent pit construction and reclamation requirements. Under no
circumstances shall reserve pits be used for disposal, dumping, or storage of fluids,
wastes, and debris other than drill cuttings and fluids used or recovered while drilling
and completing the well.
Reserve pits shall not be located in, or hazardously near, bodies of water, nor
shall they block natural drainages. No reserve pit shall be wholly or partially
constructed in fill dirt unless approved by the director.
N.D. Admin. Code § 43-02-03-19 (2008).
EOG makes several arguments why there is no issue of reasonableness to be tried with respect
to its use of a reserve pit. Some appear to be more compelling than others. However, the arguments
for which there is substantial authority include one or more of the following:
(1)

Since it is undisputed that use of reserve pits is an established industry practice and
that the Industrial Commission has long permitted their use, albeit subject to
restrictions that have been tightened over time, it cannot reasonably be disputed that
reserve pits are a reasonable use of the surface by the dominant mineral estate within
the meaning of Hunt Oil.

(2)

Even if plaintiffs could prove that one of the alternatives available to EOG would be
equally or more reasonable after a balancing of the direct and indirect benefits and
costs for both parties (including eliminating the risk of future reserve pit leaks and
the possibility of someone having to incur future environmental cleanup costs and
regulatory fines), it would not make a difference. This is because one way to read
Hunt Oil, as well as other authority that the court might find persuasive, is that, so

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long as EOG’s use of a reserve pit was reasonable, the fact that there may have been
another even more reasonable alternative is not by itself enough. Rather, plaintiffs
must demonstrate that EOG’s reasonable use physically interfered with an already
existing use by the plaintiffs of the surface, or at least one that was imminent, before
there must be any balancing of interests under the accommodation doctrine, and
plaintiffs cannot demonstrate this.
(3)

But even if there must be a balancing of interests under the “accommodation
doctrine,” one reading of Hunt Oil and other authority that the court might find
persuasive is that plaintiffs cannot prevail based on the undisputed facts of this case
given that they were not using their property for a use that (1) was materially
interfered with by EOG’s reserve pit, or (2) would require the disturbance of the
buried wastes when plaintiffs re-occupied the area of the buried pit or at any time in
the immediate future given the rural character of the property.

(4)

While some view the ability of a mineral developer to leave drilling wastes on the
property buried near the surface as being unreasonable, this must be viewed with
some perspective. The mineral estate in North Dakota is deemed dominant, and the
relative impact of leaving the wastes behind in these circumstances is likely much
less than the impacts that would result if, for example, the mineral being developed
required surface mining. Further, there appears to be nothing that would prohibit the
state legislature or, perhaps, also the Industrial Commission, from (1) prohibiting the
use of reserve pits altogether, (2) requiring complete removal of the pits and the
waste contained therein to permitted waste disposal sites after drilling is completed,

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or (3) allowing the use of reserve pits, including leaving them in place after drilling
is completed, if the mineral developer can reach a separate accommodation with the
landowner.3 The point here being that, if further regulation and control of reserve pits
is required, it should be done by state regulatory authorities with more expertise in
these matters and not by the court on what may have to be a case-by-case basis.4
See, e.g., Hunt Oil, supra, see also Amoco Production Company v. Thunderhead Investments, Inc.,
235 F. Supp. 2d 1163 (D. Colo. 2002); Sun Oil. Co. v. Whitaker, 482 S.W.2d 808 (Tex. 1972); Getty
Oil Co. v. Jones, 470 S.W.2d 618 (Tex. 1971); see generally Christopher M. Alspach, Surface Use

3

In fact, as this is being written, the Industrial Commission has before it the draft of amended rules that further
restrict the use of reserve pits. See North Dakota Industrial Commission, Notice of Proposed Rulemaking dated
September 23, 2011,W L 2011 ND REG TEXT 271514 (NS). And, it appears from recent press reports that some are
advocating as part of this regulatory process that they be done away with entirely.
4

