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North Dakota Lawmakers Busy Tweaking Industry Rules

The North Dakota Legislature has carved out a new state environmental agency as a cabinet-level unit, set higher limits for spill reporting and established a safety/environmental self-auditing program for oil/natural gas operators in the state.

Separately, a conference committee of both legislative houses is still wrestling with a state budget, which could includes some cuts for the Department of Mineral Resources (DMR) and its oil/gas regulatory unit.

Both houses passed HB 1151, which would raise the limit for reporting spills of crude oil, produced water or natural gas liquids to 10 bbls or more. A group of landowners are urging Gov. Doug Burgum to veto the proposal, while oil/gas operators want it signed into law.

"It has not yet been sent to the governor, but it is probably the most talked about bill in the oil and gas sector," said an energy observer who monitors energy developments in the state legislature. "There is a lot of pressure from both sides, and ultimately the fate of this bill lies with the governor's office."

HB 1336, which was backed by the oil/gas industry, passed by the legislature and signed by the governor, establishes a new system of environmental and health/safety audits by oil/gas operators that allows them to avoid penalties for violations they uncover and report to the state. The law is effective Aug. 1.

"It sort of puts a 'find it and fix it' mentality into state law," said the state legislative observer, noting it was modeled after approaches used in Texas, Wyoming, South Dakota and Oklahoma. The state, through DMR or the Department of Health (DOH), still has the power to assess penalties if they find operators use the self-audits to intentionally avoid penalties. "Basically, it still gives the state some protection and doesn't eliminate the state's ability to penalize bad operators.

"Other oil-producing states have laws like this in place."

State lawmakers also took initial steps to create a Department of Environmental Quality (DEQ) from the environmental health unit in DOH. Under SB 2327, the director of the new department would have a position in the governor's cabinet. If the governor signs the bill, DOH will have a year to obtain the needed federal approvals and make the change. In the meantime, the DOH environmental health section head will oversee the state programs in this area. 

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