Facial Physical‑Takings Claims Accrue Upon Implementation, Not Enactment: North Dakota Supreme Court Clarifies Standing and Jurisdiction in CO2 Pore‑Space Amalgamation

Introduction

In Northwest Landowners Association v. State, 2025 ND 147 (N.D. Aug. 28, 2025), the Supreme Court of North Dakota issued a significant procedural ruling structuring how constitutional challenges to the State’s carbon dioxide (CO2) underground storage regime proceed. The plaintiffs—a consortium of landowners and agricultural associations—sought to invalidate several statutes governing underground storage and pre‑condemnation surveys, alleging unconstitutional takings, due process violations, and an impermissible legislative delegation to the North Dakota Industrial Commission (NDIC).

The case arises amid North Dakota’s expanding role in carbon management, where CO2 generated by energy facilities is captured and injected into subsurface geological formations (pore space) under permits issued by NDIC. The statutory framework includes N.D.C.C. ch. 38‑22 (CO2 underground storage) and N.D.C.C. ch. 38‑25 (underground storage of oil or gas), both featuring “amalgamation” provisions that allow NDIC to pool pore‑space interests in a common storage reservoir, and two long‑standing statutes authorizing pre‑condemnation survey access (N.D.C.C. §§ 24‑05‑09 and 32‑15‑06).

The district court dismissed the plaintiffs’ claims as time‑barred or non‑viable facial challenges. On appeal, the North Dakota Supreme Court affirmed in part, reversed in part, and remanded, clarifying principles of standing, accrual for constitutional takings challenges, federal preemption, and exhaustion of administrative remedies.

Summary of the Judgment

• Standing:
  • No standing to challenge the non‑delegation provision in N.D.C.C. § 38‑22‑03(7) (good‑cause exception authority) because no exception has ever been requested or granted and thus no actual or threatened injury was shown.
  • No standing to challenge N.D.C.C. ch. 38‑25 (oil/gas storage amalgamation) because there have been no applications, orders, or immediate threats of enforcement affecting plaintiffs or their members.
  • Standing exists to challenge N.D.C.C. ch. 38‑22 (CO2 storage amalgamation) because NDIC has issued CO2 storage permits and amalgamation orders that affect plaintiffs or their members’ pore‑space interests.
• Federal Preemption/Exclusive Jurisdiction: The Court rejected the argument that the Safe Drinking Water Act (SDWA) and EPA program approvals deprive state courts of jurisdiction over constitutional challenges to state statutes. Plaintiffs are not challenging an EPA action; they are challenging state law, which remains within state court competence.
• Exhaustion of Administrative Remedies: Not required. Plaintiffs mount a facial constitutional challenge; NDIC cannot declare statutes unconstitutional or provide the requested relief, and no agency expertise is needed for the purely legal questions presented.
• Viability of the Plaintiffs’ Facial Theory: A facial challenge alleging that a statute authorizes unconstitutional takings procedures is viable even if the statute’s mere enactment did not itself effect a taking.
• Statute of Limitations (SOL): The district court erred in holding that a six‑year SOL barred the CO2 amalgamation challenges from the date of enactment. For physical‑takings theories, claims accrue when the government acts under the statute in a way that invades property (e.g., via NDIC orders), not when the statute is enacted. Thus, the CO2‑related claims are not time‑barred.
• Pre‑Condemnation Survey Statutes: Although the SOL rationale was incorrect, dismissal was affirmed because the plaintiffs’ facial challenge to N.D.C.C. §§ 24‑05‑09 and 32‑15‑06 is foreclosed by SCS Carbon Transport LLC v. Malloy, 2024 ND 109 (survey access is a longstanding background restriction; no protectable right to exclude limited, innocuous pre‑condemnation surveys).
• Disposition: Affirmed in part, reversed in part, and remanded for the district court to address the merits of the constitutional challenges to N.D.C.C. ch. 38‑22.

