Kartch v. EOG Res., Inc.
| Decision Date | 29 February 2012 |
| Docket Number | Case No. 4:10–cv–014. |
| Citation | 845 F.Supp.2d 995 |
| Parties | Frankie KARTCH and Kristin Kartch, Plaintiffs, v. EOG RESOURCES, INC., a foreign business corporation, Defendant. |
| Court | U.S. District Court — District of North Dakota |
OPINION TEXT STARTS HERE
Derrick L. Braaten, Todd A. Sattler, Baumstark Braaten Law Partners, Bismarck, ND, for Plaintiffs.
Larry L. Boschee, Pearce & Durick, Bismarck, ND, for Defendant.
ORDER GRANTING, IN PART, DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Before the Court is the Defendant's motion for summary judgment filed on August 25, 2011. See Docket No. 46. The Plaintiffs filed a brief in opposition to the motion on November 28, 2011. See Docket No. 74. The Defendant filed a reply brief on December 21, 2011, and an amended reply brief on December 28, 2011. See Docket Nos. 80 and 83. Oral arguments were presented by the parties on February 24, 2012. For the reasons explained below, the Defendant's motion is granted in part and denied in part.
The plaintiffs, Frankie Kartch and Kristin Kartch, own the surface rights to land located in Mountrail County, North Dakota. On March 29, 2004, Frankie Kartch purchased all of Section 17, Township 158, Range 89 West in Mountrail County, North Dakota, from Rodney Iverson and Linda Iverson. See Docket No. 13–1, pp. 37–39. The Iversons retained the mineral rights. The Kartches currently rent out the land for farming. Frankie Kartch has also hunted and camped on the land.
On November 30, 2006, the Iversons leased their mineral interest in Section 17 to Ritter, Laber & Associates, Inc. See Docket No. 13–2. On November 26, 2007, Ritter, Laber & Associates, Inc. assigned the lease to defendant EOG Resources, Inc. (“EOG”). See Docket No. 13–3.
On August 25, 2008, Contex Energy Company (“Contex”) sent a notice to the Kartches stating:
Pursuant to Chapter 38–11.1 of the North Dakota Century Code, you are hereby notified that EOG Resources, Inc. (“EOGR”) of P.O. Box 4362, Houston, Texas 77210–4326, intends to commence or cause to be commenced the drilling of its Crowfoot # 1–17H Well at the following location:
Township 158 North, Range 89 West, 5th P.M.
Section 17: NW 1/4NW 1/4 The enclosed Access and Damage Settlement Agreement describes the amount of land to be used for the Crowfoot # 1–17H well and appurtenant facilities as well as the compensation offered for such use. EOGR estimates that drilling operations will take from 40 to 45 days. After rig release, facilities will be constructed and then completion operations are commenced. These activities typically take an additional 30 days depending on weather and equipment and personnel availability. EOGR respectfully requests your waiver of the required twenty (20) day notice of its intent to drill so that it has the option of commencing well site construction before the expiration of said twenty (20) day notice period.
See Docket No. 7–3. EOG offered to pay the Kartches $8,000:
as surface damages to build the Access Road and Drillsite location, to drill a well(s) for the purposes of developing the minerals underlying said Section 17, Township 158 North, Range 89 West, and in the event the well(s) is completed as producer, to install, construct and maintain on the Drillsite equipment and facilities for production, storage, transportation and/or marketing of produced substances.
See Docket No. 7–1. The Kartches did not accept EOG's offer.
After the Kartches received the notification from Contex, their attorney sent letters on their behalf to Contex and EOG requesting that EOG use a closed loop system, rather than a reserve pit.1See Docket No. 76. The Kartches did not receive a response from either Contex or EOG. Frankie Kartch stated in an affidavit, See Docket No. 76.
On January 23, 2009, the Kartches purchased the surface interest in portions of Sections 7 and 8, Township 158, Range 89 West in Mountrail County, North Dakota. See Docket No. 13–1, pp. 41–47. The Kartches currently rent out Sections 7 and 8 for farming. There is a house located on Section 8 that the Kartches also rent out.
In December 2008, EOG drilled a well on Section 17. In an affidavit, Jim Schaefer of EOG explained:
2. EOG entered the surface and began drilling the Crowfoot 1–17H well, located in the NW 1/4 of Section 17 of Township 158 North, Range 89 West of the 5th P.M., Mountrail County, North Dakota, in 2008. It completed the well in 2009. The well produces oil and EOG has been marketing the oil. EOG is now using less surface area than when it drilled the well.
