Regulators to Give Written Reason for Cutting Oilfield Fines

January 2016, Vol. 243, No. 1

BISMARCK, N.D. (AP) — North Dakota regulators announced Monday that written justification will be provided if fines and other sanctions are lowered against companies that violate the state’s oil and gas laws.

It’s a major policy shift that comes amid public criticism for easing penalties as much as 90% against companies involved in spills and other oilfield violations. Regulators said it promotes cooperation and ensures sites are cleaned up.

Department of Mineral Resources Director Lynn Helms told reporters following a closed door meeting with the state Industrial Commission that he is to provide the documentation on all future cases.

“Part of the direction that we received was if a consent agreement is reached, that it clearly spell out any work that the offending party has performed in correcting the violation and preventing future violations, as well as anything that they’re doing or have done or are expected to do to receive any suspension of a penalty,” Helms said.

The North Dakota Industrial Commission, a three-member all-Republican panel led by Gov. Jack Dalrymple, oversees the Helms’ agency, which regulates the state’s oil and gas industry. The agency in the past has orally updated the commission quarterly on proposed sanctions or ongoing negotiations, with little detail made public.

The commission met more than an hour-and-a half Monday discussing six cases against companies, where the total of the six cases was more than $600,000.

Two of the complaints are against Houston-based Oasis Petroleum Inc. but Helms said the “root cause” of the sanctions against the company is “very different.” Helms said the practice of lowering fines through negotiations has been successful and no company has had any “recidivism” for the same violation in four years.

No action was taken on the complaints but Dalrymple said if a recommendation is made to lower sanctions a “written narrative” will be provided to spell out “what specifically is to be done for any discounting of a fine.”

Although not discussed in executive session on Monday, the biggest case pending in the state is a record $2.4 million fine levied against a Texas company for a pipeline spill that spewed saltwater and oil for three months before being detected.

State regulators have said they have considered easing the record fine levied in June against pipeline owner Summit Midstream Partners. But The Williams County Commission has gone on record as opposing a reduction of the fine for the largest pipeline spill in North Dakota history.

Written by James MacPherson, Associated Press