Detailed Analysis

A. Precedents and Authorities Driving the Decision

• Northwest Landowners Assoc. v. State (NWLA I), 2022 ND 150, 978 N.W.2d 679.
  • Recognized the surface owner’s property interest in pore space and held a 2019 statute that “eliminated” the right to exclude as an unconstitutional taking on its face. The Court here distinguishes NWLA I because the present plaintiffs are not asserting a taking occurred at enactment; rather, they contend the statute authorizes unconstitutional procedures that cause takings when implemented.
• SCS Carbon Transport LLC v. Malloy, 2024 ND 109, 7 N.W.3d 268.
  • Controls the survey‑access question. Because survey entry is a longstanding background restriction, landowners lack a constitutionally protected interest in excluding limited, innocuous survey access; hence, a facial challenge to survey statutes fails.
• Wilkinson v. Board of Univ. and School Lands, 2022 ND 183, 981 N.W.2d 853.
  • Clarifies the distinction between regulatory takings (deprivation of use/value by regulation) and physical takings (permanent physical invasion). This distinction is central to the accrual analysis: physical takings accrue on invasion/implementation; regulatory takings often accrue on enactment.
• Hager v. City of Devils Lake, 2009 ND 180, 773 N.W.2d 420.
  • Applies the six‑year limitation period in N.D.C.C. § 28‑01‑16(1) to inverse condemnation claims under N.D. Const. art. I, § 16. The Court leverages Hager’s limitation framework but clarifies when the clock starts for physical takings.
• Gillmor v. Summit County, 246 P.3d 102 (Utah 2010), and Lindner v. Kindig, 826 N.W.2d 868 (Neb. 2013).
  • Persuasive authorities explaining that facial challenges accrue when government acts pursuant to the law and adversely affects the plaintiff’s rights, not automatically at enactment.
• Lowenberg v. City of Dallas, 168 S.W.3d 800 (Tex. 2005).
  • Further supports different accrual points: regulatory takings often accrue on enactment, while physical takings accrue when property is invaded or seized.
• Standing Cases: TransUnion LLC v. Ramirez, 594 U.S. 413 (2021) (standing must exist for each claim/relief); Tooz v. State, 38 N.W.2d 285 (N.D. 1949); King v. Baker, 288 N.W. 565 (N.D. 1939) (injury or imminent injury is required to challenge statute); Barrett v. State, 547 P.3d 630 (Mont. 2024) (any one plaintiff’s standing suffices in multi‑plaintiff case).
• Preemption/Jurisdiction: State ex rel. Stenehjem v. FreeEats.com, Inc., 2006 ND 84, 712 N.W.2d 828 (preemption disfavored; presumption against displacement of state law); SDWA 42 U.S.C. § 300j‑7; California Dump Truck Owners Ass’n v. Nichols, 784 F.3d 500 (9th Cir. 2015) (federal appellate review channeling applies to challenges of EPA actions—not present here); 40 C.F.R. § 147.1751 (EPA’s incorporation by reference of ND provisions).
• Exhaustion: Medcenter One, Inc. v. ND Board of Pharmacy, 1997 ND 54, 561 N.W.2d 634; Olympic Financial Group, Inc. v. ND Dept. of Financial Institutions, 2023 ND 38, 987 N.W.2d 329; Garaas v. Petro‑Hunt, L.L.C., 2024 ND 34, 3 N.W.3d 156; Zerr v. ND WSI, 2017 ND 175, 898 N.W.2d 700. These cases underscore the exception where purely legal questions not dependent on agency expertise obviate exhaustion.
• Appellate Restraint and Constitutional Avoidance: Mead v. Hatzenbeller, 2023 ND 248, 999 N.W.2d 618; Overbo v. Overbo, 2024 ND 233, 14 N.W.3d 898; Frokjer v. ND Board of Dental Examiners, 2009 ND 79, 764 N.W.2d 657; Bolinske v. Sandstrom, 2022 ND 148, 978 N.W.2d 72.

B. The Court’s Legal Reasoning

1) Standing: Injury‑in‑Fact Is Claim‑Specific

The Court parses standing claim‑by‑claim. For the non‑delegation challenge, plaintiffs failed to show any exception had been sought or granted under N.D.C.C. § 38‑22‑03(7). Without a concrete or imminent injury, there is no standing. Similarly, no standing exists to attack the oil and gas storage amalgamation provisions (N.D.C.C. ch. 38‑25) because no orders have been proposed or issued, and plaintiffs have not shown a targeted, imminent impact.

By contrast, plaintiffs and association members have interests in pore space affected by approved CO2 storage projects under N.D.C.C. ch. 38‑22. With NDIC permits and amalgamation orders in place, actual or threatened injuries are shown, satisfying standing. The Court also acknowledges that in a multi‑plaintiff case, the standing of any one plaintiff suffices for the claims at issue.

2) Federal Preemption and Jurisdiction: EPA Incorporation Does Not Oust State Courts

Summit Carbon Solutions argued that the SDWA channeled review of challenges associated with EPA‑approved programs to federal appellate courts, citing 42 U.S.C. § 300j‑7 and the Ninth Circuit’s Nichols decision (which addressed challenges to an EPA‑approved state implementation plan). The North Dakota Supreme Court rejected this as overbroad because:

• Plaintiffs are not challenging any “final action of the [EPA] Administrator” under the SDWA; they are challenging the constitutionality of a state statute.
• State courts cannot enjoin the EPA and are not reviewing EPA action; thus the exclusive federal review pathway for EPA actions is inapt.
• Accepting the argument would effectively federalize large swaths of state law merely because EPA incorporates them by reference (40 C.F.R. § 147.1751), contrary to the presumption against preemption.

