AS I SEE IT
By Neal A. Shipman
North Dakota landowners and mineral owners got a very big win last week when a Northeast District judge ruled that the North Dakota Legislature had violated the state’s Constitution in passing Senate Bill 2344 during the 2019 legislative session.
SB 2344, which was referred to as the “pore space bill” effectively took away the ownership of the land underneath the ground’s surface from the landowner or the mineral owner and gave the right to use that space to the State of North Dakota.
As SB 2344 was drafted and ultimately was signed into law by Gov. Doug Burgum, the state’s intent was to change the definition of those underground spaces so that they could be used to temporarily store natural gas rather than to see this resource flared off, or to use it to store carbon dioxide, which at some time could be used to enhance oil and natural gas production from wells in the Bakken.
But in passing this law, the state forgot something extremely important. It does not have the power to take private property without compensating the owners for that taking.
And the ruling by Northeast District Judge Anthony Benson clearly stated that legislation was an unconstitutional taking of private property and that the pore space had value. That decision was a clear win for the Northwest Landowners Association, who brought the lawsuit, as well as to the state’s landowners and mineral owners. The loser was the State of North Dakota that wanted to claim ownership of the pore space so that it could be used by the oil and gas industry to store injected saltwater without any compensation to the landowner.
In his decision, Judge Benson wrote, “The provisions of SB 2344, both individually and taken together, prohibit landowners from obtaining any compensation for any oil and gas operators’ use of their pore space estate, whether reasonable or unreasonable, whether at large or small volumes, whether at a large financial detriment or small financial detriment. These provisions act as an absolute bar to not just money damages, but to all other meaningful remedies, including trespass, nuisance or other torts. The three provisions at issue here, enacted or amended within SB 2344, render the pore space worthless in every instance of its application, and it is unconstitutional on its face.”
Without a doubt, North Dakota needs to be able to use the pore space for oil and gas purposes.
But the use of that space is not free for the taking. If oil and gas companies want to use that underground space, they need to negotiate a fair lease price with the landowners and mineral owners just as they do to drill wells for the placement of pipelines.