A judge has ruled a complex energy bill passed in 2019 is unconstitutional because it took property from landowners and gave it to oil and gas companies.
Northeast District Judge Anthony Benson ruled that Senate Bill 2344, which passed the North Dakota Legislature in 2019 and went into effect in August 2019, amounted to an violation of property rights. The bill clarified the legal status of “pore space,” the cavities under rock and soil that can be used for several purposes by the oil and gas industry.
The Northwest Landowners Association filed a lawsuit seeking to have the law overturned.
The judge wrote that the law was unconstitutional both because it essentially destroyed the value of a person’s property, and because that value was given to a private company.
“While the parties agree, and this Court acknowledges, that the legislature can alter statutory remedies, the effect of SB 2344 is to remove all value of pore space, a property right, and all other available remedies, effectually taking that private property right for a non-public, impermissible purpose,” Benson wrote. “It acts to give North Dakota landowners’ value from pore space to the oil and gas industry, for free, under the guise of the North Dakota Industrial Commission. The citizens of North Dakota are protected from such action by both the state and federal constitutions.”
Benson pointed out that while the text of the law contains a section about the public interest in encouraging the state’s energy industry, that is barred by the state’s constitution.
“The taking of pore space from surface owners is clearly and unambiguously for the constitutionally impermissible purpose of economic development to benefit private parties, i.e. the oil and gas industry,” Benson wrote. “This is a violation of N .D. Const. art. I, § 16, which specifically directs that ‘a public use or a public purpose does not include public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health’ and ‘[p]rivate property shall not be taken for the use of, or ownership by, any private individual or entity, unless that property is necessary for conducting a common carrier or utility business.’ The purpose of this transfer was laid out in the initial draft of Section 1 of SB 2344: ‘to help
ensure the viability of the state’ s coal and power industries, and to. benefit the state economy,’ though this was eventually amended and enacted to read ‘3. It is in the public interest to encourage and authorize cycling, recycling, pressure maintenance, secondary recovery operations, and enhanced recovery operations utilizing carbon dioxide for the greatest possible economic recovery of oil and gas.’”
In a news release announcing the decision, Northwest Landowners Association Chairman Troy Coons said the association hadn’t wanted to file a lawsuit, but the board felt it had no other options.
“It is always our goal to work cooperatively with the government and industry to address issues related to use of the land for energy development,” Coons said. “Unfortunately, on this issue, the state and the industry chose to ignore our concerns and forced us to raise them in a court of law. We are very happy to know that the system of checks and balances in our government works, and that landowners can rely on the protections of the United States and North Dakota constitutions when other efforts fail to protect private property rights. In the end, it is the landowners of North Dakota who won today.”