United States District Court, D. North Dakota, Southwestern Division
June 24, 2015
Randall Mosser, Douglas Mosser, Marilyn Koon, and Jayne Harkin, Plaintiffs,
Denbury Resources, Inc. and Denbury Onshore, LLC, Defendants.
ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT
CHARLES S. MILLER, Jr., Magistrate Judge.
In this action, plaintiffs allege that defendants (collectively "Denbury") have tortiously and unlawfully invaded the subsurface of their property by using it as a permanent site for disposing of salt water generated from oil and gas drilling operations without their permission. In addition to seeking damages for the affront of the claimed trespass and for nuisance, plaintiffs also seek statutory compensation under North Dakota's surface owner protection law for the loss of the economic opportunity to lease their subsurface property to Denbury or others for the disposal of salt water and other oil field wastes or, possibly, the storage of natural gas or CO2.
Denbury denies it has committed trespass. It contends the production of salt water is a necessary incident of oil and gas production and that it has the right to dispose of the salt water not only because it is an implied right of the dominant mineral estate but also because it has been authorized by a lease executed by plaintiffs' predecessors-in-interest. As for the claim of nuisance, Denbury contends that deep-earth disposal of salt water is a practical and environmentally-sound solution for disposing of this waste stream and, more importantly, it has been authorized and approved by the governing regulatory agency. Finally, Denbury contends that plaintiffs have no right to monetary compensation because, according to it, the surface owner protection law does not extend to the subsurface disposal of salt water and that, in any event, plaintiffs have suffered no demonstrable damage.
Before the court is Denbury's motion for summary judgment of dismissal and plaintiffs' motion for partial summary judgment on the question of liability. Unless otherwise indicated, the facts relied upon by the court in resolving the motions are either undisputed or have not been sufficiently controverted.
A. Plaintiffs' interests as burdened by the Mosser Lease
Plaintiffs are the owners of the surface estate only in the following described tract of land located in Billings County, North Dakota:
When plaintiffs acquired their interest, it was already burdened by an oil and gas lease dated November 28, 1977 ("Mosser Lease") granted by plaintiffs' predecessors-in-title, who, at the time, owned both the surface and the minerals in the following property included in the Lease:
(Doc. No. 64-2). The Mosser Lease remains in effect because of continuous production of oil and gas from wells located on the leased acreage.
B. The unitization of the lessee's rights in the Mosser Lease with other interests
By Order No. 9410 dated May 16, 2003, the North Dakota Industrial Commission ("NDIC") authorized the creation of the T.R.-Madison Unit ("Unit") by approving a plan for unitization for the following lands in Billings County:
(Doc. No. 6-2, p. 9). Denbury is the current operator of the Unit.
C. The Mosser Well
Prior to the creation of the Unit, the Mosser Well was spud as an oil and gas well on what is now plaintiffs' surface acreage in the NW¼ of Section 26. It produced oil and gas from January 1979 through June 2006. (Doc. No. 64).
On March 12, 2008, the prior Unit operator, Encore Operating, L.P. ("Encore"), submitted an application the North Dakota Industrial Commission ("NDIC") to convert the Mosser Well into an injection well for the disposal of salt water. As part of the application, Encore submitted an affidavit certifying that it had notified the surface owners. Plaintiffs acknowledge that at least Doug Mosser received the notice. (Doc. No. 6-5, p. 16).
On April 11, 2008, the NDIC approved Encore's application to use the Mosser Well for the injection of salt water into the "Dakota Group, " which is a formation that lies above the formation unitized by the NDIC's order creating the T.R.-Madison Unit. (Doc. No. 6-5). By administrative rule, the permit automatically expired if the conversion to a saltwater disposal well was not commenced within one year of its issuance. N.D.A.C. § 43-02-05-04(10). This same limitation was also reflected in the permit.
Encore did not begin the conversion within the one-year time period. However, on March 8, 2009, and prior to the permit expiring, Encore requested a one-year extension, which was approved by the NDIC on April 9, 2009. (Doc. No. 71-6). Later, on March 8, 2010, Encore requested a second extension, which was similarly approved by the NDIC on March 15, 2010. (Doc. No. 71-7).
On April 8, 2011, Denbury, which had now become the Unit Operator and owner of the Mosser Well, requested a third extension, which was approved by the NDIC on April 11, 2011. (Doc. No. 71-8). Following this extension and almost three and one half years after the application for conversion of the well was first submitted by Encore, Denbury completed the conversion of the well for saltwater disposal on September 26, 2011, and the first saltwater injection took place on September 30, 2011. (Doc. No. 6-7).
Other than the first notice that went out to one or more plaintiffs when Encore made its initial application to convert the Mosser Well for saltwater disposal in March 2008, the record is devoid of any notice being given of the NDIC's approval of that request, much less any of the three follow-on requests for extensions and NDIC approvals. As will be addressed in more detail later, Denbury argues that the notice given to one or more plaintiffs in March 2008 was sufficient to put plaintiffs on notice that they needed to be diligent about protecting their rights, but the court is skeptical of that given the permit automatically expired if the conversion was not commenced in one year, the lack of any follow-on notice of extensions being applied for and granted, and the long period of inaction.
Plaintiffs claim they are entitled to damages under three separate claims for relief: trespass; nuisance; and a statutory claim for damages pursuant to N.D.C.C. ch. 38-11.1. They ask in their motion for partial summary judgment that the court adjudge Denbury liable, contending liability is clear and that the only question for trial is the amount of damages.
Denbury, on the other hand, contends it has the right to dispose of salt water in the subsurface of plaintiffs' property without having to provide compensation. Consequently, it seeks summary judgment of dismissal.
For ease of discussion, the court will address the competing motions in the context of plaintiffs' individual claims for relief.
B. Trespass and nuisance claims
1. Denbury's claim of rights under the Mosser Lease
Denbury makes several arguments for why plaintiffs have no claim for trespass or nuisance. The one that has percolated to the forefront with the supplemental briefing is its argument that by executing the Mosser Lease, plaintiffs' predecessors-in-interest expressly granted the right to use the subsurface of plaintiffs' property for the disposal of salt water. The language of the Lease that Denbury relies upon is found in the "granting clause" and reads, in relevant part, as follows:
That the lessor... has granted, demised, leased and let and by these presents does grant, demise, lease and let exclusively unto said lessee, with the exclusive right of mining, exploring by geophysical and other methods and operating for and producing therefrom oil and all gas of whatsoever nature or kind, and laying pipe lines, telephone and telegraph lines, housing and boarding employees, building tanks, power stations, gasoline plants, ponds, roadways, and structures thereon to produce, save, market and take care of said products and the exclusive surface and subsurface rights and privileges related in any manner to any and all such operations and any and all other rights and privileges necessary, incident to, or convenient for the economical operation alone or conjointly with neighboring land for such purposes, [the lands described above].
