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North Dakota Eyes Federal Fights on Water, Endangered Butterflies

In the middle of attempting to manage an ongoing oil/natural gas boom, North Dakota officials are gearing up for possible fights with the different parts of the federal government over proposed water redefinitions and an added listing of endangered species in the middle one of the state's leading oil-producing areas.

While reporting another month of record oil/gas production last Friday, the state's chief oil/gas regulator, Lynn Helms, director of the Department of Mineral Resources, noted that the state is unhappy with the latest U.S. Environmental Protection Agency (EPA) draft redefinition of U.S. waters and is wary of a proposed new Fish and Wildlife Service (FWS) Endangered Species Act (ESA) listing of two types of butterflies that have habitats in the state.

Regarding U.S. waters changes aimed at U.S. Clean Water Act protections, Helms said North Dakota submitted comments on Friday asking EPA to "withdraw the redefinition and start all over." He said the state, which includes feedback from the Industrial Commission, Water Commission, Agriculture Commission, governor's office and state attorney general, is "unhappy with the redefinition and any of its alternatives."

Equally troubling to the state is the FWS announcement that it will add two butterflies on the ESA listing, and one of them, the Dakota Skipper, has a habitat that includes a significant part of the state's major oil/gas producing county, McKenzie.

"There is a nexus with existing and future oil/gas development that we are going to have to pay a lot of attention to," said Helms, adding that so far the state hasn't done much analysis on the listing's potential impact on oil/gas operations. "I would anticipate that this will be a topic of discussion at the upcoming state legislative session -- both the ESA and the growing number of species listed in North Dakota."

Helms said state lawmakers will be looking at what approach the state should take in working with the federal FWS on the issue.

Helms told news media on a webinar that the FWS listing is "threatened," as opposed to the more rigorous "endangered" categorization, but the state still needs to verify this. He said the state may try to adopt something like a model Texas has developed to deal with ESA designations to make them work and still pursue development.

Helms called the Texas approach a Ft. Hood model developed to deal with 19 endangered species that exist on the sprawling military base. "We're having some discussions with them," he said. "I think we will see some state legislation to create a North Dakota version of the Texas approach."

On another state-federal issue, Helms said initial progress is being made in opening a dialogue with the consolidated tribes on the Fort Berthold Reservation and federal officials regarding state jurisdictional questions, such as the state's new gas capture plans to reign in volumes of associated gas flared at the wellhead. On Fort Berthold, which accounts for a third of the state's oil/gas production, flaring levels are running higher than the rest of the state.

Last summer the three tribes -- Mandan, Hidatsa and Arikara -- outlined plans for imposing a fee on the amounts of wellhead flared wet gas coming from the booming Bakken shale oil production on the reservation (see Shale Daily, Aug. 14). And there are state, federal and tribal regulations all in play in the start of discussions with tribal leaders, Helms said.

The head of the tribes and his legal counsel will attend the next set of talks, according to Helms. "We didn't break any new ground as far as who has jurisdiction over what, but we talked about all of the different scenarios that could result in jurisdictional confusion, and gas capturing is just one of them," he said.

Other issues, Helms said, are waste treatment plants, underground injection control wells, and permitting of wells owned by non tribal companies. There are also a complex mixture of options and combinations revolving around mineral rights ownership, Helms said.

"We're taking baby steps, but we got the initial conversation started," said Helms, who added that the state Industrial Commission thinks it has jurisdiction in shutting down production for operators in noncompliance with the gas capture rules (see Shale Daily, May 15), although that has not been worked out yet with the tribes. There is still some question of how this would work in a case of a tribal-owned company dealing with tribal minerals, he said.

"It is really complicated and will be like playing three--dimensional chess with a matrix of decisions and jurisdictions.

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