3) Exhaustion of Administrative Remedies: Facial Constitutional Questions Are for Courts

The Court invoked the well‑recognized exception to exhaustion: when a claim presents purely legal questions (constitutionality) that require no agency fact‑finding or technical expertise, and when the agency cannot provide the relief sought (a declaration of unconstitutionality), exhaustion is unnecessary. NDIC’s expertise in correlative rights does not change the calculus here because the gravamen is constitutional compliance, not reservoir engineering.

4) Viability of the Plaintiffs’ Facial Theory: Authorizing Unconstitutional Procedures vs. a Facial Taking

The Court clarifies that a “facial challenge” is not limited to “facial takings.” A facial takings claim posits the statute itself effects a taking at enactment. Here, plaintiffs allege that the statute authorizes a taking by unconstitutional procedures (e.g., enabling physical invasion without prior just compensation determined by a jury), which is a distinct and viable facial attack on the statute’s validity. That distinction matters for accrual and for the merits on remand.

5) Statute of Limitations: Physical Takings Accrue on Government Action, Not Enactment

This is the opinion’s most significant doctrinal clarification. The Court:

• Rejects the district court’s view that limitations begin at enactment simply because the claims are facial.
• Distinguishes regulatory takings (which may accrue at enactment because the regulation itself reduces value/use) from physical takings (which accrue when the government acts to invade or appropriate property).
• Holds that the plaintiffs’ physical‑takings claims did not accrue in 2009 (when ch. 38‑22 was enacted), but rather when NDIC implemented the statute by issuing permit and amalgamation orders that allegedly authorize physical invasions of pore space.

As a result, the six‑year limitation period in N.D.C.C. § 28‑01‑16(1) does not bar the CO2 amalgamation challenges, and the case returns to the district court for adjudication on the merits.

6) Pre‑Condemnation Survey Statutes: Correct Result, Different Reason

Although the district court erroneously used limitations to dismiss the facial challenges to N.D.C.C. §§ 24‑05‑09 and 32‑15‑06, the Supreme Court affirmed dismissal on the merits under Malloy (2024 ND 109). Survey access is a background restriction on the right to exclude, so no compensable property interest is implicated by limited, innocuous pre‑condemnation surveys; a facial takings theory fails.

C. Anticipated Impact

• On CO2 Storage Litigation: Plaintiffs now have a clear path to litigate the merits of whether NDIC’s amalgamation process under ch. 38‑22 conforms to the North Dakota Constitution’s takings and due‑process guarantees. The opinion expressly avoids deciding the merits, so the district court must now evaluate whether the statutory framework—particularly its compensation timing and method—comports with N.D. Const. art. I, §§ 12 and 16.
• On Project Developers and NDIC: While the opinion does not halt existing CO2 projects, it spotlights procedural vulnerabilities. Developers and the NDIC should be prepared to demonstrate that compensation mechanisms satisfy constitutional requirements, potentially including the timing of just compensation and the right to jury determination where implicated.
• On Future Challenges: The Court’s accrual rule means parties affected by future NDIC implementation actions (e.g., new permits/amalgamation orders) will not be barred merely because the authorizing statute is older than six years. This change will likely increase litigation on the legality of actions taken under long‑standing statutes when those actions involve physical property invasions.
• On Non‑Delegation Claims: The standing ruling sends a practical signal: plaintiffs will need to identify a concrete application of the exception authority (a requested or granted exception) to mount a non‑delegation challenge to § 38‑22‑03(7). Abstract separation‑of‑powers disputes will fail for want of injury.
• On Federal‑State Interplay: The Court’s preemption analysis preserves state court authority to decide the constitutionality of state statutes notwithstanding EPA incorporation by reference. Expect continued state‑court adjudication of constitutional questions in areas of environmental primacy programs.
• On Survey Access: Malloy cements that limited pre‑condemnation surveys do not amount to compensable takings on a facial basis. Landowners seeking to resist survey access will need to demonstrate unusual, non‑innocuous intrusions in specific factual contexts (if any remain viable), rather than facial invalidity.