3. EOG reclaimed the reserve pit at the well site in October 2009....
...
7. EOG has been flaring the gas produced at the Crowfoot 1–17H well site using a single flare....
See Docket No. 49.
According to Mark Zaun, the construction foreman for EOG's North Dakota operations, EOG lined the reserve pit with a synthetic liner. See Docket No. 53. On June 17, 2009, a tear was discovered in the liner. See Docket No. 75–1. Zaun explained the process of reclaiming the reserve pit:
In October 2009, after the well had been completed, EOG reclaimed the reserve pit. During the reclamation process, the fluids were removed. The fluids and solids were run through a centrifuge. The solids were returned to the pit and the fluids were taken to a state-approved disposal site. To address the tear that had occurred in the liner, the earth behind the tear and along its sides was removed under the direct supervision of the North Dakota Oil and Gas reclamation specialist, Nathaniel Erbele. A wooden pallet and some miscellaneous pieces of lumber from an unknown source were removed. Dirt was mixed into the remaining solids. The excess pit liner was folded over the solids, and the solids were covered with at least four feet of earth that had been dug from the pit. The area was then sloped to promote surface drainage away from the reclaimed pit area.
See Docket No. 53.
On August 13, 2009, before the reserve pit was reclaimed, the Kartches filed a complaint in Mountrail County, North Dakota, alleging that they had not entered into a contract for compensation with EOG as required by N.D.C.C. § 38–11.1–04. See Docket No. 1–4. The Kartches also allege that EOG, or agents working on EOG's behalf, dumped waste on the well site, failed to properly maintain the site, and did not properly protect underground water. EOG removed the case to federal district court on September 4, 2009. See Docket No. 1–6. The Kartches objected and the Court remanded the case back to state district court on December 15, 2009. See Docket No. 1–22. EOG again removed the case to federal district court on March 4, 2010. See Docket No. 1.
On February 1, 2011, the Kartches filed a second amended complaint. See Docket No. 33. The second amended complaint sets forth four separate causes of action. In the first cause of action, the Kartches claim they have incurred damages:
for loss of agricultural production and income by the current tenant and for future farming and ranching operations; lost land value from Defendant's direct use of the surface estate, as well as a diminution in land value caused by Defendant's waste pit and the chemicals and toxins remaining in the land and water and other nuisances and unreasonable uses of the surface estate; lost use of and access to Plaintiffs' surface estate for hunting, recreation, farming and ranching; and lost value of improvements caused by drilling operations.
See Docket No. 33. The Kartches acknowledge that EOG offered $8,000 as compensation for surface damages, but argue that the offer is inadequate.
In the second cause of action, the Kartches allege that EOG's use of a reserve pit was not reasonably necessary and violated N.D.C.C. ch. 38–11.1. The Kartches claim that alternatives to a reserve pit exist, including, but not limited to, a closed loop system. The Kartches also allege that EOG did not exercise ordinary care in the construction and maintenance of the reserve pit, resulting in the tear in the liner and contamination of the surrounding soil and water. The Kartches further allege that activity on the site—including the use of a reserve pit rather than a reasonable alternative, burial of toxic waste in the reserve pit, excessive noise and odor, litter, and storage of unnecessary equipment—constitutes a nuisance in violation of N.D.C.C. § 42–01–01.
In the third cause of action, the Kartches claim that EOG failed to provide proper notice pursuant to N.D.C.C. § 38–11.1–05 because they did not provide a plat map or notice that a reserve pit would be used. The Kartches allege that EOG's insufficient notice prevented the Kartches from demanding a reasonable alternative to a reserve pit and prevented meaningful negotiation between the parties.
In the fourth cause of action, the Kartches claim that EOG is trespassing on their land. They allege that liner and waste that remain in the reserve pit constitute a trespass and cause unnecessary damage to the surface estate.
On August 25, 2011, EOG filed a motion for summary judgment. See Docket No. 46. EOG contends that it is entitled to use a reserve pit as a matter of law because the North Dakota Industrial Commission regulates and permits reserve pit use. EOG argues in the alternative that, if common law principles apply, the use of a reserve pit is reasonable and within EOG's rights as the dominant estate owner. EOG further argues that the other activities the Kartches complain about are reasonably necessary for EOG's drilling, exploration, and production activities.
On September 21, 2011, the Kartches filed a motion to compel discovery. See Docket No. 58. The Court allowed the Kartches to respond to EOG's summary judgment motion after it ruled on the discovery motion. See Docket Nos. 64...
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