Sorum v. State

Decision Date30 July 2020
Docket NumberNo. 20190203,20190203
Citation947 N.W.2d 382
Parties Paul SORUM, Marvin Nelson, Michael Coachman, Charles Tuttle and Lisa Marie Omlid, each on behalf of themselves and all similarly situated tax payers of the State of North Dakota, Plaintiffs, Appellees, and Cross-Appellants v. The STATE of North Dakota, The Board of University and School Lands of the State of North Dakota, The North Dakota Industrial Commission, The Hon. Douglas Burgum, in his official capacity as Governor of the State of North Dakota, and the Hon. Wayne Stenehjem, in his official capacity as Attorney General of North Dakota, Defendants, Appellants, and Cross-Appellees
CourtNorth Dakota Supreme Court

Terrance W. Moore (argued), J. Robert Keena (appeared), and Joseph M. Barnett (on brief), Edina, Minnesota, for plaintiffs, appellees, and crossappellants Marvin Nelson, Michael Coachman, Charles Tuttle, and Lisa Marie Omlid.

Paul J. Sorum (appeared), self-represented, Bismarck, North Dakota, plaintiff, appellee, and cross-appellant.

Matthew A. Sagsveen (appeared), Solicitor General, Office of Attorney General, Bismarck, North Dakota, for defendants, appellants, and cross-appellees the State of North Dakota, the Hon. Douglas Burgum, and the Hon. Wayne Stenehjem.

Daniel L. Gaustad (argued), Ronald F. Fischer (on brief), and Joseph E. Quinn (on brief), Special Assistant Attorneys General, Grand Forks, North Dakota, for defendant, appellant, and cross-appellee North Dakota Industrial Commission.

Mark R. Hanson (appeared), Special Assistant Attorney General, Fargo, North Dakota, for defendant, appellant, and cross-appellee Board of University and School Lands of the State of North Dakota.

Craig C. Smith (on brief) and Paul J. Forster (on brief), Bismarck, North Dakota, for amicus curiae North Dakota Petroleum Council.

Tufte, Justice.

[¶1] The Plaintiffs, in their individual capacities and on behalf of similarly situated taxpayers, commenced this action for a declaratory judgment that chapter 61-33.1, N.D.C.C., relating to the ownership of mineral rights in lands subject to inundation by the Garrison Dam, is unconstitutional. The district court concluded that N.D.C.C. § 61-33.1-04(1)(b) is on its face unconstitutional under the "gift clause," N.D. Const. art. X, § 18, and enjoined the State from issuing any payments under that statute. The court rejected Plaintiffs’ constitutional challenges to the rest of chapter 61-33.1. The Defendants appeal and the Plaintiffs cross-appeal from the court's orders, judgment, and amended judgment. We reverse that portion of the judgment concluding N.D.C.C. § 61-33.1-04(1)(b) violates the gift clause and the court's injunction enjoining those payments. We also reverse the court's award of attorney's fees and costs and service award to the Plaintiffs because they are no longer prevailing parties. We affirm the remainder of the orders and judgment, concluding the Plaintiffs have not established that chapter 61-33.1 on its face violates the constitution.

I

[¶2] In 1944, the United States Congress authorized the construction of the Garrison Dam on the Missouri River. Closure of the Garrison Dam resulted in the impoundment of water in a reservoir now known as Lake Sakakawea. Before construction began, the Army Corps of Engineers surveyed the area to be inundated by the reservoir. The Corps used the survey to determine the acreage necessary to be taken for the Garrison Dam project. The Corps acquired through purchase or condemnation land that now makes up the bed of Lake Sakakawea.

[¶3] In 1951, oil was first discovered in the Bakken Formation, some of which lies under present-day Lake Sakakawea. Some owners of land in the Garrison Dam take area reserved their mineral interests when they conveyed land title to the United States. Beginning around 2006, horizontal drilling and hydraulic fracturing made oil and gas underneath the bed of Lake Sakakawea economically accessible to producers.

[¶4] The Board of University and School Lands ("the Land Board") manages the state's sovereign lands related oil and gas interests. The State Engineer manages all other state-owned minerals. In 2008, the Land Board authorized a "Phase 1" survey to determine the ordinary high water mark ("OHWM") of the Yellowstone and Missouri Rivers west of the Highway 85 Bridge. In 2010, the Land Board authorized the "Phase 2" survey of the historical OHWM of the Missouri River from Trenton to the Fort Berthold Reservation as it existed prior to closure of the Garrison Dam. The Land Board used the Phase 2 survey results for leasing sovereign minerals east of the Highway 85 Bridge.

