ND Courts Rule Forced CCS Pore Space Pooling an Unlawful Taking
Two North Dakota court rulings struck down the state's legal framework for amalgamating pore space for carbon capture projects, finding the practice an unconstitutional taking of private property without just compensation.
Two recent North Dakota court decisions have invalidated the state's statutory scheme for the forced pooling of underground pore space for carbon capture and storage (CCS) projects. The courts held that compelling non-consenting landowners to surrender their subterranean property rights for a private operator's use constitutes a taking under the state constitution, and that the existing statutes failed to provide the required "just compensation." These rulings create significant legal and financial uncertainty for the CCS industry, which often relies on such pooling mechanisms to assemble the large, contiguous geologic formations necessary for permanent sequestration. While the decisions are under appeal, they provide a new legal theory for opponents of CCS projects in other jurisdictions with similar laws, such as Louisiana and Indiana. Major energy and industrial clients planning or operating CCS facilities as part of their decarbonization and ESG strategies should immediately assess the takings-clause risk under the constitutions of all relevant states. The outcome of the North Dakota appeals will be closely watched and could influence pending CCS regulations in states like California.