The other arguments that EOG makes, while they might carry the day, do not appear to be as compelling.
One argument is that the Industrial Commission’s reserve pit regulation trumps whatever property rights may be involved
and is dispositive with respect to EOG’s right to use a reserve pit. However, it is not at all clear that the regulation
substantively alters existing property rights. For example, while this case involves a severed mineral interest, EOG’s
lease could have been from a person who owned both the surface and mineral estates and EOG’s lease could have been
written to forbid the use of reserve pits (thereby requiring the use of an alternative method of storing the drilling mud
and capturing the drilling wastes) or to require that the reserve pits be completely reclaimed and all wastes removed from
the property upon completion of drilling. Under EOG’s argument, the regulation would trump the ability of a landowner
in this situation to limit the use of reserve pits or prohibit buried wastes as a matter of contract, which does not appear
to be its intent. In other words, it seems more probable that the Industrial Commission’s regulation governs the use of
reserve pits if they are used, but does not purport to realign or alter the property rights of the respective parties. That
being said, the fact the Industrial Commission (1) allows the use of reserve pits and (2) allows them to remain in place
filled with certain drilling wastes after drilling is completed, provided the pits are properly reclaimed, would appear to
be highly relevant with respect to the determination of what is reasonable use of the surface by the dominant mineral
estate as already discussed above.
EOG also argues that, as a matter of common law, it had no obligation to reclaim plaintiffs’ property and that,
but for the Industrial Commission’s reclamation requirements, it could have walked away, leaving the reserve pit open
and full of wastes, without any obligation of reclamation. W hile that may be the common law in some states (and years
ago may have been the law or the practical result in North Dakota), it appears unlikely this is the law now, given what
the North Dakota Supreme Court has stated in Hunt Oil, supra, that the use of the surface by the mineral owner must be
reasonable and cannot be negligent or wanton. In other words, while restoring the land to pre-existing conditions may
not be required, it seems likely that a reasonable amount of reclamation would be, with any state regulations being highly
probative of what is reasonable. See Slaaten v. Cliff’s Drilling Co., 748 F.2d 1275 (8th Cir. 1984); Bonds v
Sanchez-O'Brien Oil & Gas Co., 715 SW 2d 444, 446 (Ark. 1986); Smith v. Schuster, 66 So.2d 430, 431-432 (La. Ct.
App. 1953); contra e.g., Fox v. Cities Serv. Oil Co., 200 P.2d 398, 401 (Okla. 1948) (citing other authority).

12

by the Mineral Owner: How Much Accommodation is Required under Current Oil and Gas Law?,
55 Okla. L. Rev. 89, 91-108 (2002) (“Alspach”).
But while EOG has persuasive arguments, it is by no means guaranteed of prevailing at this
stage. Here, plaintiffs’ argument appears to be that regardless of what might be the law in other
states, Hunt Oil requires that the finder of fact balance the interests of the parties once the surface
owner has introduced evidence that there was a viable alternative available that would have
eliminated or lessened a negative impact being imposed on the surface owner. And, according to the
plaintiffs, this is not limited to a physical interference with the surface owners’ use, but also would
include such things as exposing the surface owner to the potential diminishment of the value of their
property caused by the existence of the buried wastes and also the possibility of their future liability
for the wastes.

In addition, plaintiffs argue that past industry practice and the Industrial

Commission’s regulations are simply factors to be weighed along with everything else and are not
dispostive. Favoring plaintiffs’ position is some of the broad language used by the North Dakota
Supreme Court in Hunt Oil, supra.5 In addition, though the exploration methods at issue in Hunt
Oil appear to have been well-established standard industry practices, the court did not stop there and
rest its decision on that point. Also, it appears that the courts in some jurisdictions have adopted a
more expansive version of the accommodation doctrine than the one that EOG claims would be

5

For example, the court at one point stated:
W here alternatives do exist, however, the concepts of due regard and reasonable necessity do require
a weighing of the different alternatives against the inconveniences to the surface owner. Therefore,
once alternatives are shown to exist a balancing of the mineral and surface owner's interest does occur.
283 N.W .2d at 137. Also, the court stated the following toward the end of its opinion:
The oil companies were not required to show their proposed activities were the most
reasonable or even that other alternatives were unreasonable in the absence of the Kerbaughs' bringing
the reasonableness of other alternatives into issue. . . . . It was the Kerbaughs' burden to show the
proposed activities were unreasonable by reason of the existence of other alternatives.
283 N.W .2d at 139. On the other hand, there is other language in the opinion that EOG can point to as supporting its
positions.