Complex Concepts Simplified

• Pore Space: The tiny voids or spaces in underground rock formations. North Dakota recognizes the surface owner’s property interest in pore space.
• Amalgamation (Pooling/Unitization for Storage): A regulatory process that treats multiple subsurface interests as a single unit for storage operations so that injection and migration of substances (like CO2) can occur across property boundaries in a common formation, with compensation and protections for non‑consenting owners.
• Class VI Well: A federal Underground Injection Control category for wells injecting CO2 for geologic sequestration, overseen in North Dakota by NDIC under EPA‑approved primacy.
• Facial Challenge vs. Facial Takings Claim:
  • A facial challenge argues a statute is unconstitutional in all or nearly all applications (e.g., it authorizes unconstitutional procedures).
  • A facial takings claim argues the statute itself effects a taking upon enactment (e.g., it immediately strips a property right).
• Physical vs. Regulatory Takings:
  • Physical takings involve actual occupation/invasion (e.g., injected CO2 migrating into pore space), typically triggering just compensation at or before the invasion.
  • Regulatory takings result from laws that reduce a property’s value or permissible uses without physical occupation.
• Accrual for Limitations Purposes: The clock starts when the injury occurs. For physical takings, that is when the government acts to invade or appropriate property (e.g., implementing orders), not when the enabling statute is enacted.
• Standing: A plaintiff must show a concrete, actual, or imminent injury traceable to the challenged action. Associational standing allows organizations to sue on behalf of members for prospective relief.
• Exhaustion of Administrative Remedies: Generally needed before suing, but not when a claim involves purely legal/constitutional issues the agency cannot resolve and requires no specialized fact‑finding.
• Preemption: Federal law can displace state law, but courts presume against preemption unless Congress clearly says otherwise. EPA’s incorporation of state provisions in a primacy program does not deprive state courts of jurisdiction to decide the constitutionality of those state provisions.
• Pre‑Condemnation Survey Access: Limited, non‑destructive entry to survey land prior to condemnation. In North Dakota, such access is treated as a longstanding background restriction on property rights, not a facially compensable taking.

Unresolved Merits Questions on Remand

• Whether the amalgamation regime in N.D.C.C. ch. 38‑22 provides constitutionally adequate procedures, including:
  • Whether just compensation must be paid prior to or contemporaneously with any physical invasion/occupation of pore space;
  • Whether the right to have just compensation determined by a jury (N.D. Const. art. I, § 13/16 framework) is adequately protected in the amalgamation process;
  • Whether the statutory standard of “equitable compensation” as a condition of permitting sufficiently aligns with constitutional requirements for just compensation;
  • How the law ensures due process for non‑consenting pore‑space owners in the context of storage reservoirs where injected CO2 migrates across tracts.
• The appropriate remedy should any constitutional infirmity be found (e.g., severance, declaratory relief, injunctions, or procedural modifications).

Practical Guidance

• For Landowners and Associations:
  • Document concrete impacts from specific NDIC orders to establish standing and timeliness. Focus on physical invasion aspects and timing of compensation.
  • Frame challenges to emphasize how implementation (not enactment) causes injury.
• For Project Developers and Operators:
  • Anticipate litigation on compensation timing and procedures. Consider mechanisms that ensure payment and, where applicable, jury valuation protocols that align with constitutional requirements.
  • Maintain detailed records showing equitable compensation determinations and due‑process protections during permit proceedings.
• For Regulators (NDIC):
  • Prepare to demonstrate how permit conditions satisfy constitutional prerequisites for compensation and process, especially for non‑consenting owners.
  • Evaluate whether rules or guidance should be clarified on compensation timing and the relationship between “equitable compensation” and “just compensation.”

Conclusion

Northwest Landowners Association v. State reshapes the procedural landscape for constitutional challenges to North Dakota’s CO2 pore‑space amalgamation regime. The Court’s principal contributions are:

• A clear accrual rule for physical‑takings facial challenges: they accrue upon the government’s implementing action (e.g., NDIC orders), not at statutory enactment.
• A rigorous, claim‑specific standing analysis that rejects abstract non‑delegation and oil/gas storage challenges absent concrete or imminent injury, while recognizing standing where CO2 amalgamation orders exist.
• A reaffirmation that state courts retain jurisdiction to adjudicate the constitutionality of state statutes notwithstanding EPA incorporation, and that exhaustion is unnecessary for pure facial constitutional questions.
• A confirmation, via Malloy, that pre‑condemnation survey access statutes survive facial takings attacks as background restrictions on property rights.

With the matter remanded, the district court must now address the merits: whether ch. 38‑22’s amalgamation framework provides constitutionally adequate protections for property owners whose pore space will host injected CO2. The outcome will have significant implications for carbon sequestration projects, landowner rights, and the future of subsurface energy and climate infrastructure in North Dakota.