STATE OF NORTH DAKOTA ATTORNEY GENERAL'S OPINION 88-23

STATE OF NORTH DAKOTA
ATTORNEY GENERAL'S OPINION 88-23
Date issued: October 3, 1988
Requested by: James E. Sperry, Superintendent
State Historical Society
- QUESTIONS PRESENTED -
I.
Whether N.D.C.C. § 55-02-07, providing for the preservation of historical,
archeological, and paleontological artifacts and sites, applies to tracts of
land in which the Board of University and School Lands owns only a mineral
estate.
II.
Whether compliance with N.D.C.C.  § 55-02-07 requires the Board of University
and School Lands and political subdivisions of the state to include in their
oil and gas leases a provision retaining ownership of historical,
archeological, and paleontological artifacts and sites.
III.
Whether the Board of University and School Lands may  deal with historical,
archeological, paleontological artifacts and sites without supervision of the
State Historical Board.
- ATTORNEY GENERAL'S OPINION -
I.
It is my opinion that N.D.C.C.  § 55-02-07, providing for the preservation of
historical, archeological, and paleontological artifacts and sites, may, under
certain circumstances, apply to tracts of land in which the Board of
University and School Lands owns only a mineral estate.
II.
It is my further opinion that although N.D.C.C.  § 55-02-07 does not require
the Board of University and School Lands and political subdivisions of the
state to include in their oil and gas leases a provision retaining ownerships
of historical,archeological, and paleontological artifacts and sites, N.D.C.C. § 55-03-06 does require that a similar provision be included.
III.
It is my further opinion that the Board of University and School Lands may
deal with historical, archeological, paleontological artifacts and sites
without supervision of the State Historical Board when such supervision would
conflict with the Land Board's fiduciary responsibilities to trust property.
- ANALYSES -
I.
The first sentence of N.D.C.C. § 55-02-07 states as follows:
Any historical, archaeological, or paleontological artifact or
site that is found or located upon any land owned by the state of
North Dakota or its political subdivisions or otherwise comes into
its custody or possession and which is, in the opinion of the
superintendent, significant in understanding and interpreting the
history and prehistory of the state, shall not be destroyed,
defaced, altered, removed, or otherwise disposed of in any manner
without the approval of the state historical board.
Ownership of land carries with it title to all things on and under the land.
N.D.C.C.  § 47-01-12.  Thus, if the state owns fee title, it also owns
artifacts and sites that lay upon or under the surface.  The purpose of
N.D.C.C.  § 55-02-07 is to regulate this ownership.  Any mineral interest the
state may have in a tract does not include title to any artifacts or sites
that are part of that tract.  Therefore, application to N.D.C.C. § 55-02-07 to
land in which the state owns only minerals is beyond the statute's purpose of
regulating government-owned artifacts and sites.
However, where the state owns only the minerals of a tract it may at one time
have owned the surface.  Indeed, it is likely that most of such mineral
ownership is the result of reserving minerals upon sale of the surface.  Since
1939 a statute has provided that  upon transfer of state land, the state
retains title to historical materials. The original law said that in such
transfers "title to any and all archeological materials, whether such material
are found upon the surface or below the surface of such land, shall be
retained by the state."  1939 N.D. Sess Laws ch. 223, § 6.  In 1965 the
statute was revised to also include retention of title to paleontological
materials.  1965 N.D. Sess. Laws ch. 379, § 24.  Presently, the law is
codified at N.D.C.C. § 55-03-06.
The significance of this statute for the present inquiry is that the state may
own the archeological and paleontological materials on a tract of land even
though mineral ownership is its only other property right.  In such a
circumstance, N.D.C.C.  § 55-02-07 places such historical materials under the Historical Board's supervision.  N.D.C.C.  ' 55-02-07 not only give the Board
supervision over historical objects found on state-owned land, but also over
such objects that otherwise come into the state's custody or possession.  (The
extent of the Historical Board's supervision vis-a-vis historical objects on
lands controlled by the Board of University and School Lands is discussed in
Section III of this opinion.)
In summary, where the state's property interest in a tract is confined to
minerals, N.D.C.C.  § 55-02-07 does not apply.  Where the property interest
also includes archeological and paleontological materials, § 55-02-07 does
apply, subject to the limitations described below in section III.
II.
Nothing in N.D.C.C.  § 55-02-07, either explicitly or implicitly, requires a
government body to include in its oil and gas leases a  provision retaining
ownership of historical, archeological, and paleontological artifacts and
sites.  The statute only defines the  State Historical Board's authority over
such government-owned materials.  N.D.C.C.  § 55-03-06, however, does require
governmental bodies to retain ownership of archeological and paleontological
materials.  Thus, it is this statute, not N.D.C.C.  § 55-02-07, that requires
the Board of University and School Lands and political subdivisions to include
in their oil and gas leases a provision retaining ownership of certain
historical materials.
III.
The State Historical Board is given authority to regulate historical,
archeological, and paleontological artifacts and sites.  N.D.C.C.  § 55-02-07.