13

controlling. Cf. Gerrity Oil & Gas Corp., 946 P.2d 913 (Colo. 1997) (en banc); see generally
Alspach, 55 Okla. L. Rev. at 91-108.
With respect to the decision that needs to be made now regarding the timing of discovery, it
does appear that EOG has a significant chance of prevailing as a matter of law with respect to its
right to use a reserve pit. And, if so, that would likely negate any claim of trespass, nuisance, or
negligence arising out of the use of the reserve pit unless plaintiffs can prove something more, e.g.,
that the reserve pit is leaking contaminant or that, in using or reclaiming the pit, EOG violated an
Industrial Commission regulation.6
It also appears that ruling on the reserve pit issue now could result in significant cost savings
for the parties and not unduly prolong the case. Not only would a ruling in EOG’s favor eliminate
the necessity for much of the discovery directed toward the reasonableness of reserve pit use, it
would also save both parties the time and expense of the experts’ costs that likely would be incurred
to litigate the issue, which could be significant considering all of the factors that the experts might
be called upon to consider, as well as the expert discovery that would also likely follow.
Consequently, the court will defer ruling on that part of plaintiffs’ motion to compel that seeks
further discovery related to the reasonableness of EOG’s use of a reserve pit and the possible
alternatives until Judge Hovland has ruled on the merits of EOG’s summary judgment motion or has
decided not to rule until discovery has been completed.
However, since there is the possibility that the discovery requests related to the reserve pit
issue may have to be revisited in the future, the following observations are offered, without any final

6

W hile violation of an Industrial Commission may not create a private cause of action for damages, it may be
evidence of negligence or a nuisance. E.g., Kimball v. Landeis, 2002 ND 162, ¶ 15, 652 N.W .2d 330; Knoff v. American
Crystal Sugar Co., 380 N.W .2d 313, 317-318 (N.D. 1986).

14

rulings being made, with the hope that the parties may able to resolve the disputed discovery on their
own, should that be necessary:
C

If the court denies EOG’s motion for summary judgment on the reserve pit issue,
whether EOG used “closed loop” systems in lieu of reserve pits elsewhere (and not
just in North Dakota) would appear to be fair game along with the reasons why
“closed loop” systems were used. That being said, it appears likely that plaintiffs can
obtain sufficient information on this point without requiring EOG to identify each and
every well where “closed loop” systems are being used by narrowing their demands
and/or taking a Rule 30(b)(6) deposition of a person or persons designated by EOG
to testify on these points.7

C

EOG documents that discuss the benefits of reserve pits over closed-end systems, or
vice versa, would also appear to be fair game with some constraints and without
requiring a search of thousands of individual well files.

C

Some discovery of why EOG is not permitted to use reserve pits in some jurisdictions
or locations (assuming that to be true) may also be permitted.

C

The court would have to be convinced that the benefits of plaintiffs obtaining the
detailed cost information that is sought for potentially thousands of wells outweigh
the burdens of producing this information. This is particularly true since plaintiffs
can likely obtain comparable information that is available publically (including from

7

EOG has objected to the discovery requests seeking information about the use of “closed loop” systems in
part on the grounds that the term is too vague. This objection is without merit in that what is obviously being sought
here is information about those systems that eliminate the need for reserve pits, and EOG appears to have understood
that point in responding to some of the discovery requests.

