978 N.W.2d 679
N.D.2022Background
- In 2019 the North Dakota Legislature enacted S.B. 2344, amending multiple statutes to (a) authorize use of subsurface "pore space" for CO2 enhanced recovery and disposal, (b) state that owners of surface land may not prohibit or demand payment for such subsurface use, (c) redefine "land" in the Damage Compensation Act to exclude pore space, and (d) provide that injection/migration into pore space "by itself" does not constitute trespass, nuisance, or other tort.
- Northwest Landowners Association brought a facial constitutional challenge, arguing S.B. 2344 effects a taking of landowners' pore-space property rights without compensation and unlawfully bars tort remedies.
- The district court granted summary judgment for the Association, holding key provisions of S.B. 2344 unconstitutional as a per se physical-invasion taking, enjoining enforcement, and awarding attorney's fees to the Association.
- The State and Continental Resources appealed, arguing (inter alia) the bill can be constitutionally applied in some scenarios, the dominant mineral estate and police power save the statute, discovery on pore-space value was required, and the fees award was improper.
- The North Dakota Supreme Court affirmed the holdings that specific portions of S.B. 2344 (the authorization to use subsurface geologic formations without consent/payment; the redefinition of "land" excluding pore space in the Damage Compensation Act; and the provision that injection/migration by itself is not a tort) are unconstitutional takings or in conflict with constitutional protections, but reversed the district court's invalidation of the entire bill as inseverable. The court also affirmed the attorney's-fees award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Facial-challenge standard (Salerno vs. alternatives) | S.B. 2344 is facially unconstitutional as enacted; court should evaluate statute as written. | Defendants: statute has constitutional applications; Salerno "no set of circumstances" test defeats facial challenge. | Court applied Sorum framework (rejecting rigid Salerno bar) and proceeded with facial review; upheld facial challenge to specific provisions. |
| Existence of property interest in pore space | Surface owners own pore space and have exclusion/compensation rights under state law. | Defendants argued statutory changes altered expectations and rights. | Court: state law (including N.D.C.C. ch. 47-31 and Mosser precedent) recognizes surface owners' property interest in pore space. |
| Takings — per se physical invasion (Loretto) | S.B. 2344 authorizes third-party physical occupation (injection/storage/disposal) of pore space without consent or compensation — a per se physical taking. | Defendants argued dominant-mineral-estate principles, police power, or limitations on title mean no compensable taking. | Court: S.B. 2344 effects a government-authorized physical occupation of property (per Loretto/Cedar Point), removes exclusion/compensation rights, and is a facial taking. Dominant-estate and police-power arguments did not save the challenged provisions insofar as they authorize disposals beyond implied-easement scope or permit occupation without compensation. |
| Dominant mineral estate / implied easement defense | N/A (Association argued surface-owner rights remain). | Defendants: implied easement and unitization principles allow subsurface operations and thus preserve statute. | Court: implied easement allows certain reasonably necessary uses (e.g., disposal within the same unit), but S.B. 2344 authorizes disposal statewide and use for wastes from outside the unit and bars trespass claims — so the implied-easement doctrine does not validate the challenged provisions. |
| Severability — whether whole bill must fall | N/A | Defendants: many provisions are severable; district court erred in invalidating entire bill. | Court: invalid provisions are severable from the remainder; affirmed invalidation of specific clauses but reversed total invalidation of S.B. 2344. |
| Rule 56(f) discovery on pore-space value | N/A | Defendants: further discovery needed to determine value of pore space before deciding takings claim. | Court: pore space has value as matter of law (Mosser); exact valuation unnecessary for per se physical-invasion takings; denial of further discovery was not an abuse of discretion. |
| Award of attorney's fees under 42 U.S.C. §§ 1983/1988 | Association sought fees after prevailing on constitutional takings claim. | State argued fees improper because §§1983/1988 were not pleaded; state officials in official capacity not "persons" under §1983; association lacked §1983 standing. | Court: fees permissible under §1988 where the prevailing claim falls within scope of §1983; failure to plead the statutes by name is not fatal; §1988 may impose fee liability on state/officials; association may recover fees. |
Key Cases Cited
- United States v. Salerno, 481 U.S. 739 (U.S. 1987) (facial-challenge "no set of circumstances" formulation referenced)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (U.S. 1982) (government-authorized physical occupation is a per se taking)
- Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (U.S. 2021) (physical invasions that eliminate right to exclude are per se takings)
- Lucas v. S.C. Coastal Council, 505 U.S. 1003 (U.S. 1992) (regulatory-takings framework for total deprivation of economically beneficial use)
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (U.S. 1978) (ad hoc takings analysis for non-per-se claims)
- Horne v. Department of Agriculture, 576 U.S. 350 (U.S. 2015) (distinction between physical takings and regulatory takings)
- Mosser v. Denbury Res., Inc., 898 N.W.2d 406 (N.D. 2017) (North Dakota precedent recognizing surface-owner title and compensation rights in pore space)
- Sorum v. State, 947 N.W.2d 382 (N.D. 2020) (facial-challenge framework and analysis of legislative enactment conflicts with constitution)
- Wild Rice River Estates, Inc. v. City of Fargo, 705 N.W.2d 850 (N.D. 2005) (state recognition of per se physical-invasion takings)
- Will v. Michigan Dep’t of State Police, 491 U.S. 58 (U.S. 1989) (state and state officials in official capacity are not "persons" under §1983—distinguished from §1988 fee liability)
- Hutto v. Finney, 437 U.S. 678 (U.S. 1978) (§1988 fee awards against state officials defending injunctive actions are permissible)