AN ACT to create and enact a new section to chapter 38-11.1 of the North Dakota Century Code, relating to pretrial appraisals; and to amend and reenact section 38-11.1-09 of the North Dakota Century Code, relating to the recovery of attorney's fees in an action relating to oil and gas production.
SB2335 changes North Dakota’s surface-damage compensation process in oil and gas drilling cases by requiring a pretrial appraisal before a compensation lawsuit may be filed. A person seeking compensation for affected surface land must first obtain a written appraisal from a qualified appraiser covering all parcels affected or foreseeably affected by drilling operations, and must provide that appraisal to the mineral developer before a court can take jurisdiction over the action. After receiving the appraisal, the mineral developer may make a new settlement offer within 30 days, and that new offer becomes the offer used for purposes of the existing compensation statute.
The bill also requires the mineral developer to pay the reasonable actual cost of the appraisal, either by reimbursing the surface owner or paying the appraiser directly at the owner’s election. It further provides that the required appraisal, or the value opinion in it, is generally inadmissible in the compensation proceeding unless offered by the surface owner, while preserving the ability to introduce other evidence. In addition, the bill amends the attorney-fee provision in section 38-11.1-09 so that if a court awards more compensation than the mineral developer offered, the court must award reasonable attorney’s fees, costs, disbursements, and interest from the start of drilling, with interest tied to the Bank of North Dakota prime rate on the judgment date.
The bill adds a new procedural prerequisite to compensation actions under chapter 38-11.1, which governs surface-owner claims arising from oil and gas drilling. It affects surface owners, mineral developers, appraisers, and courts by requiring an appraisal before litigation can begin, shifting appraisal costs to the mineral developer, and limiting the admissibility of the appraisal in later proceedings. It also reinforces and clarifies the fee-shifting and interest rules in compensation disputes when the court award exceeds the developer’s offer.
The bill appears to have been broadly supported and noncontroversial in the recorded votes, passing the Senate 47-0 and the House 92-0 with only a small number of absences. The available record contains no committee transcripts or recorded debate, so there is no documented opposition in the materials provided. The unanimous votes suggest general agreement that the bill was a procedural refinement to the existing surface-damage compensation framework rather than a major policy shift.
The main potential point of contention is the new pre-suit appraisal requirement, which could be viewed by surface owners as an added hurdle before they can access court, even though the bill also requires the mineral developer to pay the appraisal cost. Mineral developers may favor the bill because it creates an early valuation step and an opportunity to renew settlement offers, while surface owners may be concerned about delay, litigation prerequisites, or the strategic use of appraisals. The bill’s exclusion of the appraisal from evidence, except when offered by the surface owner, also suggests an effort to balance those interests and reduce disputes over the appraisal’s influence at trial.