15

vendors of “closed loop” systems) or from qualified experts.8 Also, with respect to
the alternative now of reclaiming the buried pit by digging it up and trucking the liner
and buried wastes to a permitted disposal site, it seems likely that any engineering
expert worth his or her salt should be able to come up with an estimate of the costs
for accomplishing this task without a substantial amount of effort.
On the other hand, some discovery of costs on a more tailored basis may be
permitted. Also, if costs become an issue and EOG wants to offer its own opinions
and cost information (including any claim that a reserve pit alternative, such as a
“closed loop” system, would have been more costly or economically infeasible in this
case), then it may be unfair to deny plaintiffs some discovery, if for no other reason
than to verify and/or contest EOG’s information.
C

Some discovery regarding whether EOG has had problems with buried reserve pits
leaking or leaching contaminants may be permissible, but discovery on a well-by-well
basis appears to be overly burdensome.

C.

The discovery that plaintiffs claim is needed with respect to the issue of proper
compensation

A number of plaintiffs’ discovery requests seek information about payments or offers of
payment that EOG has made to other surface owners for damages, including those located in
Manitoba, Canada. EOG objects to these requests on the grounds that the payments and offers of
8

Moreover, plaintiffs’ belief that they need detailed EOG cost information to make their case may turn out to
be unfounded. If the issue of reasonableness must be litigated, plaintiffs may be able to make a prima facie case based
simply on the fact that alternatives to reserve pits exist and are being used, which may already be established by the
Industrial Commission regulation quoted earlier, as well as EOG’s admission that it has used closed loop systems as an
alternative to reserve pits elsewhere. In other words, it is not at all clear that plaintiffs’ initial burden extends to having
to prove the alternatives are more economically feasible in a particular setting, and that if the mineral developer wants
to make this an issue, it is incumbent upon the mineral developer to come forward with the evidence that such alternative
uses were not economically feasible. See Gerrity Oil & Gas Corp., 946 P.2d at 933-934.

16

payment are irrelevant and unlikely to lead to discoverable evidence. Plaintiffs respond by stating
that their “experts will need the information about EOG’s other surface damage payments in North
Dakota and Manitoba in order to form an opinion about the validity of EOG’s $8,000 offer to Kartch
and in order to form their own opinions about Kartch’s damages for lost land value, lost access to
and use of the land, and loss of agricultural production.”
Here, the court agrees with EOG for two reasons. First, the compensation that must be paid
pursuant to N.D.C.C. § 38-11.1-04 includes compensation for “loss of agricultural production and
income, lost land value, lost use of and access to the surface owner’s land, and lost value of
improvements.” Since the statute does not set forth the manner in which these damages are to be
determined, the court must assume that the general law in North Dakota for determining damages
to real property and loss of its use applies. This law requires a determination that is specific to the
particular property involved. See N.D.C.C. § 32-03-09.1. And given the large number of possible
variables, it is an inherently unique determination in each case.
Second, for most of the damage calculations, some determination of fair market or fair rental
value is required. Under North Dakota law, “fair market value” is what a willing buyer would pay
and a willing seller would accept, neither being under a compulsion or obligation to buy or sell. See,
e.g., Nuveen v. Nuveen, 795 N.W.2d 308, 313 (N.D. 2011); Mike Golden, Inc. v. Tenneco, Oil Co.,
450 N.W.2d 716, 719-720 (N.D. 1990); Bernhardt v. Rummel, 314 N.W.2d 50, 59-60 (N.D. 1981);
cf. Little v. Burleigh County, 82 N.W.2d 603, 608-609 (N.D. 1957). Compulsory damage payments
do not fit this criteria. In addition, given that the amounts of such payments may be based in part
upon other factors, such as the time, expense, and uncertainty of litigation, they are not probative
evidence of fair market value. Cf., e.g., United States v. 10.48 Acres of Land, 621 F.2d 338, 339-

17

340 (9th Cir. 1980) (evidence of price paid for a flowage easement over other land in a condemnation
setting not relevant to the determination of the fair market value of the flowage easement at issue);
Evans v. United States, 326 F.2d 827, 831 (8th Cir. 1964) (evidence of price paid by the government
for other land that was to be condemned not relevant as to the value of the land at issue in the case
before the court). In fact, N.D.C.C. § 38-11.1-09 gives surface owners the right to recover their
reasonable attorney’s fees and costs if the amount of compensation awarded to them exceeds the
amount of the mineral developer’s damage offer. Obviously, this creates an incentive for mineral
developers to pay more than what strictly might be compensable as a matter of fair market value in
order to avoid these costs, which, in many cases, may exceed the amounts that are compensable.
Consequently, the court will deny the motion to compel with respect to the discovery requests
that seek information regarding payments or offers of payment to other surface owners.
C.

