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ND bill would give elected leaders final say on oil penalties

BISMARCK - A bill introduced by a Democratic legislator would require elected officials to sign off before fines levied against oil and gas companies are reduced.

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BISMARCK – A bill introduced by a Democratic legislator would require elected officials to sign off before fines levied against oil and gas companies are reduced.

Senate Bill 2342 from state Sen. Tyler Axness of Fargo would require the North Dakota Industrial Commission to vote on any settlements with oil companies stemming from violations of the state’s rules.

Currently the Department of Mineral Resources director has the final signature on settlements of civil penalties.

The bill would require the Industrial Commission  - made up of the governor, attorney general and agriculture commissioner – to publicly vote by roll call to accept or reject a settlement. If they reject it, the settlement would go back for renegotiation.

“We want our elected officials to have the final say,” Axness said Thursday.


The Department of Mineral Resources proposes penalties for oil and gas companies that commit violations and routinely suspends up to 90 percent of the fine in settlement agreements. The practice drew public criticism following a report by the New York Times last year.

Director Lynn Helms defended the practice Wednesday during an Industrial Commission meeting.

"I think the No. 1 thing to point out is that since 2006 with the suspended penalties, we have had zero recidivism, we have had zero repeat offenders,” Helms said. “So the concept of leaving 75 to 90 percent of the penalty hanging over their head for one to five years causes them to change their processes and behaviors and results in long-term compliance with our rules, and that's our real goal."

The settlement agreements require companies to have no repeat offenses of the same or similar violation during the suspension period. It does not refer to a different type of violation, spokeswoman Alison Ritter said.

In all cases that have been resolved from 2013 and 2014, the suspension period was for one year, according to information presented by Helms. Ritter said there have been three- and five-year suspensions in the past.

Axness said the perception is that North Dakota is too lenient with penalties. More severe fines would deter bad actors from repeat violations and deter other businesses from breaking the rules, he said.

Helms told commissioners that the suspended fines force companies to review those violations routinely in their safety meetings to prevent repeat offenses from occurring, a sort of probation. Helms also said it’s important for the public to know that the Industrial Commission can propose a penalty and the only way to collect the fine other than to reach a settlement agreement is to sue in district court.

“I am a firm believer that the process that is being utilized by the Oil and Gas Division is super effective, and it's really making a difference in changing the everyday worker out there and changing their behavior,” Helms said.


Gov. Jack Dalrymple, Industrial Commission chairman, said during the meeting there ought to also be a punitive penalty in cases that involve someone who intentionally broke the rules.

In those cases, criminal charges also may be filed in addition to civil penalties.

Dalrymple said Helms’ rationale for how the Oil and Gas Division penalizes companies is a “fair explanation.”

The Industrial Commission plans to oppose the bill, Ritter said.

The bill has been referred to the Judiciary Committee. A hearing had not been scheduled Thursday.



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