 The Historical Board also has significant authority over areas of historical
and archeological value that are listed in the state historical sites
registry.  N.D.C.C.  §§ 55-10-02, 55-10-08(2).  Such artifacts and sites may
exist on lands originally granted to North Dakota by the United States.
Before answering the question whether such lands are subject to the State
Historical Board's regulatory authority, it is necessary to set forth the
unique legal principles that apply to these lands.
Original grant lands were given in trust for the benefit of the  state's
schools and certain specified state institutions.  The terms under which North
Dakota received these lands are set forth in the Enabling Act, 25 Stat. 676
(1889),  reprinted in 13 N.D.C.C. 63.  Section 10 of the Act states that the
lands are granted "for the support of common schools."  Section 11 provides
that the lands "shall be reserved for the purposes for which  they have been
granted."  Section 17 makes a land grant for certain educational,
institutional, and charitable purposes and states that such lands "shall be
held, appropriated, and disposed of exclusively for the purposes herein
mentioned, in such manner as the legislatures of the respective states may
severally provided."
North Dakota's acceptance of the grants was made "under the conditions and
limitations" of the Enabling Act.  N.D. Const. art. XIII, § 3.  See also State v. Towner County, 283 N.W. 63, 65 (N.D. 1938).  Thus, the state agreed to hold
title to these lands as trustee to fulfill the purposes of the grant.  State
v. McMillan, 96 N.W. 310, 315 (N.D. 1903).  These purposes, as is apparent
from the language quoted above from the Enabling Act,  express the
congressional intent to establish a trust "to be held and administered by the
states under trust covenants for the perpetual benefit of the public schools
systems."  State of Utah, etc. v. Kleppe, 586 F.2d 756, 758 (10th Cir. 1978),
rev'd on other grounds sub nom. Andrus v. Utah, 446 U.S. 500 (1980).
Furthermore, North Dakota's constitution makes it clear that the original
grant lands are only to be used for support of the common schools.  N.D.
Const. art. IX, §§ 1, 2.
It is true that sections  3 and 5 of North Dakota Constitution article IX
provide that the trust is subject to laws enacted by the Legislature.
Similarly, the North Dakota Supreme Court has said that throughout the state's
history "it has been the legislative policy to control the . . .[land] board."
State v. Hanson, 256 N.W. 201, 204 (N.D. 1934).  But such constitutional
language and judicial comment do not give the Legislature carte blanche to do
what it wishes with the school trust.  Were it otherwise, "then a potentially
self-defeating incompatibility exists between the stated purpose and
objectives of the trust on the one hand, and the alleged unbridled authority
granted the State Legislature to defeat the strategy by means of creative
rules and regulations on the other hand."  Oklahoma Ed. Ass'n, Inc. v. Nigh,
642 P.2d 230, 237 (Okla. 1982).   See also Fox v. Kniep, 260 N.W.2d 371, 374
(S.D. 1977),  cert. denied, 436 U.S. 918 (1978);  State v. Reynolds, 378 P.2d
622, 627 (N.M. 1963).
The North Dakota Supreme Court has indirectly said the same thing.  "The
provision in [art. IX, § 3] of the Constitution, giving to the board the power
'to direct the investment of the funds' subject to 'any law that may be passed
by the legislative assembly,' contemplates legislative control of the  school
funds within the limits of the Constitution."   State v. Hanson, 256 N.W. at
204.  The phrase "within the limits of the Constitution" is significant.  It
qualifies the legislature's authority.  It requires that legislation be
compatible with the Lands Board's fiduciary duties.   See also State Highway
Commission v. State, 297 N.W. 194, 195 (N.D. 1941);  State v. Towner County,
283 N.W. 63, 66 (N.D. 1938);  State ex rel Sathre v. Bd. of Univ. and School
Lands, 262 N.W. 60, 65-66 (N.D. 1935) (any diversion of the trust's principal,
interest, or income to purposes other than those for which the land grants
were made is unconstitutional);  State Bd. of Educational Lands and Funds v.
Jarchow, 362 N.W.2d 19, 26 (Neb. 1985) (the legislature is without power to
bestow a special benefit upon any public or private entity at the expense of
the beneficiary, the public school system of the state).
It is clear that school lands have a unique status in North Dakota law.
"These lands are to be administered by the state for the sole interest of the
trust beneficiaries. . . . We find nothing in either the Enabling Act or the
constitution of this state granting an exception to this protection when trust
lands are to be used for a public purpose no matter how meritorious the
purpose."  1986 N.D. Op. Att'y Gen. 18, 21.  See also Gladden Farms, Inc. v.
State, 633 P.2d 325, 330 (Ariz. 1981) ("The Enabling Act does not allow trust lands to be used for the purpose of subsidizing public programs no matter how
meritorious the programs").
In light of these principles, does the State Historical Board's authority take
precedence over the purposes for which the Land Board administers school
lands.  An Attorney General's opinion, a North Dakota Supreme Court decision,
and a United States Supreme Court decision, are helpful in answering this
question.