(Doc. No. 64-2) (emphasis added).
Before turning to the lease language, the court notes that plaintiffs have failed to rebut the evidence proffered by Denbury that their predecessors-in-interest granted the Mosser Lease, that it is still in effect, and that they are bound by it. Also, it is clear that Denbury, as the Unit Operator, has succeeded to and may exercise the rights of the lessee under the Mosser Lease for the benefit of the Unit's operations generally, and not just those actions occurring on the Lease premises, given the unitization provisions of the Mosser Lease and the Unit Agreement and Plan. But, even without the express language of the Mosser Lease, the result would be the same with respect to the implied rights under the Lease given the provisions of North Dakota's unitization statutes as implemented by the NDIC-approved Unit Plan. See N.D.C.C. §§ 38-08-9.4 & 38-08-09.8; cf. Continental Resources, Inc. v. Farrar Oil Co., 1997 ND 31, ¶¶ 12-17, 559 N.W.2d 841; see generally 5 Eugene Kuntz, A Treatise on the Law of Oil and Gas § 78.4[a] (Matthew Bender, Rev. Ed.); 2 Bruce M. Kramer and Patrick H. Martin, The Law of Pooling and Unitization, § 20.06 (3d ed. LexisNexis Matthew Bender 2014).
Also, before addressing the language of the Mosser Lease, it is helpful to consider the North Dakota Supreme Court's decision in Feland v. Placid Oil Co., 171 N.W.2d 829 (N.D. 1969). In Feland, the North Dakota Supreme Court discussed whether the lessee of an oil and gas lease, which was binding upon the surface owner, had the right to construct a second saltwater disposal pit under lease language that granted the lessee the right to use the surface estate for the purposes of:
operating for and producing therefrom oil, gas, casinghead gas, casinghead gasoline, and laying pipelines, telephone and telegraph lines, and building tanks, powers, stations, gasoline plants, ponds, roadways and structures thereon to produce, save and take care of said products, and the exclusive right of injecting water, brine and other fluids into subsurface strata, and housing and boarding employees and any and all other rights and privileges necessary, incident to, or convenient for the economical operation alone, or conjointly with neighboring land, for the production, saving, and taking care of oil, gas, casinghead gas, casinghead gasoline and the injection of water, brine and other fluids into subsurface strata, * * *'
Id. at 832 (the language from the lease as set forth in the opinion with italics added).
Before the North Dakota Supreme Court addressed the significance of this lease language, it discussed the fact that the granting of an oil and gas lease will give rise to an implied right to use the surface of the leased land as reasonably necessary for the production of oil and gas, quoting Summers Oil and Gas as follows:
"An oil and gas lease carries with it the right to possession of the surface to the extent reasonably necessary to enable the lessee to perform the obligations imposed upon him by the lease. (Citations omitted.) This rule is based upon the principle that when a thing is granted all the means to obtain it and all the fruits and effects of it are also granted.' (Citations omitted.) Accordingly, the right to such use of the surface is implied if it is not granted, whether the form of conveyance is a mineral deed or a lease." (Citations omitted.) 4 Summers, Oil & Gas, Sec. 652, page 2.
Id. at 833-34. The court then concluded, however, that the lessee's right to use the surface for a second disposal pit in Feland was based upon the rights expressly granted by the lease and not the lessee's implied rights. The court pointed to the catchall language set forth in italics above, stating:
Of course, in the instant case, the rights of the operator to use the land are not based on implied rights but rather on the rights expressly granted by the lease. The lease expressly designates the lessee's surface rights, including the broad authorization to "all other rights and privileges necessary, incident to, or convenient" for economical operation and production of oil.
Id. at 834.
While the Mosser Lease does not specifically mention the disposal of salt water or brine as did the lease in Feland, it does make reference to "subsurface rights and privileges" and does have essentially the same broad catchall language that the North Dakota Supreme Court relied upon in Feland. Also, at the time the Mosser Lease was consummated, disposal of the salt water by injection deep into the earth was an accepted method of salt water disposal. See, e.g., West Edmond Salt Water Disposal Ass'n v. Rosecrans, 226 P.2d 955, 969 (Okla. 1950); cf. Feland, 171 N.W.2d at 832 (lease in that case explicitly permitted injection of brine into the subsurface). Consequently, given the breadth of the lease language and the fact that the generation of salt water is a necessary "incident" of oil and gas production, the court agrees with Denbury that the express language of the Mosser Lease conveys the right to use the leased property for subsurface disposal of salt water. But, even if the court is wrong about this point, using the subsurface for disposal of salt water would be an implied right under the lease given it is a necessary consequence of oil and gas production and the need to dispose of it. See Dick Properties, LLC v. Paul H. Bowman Trust, 221 P.3d 618, 621 (Kan.Ct.App. 2010) ("Dick Properties, LLC"); Leger v. Petroleum Engineers, Inc., 499 So.2d 953, 955-56 (La. Ct. App.3d Cir. 1986); cf. Feland, 171 N.W.2d at 833-34 (discussing the implied rights of an oil and gas lessee as set forth above).
Plaintiffs contend that, notwithstanding what rights may be granted by the Mosser Lease, the exercise of those rights is still subject to a balancing of interests under the "accommodation doctrine" as adopted by the North Dakota Supreme Court in Hunt Oil Co. v. Kerbaugh, 283 N.W.2d 131 (N.D. 1979) ("Kerbaugh"), and that Denbury has other alternatives for disposing of the salt water that could have been exercised rather than using their subsurface as a permanent dumping ground for the waste. Plaintiffs contend the question of whether Denbury should have exercised one of these other alternatives is one of fact that prevents the granting of summary judgment with respect to its claims for trespass and nuisance.
Denbury disagrees, arguing that the accommodation doctrine set forth in Kerbaugh applies only when the rights being exercised are those of a severed mineral owner (or lessee thereof) and there is no contract or other instrument that has been executed by, or is otherwise binding upon, the surface owner. Denbury contends that, in this case, the lease language granting the right to use the surface estate for the purposes specified when it is "convenient" for lessee's operations gives the lessee the sole right to determine whether an authorized use should be employed and necessarily forecloses any balancing. For support, Denbury relies upon the following passage in Feland, where North Dakota Supreme Court stated:
In the instant case the operator's rights were made clear by the broad authorization in the express terms of the lease. These rights were not abrogated by lessors' refusal to grant permission for construction of salt water disposal pits. Operator's rights as lessee were not dependent on lessors' granting or not granting permission. Lessors' refusal was of no legal significance in regard to this first issue.
