CHAPTER 38-11.2 SUBSURFACE EXPLORATION DAMAGES 2

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38-11.2-01. Definitions

In this chapter, unless the context or subject matter otherwise requires: 1

"Agricultural production" means the production of any grass or crop attached to the surface of the land, whether or not the grass or crop is to be sold commercially, and the production of any farm animals, whether or not the animals are to be sold commercially

"Drilling operations" means the drilling of a subsurface mineral extraction well and the injection, production, and completion operations ensuing from the drilling which require entry upon the surface estate, and includes subsurface mineral exploration activities

"Mineral developer" means the person who acquires the mineral estate or lease for the purpose of extracting or using the subsurface minerals for nonagricultural purposes

"Mineral estate" means an estate in or ownership of all or part of the subsurface minerals underlying a specified tract of land

"Subsurface mineral" means any naturally occurring element or compound recovered under the provisions of chapter 38-12, but for the purpose of this chapter excludes coal, commercial leonardite, oil and gas, sand and gravel, and rocks crushed for sand and gravel

"Subsurface mineral exploration activities" means any method of obtaining information relative to locating and defining subsurface minerals that results in surface disturbance

"Surface estate" means an estate in or ownership of the surface of a particular tract of land

"Surface owner" means any person who holds record title to the surface of the land as an owner

38-11.2-02. Inspection of well site

Upon request of another state agency, the surface owner, or an adjacent landowner, the department of environmental quality shall conduct a site visit and evaluate site-specific environmental data as necessary to ensure compliance with applicable environmental protection laws and regulations relating to air, water, and land management under the jurisdiction of the department

38-11.2-03. Notice of drilling operations

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The mineral developer shall give the surface owner written notice of the drilling operations contemplated at least twenty days prior to the commencement of the operations, unless waived by agreement of both parties

This notice must be given to the record surface owner at that person's address as shown by the records of the county recorder at the time the notice is given

This notice must sufficiently disclose the plan of work and operations to enable the surface owner to evaluate the effect of drilling operations on the surface owner's use of the property. Included with this notice must be a copy of this chapter

If a mineral developer fails to give notice as provided under this section, the surface owner may seek any appropriate relief in the court of proper jurisdiction and may receive punitive as well as actual damages

38-11.2-04. Damage and disruption payments - Statute of limitations

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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 loss of agricultural production and income, 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 agreeable Page No. 1 2

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between the surface owner and the mineral developer. When determining damages, consideration must be given to the period of time during which the loss occurs

The surface owner may elect to be paid damages in annual installments over a period of time

The surface owner must be compensated for harm caused by subsurface mineral exploration only by a single sum payment

The payments contemplated by this section only cover land directly affected by drilling operations

Payments under this section are intended to compensate the surface owner for damage and disruption. Any reservation or assignment of such compensation apart from the surface estate except to a tenant of the surface estate is prohibited. In the absence of an agreement between the surface owner and a tenant as to the division of compensation payable under this section, the tenant is entitled to recover from the surface owner that portion of the compensation attributable to the tenant's share of the damages sustained

To receive compensation under this section, any person 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

38-11.2-05. Agreement - Offer of settlement

Unless both parties provide otherwise by written agreement, the mineral developer shall make a written offer of settlement to the person seeking compensation for damages when the notice required by section 38-11.2-03 is presented. The person seeking compensation may accept or reject any offer so made

38-11.2-06. Rejection - Legal action - Fees and costs

If the person seeking compensation rejects the offer of the mineral developer, that person may bring an action for compensation in the court of proper jurisdiction. The court, in its discretion, may award the person seeking compensation reasonable attorney's fees, any costs assessed by the court, and interest on the amount of the final compensation awarded by the court from the day drilling operations are commenced. The rate of interest awarded must be the prime rate charged by the Bank of North Dakota on the date of the judgment

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38-11.2-07. Protection of surface and ground water - Other responsibilities of mineral 1

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The mineral developer shall conduct or have conducted an inventory of water wells located within one-half mile [804.67 meters] of where subsurface mineral exploration activities are conducted, if such exploration activities appear reasonably likely to encounter ground water, or within one mile [1.61 kilometers] of a subsurface mineral production site

The mineral developer shall conduct or have conducted a certified water quality and quantity test within one year preceding the commencement of subsurface mineral production operations on each water well or water supply located on the involved real property and as identified by the surface owner of that real property. Results of water quality tests conducted under this subsection must be reported in a prescribed format to the department of environmental quality, which shall maintain a database of the results. The water quality test must be collected as prescribed by the department of environmental quality and analyzed by a state-certified laboratory

If the domestic, livestock, or irrigation water supply of any person who owns an interest in real property within one-half mile [804.67 meters] of where subsurface mineral exploration activities are or have been conducted or within one mile [1.61 kilometers] of a subsurface mineral production site has been disrupted, or diminished in quality or quantity by the drilling operations, the person who owns an interest in real property is entitled to recover the cost of making such repairs, alterations, or construction that will Page No. 2 4

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ensure the delivery to the surface owner of that quality and quantity of water available to the surface owner prior to the commencement of drilling operations

Any person who owns an interest in real property who obtains all or a part of that person's water supply for domestic, agricultural, industrial, or other beneficial use has a claim for relief against a mineral developer to recover damages for disruption or diminution in quality or quantity of that person's water supply proximately caused from drilling operations conducted by the mineral developer

Prima facie evidence of injury under this section may be established by a showing that the mineral developer's drilling operations penetrated or disrupted an aquifer in such a manner as to cause a diminution in water quality or quantity within the distance limits imposed by this section, or by showing the mineral developer did not conduct or have conducted the testing required under subsection 2

If a person refuses to consent to the testing of a water well or water supply on land owned by the person, as required under subsection 2, the person forfeits any claim for relief under subsection 3 or 4

An action brought under this section when not otherwise specifically provided by law must be brought within six years of the time the action has accrued. For purposes of this section, the claim for relief is deemed to have accrued at the time it is discovered or might have been discovered in the exercise of reasonable diligence

A tract of land is not bound to receive water contaminated by drilling operations on another tract of land and the owner of a tract has a claim for relief against a mineral developer to recover the damages proximately resulting from natural drainage of waters contaminated by drilling operations

The mineral developer is also responsible for all damages to person or property resulting from the lack of ordinary care by the mineral developer or resulting from a nuisance caused by drilling operations

This section does not create a cause of action if an appropriator of water can reasonably acquire the water under the changed conditions and if the changed conditions are a result of the legal appropriation of water by the mineral developer

38-11.2-08. Application of chapter

The remedies provided by this chapter do not preclude any person from seeking other remedies allowed by law. This chapter does not apply to the operation, maintenance, or use of a motor vehicle upon the highways of this state as these terms are defined in section 39-01-01

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