BISMARCK – Facing mounting criticism over the lowering of fines for oil and saltwater spills, North Dakota regulators were directed Monday to start providing written explanations of what oil companies must do in exchange for reduced fines.
The state Industrial Commission met for more than an hour and a half behind closed doors with Department of Mineral Resources Director Lynn Helms and legal counsel to review six outstanding spill cases with proposed fines totaling more than $600,000.
After the meeting was reopened up to the public, Gov. Jack Dalrymple, who chairs the commission, said that “going forward, we will have a written narrative on what is … specifically to be done in exchange for any discounting of a fine.”
The commission has been under increasing fire for its common practice of reaching settlement agreements with oil companies and suspending 75 percent to 90 percent of the fine amounts.
Last month, the Williams County Commission voted unanimously to send a letter to state regulators objecting to any reduction of a proposed record $2.4 million fine against Summit Midstream for a spill discovered about a year ago. A pipeline leaked an estimated 3 million gallons of saltwater, affecting Blacktail Creek and the Little Muddy and Missouri rivers, and the state alleges the pipeline was leaking for more than three months before it was discovered.
Helms told reporters after Monday’s closed-door session that part of the direction he received was, if a consent agreement is reached, to “clearly spell out” any work offending parties have done to correct the violation and prevent future ones, “as well as anything that they’re doing or have done or (are) expected to do to receive any suspension of a penalty.”
In the past, that information has been shared orally with the commission and wasn’t part of consent agreement documents, “so it was never put out there in black-and-white,” Helms said, though he noted they began summarizing the mitigating factors in a quarterly report around June.
“But this will now be spelled out in quite a bit of detail within any consent agreements,” he said.
Helms defended the practice of discounting fines to gain compliance from companies, saying, “In my opinion, it has been working,” and that there hasn’t been a repeat offense “of a very similar nature” by the same company in more than four years.
“We haven’t had any recidivism,” he said.
Two of the cases discussed Monday involved Oasis Petroleum, which paid a reduced fine in May for a previous violation. But Helms said the root causes of the violations are “very” dissimilar.
In May, Oasis paid $16,500 in fines and fees, with $60,000 suspended for one year, for a November 2014 mechanical failure that caused a well to release uncontrollably for three days in Williams County.
The commission is now proposing a $100,000 fine for Oasis for violations related to an out-of-control well that spewed oil, gas and brine for four days near the White Earth River in Mountrail County in October. Also discussed Monday was an $87,500 fine proposed for Oasis for a May saltwater pipeline spill that affected a creek and Smishek Lake in Burke County.
“I think once you see the facts, you’ll see why the commission doesn’t believe that that is a same or similar event,” Helms said.
Dalrymple said the commission took no action on the proposed fines Monday but gave its attorneys guidance on developing the final orders, which will be reported back to the commission as recommendations at a later date.
Reach Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com .