171 N.W.2d at 834. Denbury also cites to cases from other jurisdictions which have held that the accommodation doctrine applies only when the mineral developer's rights are based upon the dominance of the mineral estate, i.e., not upon an agreement or instrument binding upon the surface owner, and that the term "convenient" in such a lease or other instrument gives the mineral developer essentially unfettered discretion in employing a use of the surface estate authorized by the contract or other instrument. The two cases that Denbury primarily relies upon are Zeiler Farms, Inc. v. Anadarko E & P Co., LP, No. 07-cv-01985, 2009 WL 890716, at **3-5 (D. Colo Mar. 31, 2009) supplemented by 2010 WL 2681724, at **3-5 (July 1, 2010) and Landreth v. Melendez, 948 S.W.2d 76, 80-82 (Tex. Ct. App. 1997).
In addressing these arguments, it is necessary to begin with the North Dakota Supreme Court's decision in Kerbaugh where it adopted the accommodation doctrine. In Kerbaugh, the dispute was between the surface owner and an assignee of a severed mineral owner's lessee. Consequently, the court did not address what regard a mineral developer would have to give to the surface owner's use of the surface estate when the rights of the mineral developer are the subject of an agreement or instrument binding upon the surface owner. In fact, the North Dakota Supreme Court's discussion of the rights acquired by a mineral developer simply by virtue of the dominance of the mineral estate suggests that the language of an express agreement or instrument may trump. In particular, the court stated:
The above cases recognize the well-settled rule that where the mineral estate is severed from the surface estate, the mineral estate is dominant. See Annot., 53 A.L.R.3d 16; 4 Summers, Oil and Gas, s 652; 58 C.J.S. Mines and Minerals s 159b. The mineral estate is dominant in that the law implies, where it is not granted, a legitimate area within which mineral ownership of necessity carries with it inherent surface rights to find and develop the minerals, which rights must and do involve the surface estate. Without such rights the mineral estate would be meaningless and worthless. Thus, the surface estate is servient in the sense it is charged with the servitude for those essential rights of the mineral estate.
In the absence of other rights expressly granted or reserved, the rights of the owner of the mineral estate are limited to so much of the surface and such use thereof as are Reasonably [sic] necessary to explore, develop, and transport the minerals. See, Union Producing Co. v. Pittman, 245 Miss. 427, 146 So.2d 553 (1962); 58 C.J.S. Mines and Minerals s 159c; Annot., 53 A.L.R.3d 16 s 3(a). In addition to, or underlying the question of what constitutes reasonable use of the surface in the development of oil and gas rights, is the concept that the owner of the mineral estate must have Due regard for the rights of the surface owner and is required to exercise that degree of care and use which is a just consideration for the rights of the surface owner. Getty Oil Co. v. Jones, 470 S.W.2d 618, 621, 53 A.L.R.3d 1 (Tex. 1971). Union Producing Co. v. Pittman, supra; 58 C.J.S. Mines and Minerals s 159c; Annot., 59 A.L.R.3d 16 s 3(c). Therefore, the mineral estate owner has no right to use more of, or do more to, the surface estate than is reasonably necessary to explore, develop, and transport the minerals. Union Producing Co. v. Pittman, supra; 58 C.J.S. Mines and Minerals s 159c. Nor does the mineral estate owner have the right to negligently or wantonly use the surface owner's estate. See, Union Producing Co. v. Pittman, supra; 4 Summers, Oil and Gas, s 652.
Kerbaugh, 283 N.W.2d at 135-36 (footnote omitted) (italics added).
Since Kerbaugh, the North Dakota Supreme Court has not had occasion to address what obligations a mineral developer would have in terms of giving due regard to a surface owner's existing use of the surface estate when there is a lease or other agreement binding upon the surface owner, much less one that permits the uses specified in the lease or other agreement to be employed when it is "convenient" for the lessee. While the North Dakota Supreme Court might conclude that Feland (which was decided before the adoption of the accommodation doctrine in Kerbaugh) is dispositive and no balancing is required as Denbury contends, this result is not inevitable for several reasons.
First, it does not appear the surface owner in Feland contended that an existing surface use was unduly burdened and presented evidence that the mineral developer had another reasonable alternative. Rather, the court's discussion about the mineral developer's right under the lease to construct a second pit was in the context of an outright refusal of the surface owner to permit a second pit.
Second, and perhaps more significantly, it is not out of the realm of possibility that the North Dakota Supreme Court could conclude that the use of the word "convenient" is not enough to trump the limits that otherwise would exist upon the right of the mineral developer to use the surface estate and that more clear language would be required. See Bruce M. Kramer, The Legal Framework for Analyzing Multiple Surface Use Issues, RMMLF (Feb. 17-18, 2005) (suggesting that the phrase "all usual, necessary and convenient means" does not necessarily foreclose applying the "multi-dimensional approach" [ i.e., balancing of interests] of the accommodation doctrine); cf. Greeley-Rothe LLC v. Anadarko E & P Co. LP, No. 08-cv-00401, 2010 WL 1380365, at ** 5-7 (D. Colo. Mar. 31, 2010). There may be other possibilities as well, such as the conclusion that the stock phrase "necessary, incident to, or convenient" creates only the nominal right to use the surface subject to any balancing that may be required under the accommodation doctrine.
In this case, the court need not decide what the North Dakota Supreme Court would conclude about whether the use of the word "convenient" in the Mosser Lease necessarily forecloses a balancing of interests comparable to what it concluded in Kerbaugh may sometimes be required. This is because plaintiffs have failed to make the required threshold showing for any balancing of rights.
The prevailing view of the jurisdictions that have adopted the accommodation doctrine is that it requires due regard be given only to existing uses of the surface estate by the surface owner and, perhaps, future uses that are imminent, such as where a substantial step or investment has been made by the surface owner. See, e.g., Amoco Production Co. v. Thunderhead Investments, Inc., 235 F.Supp.2d 1163, 1172-73 (D. Colo. 2002); Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 249 (Tex. 2013); see generally 4 Summers Oil and Gas § 40:2 (3d ed. database last updated Nov. 2014); Patrick H. Martin and Bruce M. Kramer, 1-2 Williams & Meyers, Oil and Gas Law § 218.8 (LexisNexis Matthew Bender 2014) ("Williams & Meyers"). While it does not appear that the North Dakota Supreme Court has explicitly addressed this point, it is likely to reach the same conclusion, given the tenor of its discussion of the accommodation doctrine in Kerbaugh, the authority it relied upon, and the underlying rationale for why due regard must be given to the surface owner's interests in some, but not all, situations. See Kerbaugh, 283 N.W.2d at 136-38.
