A landowner group's legal challenge to how North Dakota officials permit carbon storage projects was shot down in state court Tuesday over procedural issues.
Northeast DistrictJudge Anthony Swain Benson in Bottineau County mainly ruled that since the suit was filed years after a number of the storage laws were passed by the state Legislature, the statute of limitations prevented a "facial" challenge to them. A facial challenge is to the law itself.
The court did not rule on the merits of the arguments, leaving open the possibility of "as applied" challenges to specific carbon storage projects from individual landowners.
Northwest Landowners Association sued the state Industrial Commission last year over its use of a technical process called "amalgamation." The three-member Industrial Commission is made up of the governor, the attorney general and the agricultural commissioner, who give the final go-ahead on decisions made by the state Department of Mineral Resources.
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Carbon storage requires access to small cavities below the ground called pore space, the part of the subsurface that is porous enough for liquid and gas to flow through. Amalgamation is the process of requiring pore space owned by those who did not accept easem*nts to be included in the storage facility.
North Dakota law says for amalgamation to occur, owners of at least 60% of the pore space in a storage facility must consent to easem*nts and the storage facility operator must make a “good-faith effort” to get the consent of all landowners. Those who do not sign easem*nts are to be “equitably compensated.”
The landowners group -- which was joined by the North Dakota Farm Bureau -- argues that the practice of permitting the property of non-consenting landowners for carbon storage constitutes a taking of land. When the state takes -- or allows a company to take -- private land after it cannot obtain voluntary easem*nts, it must file eminent domain proceedings against landowners where a court determines what "just" compensation would look like, and sometimes if the taking constitutes a "public use." The latter is less common.
By amalgamating pore space without filing eminent domain proceedings, the state is violating the constitution, the landowner group argues.
Amalgamation has been used numerous times over the past few years as the state has permitted a growing number of carbon storage facilities. Summit Carbon Solutions, Minnkota Power Cooperative and Basin Electric Power Cooperative intervened in the case on the side of the state; all of those companies have ongoing or planned carbon storage projects.
Defenders of the amalgamation law argue pore space should be viewed as a resource similar to oil and gas, which the state can "pool" or combine interests to allow for drilling when there is not 100% approval from mineral owners within an oil well's spacing unit. They also point to the relatively large chunks of pore space -- sometimes exceeding 90% -- that companies have obtained with voluntary contracts.
Carbon capture and storage is a key initiative of both the state and federal governments. The relatively nascent practice prevents CO2 emissions from entering the atmosphere and contributing to climate change. The infrastructure for it could also set the stage for using CO2 in enhanced oil recovery, a practice needed to keep high oil production in North Dakota's Bakken oilfields long-term. The landowner group has said it is not opposed to carbon storage projects, just how the state permits them.
Derrick Braaten, the Northwest Landowner's attorney, said the group may appeal the Bottineau County decision, though he said going the "as applied" route with a direct challenge to a specific project is more likely.
Members of the group are contesting Summit's storage permits which are in front of the Department of Mineral Resources. If the state ultimately permits those and amalgamates the pore space, a legal challenge likely will follow, according to Braaten.
"The unfortunate part in this is it actually creates more uncertainty for both the landowners and the companies," he said.
The Industrial Commission and the Department of Mineral Resources declined to comment. Neither Minnkota nor Basin provided immediate comment.
Attorney General Drew Wrigley in a statement called the decision "a positive victory for the vast majority of landowners in North Dakota who recognize that our state is on the cutting edge of developing pore space reservoirs for CO2 storage, producing significant additional income for property owners.”
Summit in a statement said the company "acknowledges the court’s decision and remains focused on the next steps in permitting. With 93% of landowners voluntarily signing leases, we believe this project will positively impact the future of agriculture and energy across the United States, opening new markets and creating opportunities for farmers.”
The same landowners group found success in 2022 at the North Dakota Supreme Court in another lawsuit regarding pore space. The suit concerned provisions in Senate Bill 2344 from 2019. The bill excluded landowners without a preexisting contract from compensation if their pore space was used for saltwater disposal or enhanced oil recovery.
Braaten said the association’s lawsuit contained similar legal reasoning to its previous case.
Reach Joey Harris at 701-250-8252 or joseph.harris@bismarcktribune.com.
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JOEY HARRIS
Energy/Environment Reporter
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