Requests for production Nos. 29 & 30

Plaintiffs seek documents, correspondence, and e-mails along with enclosures and
attachments exchanged between EOG and its agents and the person or entity that installed the pit
liner used by EOG. EOG produced only the invoice for the liner, a copy of the specification sheet,
and a copy of the master service’s contract with the installer. There are issues relating to the tear of
the liner and whether there was any leakage, and it is certainly conceivable that the documents and
communications requested may contain evidence that would be relevant or lead to the further
discovery of relevant evidence related to these matters.
EOG appears to contend that any leakage is relevant only if there has been some
contamination to the surface or groundwater and that tests so far have indicated no contamination.
EOG also argues that plaintiffs have not done the testing that EOG claims is required to establish a

18

baseline in order to recover the costs of securing water from replacement sources under ch. 38-11.1.
However, the testing done by the Health Department appears to have been limited. Further, it is
doubtful that the inability of plaintiffs to produce a water quality test taken in advance forecloses all
rights of relief for damages to the water supply, particularly with respect to the common law claims
of trespass, negligence, and/or nuisance. Finally, just the mere fact that the reserve pit is leaking (if
it is) or has the potential to leak may affect the land value of the property.
The court will grant the motion to compel with respect to Requests for Production Nos. 29
& 30 insofar as they relate to the pit liner and the well site at issue in this case. The court will
reserve judgment regarding whether any further discovery of documents and correspondence related
to pit liners for other wells will be permitted - if that is in fact being sought, which is not at all clear.
To the extent that plaintiffs believe that they need to complete this discovery before fully
responding to all of the points raised in EOG’s motion for summary judgment, they must comply
with the requirements of Rule 56 in terms of bringing this to the attention of the court. It does not
appear, however, that plaintiffs need this discovery for the court’s resolution of the issue of whether
EOG had the right to use the reserve pit as matter of law assuming no problems with pit or
compliance with the Industrial Commission’s regulations.
III.

ORDER
Based on the foregoing, plaintiffs’ motion to compel is GRANTED IN PART, DENIED IN

PART, and DEFERRED IN PART as follows:
1.

Plaintiffs’ motion to compel is granted with respect to Requests for Production of
Documents Nos. 29 & 30 insofar as they relate to the pit liner and the well site at

19

issue in this case. Absent a further extension from the court, this material should be
produced for inspection within fifteen days.
2.

Plaintiffs’ motion to compel is denied as to Interrogatory No. 10; Requests for
Production of Documents Nos. 11, 17, 23; and Requests for Admissions Nos. 7 & 9.

3.

Plaintiffs’ motion to compel is deferred pending a ruling on EOG’s motion for
summary judgment as to Interrogatory Nos. 2, 3, 7, 14, & 16; Requests for Production
of Documents Nos. 1, 12, 14, 21, 24, 29 & 30 (to the extent not granted above), and
35; and Requests for Admissions Nos. 4 & 5. If plaintiffs believe that Judge
Hovland’s ruling does not moot the need for this discovery, plaintiffs’ counsel shall
first discuss the matters in dispute one more time with counsel for EOG in light of the
guidance set forth above and then, as to any matters that cannot be resolved,
plaintiffs’ counsel shall contact the chambers of the undersigned and a date will be
set for a hearing.

IT IS SO ORDERED.
Dated this 10th day of November, 2011.
/s/ Charles S. Miller, Jr.
Charles S. Miller, Jr.
United States Magistrate Judge

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