In this case, plaintiffs have proffered no evidence of their having used the subsurface formation into which Denbury is currently injecting salt water for any purpose or that they were on the verge of doing so. Hence, even if in other situations there may have to be a balancing of interests notwithstanding the use of the word "convenient" in an oil and gas lease binding the surface owner, this is not one of them.
2. Fact issues remain that preclude the granting of summary judgment with respect to plaintiffs' claims of trespass and nuisance
Given the foregoing, plaintiffs' claims of trespass and nuisance fail save in one possible respect. The express or implied rights that Denbury has succeeded to do not authorize it to dispose of salt water generated from outside the Unit. Cf., e.g., Hill v. Southwestern Energy Co., No. 4:12-cv-500, 2013 WL 5423847, at **3-4 (E.D. Ark. Sept. 26, 2013) (lease did not grant right to use the property for storage of frack waste fluid from any possible source); Dick Properties, LLC, 221 P.3d at 621 (lessee's court-implied covenant to dispose of salt water is limited to salt water produced on the lease); Kysar v. Amoco Production Co., 93 P.3d 1272, 1278, 1283-86 (N.M. 2004) (no right of the unit operator to use the surface of leased lands lying outside the unit absent an agreement to the contrary). And, whether or not that has occurred remains a proper subject for discovery. For this reason, plaintiffs' claims of trespass and nuisance will not now be dismissed.
C. Statutory claim for damages pursuant to N.D.C.C. ch. 38-11.1
N.D.C.C. ch. 38-11.1 was enacted by the North Dakota Legislature in 1979 to ameliorate what was perceived to be inequities resulting from application of the common law doctrine that the mineral estate is dominant and permits cost-free use of the surface estate as is reasonably necessary for the development of the minerals. See Murphy v. Amoco Production Co., 729 F.2d 552 (8th Cir. 1984); Kartch v. EOG Resources, Inc., No. 4:10-cv-014, 2010 WL 4260103, at *2 (D.N.D. Oct. 22, 2010). Included within the chapter are various provisions that require the mineral developer to pay compensation for the use of the surface estate and any damage to it, regardless of whether the mineral estate is separated from the surface estate and regardless of who executed the document that gave the mineral developer the right to develop the mineral estate. See id.
In this case, plaintiffs seek monetary compensation for Denbury's use of the pore space underlying the surface of their land for the injection of salt water. Plaintiffs point to N.D.C.C. § 38-11.1-04, which requires that mineral developers compensate surface owners for the use of and damage to the surface estate - even when it is reasonably necessary for the development of the mineral interests. Denbury makes several arguments for why plaintiffs are not entitled to compensation pursuant to § 38-11.1-04. However, before addressing these arguments, it is helpful first to discuss the ownership of the subsurface pore space under North Dakota law.
2. Ownership of subsurface pore space
In North Dakota, it is clear that the surface owner owns the subsurface pore space given that N.D.C.C. § 47-01-12 (which dates back to at least the 1877 Civil Code for the Dakota Territory) provides:
§ 47-01-12. Scope of ownership - Above and below the surface.
The owner of land in fee has the right to the surface and to everything permanently situated beneath or above it.
(italics added). See also Burlington Resources Oil & Gas Co., LP, v. Lang and Sons Incorporated, a/k/a Lang and Sons, Inc., 2011 MT 199, ¶¶ 23-24, 259 P.3d 766 ("Burlington Resources") (construing an almost identical statute to include pore space).
More recently, the North Dakota Legislature in 2009 adopted N.D.C.C. ch. 47-31 to address subsurface pore space. While N.D.C.C. § 47-31-03 provides that "[t]itle to pore space in all strata underlying the surface of lands and waters is vested in the owner of the overlying surface estate[, ]" this appears to do nothing more than put a finer point on what already has been the long-established law in North Dakota. Of more significance, and probably the reason for the enactment of ch. 47-31, are the provisions that prohibit severance of the pore space from the surface estate along with the provision making clear that a lease of the pore space is not a prohibited severance. See N.D.C.C. §§ 47-31-04 to 47-31-06.
Not surprisingly, Denbury does not appear to contest that the surface owner owns the pore space in North Dakota.
3. Denbury's argument that plaintiffs' complaint fails to state a claim for damages pursuant to ch. 38-11.1
Denbury argues that plaintiffs' statutory claim for damages pursuant to ch. 38-11.1 should be dismissed because plaintiffs failed to set forth a claim under this chapter in their complaint. While the complaint could have been more clearly written, the court concludes plaintiffs have pled just enough to state a claim pursuant to ch. 38-11.1 for the reasons articulated by this court in Fisher, where the court rejected the same argument with respect to a similarly-worded complaint, which, notably, was prepared by the same attorneys who are representing plaintiffs in this case. Fisher, 49 F.Supp. 3d at 648.
4. Denbury's argument that any right to statutory damages pursuant to ch. 38-11.1 does not extend to the use of subsurface pore space
a. Denbury's argument based on the use of the word "land" in § 38-11.1-04
Denbury argues that the right of the surface owner to damages under ch. 38-11.1 does not extend to a mineral developer's use of the pore space. In support, Denbury focuses primarily upon the use of the word "land" in § 38-11.1-04, which is the section both parties agree provides the operative language in terms of whether or not the chapter provides compensation for a mineral developer's use of the pore space. In relevant part, § 38-11.1-04 reads:
§ 38-11.1-04. Damage and disruption payments.
The mineral developer shall pay the surface owner a sum of money equal to the amount of damages sustained by the surface owner and the surface owner's tenant, if any, for lost land value, lost use of and access to the surface owner's land, and lost value of improvements caused by drilling operations. The amount of damages may be determined by any formula mutually agreeable between the surface owner and the mineral developer. When determining damage and disruption payments, consideration must be given to the period of time during which the loss occurs and the surface owner must be compensated for harm caused by exploration only by a single sum payment. * * * *
Denbury argues that, while the term "land" is not defined in ch. 38-11.1, it is defined in N.D.C.C. § 47-01-04, which reads as follows:
§ 47-01-04. Land defined.
Land is the solid material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance.
Denbury contends that, absent some indication to the contrary, the North Dakota Legislature must have intended that the term "land" as used in § 38-11.1-04 would have the meaning as that set forth in § 47-01-04 and that this definition necessarily excludes pore space.
