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Published August 19, 2013, 10:12 AM

Landowner legislation

A number of bills passed in recent legislative sessions are important for landowners, and many of these new laws have already gone into effect, or will soon.

By: Derrick Braaten, Agweek

BISMARCK, N.D. — A number of bills passed in recent legislative sessions are important for landowners, and many of these new laws have already gone into effect, or will soon.

In Montana, an amendment was made to the Surface Owner Damage and Disruption Compensation laws. These laws relate to compensation paid to the owner of the surface estate for damages caused by oil and gas exploration. The laws are found in the Montana Code Annotated, Title 82, Chapter 10, Part 5.

The amendment, contained in House Bill 431, added two new definitions. “Lost land value” means the value of the highest and best reasonably available use of the land directly utilized by oil and gas operations and production, other than uses appurtenant to the mineral estate. “Reasonably available use” means the present use or a future use for which a permit, if necessary, has been issued under applicable law. Many appraisers use only the “existing use” of a piece of land to determine land values, which in most cases is going to be cropland or pastureland. If a landowner has definite plans to subdivide a piece of land for residential purposes, or to utilize it for a commercial use, these amendments make it clear that those more expensive uses can be used to value the land damaged by the oil and gas developer. Although such valuation methodologies should be allowed under previous law, the amendment is a helpful clarification for landowners seeking to recover damages for land they have lost to oil and gas development.

In South Dakota, the laws related to recovery of abandoned minerals were amended in a few important ways. These laws are found in the South Dakota Codified Laws, Chapter 43-30A. Several provisions were added to the abandoned minerals laws, and were taken from similar provisions in North Dakota’s laws. For example, a surface owner attempting to recover abandoned minerals must conduct a reasonable inquiry to find the owner of the minerals. A new section was created that specifies what actions the surface owner must take to comply with the reasonable inquiry requirement. This is important because courts have set aside judgments by which surface owners have recovered minerals when the courts have decided that the surface owner did not conduct a reasonable inquiry. The amendments also added a new section allowing for quiet title action. Unfortunately, the provisions have caused some confusion in the courts in North Dakota regarding the reasonable inquiry requirements, and that confusion is likely to arise in South Dakota.

In North Dakota, House Bill 1333 was a suite of amendments to several oil and gas laws. The changes included new requirements for underground gathering pipelines such as providing GIS information to the North Dakota Industrial Commission, Oil and Gas Division, as well as the creation of a funding mechanism for an abandoned well fund. The bill also added language to North Dakota Century Code chapter 38-08, which specifies the jurisdiction of the NDIC. The language expanded the jurisdiction of NDIC to regulate disposal of saltwater and oil field wastes, and was a response to concerns raised by landowner groups regarding saltwater spills in oil country. NDIC committed to adopting new regulatory rules this summer to address the problems.

Although there are many issues important to landowners that need to be addressed with respect to mineral development, landowners have made some progress by being involved in state legislative sessions. It is crucial, moving forward, for landowners to continue to become more involved with the legislative process so that their interests are recognized and protected.