Merger: North Dakota landowners call state law unconstitutional, others say it’s necessary

The Northwest Homeowners Association recently filed a lawsuit with the North Dakota Supreme Court, seeking to overturn legislative changes that could force some North Dakota landowners to accept the deposition of carbon dioxide beneath their properties without their permission. .

Summit Carbon Solutions has applied to the North Dakota Industrial Commission for a permit to inject C02 at three different sites, each approximately 30,000 acres, all in the Beulah, North Dakota area. This would be the storage area for the C02 that the 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 “clearance” by the district court, knowing that the case will head to the Supreme Court anyway. “He (that judge) spent a lot of time last time ruling in our favor,” he said. The NWLA won a ruling in district court and state supreme court against tougher merger 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 the merger (the authority to require landowners to participate in underground tenure sites if 60 percent of landowners voluntarily agree) that has prompted the current NWLA lawsuit.

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 , will rule on the merits of the case.

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

Sabrina Zenor, communications director for Summit Carbon Solutions, noted that the District Court ruled against NWLA.

In the October 24, 2024 filing, the NWLA asserts that North Dakota’s Century Code merger laws (38-25-08 and 38-22-10) are unconstitutional because the laws do not allow dissenting property owners a trial by jury of their peers and the laws do not require fair compensation for those affected, resulting in expropriation.

“The precedent set in the previous lawsuit (after the 2019 merger law was passed) is why the owners filed these lawsuits,” Braaten said.

The merger 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 60% threshold has been signed. percent or more of the acres voluntarily. .

“Before this law existed, people had the right to go to court to have their peers tried by jury,” said NWLA President Troy Coons of Donnybrook, North Dakota.

“They took that away from us immediately and took away our right to fair 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 passed in the 2023 legislative session, they can take away your property. “You do not have the right to a jury trial against your peers and you do not receive fair compensation,” he said.

Coons’ property is not affected by Summit’s permit application.

Another NWLA director, Kurt Swenson of Beulah, has land within Summit Carbon Solutions’ permit application area.

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

The land is currently used for agriculture, haying and grazing, and Swenson hopes to continue those uses on the land’s surface regardless of whether CO2 is injected underground or into its “pore space.”

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

Swenson, a civil engineer, who has spent his career in energy-related fields, including oil refining and alternative fuels operations, as well as leading engineering and construction of industrial projects, does not oppose the Summit project proposal, per se.

“We are not opposed to the project, but we do not like the terms and conditions of the lease. That’s why we haven’t signed,” he said.

Swenson and several other affected property owners have filed a motion opposing Summit’s permit application and requesting a new hearing.

Swenson is asking the commission to hold a new hearing because, he says, the state “has played hide-and-seek with a ton of data” and violated his civil procedural rights. “Now we are modeling the wells with our experts because the State never gave us the information. “We ask you to pause and start again now that we actually have the data,” he said. Expect a ruling from the commission any day now.

If the North Dakota Industrial Commission grants its permit to Summit, Swenson hopes to file a lawsuit against Summit in District Court.

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

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

Then, if the lease option were exercised, Summit would pay him $4 per acre in rent until the land was within a permitted storage facility. If C02 injection occurred, Summit would pay $0.50 per metric ton of proportional acreage within the entire facility. This is an annual payment for as long as the 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 $0.50 times 10 percent of the million or $50,000 annually based on that injection, up to that they stop injecting,” he said. saying. Swenson said the offer was for a 20-year lease with the option of a renewal, for a maximum total of 40 years. If the agreement is renewed, Summit will pay another $100 per acre at that time.

While some property owners are concerned about the constitutionality of the merger, some organizations believe it is important to North Dakota’s economic foundation.

The North Dakota Petroleum Council has supported the merger idea through multiple legislative sessions.

Brady Pelton, speaking on behalf of that group, said he believes the problem could also affect mineral extraction. He said it can be difficult to achieve 100 percent acceptance for oil and gas recovery, for example. “The idea is that the majority of landowners within a proposed melt site should not suffer losses or the ability to store natural gas or C02 within their pore space just because one or two don’t like it,” he said.

The merger “preserves correlative rights and avoids the waste of a resource,” he said.

“If we could merge into a natural gas storage unit, it would open up the opportunity for value-added projects that rely heavily on natural gas – think of a petrochemical facility that needs a constant feedstock of natural gas. Instead of relying on a multitude of operations, they could have one underground storage facility that contains enough natural gas,” he said.

“We’re not that focused on any particular project, but there is a proposed project to get to North Dakota and store C02 from a variety of other states,” he said, referring to the Summit pipeline proposal.

Pelton said his group likes the Summit pipeline proposal because it incorporates a C02 transmission main line, which could potentially be used to improve oil recovery in the future.

“North Dakota alone does not produce enough CO2 to truly facilitate large-scale enhanced oil recovery. So the C02 has to come from other areas. “Any pipeline that brings C02 into the state is a plus,” he said.