The court is not convinced. Even if the state legislature intended that "land" as used in § 38-11.1-04 should have the same meaning as in § 47-01-04, "solid material of the earth" is clearly a relative description in that all soil and gravel, as well as many rock formations, have some interstitial space, and there is no reason to believe that the reference to soil, rock, or other substance in § 47-01-04 was meant to exclude the space encapsulated within that material. Also, in focusing upon the definition contained § 47-01-04, Denbury ignores the other section from that same chapter set forth earlier, i.e., § 47-01-12, which states the "owner of land in fee has the right to the surface and to everything permanently situated beneath or above it." (italics added). In other words, even if the use of the word "land" in § 38-11.1-04 was intended to be the definition set forth in § 47-01-04, there would be no reason to believe that the use of that term in ch. 38-11.1 would not carry with it the rights that extend to the person owning the land as set forth in § 47-01-12.
The court doubts, however, that the state legislature had in mind the particular definition of "land" set forth in § 47-01-04 when it is used the term in § 38-11.1-04, which is in a different title of the North Dakota Century Code. The word "land" can have different meanings depending upon the context in which it is used. A very common usage is that it is another term for a person's property or estate. See, e.g., Webster's New World Dictionary, Third College Edition 758 (1988) ("5 a) ground considered as property; estate [to invest in land], b) [pl.] specific holdings in land"); Webster's Third New International Unabridged Dictionary 1268 (1965) (" b law : any ground, soil, or earth whatsoever regarded as the subject of ownership (as meadows, pastures, woods) and everything annexed to it whether by nature (as trees, water) or by man (as buildings, fences) extending indefinitely vertically upwards and downwards c: an interest or estate in land: broadly : TENEMENT, HEREDITAMENT - compare REAL ESTATE); Black's Law Dictionary 892-93 (8th ed. 2004) (1. An immovable and indestructible three-dimensional area consisting of a portion of the earth's surface, the space above and below the surface, and everything growing on or permanently affixed to it. 2. An estate or interest in real property.). And here, the context in which the word "land" is used in § 38-11.1-04 is consistent with this common usage.
In particular, "lost land value" as used in § 38-11.1-04 usually connotes a loss of value of a person's entire interest in the property. Further, the fact that "land" likely was intended to mean essentially "property" is further reinforced by what the state legislature stated in the first section of the chapter with respect to its legislative findings:
3. Owners of the surface estate and other persons should be justly compensated for injury to their persons and property and interference with the use of their property occasioned by oil and gas development.
N.D.C.C. § 38-11.1-01(3) (italics added). Not surprisingly, the Montana Supreme Court appears to have ascribed the same meaning to the term "land" when, in construing comparable language under Montana's surface owner protection law, it suggested a mineral developer would be required to pay compensation for use of subsurface pore space if the surface owner could prove compensable damages. Burlington Resources, 2011 MT 199, at ¶ 31 ("We recognize that the provision authorizing compensation for lost land value' under § 82-10-504(1)(a), MCA, could encompass damage sustained by a surface estate owner for the use of pore space.").
Finally, the statute's use of "surface owner" and the definition of "surface owner" does not suggest that the intent of the legislature was only to compensate for damages to the surface of the surface estate, as Denbury suggests. The term "surface owner" is commonly used to distinguish the owner of the surface estate (together with all of the rights of the surface owner) from the owner of the mineral estate or the rights of a mineral lessee. Further, in making this argument, Denbury ignores the references to "surface estate" in ch. 38-11.1, including the legislative finding set forth above and the definition of that term in N.D.C.C. § 38-11.1-03(6).
b. What the North Dakota Supreme Court is likely to conclude with respect to pore space being included within the scope of ch. 38-11.1
The court's sole task here is to make a judgment with respect to how the North Dakota Supreme Court is likely to decide whether pore space is included within the term "surface owner's land, " such that a surface owner may be entitled to damages if the surface owner can prove that the use of the pore space for permanent saltwater disposal has resulted in "lost land value" or "lost use of and access to the surface owner's land" within the meaning of § 38-11.1-04. While the court is not persuaded by Denbury's arguments based on its parsing of the word "land" and believes the North Dakota Supreme Court would reach the same conclusion, the court recognizes that ch. 38-11.1 does not specifically mention pore space. Also, it may very well be that the state legislature did not have pore space in mind when it passed the law. Nevertheless, the North Dakota Supreme Court is likely to follow its clearly-established rule of giving effect to the plain and ordinary meaning of the statutory language in the context in which it is used and conclude, just as the Montana Supreme Court appears to have concluded, that (1) "surface owner's land" as used in ch. 38-11.1 includes all of the surface owner's rights and interests, and (2) this necessarily includes the right of the surface owner to control everything above and below the surface (including here the pore space), given that this right has long been the law in North Dakota and was not explicitly excluded by ch. 38-11.1. See, e.g., Locken v. Locken, 2011 ND 90, ¶9, 797 N.W.2d 301; Estate of Christeson v. Gilstad, 2013 ND 50, ¶ 14, 829 N.W.2d 453 ("[T]his Court must presume the legislature meant what it said and said all it intended to say.... Consequently, we will not correct an alleged legislative oversight' by rewriting unambiguous statutes to cover the situation at hand.") (internal quotation omitted); N.D.C.C. § 1-02-02. And with that, the North Dakota Supreme Court would likely say to Denbury and other mineral developers that any problems this creates are for the state legislature to fix and not the court. See, e.g., Doyle ex rel. Doyle v. Sprynczynatyk, 2001 ND 8, ¶ 14, 621 N.W.2d 353 ("We have said many times if changes are to be made in the statute, we leave that matter to the legislature, as it is for the legislature to determine policy, not for the courts.") (internal quotation omitted).
5. Denbury's argument that plaintiffs' ch. 38-11.1 claim is barred because plaintiffs failed to give timely notice of their damages
a. Disagreement over the construction of the notice requirement
Denbury contends that plaintiffs' ch. 38-11.1 claim is barred because they failed to give notice of their damages within two years of the first injection of salt water into the Mosser Well. Denbury cites to N.D.C.C. § 38-11.1-07, which, in its present form,  reads as follows:
§ 38-11.1-07. Notification of injury-Statute of limitations.
Any person, to receive compensation, under sections 38-11.1-08 and 38-11.1-09, shall notify the mineral developer of the damages sustained by the person within two years after the injury occurs or would become apparent to a reasonable person. Any claim for relief for compensation brought under this chapter must be commenced within the limitations period provided in section 28-01-16.
In this case, the first occurrence of any "injury" resulting from Denbury's use of the pore space would have been no earlier than the first injection of salt water on September 30, 2011. Denbury claims that § 38-11.1-07 must be read to require that plaintiffs were obligated to provide notice within two years of that date or on or before September 30, 2013.
