Citing state policy that makes the state's chief oil and natural gas regulator both a promoter and regulator for the industry, minority Democrat North Dakota state legislative leaders on Tuesday asked Republican Gov. Jack Dalrymple to shake up the state Department of Mineral Resources (DMR) that oversees the oil/gas sector.
The lawmakers were reacting to a series of oil-transportation incidents in the state or involving its robust Bakken crude oil supplies. DMR, which is overseen by the three-member state Industrial Commission that includes Dalrymple, does not regulate the transportation of energy supplies.
State Senate and House minority leaders, Sen. Mac Schneider and Rep. Kenton Onstad, wrote to Dalrymple and the two other Industrial Commission members, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring, expressing their concerns about the DMR's oversight of the industry, alleging that the "public trust" has been eroded by recent incidents.
With oil production having increased tenfold in less than a decade, the lawmakers contend it no longer makes sense to have the DMR Director Lynn Helms be both a "lead promoter and regulator" of oil development. "We must take steps to restore citizens' faith that we need not trade public health/safety for the sake of development," the two lawmakers wrote.
Helms, a long-time state oil/gas official, is the focus of the lawmakers' criticism in the two-page letter to the governor and the two other statewide elected officials on the Industrial Commission. They cited an oil pipeline spill last fall that Helms delayed making public (see Shale Daily, Dec. 4, 2013; Oct. 28, 2013). They also noted the DMR head's comment early in December to a legislative interim committee before the Dec. 30 crude oil-carrying train derailment in Casselton (see Shale Daily, Dec. 31, 2013).
The lawmakers asked Dalrymple to have the commission separate and clarify the promotion and regulation roles for Helms. Longer term the governor should support legislation that would transfer the oil/gas promotion role to the state Department of Commerce. They cite a proposal by Dalrymple in the 2011-13 executive budget to create a new unit in Commerce to "promote the development of all of North Dakota's energy resources."
On a webcast Tuesday reporting the latest monthly oil/gas production statistics, Helms sought to clarify remarks he made to the state legislature's Interim Government Finance Committee Dec. 12 in which he said rail oil shipping was "under pressure" and he thought the state should undertake a study (now being done by the federal government) to compare the composition of Bakken sweet light crude oil to other crudes produced around the nation.
In those remarks, Helms said the state would try to remove the "myths" about Bakken crude, and this stirred criticism from the state legislators and others, questioning whether he was forsaking his regulator role to be a promoter for the industry at a time when federal authorities were raising questions about the safety of rail shipments of the state's crude supplies.
In response to questions from news media Tuesday about his role, Helms said it is defined in state law (NDCC 38-08-01) "and only the legislature can change it." He said what the state lawmakers are suggesting is to go back to a system that was in effect prior to 2005 when he became the head of DMR and the oil/gas division and state geological survey were merged under him with the Industrial Commission setting the policies.