Two North Dakota Democratic leaders want to see a split in what the Department of Mineral Resources director is charged to do in his job, in hopes of restoring public trust.
Minority leaders Sen. Mac Schneider, D-Grand Forks, and Rep. Kent Onstad, D-Parshall submitted a letter to the Industrial Commission on Jan. 14 asking that they separate the duties of promotion and regulation under their authority.
Their request stems from what they feel is a conflict of interest for the Department of Mineral Resources director’s job duties. The letter says “the public is ill-served by a Director who is charged with regulating the development he is duty-bound to promote.”
The state’s official policy is “to promote the development, production, and utilization of natural resources of oil and gas” for the sake of various ends, including providing for “a greater ultimate recovery” of these resources.
The Democrats contend that since the Industrial Commission is responsible for operations of oil and gas production, and the director of Mineral Resources is tasked with those duties, that the position requires “promoting oil development while simultaneously regulating it.”
Democrats want the director to shed a hat
The two legislative leaders believe the roles of regulator and promoter should be separated, and they would like to see the promotion role in a separate department. They are in favor of resurrecting the concept that Gov. Jack Dalrymple introduced at the start of the 2013 legislative session to create a new division within the state’s Department of Commerce that would have the sole focus of promotion.
“If you have a promotion role in a completely different agency, that would make sense,” Schneider told Petroleum News Bakken following the submission of the Jan. 14 letter. “That person can do the public speaking and the promotion end of things. Whereas, the regulator can focus exclusively on siting waste pits, on ensuring that we’re able to transport this valuable natural resource safely. I just think it’s a matter of focus.”
According to legislative records, the original state policy passed in 1953. At that time, the state geologist was responsible for these activities and served under the Board of Higher Education. The Geological Survey staff that carried out the regulatory duties were moved in 1981 into a newly created Oil and Gas Division which came under Industrial Commission’s authority. Then in 1989, the survey was shifted from the Board of Higher Education’s authority to the Industrial Commission. In 2005, the Geological Survey and Oil and Gas Division merged, resulting in the Department of Mineral Resources and giving the Commission authority to name a director to take on both promotion and regulation of the industry.
Schneider and Onstad feel that due to the increase in oil activity in the state, the Industrial Commission has put too much on the director’s plate.
“When wearing these two hats, especially as busy as that position has been the last couple of years, there’s always going to be the chance for human error. And that happens. But structurally how do we diminish that human error? I think you can do that meaningfully to have one person focus on the promotion role, and one person on regulation,” Schneider said. “We didn’t write that letter to take a shot at Mr. Helms. This is about policy of the Industrial Commission. In a lot of ways they have put Mr. Helms in an untenable position, with broad delegation of their authority. There are two jobs there for two different people.”
Onstad told Petroleum News Bakken they want to “put the impetus on the Industrial Commission” to make a decision immediately.
“The Industrial Commission can make the change,” Onstad said. “We encourage that.”
Helms doesn’t see himself as a promoter
Helms told reporters on Jan. 14 in response to the letter that when he took the director position in 2005, the two roles were joined with the hope that synergies would be created by having a promotional and investigative agency in close proximity regulating the industry that geologists were promoting.
“I think the results speak for themselves because production is up 10 times what it was in 2005,” Helms said.
Despite how policy reads, Helms said he sees himself as a regulator, not as a promoter.
“Promotional? When I think of promotional, that’s someone who appears in ads, that sort of thing, and that doesn’t happen,” he said. “Sometimes I am asked to make predictions on the basis of my industry experience, or my knowledge from what geologists are finding, and I’m asked to help with projections by legislators. People may get the impression that those are promotional activities, and maybe they are, but they are from requests from people who want to know the answers.”
Industrial Commission should take the heat
In their Jan. 14 letter, the two Democratic leaders cite examples of when they found the director’s two hats to be problematic. They mention the September 2013 oil spill near Tioga when legislators felt they were “kept in the dark” regarding the incident. The letter also refers to comments Helms made in December 2013 about a potential oil content study that would try “to dispel this myth that (Bakken oil) is somehow an explosive, really dangerous thing to have traveling up and down your rail lines.” Just weeks later, a train derailment and explosion near Casselton caused the legislators to question Helms about those comments, but Helms told reporters on Jan. 14 that his words were misconstrued.
“Maybe what got to people was the word ‘myth,’” Helms said. “Sometimes they are proven true or false. There wasn’t any intent to characterize that this would come out false … because what we need to do is do the science, collect the facts, and see where that takes us.”
The letter also makes note of an error in which Helms’ department allowed the permitting of an oil waste site within a water supply zone in Mountrail County.
“While we understand Director Helms has pled human error with regard to the siting of these waste pits, we believe the chances for such human error would be meaningfully diminished if the role of promoting oil development were separated from the regulation of such development,” the letter states.
Onstad noted that though the examples were specific to Lynn Helms, the buck stops with the Industrial Commission.
“If Lynn Helms is going to take the heat for something, the Industrial Commission really should share that because they are the overseers of the oil and gas division,” Onstad told Petroleum News Bakken. “It isn’t Lynn Helms that needs to defend his position; we’re just saying it’s a conflict of interest.”