Plaintiffs, on the other hand, contend that notice is timely if it is given within two years of when they reasonably should have become aware that damage was occurring even if that date is beyond two years from when the damage first occurred. In response, Denbury argues that this interpretation reads out of the statute the words "after the injury occurs, " and that if the state legislature had intended that notice need only be given within two years of when a reasonable person would have known of the injury, the statute would have simply stated that and not included "after the injury occurs." What Denbury leaves unsaid, however, is that the same argument can be made for plaintiffs' proffered construction, which is, if notice must be given within two years of when the injury occurred, that ignores the alternative of "would become apparent to a reasonable person" - at least under any sensible reading of the statute.
The North Dakota Supreme Court has stated that "or" normally should be interpreted as applying the disjunctive. State v. Silseth, 399 N.W.2d 868, 870 (N.D. 1987) ("In its ordinary sense, the term or' is a conjunction indicating an alternative between different things or actions."). And, applying the disjunctive here, means that, in order for a person to make a claim for compensation as authorized by the two sections referenced in § 38-11.1-07, notice must be given within two years of when the injury occurs or, in the alternative, within two years after a reasonable person would have become aware of the injury. Further, applying this construction to the statutory language does not render doubtful its meaning or lead to an "absurd" or "ludicrous" result. Rather, it simply expresses what likely was the state legislature's intent and the mere fact the statute could have been written more simply does not here suggest the contrary.
But, even if it could be concluded that the notice language is ambiguous, the North Dakota Supreme Court would likely in that instance adopt the construction that best fits the ameliorative purpose of the statute, which, as noted earlier, is providing maximum protection to surface owners. And here, that construction would be that notice is timely if given within two years of when a reasonable person would have become aware of the damages.
b. There are material questions of disputed fact with respect to whether plaintiffs' claims of notice were timely for all injections of salt water dating back to the first injection
Turning then to the question of whether notice was timely given, plaintiffs claim that notice was first given in August 2013 during a conversation that Ralph Mosser had with a purported agent of Denbury who was seeking to obtain an easement for a pipeline. Mosser claims he advised the agent that before he was willing to address the pipeline, an agreement needed to be reached with respect to the disposal of salt water into the Mosser Well. If this notice was sufficient, then notice for all of the damage occurring as a result of the saltwater injection was timely since two years from the first injection of salt water would have been on or about September 30, 2013.
Denbury contends this conversation was insufficient because it was not notice of damage, but rather a conversation about whether Denbury would be willing to enter into a contract with plaintiffs for the disposal of salt water. The court concludes, however, that what has been proffered is sufficient to create a fact issue regarding notice of damage. That is, a reasonable juror could conclude that Denbury understood from the tenor of the conversation and the demand for an agreement for saltwater disposal that plaintiffs were taking the position that Denbury did not have the right to do what they were doing and this necessarily involved damage to plaintiffs' property interests.
While this is sufficient to deny Denbury's motion for summary judgment based on the lack of notice, one of plaintiffs' attorneys wrote Denbury a letter dated October 17, 2013, claiming damage resulting from Denbury's use of the pore space that Denbury agrees would have been sufficient notice if timely. Notably, this was only 17 days beyond the two-year period from the first injection of salt water that Denbury claims plaintiffs had to give notice. To bridge the 17-day gap, if not more, one of the plaintiffs has submitted an affidavit claiming lack of awareness that salt water was being disposed of in the Mosser Well until sometime in 2013, given the remoteness of the Mosser Well and the fact that the traffic in the area was believed to have been generated by activity at other nearby wells.
Denbury contends this is insufficient to create a fact issue. In particular, Denbury argues that, even if the notice provisions are construed to permit notice within two years of when a reasonable person would have known of the damage, it does not make a difference in this case. Denbury contends this is because of the notice given by its predecessor Encore to one or more plaintiffs in March 2008 that a saltwater disposal permit was being applied for. Denbury argues this was sufficient to put plaintiffs on notice that the saltwater disposal would be taking place such that, if they were going to claim damage as a result of the saltwater disposal, they needed to be vigilant in terms of protecting their rights and should have known that Denbury was using the well for saltwater disposal when the first injection of salt water took place. According to Denbury, the last date plaintiffs had to give timely notice was two years from the first injection of salt water on September 30, 2011, regardless of how the statute is construed, so the October 17, 2013, letter would have been untimely.
The court disagrees. Plaintiffs have submitted enough to create a fact issue with respect to when a reasonable person would have become aware that damage was taking place. As for the March 2008 notice of the application to convert the Mosser Well for saltwater disposal, the court believes that a jury might very well give it little weight since the notice was only for an application for a permit, not the granting of it. Further, even if plaintiffs had followed up and learned the permit had been granted, nothing happened at the well during the year for which the permit was issued. And, while Encore timely applied for an extension, no notice was given of that application or the fact it was granted. Moreover, this happened not just once, but two more times, during the almost three and one half years in which no effort was made to convert the well. In other words, Denbury's argument that the notice given in March 2008 was adequate assumes plaintiffs should have been constantly checking the NDIC docket during this time period. In short, not only might a jury reasonably conclude the March 2008 notice lacked probative force, it is on the borderline of having any relevance at all given its remoteness in time and the lack of any follow-on notices.
c. Plaintiffs' "continuing conduct/damage" argument
Finally, plaintiffs take the position that, even if the jury concludes notice was untimely with respect to the initial damage that occurred when salt water was first injected, the October 17, 2013 letter was timely notice for any damage that occurred beginning two years prior to the date of the letter. According to plaintiffs, this is because there has not been a single injury or one instance of damage. Rather, according to plaintiffs, the injury is continuing with the repeated injection of salt water because more pore space is being occupied and the capacity of the already-occupied pore space to hold more is being diminished.
Denbury, on the other hand, contends the purported injury is the injection of salt water into the pore space generally and that the obligation to provide notice is triggered with the first occurrence of damage. Here, both arguments are plausible given the statutory language of § 38-11.1-07: "Any person, to receive compensation, under sections 38-11.1-08 and 38-11.1-09, shall notify the mineral developer of the damages sustained by the person within two years after the injury occurs or would become apparent to a reasonable person."
While plaintiffs argue that this question can be resolved based on the statutory language alone, they suggest the North Dakota Supreme Court would look to its case law with respect to continuing conduct or damage - specifically those cases addressing continuing trespasses or nuisances, since, arguably, these are the most analogous given the nature of the claimed injury, even though what is at issue is a statutory claim for damages that presumes the mineral developer has the right to inflict the damage. Plaintiffs argue that the policy underlying continuing trespass/nuisance cases of allowing recovery for continuing acts would be applied by the North Dakota courts here to permit the statutory notice under § 38-11.1-07 to be given at any time, so long as the conduct giving rise to the injury is continuing and creating additional damage, but with right to recover compensation being limited to the damages occurring after the point in time beginning two years prior to when the notice is given.
