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AS I SEE IT

Posted 4/25/17 (Tue)

By Neal A. Shipman
Farmer Editor

The state of North Dakota took a big and final step in clarifying that it does not own the minerals under Lake Sakakawea with the passage of Senate Bill 2134, which was signed by Governor Burgum last Friday.
The passage of this legislation, which outlines a process for determining the ordinary high-water mark of the historical Missouri River riverbed channel, is a big win for private individuals who had sold their property to the U.S. Army Corps of Engineers for the creation of Lake Sakakawea.
The new law effectively ends decades long lawsuits that private individuals brought against the state in what was being called “a state land grab for minerals under the lake.” According to one of the attorneys representing the private land owners, the state’s previous contention that the minerals belonged to the state affected as many as 3,600 individual mineral owners.
According to the bill, the state acknowledged that it holds no claim to any minerals above the ordinary high-water mark of the historical Missouri riverbed channel inundated 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. But it doesn’t affect mineral or land ownership issues within the Fort Berthold Indian Reservation.
The new law is expected to have a $187 million fiscal impact on the state’s treasury as royalty payments that have been in question and have been held in escrow for various mineral owners will finally be released. During an earlier McKenzie County Farmer interview with Lance Gaebe, Commissioner of Trust Lands, noted that the state of North Dakota would repay the revenue from the Strategic Investment and Improvements Fund for 710 mineral leases on 40,000 acres along 164 river miles, as well as relinquish future royalty revenue. Included in that return is $90 million of bonuses and rent, repaying $63.5 million in royalties collected and expected through fiscal year 2017 and forfeiting $29 million of royalties currently in escrow. The impact also includes a reduced future royalty revenue of $30.3 million for each of the next two biennia, based upon current prices and production.
The new law is obviously very good news for the private mineral owners who have been challenging the state’s initial position on ownership. But it is even more important going forward as it finally clears up the mineral ownership issue under Lake Sakakawea and makes it easier to further develop the oil and gas reserves along and under Lake Sakakawea in the future.
The overwhelming passage of SB2134 by the North Dakota Legislature, according to Burgum during Friday’s signing, provides a clear road map toward resolution that includes due process for stakeholders.
The state of North Dakota needs to be commended for recognizing that their initial assumptions were wrong and then took the necessary steps to ensure the rightful mineral owners were recognized.