CHAPTER 18 RIPARIAN RIGHTS: OWNERSHIP OF MINERALS UNDER RIVERS AND LAKES

• Jurisdiction: United States

Advanced Mineral Title Examination
(Jan 2014)
CHAPTER 18
RIPARIAN RIGHTS: OWNERSHIP OF MINERALS UNDER RIVERS AND LAKES
Brian R. Bjella
Craig C. Smith
Crowley Fleck PLLP
Bismarck, North Dakota

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BRIAN R. BJELLA is a senior partner in the Bismarck, North Dakota, office of the law firm of Crowley Fleck PLLP. He received his law degree from the University of North Dakota in 1979. Prior to joining the firm, he served as an Assistant Attorney General for the State of North Dakota, representing the Board of University and School Lands in supervision of the state's mineral interests. Brian is admitted to practice in the States of North Dakota and Montana. Brian's primary areas of practice are mineral law and public utilities law. He has extensive experience in preparation of mineral title opinions and the siting of energy facilities before state regulatory agencies. Brian has been very active in the Rocky Mountain Mineral Law Foundation. He formerly served on the Board of Directors and several terms as a trustee. He is chair of the Long Range Planning Committee. He was-on the program committee of the following special institutes: Mineral Title Examination III (1992); Oil & Natural Gas Pipelines (1995); The Electric Industry (1997); and Water Quality and Wetlands (2002). He served as co-chair of the landman's section for the 2006 annual institute and of the oil and gas section for the 2011 annual institute. Brian authored the following papers: "Removing the Operator Under the Joint Operating Agreement" (1999); "Management of Water and Water Quality in Coal Mining: A Legal Perspective" (2002); "Are Landmen Practicing Law? The Legal & Ethical Issues" (2003); "Advanced Mineral Conveyancing and Title Issues" (2007); and co-authored "Common Issues in Preparation of a Title Opinion" (2012).

CRAIG C. SMITH is a partner in the Energy, Environment, and Natural Resources Department of Crowley Fleck PLLP in Bismarck, North Dakota. He joined the firm in 2009 after practicing with Fleck, Mather & Strutz, Ltd. in Bismarck since 1988. He has extensive experience in the preparation of drilling title opinions, division order title opinions, and acquisition title opinions in North Dakota, Montana, and Wyoming. Mr. Smith is immediate past Chairman of the North Dakota Petroleum Council and has served on its Board of Directors since 1998. Mr. Smith is a member of the American Association of Petroleum Landmen, Landman's Association of North Dakota, the Real Property and Probate Section of the North Dakota State Bar Association, and the American Bar Association (Natural Resources Section). He is a contributing author representing the states of North Dakota and Montana to the Oil and Gas Law, Comparison of Laws on Leasing, Exploration and Production publications sponsored by the AAPL. He has also participated as a speaker at the 2001, 2010, 2012, and 2013 AAPL Annual Meetings, the 2012 NADOA annual meeting, and at several other local and regional Landman seminars.

Part 1: Rivers Run Wild

INTRODUCTION

Mid-way through the Monday morning meeting at ABC Oil & Gas Company the Land Department advises Operations and Management personnel regarding the upcoming drilling schedule, "Yes, we know we own leasehold interests in these proposed drilling units, but we really have no idea what interests we own, nor do we know who or what interest to AFE third parties."

"Why, don't we have title opinions?"

"We have title opinions, some are three hundred pages. The law firm says they have no idea what percentage of acreage we or anyone else owns. The Missouri River runs right through the drilling units. They also advise us in some spacing units the feds claim an interest and will sue us for trespass if we drill through lands the feds once owned but they no longer own."

"What [expletives omitted]? We need to drill this well. Figure it out."

And with that all the title issues are resolved quickly, the wells are drilled, and production proceeds are distributed in a timely manner. Well, not exactly.

