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Mosser v. Denbury Resources, Inc.

United States District Court, D. North Dakota

November 18, 2016

Randall Mosser, Douglas Mosser, Marilyn Koon, and Jayne Harkin, Plaintiffs,
v.
Denbury Resources, Inc. and Denbury Onshore, LLC, Defendants.

          REQUEST FOR ANSWERS TO CERTIFIED QUESTIONS AND ORDER FOR TRANSMITTAL TO THE NORTH DAKOTA SUPREME COURT

          Charles S. Miller, Jr., Magistrate Judge United States District Court

         I. CERTIFIED QUESTIONS

         Pursuant to N.D. R. App. P. 47, the United States District Court for the District of North Dakota respectfully requests that the North Dakota Supreme Court answer the following questions that have arisen in this action between plaintiffs and defendants (collectively “Denbury”):

1. In North Dakota, does the owner of the surface estate own the pore space deep below the surface, absent some conveyance of the pore space to a third party and even when the mineral estate has been severed from the surface estate?
2. If the answer to the first certified question is yes, do the provisions of N.D.C.C. § 38-11.1-04 that require compensation be paid to a surface owner for “lost land value” and “lost use of and access to” a surface owner's land extend to a mineral developer's use of the subsurface pore space for the disposal of saltwater generated as a result of drilling operations?
3. If the answer to the second certified question is yes, is the ability to recover damages under N.D.C.C. § 38-11.1-04 limited to when the surface owner is currently using the pore space or when there is evidence that the surface owner is likely to make use of the pore space within the reasonably near future, either by personally using it or leasing it to another?
4. Are damages under N.D.C.C. § 38-11.1-04 for a mineral developer's use of subsurface pore space for disposal of saltwater recoverable only if the surface owner can prove a diminution in the market value of the affected property?
5. In order to recover damages for a mineral developer's use of subsurface pore space for the disposal of saltwater under N.D.C.C. § 38-11.1-04, must the surface owner prove some damage other than the mere occupancy or loss of access to the pore space, e.g., an interference with the surface owner's actual use of the pore space or a concrete plan to do so in the reasonably near future or evidence of diminution in the market value of the property affected by the saltwater disposal?
6. Can a surface owner recover damages under N.D.C.C. § 38-11.1-04 for a mineral developer's use of the surface owner's pore space for the disposal of saltwater when the only evidence upon which to calculate damages is: (1) proof of what is being paid to other surface owners for the use of their pore space for the disposal of saltwater on a per barrel basis (assuming the third party transactions being relied upon are "arms length" and fairly comparable); and (2) evidence of the number of barrels of injected saltwater that, more likely than not, is occupying the surface owner's pore space?
7. If a surface owner can recover damages under N.D.C.C. § 38-11.1-04 for a mineral developer's use of the surface owner's subsurface pore space based on an amount per barrel for barrels of saltwater injected into the subsurface, can the surface owner in the same action recover additional damages based on an estimate of how many more barrels of saltwater could be injected into the pore space if the surface owner is able to prove, more likely than not: (1) the mineral developer's disposal of saltwater has foreclosed the ability of the surface owner to make use of the remaining capacity in the formation into which the saltwater is being injected; and (2) the remaining capacity of the formation into which the saltwater is being injected?

         II. STATEMENT OF FACTS

         Unless otherwise indicated, the following facts are uncontested. Additional background information is set forth in Mosser v. Denbury Resources, Inc., 112 F.Supp.3d 906 (D.N.D. 2015) (“Mosser”).

         A. Plaintiffs' interests as burdened by the Mosser Lease

         Plaintiffs are the owners of the surface estate only in the following described quarter section of land located in Billings County, North Dakota:

Township 141 North, Range 101 West
Section 26: NW¼

         When plaintiffs acquired their interest, it was already burdened by an oil and gas lease dated November 28, 1977 (the “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:

         Township 141 North, Range 101 West

Section 17: All
Section 20: S½N½, SE¼
Section 21: S½
Section 22: S½
Section 25: All
Section 26: All
Section 27: All

         The Mosser Lease remains in effect because of continuous production of oil and gas from wells located on the leased acreage.

         B. Unitization of the lessee's rights in the Mosser Lease with other interests

         By an order 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:

         Township 141 North, Range 101 West

Section 10: All
Section 11: All
Section 12: All
Section 13: W½, NW¼NE¼
Section 14: All
Section 15: All
Section 16: All
Section 21: All
Section 22: All
Section 23: All
Section 24: NW¼NW¼
Section 25: W½
Section 26: All
Section 27: All Denbury is the current operator of ...

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