North Dakota surface owners defeated the carbon-storage lobby’s effort to steal their interstices.*  In Northwest Landowners Association, et al, v. State of North Dakota et al, a district court declared a portion of the CO2 underground storage statute (NDCC 38-22) unconstitutional because it provides for a government-authorized physical invasion of property, which constitutes a taking, and does not provide for just compensation required by the North Dakota Constitution.

The statute

The statute requires that before issuing a permit for underground carbon storage the North Dakota Industrial Commission must find that all nonconsenting pore space owners will be equitably compensated. If the operator fails to obtain consent of all pore space owners the Commission may require that nonconsenting owners be included in a storage facility and subject to CO2 storage. Once the project is completed, title to the facility and the stored CO2 would transfer to the State without payment of compensation.

The Supreme Court decisions

So-called NWLAI involved saltwater injection under portions of the statute. There the Supreme Court concluded that surface owners have a constitutionally protected property interest in pore space, and thus subject to a “takings” analysis under the North Dakota Constitution.  Permanent physical invasion is a per se taking.

This case is on remand from the North Dakota Supreme Court in “NWLAII” (Space does not allow a discussion). Some of plaintiffs’ claims were rejected. Remand addressed the issues on which they prevailed.

The pore space invasion would be extensive. Under the statute operators could inject millions of metric tons of CO2 into the pore space, store it for an undetermined amount of time, and eventually title to the pore space and carbon in the facility would be transferred to the State.

Is there “just” compensation

The court rejected the defendants’ argument that this case is different than NWLAI because there, the surface owners demanded compensation for physical occupation of pore space while this portion of the statute does not. Invasion of the pore space is a taking and requires just compensation. And there is a timing requirement.  Private property cannot be taken or damaged without “ … just compensation having been first made……. “.

Correlative rights doctrine does not apply

In rejecting the State’s argument that CO₂ storage is similar to oil and gas unitization, where owners can be forced into pooled units, the Court observed that unitization involves extracting a shared resource, not forcing storage of a foreign substance. NWLAI established that pore space is a vested property right, not a resource to be extracted. Applying correlative rights here would justify forced storage of any unwanted substance such as garbage or nuclear waste.

In unitization an owner would always be entitled to his just and equitable share of production to prevent waste and ensure maximum recovery of the landowner’s resource. This statute is not about maximizing extraction of a resource but instead the aim is to maximize storage of a resource – carbon – that may or may not be present on the owner’s property. Producing units share natural resources within the unit but in this case space amalgamation would bring carbon to property from wherever it was previously located, forcing nonconsenting owners to store carbon not native to their land. Then once the project is finished, the carbon and pore space goes to the State, depriving the landowner of that property right indefinitely.

No valid use of police power

The State’s argument that the law was a valid exercise of police power was rejected. The police power cannot authorize physical occupation of private property without compensation.

Result

Summary judgment for landowners; attorneys’ fees to be determined.

Bob Weir RIP and post-Dead Bob.

*In the spirit of General Jack D. Ripper?