Deadline fast approaching for mineral royalty refunds owed by the state

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The majority of mineral owners in suspense will continue to wait

An important deadline for the state to pay hundreds of thousands of dollars owed to North Dakota mineral owners is approaching.

By December 25th, the state will owe about $360,000 to those who sold their land to the federal government to make way for the creation of the Garrison Dam and Lake Sakakawea.

Even though the land itself was sold, those North Dakotans retained their mineral royalties up to the bed of where the river once was.

But the ongoing question remains: Where should that line be drawn, now that it’s buried under the biggest lake in North Dakota?

KX News has been following this controversy all year, but it’s a decade long discussion, and really, it begins back in the 1940s when the federal government drew the first river boundary, before flooding the land.

The state has since redrawn it, most recently in 2009 and again in 2018. But the line created about a decade ago stirred controversy because many mineral owners lost acres where the boundary was redrawn.

The Legislature paved the way for a final study and boundary line, now called the Wenck line. That’s the 2018 line that is requiring some back-payments.

Since the Wenck Line was finalized in 2018, the Department of Trust Lands has been figuring out the acreage between it and that 2009 line. Any mineral royalties earned by the state on property between the two is what’s owed back to the people.

But the $360,000 only covers 27 oil and gas leases out of about 600.

“It’s about 45,000 square miles and then it’s 600 leases that we have to go back and reassess,” explained North Dakota Land Commissioner Jodi Smith.

“Some of those may not change, some of them the state will gain acreage and some of them the operator will gain acreage, so we have to review them on an individual basis.”

After the first deadline this month, the state has up to two years to refund the remaining (and the majority) of affected mineral owners.

“Which is simply not acceptable,” according to Attorney Josh Swanson.

All the while more lawsuits are popping up, one filed in Federal District Court, just Tuesday, by Swanson on behalf of the Ed Lynch family.

“Both the state and Continental [Resources] have told us that they’re using the Phase I survey and under that, there’s about 200 acres of Ed’s property that now belong to the state, which is Constitutionally invalid,” explained the Vogel Law Firm Lawyer.

The lawsuit was also filed against the oil company. Continental Resources refused to comment.

“I haven’t had time to read through it. I’ve just forwarded it to our Attorney and he’s getting through it now,” Smith shared.

Smith could tell us that Phase I is still being applied to the land because her Department just hasn’t gotten to any acreage adjustments east of the Highway 85 bridge, where the Lynch’s mineral acres lie. Eventually, the Wenck line will apply.

At the end of the day, Swanson says the original 1940s U.S. Army Corps line is the only one that matters.

“What we’ve warned the state about for years is they can’t redraw that line,” he added.

One of two major cases decided in the North Dakota Supreme Court this year (both in favor of the mineral owners) say essentially that.

The Wenck line can only be applied where it does not conflict with federal law. In this case, that refers to the original line drawn under the Flood Control Act of 1944.

“Jodi, in all fairness walked into a mess…” Swanson added.

Smith, who was appointed as Commissioner in 2017, says mineral owners have two years to contest the state’s new line.

“From June 25th or from the time the acreage adjustment was approved, so like some were just approved last month. The two-year clock starts for those, last month,” she elaborated.

But that’s not good enough for Swanson, “We’re going to fight until the last dog dies, to make sure every single penny that’s due these families is accounted for because that is what justice requires here.”

It’s important to note, the state actually sends refunds to the oil and gas companies who are then responsible for paying the mineral owners. Smith says the companies are under the same deadlines.

The Department of Trust Lands is releasing a website in about two weeks that will make this process and the documents involved public for landowners to follow.


One of those two major cases settled in the state’s Supreme Court was the Wilkinson case.

The high court decided the family, not the state, owns the oil and gas mineral rights on their 286 acres, now under the Missouri River reservoir near Williston. The family is one of those awaiting payment by December 25th.

In the meantime, they’ve opened a civil case against the state, looking for damages for the decade spent in legal battles. That court date has been pushed back to at least April.

And because of the newest suit, Jodi Smith fears the oil and gas company, Equinor, won’t pay the $900,000 owed in royalties until all of the civil cases are settled.

“In a perfect world, that family, they would get the money by Christmas…” Swanson said, adding, “I’m not holding my breath on it.”

Swanson says if the payment is not made to the family by the 25th, he will add another claim for relief into the existing litigation. He’s also filing a motion in the coming weeks, requesting the state pay the Wilkinsons back all attorney fees.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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