Guest Post: Landowners Cannot Support SB2344

This guest post was submitted by Troy Coons, chairman of the Northwest Landowners Association.

As we have stated in our testimony regarding Senate Bill 2344, Northwest Landowners Association has always attempted to work with our State’s energy industry in a spirit of cooperation and compromise. Our organization, and our members, are not opposed to development; we only ask for responsible development that is respectful of the rights and way of life of the farmers and ranchers and other landowners who host the energy industries on their land. It is disheartening and disappointing that the landowners, stakeholders who have given so much to accommodate development, were left out of the discussion when it came to the development of Senate Bill 2344.

In recent weeks there has been a significant amount of pressure upon our organization to come to some kind of compromise on the taking of private property rights in SB 2344. As an organization, we have had countless internal conversations among our board, and with our members, and we have come to the conclusion that it is simply impossible for our organization to fix the problems with this legislation. It takes away the property rights of landowners, and through our discussions with other stakeholders, it has become apparent that while some of the takings and concerns could be addressed by amending the bill, there will always remain some takings of property that we cannot accept.

[mks_pullquote align=”left” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]In our view, there are a couple primary objectives of the legislation; to foreclose claims from adjacent pore space owners who have had produced water migrate into their pore space, and to remove any obligation for operators to pay for disposal of produced water within unitized fields or spacing units when that water comes from within the unit.[/mks_pullquote]

In our view, there are a couple primary objectives of the legislation; to foreclose claims from adjacent pore space owners who have had produced water migrate into their pore space, and to remove any obligation for operators to pay for disposal of produced water within unitized fields or spacing units when that water comes from within the unit. The bill as proposed goes much further, and removes the ability of landowners to sue for compensation under NDCC 38-11.1, and to bring an action for subsurface trespass into their pore space, even for commercial disposals handling off unit water. These are major concerns because without these legal rights, landowners with commercial disposals who have contracts that lapse at the end of their term, and landowners who have “on unit” disposals that may at some point begin accepting “off unit” water would be left with no remedy if a dispute arises, despite ownership of the pore space. While some have claimed that a landowner could assert an action for the trespass upon their surface, there is no guarantee that a court would order an offending disposal to stop its operations through an injunction, which could leave the landowner with little more than a claim in court for a few acres of surface damage. The bill also removed the ability of landowners to be compensated for storage of gas due to “economics,” even if this gas came from another unit. It is our view that the market should resolve this problem, and that government intrusion into this market is unwarranted; particularly when it comes at the cost of private property rights. It appears that this has been recognized and this language removed, but this was only one of numerous problems with SB 2344.

Although some of the concerns noted above potentially could have been addressed with some significant amendments to the bill, the intent of this bill is to take away the right of landowners to compensation for produced water disposed of within unitized fields. We stand with and for all landowners in the state, and we will not be forced into a position in which we must pick winners and losers. Additionally, in our view, it is a bad policy to reduce the disposal costs for on-unit produced water by taking this right from property owners. It is in the most marginally productive areas of the state that this refusal to compensate for produced water disposal will benefit operators most, and by doing so, it will allow aging, dilapidated oilfield facilities such as those outside the Bakken formation to continue to be economic. Many of these wells should be shut in, and the decades-old pipelines abandoned or replaced. This will not happen if we prop up the marginal economics through private property takings and fail to allow the economy to force the rational decisions that must be made.

In the end, this issue has been emotionally charged, and for good reason. While it is a complicated issue, we as an organization have consulted with lawyers and law firms in numerous states, and all have confirmed that this proposed legislation is a taking of private property rights. The courts have not changed the law – they confirmed the law, although perhaps some did not expect them to do so. We are not, however, mistaken or confused. Our discussions with other stakeholders have confirmed our concerns and position on these critical rights and the issues with SB 2344. We have reviewed all the proposed amendments, and we have discussed at length the possibility of other proposed amendments. The bottom line, however, is that even with amendments, we cannot support this bill without choosing winners and losers, and we cannot support this bill without supporting the taking of at least some private property rights. We will not choose winners and losers, and we will not support taking private property rights. We stand on the side of the landowners of North Dakota.

If there is confusion about the consequences of passing SB 2344, we ask that our legislators choose caution over being pushed ahead at any cost. Complicated problems should be resolved with all stakeholders at the table, and an opportunity for thoughtful and informed decision-making; not in last-minute, high pressure situations without time for adequate consideration of all interests.

The Northwest Landowners Association remains ready to work cooperatively toward solutions in a thoughtful and careful manner. Senate Bill 2344 is not the solution, so the Northwest Landowners Association stands firm with private property rights and the landowners of North Dakota, opposed to this legislation. We ask our legislators to stand with us.