Republican lawmakers in North Dakota have initiated legislation that would bring already-established rules on reduced gas flaring and on oil conditioning standards for crude produced from the Bakken, Three Forks, and Sanish formations back into the statehouse.
Separately, a bill was introduced seeking to expand the North Dakota Industrial Commission from three members to five. The governor, attorney general, and agriculture commissioner now compose the NDIC. The bill proposes to add the state tax commissioner and Public Service Commission chairperson.
Rep. Keith Kempenich, R-Bowman, was a sponsor of both bills. He said House Bill 1187 involves rulemaking procedures.
HB1187 was filed in response to the NDIC authorizing reduced gas flaring goals in July and approving oil conditioning standards in December 2014 that are scheduled to become effective Apr. 1 (see story, this issue, p. 1).
Both measures were implemented by the NDIC without going through the Legislature's Administrative Rules Committee.
Separately North Dakota state Sen. Bill Bowman, R-Bowman, introduced a resolution in early January calling for an interim study of the NDIC's membership.
Concurrent Resolution 4009 said other states, using Wyoming for example, use regulatory boards whose members have direct oil and gas experience, expertise, or technical knowledge.
Flaring-reduction deadlines
Kempenich believes the Legislature's Administrative Rules Committee probably would have rejected the flaring-reduction order, which established goals and deadlines that he called "arbitrary."
On July 1, the NDIC adopted a plan that requires operators in the Bakken and Three Forks plays to restrict their oil production unless they complied with goals to capture 77% of gas production by Jan. 1, 85% by January 2016, and 90% by October 2020. Those goals stemmed from an industry task force.
The first deadline for the flaring-reduction plan called for operators to capture 74% of gas production by Oct. 1, 2014, under a flaring-reduction policy that the NDIC approved in March 2014. Gov. Jack Dalrymle signed the order (UOGR, July/August 2014, p. 18).
In January, North Dakota Mineral Resources Director Lynn Helms said operators have delayed completing wells as they work to meet the gas-capture goals. Helms said he believes it could be difficult for operators to meet the 85% goal by January 2016.
When asked by reporters about the proposed legislative changes, a governor's spokesman said Dalrymle did not see the need for such legislation.
"What problem is it that needs to be solved," Jeff Zent told The Dickinson Press. "We think the current Industrial Commission is doing a good job."
The oil-conditioning standard, set to become effective Apr. 1, requires operators to remove light hydrocarbons from crude before transporting it by railroad. The order is intended to ensure crude oil has a vapor pressure limit of 13.7 psi using the American National Standards Institute measurement. That standard was outlined by an NDIC rule and did not go through the Legislature's Administrative Rules Committee.
Various industry groups have questioned parts of the order (see comments, this issue, p. 6).
The bill introduced by Kempenich and other lawmakers would make void any general rules that did not go through the administrative rules process and that were put in place after June 30, 2014-meaning that it would include both the gas flaring goals and the oil conditioning standards.
But existing orders would not become void until the bill could be passed by lawmakers with an effective date of Jan. 1, 2016.
Kempenich said the NDIC would have to take the orders in question through the rules process, which can take about 10 months as it involves public notices, hearings, public comment, and reviews.
The bill that would expand the NDIC is HB1179, said Kempenich, adding it is an attempt to ensure that more people are involved with dealing with policy issues. Currently, two of the three NDIC members constitute a quorum under open meetings laws.