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North Dakota Supreme Court weighs shoreline mineral rights arguments

BISMARCK -- With at least $134 million hanging in the balance, and potentially millions of dollars more at stake, North Dakota's Supreme Court heard arguments Tuesday on who owns mineral rights along the Missouri River and Lake Sakakawea -- landowners or the state.

The court will decide who owns the rights to the "shore zones," or the area between the ordinary high and low watermarks along public waters.

Attorneys had 30 minutes to sway the five-member court over the ownership of the shore zone minerals after Stanford Reap and Brigham Oil and Gas, which was acquired by Statoil Oil & Gas, filed similar lawsuits against the state. The two suits were combined during Tuesday's hearing.

The oil companies have an interest because a ruling in favor of the landowners would open up more acres for oil and gas development.

"It's one big decision of a long line of decisions," said Lance Gaebe, commissioner of the Department of Trust Lands, which oversees the state's 2.5 million mineral acres. "It's a big piece of the discussion, but there are still a lot of parts yet to be decided."

The case was appealed to the high court after Northwest Judicial District Judge David Nelson ruled in January that the state owns the minerals in the shore zone.

More than 40 attorneys, landowners and spectators packed the court chambers for the arguments. It is unclear when a ruling will be issued.

Justice Daniel Crothers disqualified himself from Tuesday's hearing. District Court Judge James Hovey from New Rockford sat in his place.

Gaebe said the state owns roughly 20,000 mineral acres under navigable waters.

As companies continue to explore for new oil opportunities and landowners along the Missouri River and Lake Sakakawea aim to profit from it, both have interest in where landowners' property begins and ends.

Under state law, the state has authority over "sovereign lands" as defined as the, "areas lying within the ordinary high watermark of navigable lakes and streams."

The $134 million purse attached to the case comes from a special fund that has been collecting bonuses paid to the state when it leases its mineral acres within the disputed shore zones. The money has been kept off limits for spending until the shore zone dispute is resolved, Gaebe said.

"In order to be prepared in the event the state does lose this case, there would be monies available to address any concerns," he said.

If the state does lose the case, he said it would be a large undertaking to determine what the low watermark is.

Charles Carvell, a Bismarck attorney representing the state, told the high court if the state loses its authority over the shorelines along public waters, it would be, "a massive transfer of mineral wealth from the people to private hands" and give away its authority over the regulation of the shore zones along public waters.

But landowners and companies should have the right to the minerals beneath the navigable waters since "there isn't a single court that has said minerals two miles down are subject to public trust," said Jan Conlin, counsel for the two companies.

She added during a 2010 meeting, the Land Board discussed moving forward to determine who owned the shore zone, but nothing happened.

"This is an issue we would urge the court to decide now," she said.

Conlin, who is originally from Williston, said the low watermark is not unique attribute to state laws as at least 20 other state base their ownership laws off the low watermark.

Both sides based many of their arguments off the 1994 Supreme Court hearing that also muddies the case.

The case, North Dakota v. Mills, had the state challenging William and Betty Mills, landowners that claimed they owned the shoreline down to the ordinary low watermark.

The state sought to determine its authority over the shore zone that extended to the ordinary high watermark.

South Central Judicial District Court Judge Bruce Bohlman ruled in favor of the Mills, only to have it reversed by the Supreme Court.

In the summary, former Justice William Neumann said, "neither party has absolute ownership of the shore zone. Instead, they have coexistent, overlapping interests in the area."