North Dakota Supreme Court hears challenges to pore-space ‘amalgamation’ statutes; case taken under advisement

The North Dakota Supreme Court heard oral argument over whether state statutes and related permitting allow regulators or private companies to force use of underground ‘‘pore space’’ for storage without providing constitutionally required, jury-determined just compensation.

The dispute before the court centers on challenges by the Northwest Landowners Association and the North Dakota Farm Bureau to statutes and implementing actions that appellants say permit injection of gases and liquids into privately owned pore space, and that either on their face or when applied effectuate uncompensated takings.

At the core of the appellants’ argument, Derek Broughton, attorney for the Northwest Landowners Association, told the court: "The amalgamation statutes being challenged do not effectuate a taking upon enactment," and urged that, when applied, the statutes would authorize third parties to "inject liquids and gases into that pore space over the objection of the landowner." Broughton said the statutes offer only an undefined scheme of "equitable compensation," which he called inadequate: "Equitable compensation is not a thing," he said, and argued the North Dakota Constitution’s Article I, Section 16 requires a jury determination of just compensation.

Andrew Cook, counsel for appellant North Dakota Farm Bureau, urged the court to view pore space injections as a physical taking under U.S. Supreme Court precedent. "Pore space has value as a matter of law," Cook said, adding that "a permanent physical occupation is the most serious form of invasion that there is," and citing Loretto and this court’s earlier Northwest Landowners decision as controlling authorities that treat third‑party physical invasions as per se takings.

Industry and state counsel urged a different analysis. Paul Forster, representing Basin Electric Power Cooperative and Dakota Gasification Company, argued the plaintiffs’ facial takings claims fail because the statutes do not effect a taking "by their mere enactment" and instead create an administrative process before the Industrial Commission. Forster also said a six‑year statute of limitations bars challenges to the carbon dioxide amalgamation statute, and he noted jurisdictional limits where federal programs (the EPA’s underground injection control program under the Safe Drinking Water Act) are implicated. "If a landowner believes they're aggrieved by that process, then the proper procedure is to participate in those proceedings in front of the Industrial Commission," Forster said.

Philip Axel, arguing for the state, told the court the correlative‑rights doctrine that North Dakota and other courts have applied to shared subsurface resources can be used to manage pore‑space resources without transforming the statutes into unconstitutional takings. Axel traced correlative rights to older common‑law principles and the U.S. Supreme Court’s 19th‑century decisions, saying the doctrine historically allowed majority use of a jointly owned resource while protecting minority owners through compensation mechanisms administered by a regulator or tribunal.

Appellants rejected the correlative‑rights answer as insufficient in this context. Broughton acknowledged the doctrine could be applied but said it would not eliminate the constitutional problem unless landowners receive either their full "just and equitable share" as applied in oil‑and‑gas pooling or actual just compensation determined by a jury. He pointed to project contracts in which a proposed payment was "16¢ per metric ton," which he said would not equate to landowners’ proportionate share of value.

Counsel debated whether the issues are appropriate for a facial challenge (invalid on their face at enactment) or require as‑applied review (factfinding about particular industrial commission orders and permits). Appellants urged the court to reverse the district court’s dismissal and either decide the legal issue or remand for merits consideration; several appellees argued the dismissal should stand because the statutes do not effect takings on enactment and because some CO2 permits at issue were issued years before and thus may be time‑barred.

Justices asked detailed questions about jury trial rights, whether title or compensable interests shift over time (counsel pointed to an asserted statutory shift of title to the state after at least 10 years in some schemes), and how unitization, eminent domain and natural‑gas storage precedents compare to carbon‑storage projects. Counsel discussed real projects and precedents: industry counsel cited unitization and forced‑pooling cases and one Montana natural‑gas storage example that used condemnation for holdouts; appellants emphasized differences in compensation methods and the scale of injections "millions of metric tons per year" of CO2 described by counsel.

The court did not rule after argument. The justices took the case under advisement and announced no immediate decision; the argument session concluded with the court adjourning for a scheduled swearing‑in.

What happens next: the court’s written decision will determine whether the dismissal is reversed and the case remanded for merits proceedings, whether the correlative‑rights framework can be applied to pore‑space storage without creating a per se taking, or whether other threshold defenses (such as statutes of limitations or federal‑jurisdiction limitations) preclude relief. No ruling was issued from the bench at the close of argument.