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ND landowners call state law to force CO2 injection under their property unconstitutional

Kurt Swenson’s North Dakota property is currently used for grazing, haying and farming. Photo courtesy Swenson Cattle
Amalgamation

The Northwest Landowners Association recently filed a suit with the North Dakota Supreme Court, seeking to overturn legislative changes which could force some North Dakota landowners to accept the deposition of carbon dioxide underneath their property without their permission.

Summit Carbon Solutions has filed with the North Dakota Industrial Commission for a permit to inject CO2 into three different sites, each approximately 30,000 acres, all in the Beulah, N.D., area. This would be the storage area for the CO2 Summit proposes to sequester from ethanol plants in Iowa, Nebraska, South Dakota, Minnesota and North Dakota.

The district court ruled against the NWLA in a recent lawsuit, saying the statute of limitations had run out. Derrick Braaten, the group’s attorney, said he sees the ruling as a “punt” by the district court, knowing the case would be headed to the Supreme Court anyway. “He (that judge) spent a lot of time last time ruling in our favor last time,” he said. The NWLA won a ruling in district court and the state supreme court against more severe amalgamation (the state’s authority to require landowners to participate in underground holding sites if 60 percent of landowners voluntarily agree) laws put into effect in North Dakota in 2019. After the NWLA won that first lawsuit, the North Dakota legislature passed a watered down version of amalgamation, which has sparked the current NWLA suit.



Braaten explained that the supreme court will first have to rule on the statute of limitations issue, and if it agrees with the district court, the case will be over, but if the supreme court decides that there is no statute of limitations affecting this case, it will rule on the merits of the case.

Braaten himself said the case is a constitutional issue and should not be impacted by any statute of limitations.



Sabrina Zenor, Summit Carbon Solutions communications director, pointed out that the district court ruled against NWLA.

A TAKING

In the Oct. 24, 2024, filing, the NWLA states that the amalgamation laws in the North Dakota Century Code (38-25-08 and 38-22-10) are unconstitutional because the laws do not allow dissenting landowners a jury trial of their peers and the laws do not require just compensation for those affected, thus resulting in a taking.

“The precedent set in the earlier lawsuit (after the 2019 amalgamation law was approved) is the reason the landowners brought these lawsuits,” said Braaten.

The amalgamation language, in Braaten’s words, gives the state of North Dakota the right to force landowners within a proposed injection site area to participate in the injection project if a threshold of 60 percent or more of the acres have been signed up on a voluntary basis.

“Before this law existed, people had the right to go to court to have a jury trial of their peers,” said NWLA president Troy Coons of Donnybrook, N.D.

“They took that right away, and they took away our right to just compensation. They use the words “equitable compensation,” which will be determined by the Department of Mineral Resources or the Industrial Commission,” he said.

“Now, under this law, which was approved in the 2023 legislative session, they can take your property. You don’t have a right to a jury trial of your peers, and you don’t receive just compensation,” he said.

Coons’ property is not affected by the Summit permit request.

Another NWLA director, Kurt Swenson of Beulah, does have land within the Summit Carbon Solutions’ permit request area.

One of the three injection well sites would incorporate some of the approximately 2,000 acres he owns in the area.

The land is currently used for farming, hayland and grazing, and Swenson expects to be able to continue with those uses on the land’s surface regardless of whether or not CO2 is injected below ground or into his “pore space.”

Kurt Swenson’s North Dakota property is currently used for grazing, haying and farming. Photo courtesy Swenson Cattle
Amalgamation

Swenson said Summit’s permit request affects hundreds of landowners, and he believes the 60 percent threshold required to impose the amalgamation law has been met.

Swenson, a civil engineer, who has spent his career in energy related fields, including petroleum refining and alternative fuels operations along with leading engineering and construction of industrial projects, doesn’t oppose the Summit project proposal, per se.

“We aren’t opposing the project, but we don’t like the terms and conditions of the lease agreement. That is why we haven’t signed,” he said.

REQUEST FOR NEW HEARING

Swenson and several other affected landowners have filed a motion opposing the Summit permit request and asking for a new hearing.

Swenson is asking the commission to conduct a re-hearing because, he says the state “has played hide and seek with a bunch of data” and violated his civil procedure rights. “Now we are actually modeling the wells with our experts because the state never gave us the information. We are asking them to pause and let’s start over now that we actually have the data,” he said. He’s expecting a ruling from the commission at any time.

If the North Dakota Industrial Commission grants Summit its permit, Swenson expects to file suit against Summit in district court.

Braaten, who also represents Swenson and the other landowners in his motion, believes that Swenson’s case has an excellent chance of winning in the district and supreme court, based on previous rulings on the similar lawsuit they brought a few years ago.

Swenson explained the financial offer Summit has made to him. He said Summit offered $25 per acre to sign an initial agreement giving Summit the option to exercise a lease.

Then if the lease option were exercised, Summit would pay him $4 per acre rent until the land was within a permitted storage facility. If and when the injection of CO2 took place, Summit would pay 50 cents per metric ton of proportional acres within the entire facility. This is an annual payment as long as injection continues. “So if you own 10 percent of the facility or 3,000 or 30,000 acres, and they deposit a million tons, they would pay 50 cents times 10 percent of the million or $50,000 annually based on that injection, until they stop injecting,” he said. Swenson said the offer was for a 20 year lease with the option of one renewal, for a maximum of 40 years. If the agreement is renewed, Summit will pay another $100 per acre at that time.

While some landowners are concerned about the constitutionality of amalgamation, some organizations believe it is important to North Dakota’s economic base.

PRO AMALGAMATION

The North Dakota Petroleum Council has backed the idea of amalgamation throughout multiple legislative sessions.

Brady Pelton, speaking on behalf of that group, said he believes the issue could also affect mineral extraction. He said it can be difficult to achieve 100 percent buy-in for oil and gas recovery, for example. “The idea is that the majority of landowners within a proposed amalgamation site shouldn’t suffer loss or the ability to store natural gas or CO2 within their pore space just because one or two don’t like it,” he said.

Amalgamation “preserves correlative rights and prevents waste of a resource,” he said

“If we could amalgamate into a storage unit for natural gas, it would open up the opportunity for value-added projects that depend heavily on natural gas: think a petro-chem facility that needs a steady feedstock of natural gas. Instead of relying on a multitude of operations, they could have one underground storage facility that holds sufficient natural gas.

“We’re not so much focused on any one project, but there is one project proposed to come into North Dakota and store CO2 from a variety of other states,” he said, referencing Summit’s pipeline proposal.

Pelton said his group likes the Summit pipeline proposal because it brings in a mainline transmission line for CO2, which could potentially be used for enhanced oil recovery in the future.

“North Dakota, by itself, doesn’t produce enough CO2 to really facilitate large scale enhanced oil recovery. So that CO2 has to come from other areas. Any pipeline that brings CO2 into the state is a bonus,” he said.

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