A North Dakota legislator questions whether the state is tough enough on operators who violate Industrial Commission rules, but regulators claim enforcement is adequate.
Department of Mineral Resources Oil and Gas Division Assistant Director Bruce Hicks gave the Energy Development and Transmission legislative committee an update on July 8 on his office’s ongoing remediation projects as well as what it is doing to determine effective pipeline monitoring to prevent spills. But as Hicks continued with his presentation and began to describe the process for cracking down on state rules violators, committee chairman Sen. Rich Wardner interjected and admitted some frustration.
“I get a little tired of people pounding on us all the time like we’re the wild west out here, we have no rules and we just let everything go in the oil patch,” he told Hicks. “I don’t think that’s true, but are we prosecuting some of these people?”
Hicks responded that the state does prosecute, and that currently his office is working on approximately 15 complaints whereas five years ago it may have only had two or three all year.
“We spend a lot of time on complaints,” Hicks replied. “We meet once a month on them to make sure we’re tracking them all and proceeding. It’s something we’ve tried to step up.”
Hicks described the process saying the commission prefers to handle the violation at the field level with an inspector approaching well site operators to correct the problem. If that fails, the commission submits a letter to the operator, and if that garners no response, a complaint letter is filed. Hicks said many of the complaints are settled, and then the company is put on notice for a year or two so if they commit a similar violation, they will have to pay a fine. In some instances, the company must attend an administrative hearing for a judge to preside over the case.
“Our philosophy in the past is to not fine them but to use that money to get them to correct the action,” Hicks said. “But some complaints are filed immediately because we believe some actions of an operator do warrant a complaint.”
Wardner pressed the issue saying the state gets criticized for not having stiff enough fines and enforcement.
“Do we, as a Legislature - is there something we should do? Increasing fines? I suppose you could use more people,” he continued. “But what’s your feelings?”
“The fines are very adequate,” Hicks responded. “We can fine up to $12,500 a day and each day is a separate violation. So if an operator was out there doing something and they were continually violating the law that really mounts up.”
He added that if the operator is making a willful act to break the law, it is a Class C felony and the commission has “gone after” some operators through the attorney general’s office.
Dumping filter socks and saltwater
Wardner questioned whether the party responsible for dumping filter socks near Noonan in Divide County in March has been tracked down and prosecuted. Hicks said he was not a part of the investigation but believed evidence from the site was still being reviewed. Hope Hogan from the state’s attorney general’s office told Petroleum News Bakken in an email that on June 4, the commission filed an administrative complaint against Zenith Produced Water LLC alleging violations of North Dakota Administrative Code for improper disposal of used filter bags and for allowing the filter bags to spill or leak onto the ground and infiltrate the soil. An answer from Zenith has not yet been filed.
In April, Wyoming-based Black Hills Trucking was charged with allowing saltwater to flow on the ground, improperly disposing of it, and failing to have a license to haul waste. The commission was seeking more than $950,000 in the case and the attorney general’s office charged the driver of the truck with a Class C felony for illegal dumping.
Presently, the parties are working toward negotiating a settlement, Hogan said.
Hefty penalties help keep bad players out of the state
Halek Operating, a company fined more than $1.5 million by the commission in 2012 for illegally dumping 800,000 gallons of saltwater down a well near Dickinson which threatened area groundwater, never paid the penalty. The case records on file with the commission state that the violations admitted by Halek were “amongst the most egregious violations ever pursued by the Commission in a complaint action.” However, to date, the only money the state has received is a bond of approximately $40,000 that Halek posted on its well which was confiscated after the District Court issued a judgment against Halek, Hogan said. Halek had transferred ownership of the disposal well to Nathan Garber and the commission ordered Garber to pay just over $4,800 which included a $2,500 fine, $1,800 in restitution, plus criminal court fees. Hogan said Garber has paid off the entirety of this amount and was placed on supervised probation for two years, which is still in effect but was transferred to Montana where he now resides.
Alison Ritter, spokeswoman for the state’s Department of Mineral Resources told Petroleum News Bakken that the commission will exhaust all avenues to collect any and all assets Halek holds in North Dakota which the commission may be able to seize for further payment of the fine. She added that judgments can be pursued for 10 years in North Dakota.
“The commission believes that assessing a significant fine against Halek will prevent it from doing business in North Dakota until the fine is paid in full,” Ritter said.
She noted that from an oil and gas perspective, in most cases a percentage of the fine is collected and the rest is suspended because the commission makes the operator aware that the rest of the fine would be collected if it fails to comply with cleanup or if it has any other violations.
Whether enforcement is “adequate” or not, Wardner wants to be armed with the facts.
“I will tell you that I do get a little irritated that North Dakota is painted as a state that we’re greedy, we take the money and let the industry do what they want because nobody’s watching them,” Wardner said. “I don’t think that’s true and I’d like to make sure I have the facts to prove that because we’re being watched by a lot of people.”
