North Dakota Supreme Court Allows Landowner Challenge to CO2 Storage Law to Proceed

BISMARCK — The North Dakota Supreme Court has ordered a lower court to take another look at a legal challenge related to underground carbon dioxide storage projects – a case that could have long-term effects on carbon pipelines, ethanol producers and power plants.

The Northwest Landowners Association, a North Dakota group formed to defend property rights, is suing the State of North Dakota and the North Dakota Industrial Commission, which approves permits for permanent underground storage of carbon dioxide.

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The association in 2023 sued over a state law that requires landowners to allow carbon dioxide storage beneath their property if 60% of the affected landowners agree to the project, a procedure referred to as amalgamation. The group argues the law is unconstitutional because it allows companies to use private property without letting landowners use the court system to argue for just compensation.

The Supreme Court gave landowners a partial win, reversing a district court judge’s opinion that affects carbon storage, but upholding the judge’s rulings on two other property rights issues.

The outcome of the case could affect the Summit Carbon Solutions pipeline project, which proposes to gather carbon dioxide from ethanol plants in five states and bring it to North Dakota for underground storage.

Summit Carbon Solutions, Minnkota Power Cooperative and Basin Electric Power Cooperative have joined the state in defending the law. The companies have argued that an adverse ruling could prevent the use of carbon capture technology in some cases, threatening North Dakota’s energy industry.

A judge had previously ruled that landowners had missed their window of opportunity to sue. Northeast Judicial District Judge Anthony Swain Benson dismissed the lawsuit last August, ruling that the law passed in 2009 could not be challenged because a statute of limitations had expired.

But the Supreme Court rejected the procedural objections to the case in Wednesday’s ruling. It now goes back to the district court judge to rule on the merits of the case.

Derrick Braaten, attorney representing the Northwest Landowners, said the judge could make a ruling based on the arguments he has already heard or could ask for additional information.

Braaten said he was thrilled with the ruling. “It essentially clears all the procedural roadblocks for our primary challenge to the CO2 amalgamation lawsuit to move forward,” Braaten said. Summit declined to comment on the ruling. The Iowa-based company is seeking to use property in Oliver, Mercer and Morton counties that has geology that the company says is well-suited for underground storage.

About 92% of the landowners in the 90,000-acre sequestration area chose to participate in the Summit project when the Industrial Commission approved the storage permit in December.

North Dakota Attorney General Drew Wrigley issued a statement, saying the state is prepared to proceed with the case.

“The state laws in question respect the sanctity of private property rights and constitutionally balance the interests of all parties,” Wrigley said.

In an April hearing before the Supreme Court, attorney Phil Axt, representing the state, said the state should have the authority to regulate a shared resource like pore space.

He said the case could set a national precedent on the pooling of pore space.

Troy Coons, chair of the Northwest Landowners Association, said Thursday that the lawsuit goes beyond Summit’s pipeline project.

“Really, Summit isn’t the focus here,” Coons said. “It’s the unconstitutional taking that this piece of legislation did. Nothing to do with saying ‘no’ to Summit. It’s about the law and the constitutionality.”

The Supreme Court did uphold the district court on two other parts of the landowners lawsuit.

The lower court dismissed the Northwest Landowners’ argument that companies do not have the right to go on to property for the purpose of surveying for a potential project. The Supreme Court in 2024 ruled in Summit’s favor in a separate case on that claim.

The district court also ruled the landowners lack standing to challenge an underground gas storage law passed in 2021 because regulators have not yet been asked to grant a permit under that statute.

Braaten said the law’s language is nearly identical to the 2009 law that is specific to carbon dioxide. He said he expects the ruling on the CO2 case to eventually apply to the gas storage law as well.

While the Summit pipeline has received the permits it needs in North Dakota and Iowa, it still faces hurdles in South Dakota. Minnesota has approved a small portion of the pipeline route and Nebraska has no state permitting authority for carbon pipelines.