Western North Dakota landowners lined up Friday to testify against an energy bill they called an “offensive” taking of private property rights, while supporters said there’s a misunderstanding of the bill’s intention.
Sponsors of Senate Bill 2344 say it seeks to clarify issues related to pore space, or the cavity or void in an underground formation.
Watford City attorney and landowner Dennis Johnson brought a sponge to the packed legislative committee hearing to illustrate pore space.
“The formations below the surface have tiny pockets of space,” Johnson told members of the House Energy and Natural Resources Committee. “It is empty, but it is a container that belongs to me and, as the owner of that container, it should be up to me whether I am going to allow someone to use it.”
Ownership of pore space belongs to the surface owner, not the mineral owner.
The bill would change the definition of land to say it means the solid material of the earth, but excludes pore space.
That change in definition was one aspect of the bill that prompted strong opposition from farmers and ranchers who drove to Bismarck for the committee hearing.
“Nothing could be more offensive to the landowners of this state,” said Troy Coons, chairman of the Northwest Landowners Association, which represents more than 500 farmers, ranchers and property owners in the state.
Opponents also objected to language in the bill that states a landowner is not entitled to prohibit or demand payment for the use of pore space.
Attorneys who represent landowners cautioned that, if the state takes away landowners’ rights related to pore space, it would be a violation of the constitution and open the state to lawsuits.
“If the state takes private property, it must pay for it,” Johnson said.
Sen. Jessica Unruh, R-Beulah, the primary sponsor of the bill, said her intention is to protect landowners by providing clarification where currently there is confusion and uncertainty.
“I have been a proponent of landowner issues my entire time in the Legislature and would not stand in front of this committee in a different position,” Unruh testified.
The bill has implications for saltwater disposal wells, injecting carbon dioxide underground for enhanced oil recovery and temporarily storing natural gas underground as an alternative to flaring.
Lynn Helms, director of the Department of Mineral Resources, testified in support of the bill, which he said provides the necessary clarity for industry to proceed with storing gas in underground formations while the industry develops gas capture infrastructure.
Helms said the North Dakota Industrial Commission supports the bill to differentiate between the use of pore space and damages. Helms said the bill does not remove the responsibility of an operator to pay for damaging or disrupting the surface of the land.
“It makes it clear that the use of pore space is not damage,” Helms said.
Agriculture Commissioner Doug Goehring testified in support of the bill, which he said protects farmers and ranchers.
“I believe this bill addresses my concerns for the surface owner recovering damages because of activities on the land while defining pore space in formations below,” Goehring said in prepared testimony.
The bill also received strong support from the oil industry. Jim Arthaud, a Billings County landowner who has operated saltwater disposal wells, urged lawmakers to clarify the law. Arthaud, former CEO of MBI Energy, said he expects a “rush” of litigation after a recent North Dakota Supreme Court ruling created uncertainty related to disposal wells.
The case, Mosser v. Denbury Resources, upheld that the company had to pay the ranchers for injecting waste into pore space under their land.
The bill received no opposition in the first half of the legislative session and passed unanimously in the Senate with little discussion. Landowners who testified Friday said they weren’t aware of the bill when it was considered by the Senate.
“People are upset that this has been done without even reaching out to the landowner community to discuss it,” Coons said.
Rep. Todd Porter, R-Mandan, chairman of the legislative committee and a co-sponsor of the bill, assigned a subcommittee to work on the bill.
Some urged lawmakers to consider a more in-depth study of the issue rather than proceed with the bill as proposed.
“I agree that there are issues,” testified Bismarck attorney Derrick Braaten. “But they are complex, dicey issues that require slow and careful thought to figure them out.”