Denbury disagrees, contending that the analogy to the continuing trespass/nuisance cases is not a good one. But, even if it is, Denbury argues that any injury resulting from its use of the pore space would be deemed "permanent" under the North Dakota cases that have rejected claims for continuing trespass on that ground. Denbury cites in particular to the North Dakota Supreme Court's decision in Hager v. City of Devils Lake, 2009 ND 180, 773 N.W.2d 420 ("Hager"). In that case, the North Dakota Supreme Court addressed whether the plaintiffs could bring successive actions for periodic flooding created by a "permanent storm sewer system which ha[d] been in place for nearly thirty years[.]" Id. at ¶ 23. The court concluded plaintiffs could not, distinguishing earlier cases that permitted or discussed the fact that, in some situations, successive actions can be brought for a continuing trespass, including Peacock v. Sundre, Twp., 373 N.W.2d 877, 879 (N.D. 1985) ("Peacock") ("The Peacocks accurately describe the general rule that recurring trespasses give rise to repeated actions to recover for successive actions.") and Rynestad v. Clemetson, 133 N.W.2d 559 (N.D. 1965) (permitting a successive action for injunctive relief ordering the closing of ditches that created repeated acts of flooding). The court stated in Hager:
[¶ 21] The Hagers contend that North Dakota law does not recognize the distinction between permanent and temporary injuries, and that Rynestad creates a bright-line rule that, no matter the nature of the cause of the diversion of water, each time water flows in an unnatural manner as a result of the actions of upstream landowners a new cause of action accrues and a new limitations period begins to run. The Hagers do not argue that the construction causing the discharge of storm water onto their land is not permanent, but claim the permanent nature of the structure is irrelevant under Rynestad. The Hagers assert that Rynestad applies to permanent obstructions because, in that case, "the Court ruled the statute of limitations starts over each time water flows through the improvements made by the defendants and onto the land of the plaintiff despite the fact the ditches and drains installed by the defendants were presumably permanent."
[¶ 22] The Hagers have misread Rynestad when they suggest the ditches and drains in that case were "presumably permanent." This Court never characterized the ditches as permanent, and in fact the Court expressly ordered that the ditches which had been constructed by neighboring landowners be filled, and that the ditches along the township roads be properly maintained, to allow water to follow its natural course of drainage. Rynestad, 133 N.W.2d at 566. When a plaintiff seeks injunctive relief and a writ of mandamus, and the court orders that the property be restored to its natural condition to allow the original, natural course of drainage, the improvements cannot be considered permanent. See 1 Dobbs, supra, § 5.11(2) ("[i]f the court has already compelled an abatement of the nuisance, it will be obvious that the nuisance is not a permanent one").
[¶ 23] In this case, the alleged dispersal of water upon the Hagers' property is caused by a permanent storm sewer system which has been in place for nearly thirty years and which was built at the Hagers' request. While it may be logical to allow recurring causes of action for temporary conditions which can be remedied or removed through injunctive relief, as in Rynestad, it would be wholly illogical to allow repeated causes of action when the instrumentality causing the flooding is a permanent structure which provides substantial, continuous benefits to the general public, as in this case. When the cause of the injury is a permanent structure and injunctive relief is not appropriate or practical, the injury gives rise to only one cause of action, not a series of actions. See 1 Dobbs, supra, § 5.11(1); 78 Am.Jur.2d Waters § 388 (2002). Furthermore, the Hagers' pleadings recognize the permanent nature of the alleged damage to their property, as evidenced by their allegation that the flooding has caused an actual physical taking of a part of the larger parcel. See Peacock, 372 N.W.2d at 879.
[¶ 24] We conclude that, when water is diverted onto property by construction or operation of a permanent structure, there is only one cause of action, successive suits may not be maintained, and the statute of limitations begins to run when harm first occurs. We therefore conclude that Rynestad does not apply in this case.
Hager, 2009 ND 180 at ¶¶ 21-24.
Hager, however, is distinguishable in several respects. For one thing, the trespasser in Hager built a sewer system and after that nature took its course. Here, the saltwater disposal well is not a permanent structure in the same sense since it can more readily be removed. Further, and more significantly, the mere existence of the saltwater disposal well does not create the invasion upon plaintiffs' subsurface; rather, it is the operation of the well, which can be stopped at any time. Also, Hager involved a case where the flooding, while intermittent and not always the same, was cabined in its scope by the maximum runoff that nature could produce. In this case, according to plaintiffs, the repeated injections of salt water are spreading its invasion into new pore space and diminishing the available capacity of that already occupied.
Denbury also argues that, notwithstanding the fact that the disposal of the salt water could be stopped at any time, plaintiffs have elected to treat the injury that they claim is occurring as permanent and cites to cases where the North Dakota Supreme Court has held or suggested that an election to treat the damages as permanent forecloses the right to bring successive actions for a continued trespass or nuisance. The problem with this is that it is not clear that plaintiffs have yet made an election. Further, even if they have, it is not clear whether that would foreclose the right to bring successive actions from that point forward or whether the election dates back to the time of first occurrence of injury, which may depend on what is claimed for past and future injury, how each is calculated, and whether any argument for treating possible future conduct or damages as permanent did not become viable until later. See Restatement (Second) Torts § 930 comment (1)(b) (1979) (suggesting that, in some cases, any election to treat the damages as permanent would operate prospectively only); cf. Peacock, 372 N.W.2d at 879. Denbury cites to Hager, where the North Dakota Supreme Court, after concluding that the trespass in that case was permanent, went on to state that the plaintiffs' pleadings "recognize[d] the permanent nature of the alleged damage to their property, as evidenced by their allegation that the flooding has caused an actual physical taking of a part of the larger parcel." 2009 ND 180, ¶ 23. This, however, may be nothing more than an observation confirming what the court had already concluded with respect to permanency and not a holding that an otherwise temporary trespass is made permanent ab initio by a later election to treat future damages as permanent.
In summary, the North Dakota Supreme Court has not addressed the question of permanency in the context of continued discharges of a polluting substance on or within land belonging to another that could be stopped at any time and that may be causing additional damage, which arguably provides the closest analogy to what is taking place here - if any analogy to the continuing trespass or nuisance doctrine is relevant.
At this point, the court will not decide whether plaintiffs' "continued conduct/new damages" argument for why their October 17, 2013, notice was timely for damage occurring after October 12, 2011, since the fact issues with respect to the timeliness of the plaintiffs' notice that the court has otherwise determined to exist are sufficient to resolve the pending motions. Further, the court believes it would be better to decide the issue with a more complete record that hopefully will address the actual mechanics of what takes place when the salt water is injected into the formation authorized by the NDIC.
