Dispute between state, landowners over 'pore space' law reaches North Dakota Supreme Court - INFORUM

BISMARCK — North Dakota’s highest court heard arguments Thursday, March 24, in a dispute over the constitutionality of an oil industry-backed law governing the use of underground rock cavities, an esoteric legal arena of increasing consequence to the state’s landowners and energy companies.

The appeal before the North Dakota Supreme Court concerns a 2019 law governing these subterranean cavities, known as “pore space,” which a district court judge struck down last year . Northeast District Judge Anthony Benson ruled the bill violated both the state and U.S. constitutions by allowing oil and gas companies to enact a “taking” of private property from landowners “for free, under the guise of the North Dakota Industrial Commission,” the three-member panel charged with regulating the state’s energy industries.

The state and Continental Resources, an oil company that intervened in the lawsuit, appealed Benson’s ruling to the North Dakota Supreme Court last spring and are seeking to have the law reinstated. Meanwhile, the Northwest Landowners Association, which successfully sued the state over the legislation, is asking the justices to uphold the lower court’s decision and keep the law off the books.

Senate Bill 2344 , which was backed by the North Dakota oil industry and signed into law by Gov. Doug Burgum during the 2019 legislative session, looked to clarify laws around the use of pore space.

The underground cavities can be used for the disposal of salt water, one of the oil field's biggest waste problems, or for the injection of carbon dioxide to juice production from declining oil wells. Under the law, which declared such uses of pore space “in the public interest,” some landowners could not receive compensation for the industry's use of their underground property, nor could adjacent landowners make claims that the stored substances had migrated underneath their land.

In briefs before the high court, state attorneys noted the Northwest Landowners’ argument for the complete overturning of the pore space law “carries an extremely heavy burden.”

North Dakota Solicitor General Matt Sagsveen told justices on the high court Thursday that no provisions of the pore space bill amount to a “taking” of private property, arguing the law falls within the state's authority to coerce property for the public good. He added that the Legislature can still "amend the statutory remedy" for landowners and objected to the district court's ruling that owners of land on the surface "have the right to complete control" over the pore space beneath them.

An attorney for the Northwest Landowners said companies cannot take property without fair compensation and argued the oil industry pushed for SB 2344 after a court ruling concerning a saltwater disposal well threatened to make companies pay for pore space.

“The industry realized they were going to have to pay for pore space use in a lot situations where they didn't anticipate that. And they didn't like that," Braaten said. “It was the purpose, the intent and the plan to make sure the industry didn’t have to pay for its use of pore space anymore."

Poe Leggette, an attorney representing Continental Resources, said even the lower court judge found major portions of the law to be constitutional and objected to a contention from the Northwest Landowners that the justices needed to base their decision on the bill in its entirety, rather than discrete parts. He and Sagsveen also took issue with the landowners' argument that the legislation prevented them from seeking compensation in court.

Braaten noted the implications of the North Dakota high court's decision on SB 2344 could have wide-ranging implications for an issue of mounting importance to the state, energy industries and landowners. Industries like oil and coal have increasingly looked at pore space as potentially valuable underground real estate for the permanent storage of carbon dioxide, a practice many fossil fuel companies are exploring in an effort to make their industries cleaner and more economic for the long-term.

“There is a boom of CO2 sequestration going on in this state right now,” Braaten told the court. “There’s a lot happening with pore space, and there’s more to come. And that is what the concern is here — it is that this is a wholesale transfer of a landowner’s property to the industry.”

Chief Justice Jon Jensen said the court would take the arguments under advisement. The court could release a ruling in the coming weeks or months.

Readers can reach Forum reporter Adam Willis, a Report for America corps member, at [email protected].

source: https://www.inforum.com/news/north-dakota/dispute-between-north-dakota-landowners-oil-industry-over-pore-space-law-reaches-state-supreme-court

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