A 1986 Attorney General's opinion considered N.D.C.C. § 61-24.3-03.  This
statute was enacted to further construction of the Southwest Pipeline Project
by the State Water Commission.  The statute states that a "right of way is
hereby given, dedicated, and set apart, to locate, construct, and maintain
such works over and through any of the lands which are or may be property of
the state."  I was asked whether this statute authorized the Water Commission
to acquire without compensation a pipeline right of way over original grant
lands.  Interpreting the statute in light of the purposes for which school
lands are held, I concluded that the Water Commission does not have the
authority to acquire a right of way over such lands without compensation.
1986 N.D. Op. Att'y Gen. Op. 18, 21-22.
The relevant Supreme Court decision,  State Highway Comm'n v. State, 297 N.W.
194 (N.D. 1941), concerned a statute that gave the Highway Commissioner the
right to acquire by eminent domain land needed for construction of state
highways.  The statute provided that if the commissioner could not buy the
land through negotiation, the land could be condemned in a proceeding brought
before the county commissioners.  The question was whether the condemnation
statute applied to school lands.  The court stated that the constitution sets
forth the only manner for disposal.  The court held that because of the
statute's inconsistency with the constitution and Enabling Act, it was not
applicable to school lands.  Id. at 197.
There is a clear analogy between the scope of the Historical Board's authority
over school lands and the circumstances giving rise to the Attorney General's
Opinion and the Supreme Court decision.  Each situation involves a broadly
written statute that seemingly gives an agency authority over school lands.
But as the opinion and decision make clear, such authority must be read in
light of the constitutional mandate that school lands are held in trust for a
special purpose, and this purpose is paramount.
In  Lassen v. Arizona Highway Dep't 385 U.S. 458 (1967), the United States
Supreme Court addressed an issue similar to that analyzed by the North Dakota
Supreme Court in  State Highway Comm'n v. State.  In Lassen the Supreme Court
considered the Arizona Land Commissioner's rule governing acquisition of
highway rights of way upon trust lands.  The rule restated a provision in
Arizona's Enabling Act requiring full payment of the appraised value of land
to be granted.   Id. at 460, 472.  The Arizona Supreme Court found that the
actual value of areas taken need not be paid.  Id.  The United States Supreme
Court, however, after noting the special purposes to which trust lands are
dedicated, asked whether these purposes could be disregarded in favor of other
important public activities.  Id. at 468.  The court answered that the trust's beneficiaries are entitled to the full benefit of the grant and, thus, all
acquisitions  -- even those by the state itself for other public purposes and
even though less than a fee interest is sought  -- must comply with the Land
Commissioner's rule that full compensation be paid.
While N.D.C.C.  § 55-02-07 applies to historical, archeological, and
paleontological artifacts and sites on school lands, the authorities discussed
above make clear that situations may occur that prohibit or limit this
statute's application.  These instances occur when application of the statute
is incompatible with the trust and the Land Board's fiduciary responsibilities
to the trust.  Since "the honor of the state was pledged to the observance of
the obligation of the trust," State v. McMillan, 96 N.W. 310, 315 (N.D. 1903),
subjecting the trust, in instances of incompatibility, to purposes for which
the Historical Board was established would violate this pledge.
The Legislature has made clear that historical, archaeological, and
paleontological artifacts or sites are valuable assets that require
protection.  The Historical Board is the guardian of these assets.  When the
Historical Board's authority is compatible with the Land Board's fiduciary
duties, the Land Board must recognize the Historical Board's authority under
N.D.C.C. ' 55-02-07.  Should an incompatibility occur, however, the Land Board
is not subject to the statute.  But even in these cases, the Land Board, to
carry out the legislature's wish to protect artifacts and sites, should do
whatever its fiduciary responsibilities allow.
There is a way to find the statute applicable to the Land Board in all
situations.  This would require the Historical Board to compensate the Land
Board for any loss incurred by the trust due to the Historical Board's
exercise of authority under N.D.C.C. title 55.  See Andrus v. Utah, 446 U.S.
500, 524 (1980) (Powell, J., dissenting) ("no State could divert school lands
to other public uses without compensating the trust for the full market value
of the interest taken").
Over 90% of the land managed by the Land Board is original grant land.  The
remaining land is acquired land.  "Acquired lands are those which were not
originally granted by the North Dakota Enabling Act as school or institutional
lands but have since been acquired by the various school and institutional
trusts."  1986 N.D. Op. Att'y Gen. 18, 25.  Despite their different origin,
acquired lands are part of the fund dedicated to the maintenance of state
schools.  N.D. Const. art. IX, '' 1, 2.  Therefore, the analysis of the
application of N.D.C.C.  § 55-02-07 to original grant lands also applies to
acquired lands.
Though state school and acquired lands may not always be subject to the
Historical Board's regulatory authority, it has been the policy of the Land
Board to cooperate with the Historical Board for the protection of historical,
archeological, and Paleontological artifacts and sites.  As a member of the
Land Board, I will encourage continuation of this policy.
- EFFECT -This opinion is issued pursuant to N.D.C.C. § 54-12-01.  It governs the
actions of public officials until such time as the question presented is
decided by the courts.

Nicholas J. Spaeth
Attorney General
Assisted by: Charles Carvell
Assistant Attorney General