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McFeely: Dear John Oliver, North Dakota has given you more material

Mike McFeely

Maybe it's time for John Oliver to eviscerate North Dakota again. Apparently those who oversee the state's oil industry haven't learned anything.

The HBO comedian, host of the news-based "Last Week Tonight" program, tore the state a new one in October with a body-slam of North Dakota's cozy relationship with Big Oil and the Big Boys who run it. Gov. Jack Dalrymple, the three-person Industrial Commission of which he's a part and Director of Mineral Resources Lynn Helms were all shown to be rather pliant when it came to laying down the law for the oil industry.

Or, if you prefer, getting out of the way of the oil industry so it could run roughshod over the western part of the state to the detriment of its land and people.

Maybe your viewpoint depends on whether or not your No. 1 value is maximizing profit for oil barons like Harold Hamm of Continental Resources.

Anyway, much of Oliver's entertaining 19-minute piece was based on reporting from the New York Times. That newspaper did a major series of stories in late 2014 titled "The Downside of the Boom." Among its findings was that North Dakota was extremely lenient when it came to collecting fines from oil companies guilty of spilling oil or chemicals onto the state's landscape.

The state, the Times reported, "typically settles for about 10 percent of the assessed penalties."

For example, when Continental Resources was fined $220,000 for a spill, the company negotiated the fine down to a paltry $20,000.

The reasoning, according to state officials, is that North Dakota wants to be cooperative with oil companies rather than punitive because it wants to be allies instead of adversaries.

Sounds a lot like the dad who wants to be friends rather than the parent to his headstrong son. Seems like it has about the same results, too. Dad thinks he has a pal who trusts and respects him. Son sees a wishy-washy wimp he can take advantage of.

And it looks like Dear Old Dad is at it again. North Dakota regulators are considering reducing a $2.4 million fine given to a Texas company that spilled a record 3 million gallons of oil and saltwater near Williston in late 2014. A pipeline spewed contaminants for about three months before Summit Midstream Partners detected it.

In official-ese, the state and the company are "negotiating a settlement." In candid-ese, North Dakota is "flopping like a dead carp."

There is no compelling reason for the state to reduce a fine for an oil company that has soiled North Dakota's land and water with 3 million gallons of toxic waste.

It can't be that the state is worried about the financial health of Summit Midstream Partners, because the company reported a net income of $33.7 million for the first nine months of 2015. That comes from earnings before interest, taxes, depreciation and amortization of $157.2 million for the first nine months of the year.

In other words, the good old boys down in Houston can afford $2.4 million. It might sting a little bit, but they're not going broke by paying a fine that size.

And isn't that the point? If somebody breaks a rule, and is negligent in doing so, isn't a harsh penalty a way to ensure they'll be more alert next time? Or to make sure a company will put more safety measures or monitoring in place?

Not in North Dakota, where a Department of Mineral Resources spokeswoman said fines "are sometimes lowered to ensure proper cleanup and so that no similar violations occur."

So the state helps the company pay for the mess it made and hopes that if it's really nice to the Big Boys they'll do better next time.

It seems to not be working. The New York Times analysis found the volume of spills increased markedly in 2014, reaching about the same amount as 2011 and 2012 combined.

But this matters not to North Dakota leaders, who still seem to be mostly concerned about angering oil companies. And an angry oil company, one that is regulated or overseen too aggressively, might just up and leave. And we can't have that. At all costs, we can't have that. Or so the thinking goes.

That is the great fallacy. Of course the oil companies are not going to leave because of fines. They'll bolt because of low oil prices, yes. But there is sweet Bakken crude in the ground and it's not going anywhere. And the only way for companies to make their profit is to take the oil out of the North Dakota ground. A stiff fine will not deter them.

Remember Continental Resources, who had an already trifling fine reduced to insignificance? It earned $2.8 billion in net income from 2006 through 2013, according to the Times. It can afford more than a slap on the wrist.

That doesn't seem to matter to the state, however. It's apparently busy negotiating away money it's owed. Oil companies say "jump" and North Dakota asks "how high?"

Somebody call John Oliver. North Dakota is giving him new material.

Mike McFeely
Mike McFeely is a WDAY (970 AM) radio host and a columnist for The Forum. You can respond to Mike's columns by listening to AM-970 from 8:30-11 a.m. weekdays.
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