In North Dakota and Montana, the mighty Missouri River and to a lesser extent the Yellowstone River course directly through the center of the vast Bakken field affecting spacing units and horizontal wells located along these two navigable rivers for over 150 continuous miles. The uncertainties of ownership of mineral interests underlying rivers, defining river boundaries, the effects of river movements through accretion, erosion and avulsion is certainly not a new challenge for oil and gas operators in many states. However, in addition to the more common problems associated with rivers, the Missouri River has presented other complexities in leasing

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and payment of production proceeds. Due to the federal government's construction of the Garrison Dam in the 1950s, diverse and competing ownership issues between the State of North Dakota, fee owners, the United States, and the Three Affiliated Tribes have resulted. Several key issues remain unresolved as of the authoring of this paper, but the first major obstacle in resolving these title problems is finally before the North Dakota Supreme Court for consideration.

Although the two major rivers and the Garrison Dam have created frustrating challenges relating to land and ownership issues, it cannot be stressed enough that these water bodies have also blessed industry by providing unlimited water supply for drilling operations and other industrial and residential needs necessary to drive development in the Bakken.

Part 1 of this paper will attempt to provide an overview of the history of ownership rights beneath navigable rivers generally, highlight the pending litigation in North Dakota relating to whether the State owns minerals to the Ordinary High Water Mark or Ordinary Low Water Mark, and will discuss various other issues relating to title examination, drilling and production payment issues on fee, state, tribal and federal lands affected by navigable rivers.

Part 2 of this paper will discuss riparian rights and mineral ownership issues affecting non-navigable rivers and lakes.

I. OWNERSHIP BENEATH NAVIGABLE WATERS

A. Background of Equal Footing Doctrine.

At common law, the original thirteen states owned title to the land underlying navigable tidal waters in their sovereign capacity. In 1842 the United States Supreme Court in Martin v. Waddell held that State's dominion over navigable rivers were held by the States in "public trust".¹ In 1845 the United States Supreme Court recognized the "equal footing doctrine."² Under the equal footing doctrine, the United States held in trust for the new states navigable waters and the lands beneath, and upon statehood the new states would acquire title to the beds of the navigable waters and be admitted "upon equal footing, in all respects whatever...." with the original States.³ The Court further held the Equal Footing Doctrine was a right conferred by the Constitution itself, not by Congress.⁴

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In 1877 the Supreme Court reaffirmed that the equal footing doctrine applies to all navigable waters.⁵ The Court held the rights of riparian owners in the soil below the high water mark are governed by state law, not federal law, and the states could determine the extent of riparian title below the high water mark as a matter of State property law.⁶ In Shively v. Bowlby,⁷ the Court reaffirmed that state law controls riparian ownership and the use of the shores, and in Joy v. St. Louis,⁸ the Court held that changes to the boundary of the navigable water, whether by accretion, erosion or avulsion, are likewise governed by state law. Thus, upon entering the Union, the states acquired title to all lands underlying navigable waters to the high water mark, and the ownership rights of riparian owners upland from the high water mark and any changes in the boundary of the water body would be governed by state law.

B. What constitutes a navigable river or body of water?

For the purposes of title to a riverbed, what constitutes a navigable river is a federal question to be determined by federal law.⁹ In an admiralty case, The Daniel Ball, the Supreme Court adopted the first version of the test:

Those rivers must be regarded as public navigable rivers in law which are navigable in fact. And they are navigable in fact when they are used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water.¹⁰

Four years after The Daniel Ball, the Supreme Court further noted in determining navigability:

It is not . . . every small creek in which a fishing skiff or gunning canoe can be made to float at high water which is navigable, but, in order to give it the character of a navigable stream, it must be generally and commonly useful to some purpose of trade or agriculture.¹¹

Since these early decisions by the Supreme Court, a vast amount of judicial cases have wrestled with the navigability test, modified the test on occasion, and have struggled with evidentiary

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issues since the test for navigability must consider the facts as they existed at Statehood, not as they exist today. For purposes of this paper, The Daniel Ball test, however, still sets forth the basic principles.

Of the three major rivers that course through the Bakken, the Missouri River and the Yellowstone River have been determined to be navigable by several judicial decisions.¹² The Little Missouri River, after years of litigation in the 1980s and the 1990s, was determined to be non-navigable in State of North Dakota v. United States resulting in the bed of the river being owned by the riparian landowners to the thread of the stream.¹³

C. If navigable, who owns what? The Public Trust Doctrine.

While each State upon entering the Union acquired title to navigable riverbeds to the high water mark, the States...