6. Denbury's argument that the ch. 38-11.1 claim fails because plaintiffs have failed to demonstrate they have suffered actual damages
Denbury argues that ch. 38-11.1 requires proof of actual damages and that plaintiffs have not suffered any, particularly since they were not using the pore space for any purpose when Denbury began using it. In addition to relying upon the statutory language, which Denbury suggests requires proof of actual damage, Denbury points to the Eighth Circuit's decision in Murphy v. Amoco Production Co., 729 F.2d 552 (8th Cir. 1984), where the court stated in a footnote: "We emphasize that the statute in question neither requires a developer to pay for anything other than the actual damage to the surface estate which results from development, nor requires a developer to share any of the actual proceeds of mineral development with the surface owner." Id. at 555 n.3 (italics in original).
Plaintiffs disagree. They contend that the statement in Murphy was based upon an older version of ch. 38-11.1 that did not contain "lost use of and access to" as one of the listed items for which damages could be recovered, which was added to § 38-11.1-04 in 1983. Plaintiffs contend that, while lost agricultural production, lost land value, and lost value of improvements require a showing of actual damages under § 38-11.1-04, "lost use of and access to" is broader and injury can be inferred as it occurs without a showing of actual damages.
Unfortunately, not only are there no North Dakota cases addressing a statutory claim for damages for a mineral owner's use of pore space, the parties have been able to point to only one other case in the country that has addressed a similar claim, that being the previously referenced decision by the Montana Supreme Court in Burlington Resources, 2011 MT 199. In that case, plaintiff claimed he had suffered a loss by the mineral developer's use of the pore space underlying his property for the disposal of salt water even though he was not using it, and offered evidence of what other landowners were receiving for saltwater disposal as a matter of industry custom as proof of his damages. Id. at ¶¶ 5-6, 32. The Montana Supreme Court, while recognizing that a claim for "lost land value" under the Montana statute could encompass damages sustained by a surface owner for the use of the pore space, concluded that plaintiff's evidence was insufficient proof of any item of injury compensable under Montana's statute, including "lost land value." In relevant part, the court stated:
¶ 27 Lang argues first that SODDCA requires Burlington to pay a per barrel fee to dispose of wastewater into the pore space. SODDCA requires Burlington to pay Lang for "loss of agricultural production and income, lost land value, and lost value of improvements" caused by Burlington's oil and gas operations. Section 82-10-504(1)(a), MCA. The District Court determined that Lang had failed to provide evidence that Burlington's use of the pore space affected Lang's interest in the land value, agricultural production, or value to improvements, as set forth under SODDCA.
¶ 28 Lang conceded that use of the pore space in the Dakota and Swift Formations did not affect its agricultural production and income. Lang provided no evidence that injecting wastewater into the pore space lessened the value of the land. Lang admitted that it had not lost value in improvements to the land. Finally, Lang offered no evidence that the pore space underlying its land had been degraded, damaged, devalued, or otherwise consumed by Burlington's use of the pore space. The District Court correctly concluded that Lang had failed to offer evidence of separate compensable damages under the elements specifically enumerated in SODDCA.
¶ 29 Burlington hired George Luther to appraise damages to Lang's property. Luther has over 26 years of appraisal experience and has appraised over 1, 000 properties. Luther had never valued, or heard of any other appraiser valuing, pore space. Luther testified that no demonstrable market exists for pore space. Luther opined that Burlington's development activities of the pipeline and pumping station in 2008 had caused $5, 500 in SODDCA damages to the surface of Lang's property. Lang offered no separate expert appraisal of damages. Lang agreed that Luther's calculations constituted a fair estimate of lost land value under SODDCA.
¶ 30 Lang insisted, however, that § 82-10-501(2)(c), MCA, requires that a landowner be made whole for all impacts upon the surface estate. Section 82-10-501(2)(c), MCA, provides the purpose statement for SODDCA. It provides that "owners of the surface estate should be justly compensated for use of their property and interference with the use of their property due to oil and gas development." Section 82-10-501(2)(c), MCA. The District Court concluded that the more specific provision for damages at § 82-10-504(1)(a), MCA, controlled over the broad purpose statement in § 82-10-501, MCA.
¶ 31 We agree, in this instance, that Lang's broad "made whole" interpretation of § 82-10-501(2)(c), MCA, could render meaningless the more explicit provision of damages contained in § 82-10-504(1)(a), MCA. We recognize that the provision authorizing compensation for "lost land value" under § 82-10-504(1)(a), MCA, could encompass damage sustained by a surface estate owner for the use of pore space. Lang made no claim for "lost land value."
¶ 32 Lang instead claimed a right to separate compensation for Burlington's use of the pore space. Lang points to testimony from seven witnesses before the District Court who testified that other landowners have received a fee for wastewater disposal as a matter of industry custom. SODDCA sets forth no element of compensation to landowners for the use of pore space according to industry custom. SODDCA requires compensation only for "loss of agricultural production and income, lost land value, and lost value of improvements." Lang failed to offer evidence of losses to the surface estate compensable under SODDCA.
Burlington Resources, 2011 MT 199 at ¶¶ 27-32.
N.D.C.C. § 38-11.1-04 similarly allows a surface owner to recover for lost land value. And here, the North Dakota Supreme Court would likely conclude that plaintiffs can recover for lost land value resulting from Denbury's use of the pore space even though plaintiffs were not using it when Denbury commenced its use, as the Montana Supreme Court appears to have concluded Burlington Resources. In other words, one pathway for plaintiffs recovering for any lost potential for use of the pore space is evidence that the value of their tract has been diminished by Denbury's use of it.
Plaintiffs correctly point out that another compensable item of injury under § 38-11.1-04 is "lost use of and access to" their property, which, as noted by Burlington Resources, was not a listed item of compensable injury under Montana's statute. However, the court need not decide now what it might take to prove that Denbury's use of the pore space has resulted in lost use of or access to the pore space by plaintiffs or what evidence would be sufficient to prove damages if there has been such a loss. At this point, plaintiffs have not had an opportunity to fully develop their damage case and resolution of these issues would benefit from a more developed record. Also, since the possibility of being able to prove lost land value exists, this alone is sufficient to deny Denbury's present motion for summary judgment.
III. CONCLUSION AND ORDER
For the reasons set forth above, plaintiffs' motion for partial summary judgment (Docket Nos. 31 & 55) and defendants' motion for summary judgment (Docket No. 35) are DENIED.