Court Opinion

ID: 9823732
Source: CourtListenerOpinion
Date Created: 2023-09-01 10:08:44.325341+00
Date Added: 2024-06-11T07:39:25.913817
License: Public Domain

VANDE WALLE, Chief Justice,
concurring in the result.
[¶ 45] ' I concur in the result reached -by the majority opinion. I concur because of the ñatee of the pleadings in this case and the analysis of whether or not a statute requires exhaustion of administrative remedies and whether or not it creates a private cause of action. However, I am concerned with the precedent this opinion,-if read too broadly, may establish for future cases with differently pled facts or different issues, and I write separately to outline those concerns.
[¶ 46] Ordinarily, the obligation for the lessee to pay the lessor royalties is a matter of contract between the lessor and the lessee of the mineral interest, not a matter of statute. See N.D.C.C. § 47-16-89.1 (“The obligation arising under an oil and gas lease to pay oil or gas royalties to the mineral owner ... is of the essence in the lease contract, ... ”). To that extent, N.D.C.C. § 38-08-06.4 may be read, as we read it in this opinion, to simply create another means by which a lessor may be reimbursed for the nonpayment of royalties for gas produced on the leased premises, in which case the doctrine of exhaustion of remedies applies." That reading also raises the issue ,of whether or not the statute, creates a private cause of action for violation of the statute. Or, the statute might be construed to impose restrictions on the rights of the lessor under the lease relationship. In any event, I believe the statutes should be strictly construed to minimize, the interference with that relationship.-
■ [¶ 47] However, the complaint does not allege, and wé do not know, whether Marathon Oil is -the .lessee of the plaintiffs mineral interest' or merely the operator of the well for the lessee of the plaintiffs mineral interest. ' We also do not know whether or not the lessee is obligated under the lease to pay royalties on the flared gas or whether the lease provisions relieve the lessee of the obligation, if a statute or regulation allows such flaring. If, but for § 38-08-06.4, an obligation exists to pay royalties under the lease, I would not construe that section to limit the remedies of the lessor by requiring an exhaustion of administrative^ remedies or to deny a private cause of action for violation of. either the statute or the lease.' Rather, I would construe the statute to provide an additional remedy to the lessor. For example, under N.D.C.C. § 12.1-32-02, a defendant convicted in a criminal.action may be required to. pay restitution for damages or restore damaged property in the criminal action, but we have never held that the victim must first seek damages ,in the criminal proceeding before bringing a civil action to recover those damages.
[¶ 48] A second and related concern is subsection 5 of N.D.C.C. § 38-08-06.4, which states: “The industrial commission may enforce this section and, for each well operator found to be in violation of this *486section, may determine the value of flared gas for purposes of payment of royalties under this section and its determination is final.” (Emphasis added).
[¶ 49] Final as to what? The decision to enforce the section or the value of the flared gas for the purpose of the payment of royalties or both? The majority opinion does not tell us. Furthermore, the majority opinion, citing to N.D.C.C. §§ 38-08-13 and 38-08-14 suggests that the Industrial Commission’s decision to enforce or not enforce the provision is appealable. I am not entirely convinced. In the first instance the statute says the Industrial Commission “may enforce” and it also says “its determination is final.” Read together it might be said this is not a case in which the lessor may seek enforcement and the payment of royalties through the Industrial Commission and, after exhausting the administrative remedies, if the Commission does not enforce the statute and the payment of royalties, the lessor may bring a private action or at least appeal the Commission’s decision. Rather, the statute could be read to mean that the Commission alone makes the final determination as to whether or not to enforce the section as well as to the value of the royalty payment if it determines to enforce the section. To that extent it heightens my concern about the potential interference with the rights of the lessor under the lease and I would caution against a reading of the opinion to conclude that a lessor’s exclusive remedy is through the Industrial Commission.
[¶ 50] Although it may be argued that these are issues which, if raised, will be decided in future cases, I am troubled that our decision today will be cited as the basis for the position that N.D.C.C. § 38-08-06.4(5) is the exclusive remedy for lessors or, at the very least, the portal through which all lessors must pass before being allowed to bring a private cause of action against the lessee for royalties for flared gas under their leases. It should not be cited for that position.
[¶ 51] GERALD W. VANDE WALLE, C.J.