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N.D. lawmakers hear arguments on bill to split oil regulation, promotion duties

BISMARCK - Separating the North Dakota Industrial Commission's duties to promote and regulate oil and gas development would end an "unseemly" dual role but also have "enormous" unintended consequences that could put the state at a competitive dis...

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FNS Photo North Dakota Department of Mineral Resources Director Lynn Helms, shown here, is the state’s top regulator for the oil industry and advises the Industrial Commission. A bill would separate the commission’s role as a regulator and promoter of the industry.

BISMARCK – Separating the North Dakota Industrial Commission’s duties to promote and regulate oil and gas development would end an “unseemly” dual role but also have “enormous” unintended consequences that could put the state at a competitive disadvantage, lawmakers heard in competing testimony Thursday.

Democrats started calling for the split last year, citing the state’s response to oil spills such as the 2013 pipeline leak that tainted a wheat field near Tioga with an estimated 20,600 barrels of oil, the largest oil spill in history on U.S. soil.

The Industrial Commission has been charged with both regulating and promoting oil and gas development since the state’s first oil boom in the 1950s.

While it may have made sense then, “I think that time has long since passed,” said Sen. Connie Triplett, D-Grand Forks, the prime sponsor of Senate Bill 2366.

Shifting the commission’s promotional duties to the state Department of Commerce as the bill proposes would remove the appearance of a conflict of interest, “which does exist and will continue to exist” if the law isn’t changed, Triplett said.

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“I do believe that this dual role is unseemly and that it needs to be corrected,” she testified before the Senate Energy and Natural Resources Committee.

Wayde Schafer, a staffer with the Dacotah Chapter of the Sierra Club, said the commission, which oversees the state Department of Mineral Resources and its Oil and Gas Division, is expected to be both a regulator and head cheerleader for the oil industry, “and it just doesn’t feel right.”

“We would not expect a police officer to also be a social worker,” he said.

Department of Mineral Resources Director Lynn Helms countered that 16 other states have similar regulation-and-promotion language in their laws.

He said the commission doesn’t promote the industry – that’s the job of the North Dakota Petroleum Council, which also testified against the bill – but rather promotes responsible development and use of the state’s oil and gas resources and protection of landowner and mineral owner rights.

Mike Smith, executive director of the Interstate Oil & Gas Compact Commission, of which North Dakota is a member, said the phrase “to foster, to encourage and to promote” is part of a model conservation statute offered to states considering joining the compact. Five states, including South Dakota, have adopted the language verbatim, and nine other states use some combination of the terms.

Smith said he’s not aware of any other member state considering splitting their oil and gas regulatory agency’s duties to an unrelated state agency with no oil and gas regulatory authority.

“When no one else is doing it, I just don’t think it’s worth the risk,” he said. “I think it puts you at a competitive disadvantage.”

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Helms noted that other state agencies such as the Department of Agriculture and Game and Fish Department also are charged with regulating and promoting their resources, and he questioned whether the bill’s sponsors – all Democrats – would seek similar changes for those agencies.

“If the answer is ‘no,’ then what we’re looking at is anti-oil politics,” he said.

The committee took no immediate action on the bill.

 

Reach Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com .

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