[¶5] The Phase 2 report contained the caveat that "[t]he work completed under this contract was to investigate and identify the OHWM using historic data, and is not a final legal determination as to whether any specific property is ‘sovereign land.’ " In anticipation of title disputes, the Land Board also established escrow accounts for disputed funds.

[¶6] In 2017, the Legislative Assembly enacted Senate Bill 2134, which is now codified as N.D.C.C. ch. 61-33.1 ("the Act"). The Act sought to define and limit claims of state ownership of the minerals underneath Lake Sakakawea. Section 61-33.1-02, N.D.C.C., states:

The 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. The state holds no claim or title to any minerals above the ordinary high water mark of the historical Missouri riverbed channel subject to inundation by Pick-Sloan Missouri basin project dams, except for original grant lands acquired by the state under federal law and any minerals acquired by the state through purchase, foreclosure, or other written conveyance. Mineral ownership of the riverbed segments subject to inundation by Pick-Sloan Missouri basin project dams which are located within the exterior boundaries of the Fort Berthold reservation and Standing Rock Indian reservation is controlled by other law and is excepted from this section.

[¶7] Under the Act, the Corps Survey acted as the presumptive historical OHWM of the Missouri River. N.D.C.C. § 61-33.1-03(1). The Act directed the department of mineral resources to hire an engineering firm to review the corps survey. N.D.C.C. § 61-33.1-03(2). Wenck Associates, Inc., completed a survey, and its results were adopted as the true historical OHWM of the Missouri River.

[¶8] The Act also provided that within six months after the Land Board adopted the acreage determination, "[a]ny royalty proceeds held by operators attributable to oil and gas mineral tracts lying entirely above the ordinary high water mark of the historical Missouri riverbed channel on both the corps survey and the state phase two survey must be released to the owners of the tracts, absent a showing of other defects affecting mineral title." N.D.C.C. § 61-33.1-04(1)(a). The Act is retroactive and applies to oil and gas wells spud after January 1, 2006, for purposes of oil and gas mineral and royalty ownership. Id. ; 2017 N.D. Sess. Laws ch. 426, § 4. The Legislative Assembly appropriated $100 million for these refunds, and authorized an $87 million line of credit with the Bank of North Dakota if the initial appropriation was insufficient. 2017 N.D. Sess. Laws ch. 426, § 3.

[¶9] In January 2018, the Plaintiffs sued the Defendants, seeking a declaratory judgment that the Act is unconstitutional, and to enjoin the Defendants from enforcing it. The Plaintiffs’ complaint alleged N.D.C.C. ch. 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." The Plaintiffs sought "a declaration that 61-33.1 is unconstitutional and an injunction prohibiting all State officials from further implementing and enforcing the Act."

[¶10] The Defendants moved to dismiss under N.D.R.Civ.P. 19(b). The Defendants argued the Plaintiffs’ failure to join all parties with leaseholds and other interests in the minerals affected by the lawsuit required dismissal. The district court denied the Defendants’ motion, concluding the Plaintiffs did not fail to join any necessary party.

[¶11] The Plaintiffs moved to preliminarily enjoin the Defendants from enforcing the Act. The district court concluded the Plaintiffs were unlikely to prevail on any of their claims except that payments authorized under N.D.C.C. § 61-33.1-04(1)(b) violated the gift clause of the North Dakota Constitution. The district court granted a partial preliminary injunction preventing the Defendants from releasing refund payments under N.D.C.C. § 61-33.1-04(1)(b).

[¶12] The parties submitted opposing motions for summary judgment premised on material facts stipulated for purposes of the motions. With one exception, the district court rejected the constitutional challenges to N.D.C.C. ch. 61-33.1 and granted summary judgment in favor of the Defendants. The court concluded the authorization for payment of refunds under N.D.C.C. § 61-33.1-04(1)(b) on its face violates the gift clause, N.D. Const. art. X, § 18, and enjoined the Defendants from paying the refunds.

[¶13] The Plaintiffs moved for an award of attorney's fees, costs, and service awards. The Plaintiffs asked for $62,271,000 in attorney's fees under the common fund and private attorney general doctrines. The Plaintiffs’ attorneys submitted affidavits indicating the number of hours billed and hourly rates of the attorneys totaling $2,428,111 and $138,914.96. The district court concluded there was no common fund and the Plaintiffs’ lodestars were excessive, but it awarded $723,200 and $43,800 in attorney's fees to the Plaintiffs under the private attorney general doctrine. It also awarded $18,145.20 in costs. The...

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