A Loophole Big Enough To Drive A Fracking Truck Through

I’m working on an article for a magazine I write for about the North Dakota Industrial Commission’s new policy for siting oil wells, and I thought I might share some of what I have learned here, because it’s pretty interesting and I can often say things here that my editor at the magazine (although he is fairly generous with me) won’t let me say in print. Things like bad words, really bad words, of which I have a few on my mind today. Let’s see if I can get through this without using too many of them.

The article zooms in on the Industrial Commission’s Policy “NDIC-PP 2.01,” more commonly known as Wayne Stenehjem’s “Special Places,” “Extraordinary Places,” or “Areas of Interest” policy. That’s the policy that identifies 18 of these “Areas of Interest” in the Bakken oil field which have some intrinsic value beyond the minerals under them, generally scenic values, critical wildlife habitat or historical significance. Stenehjem’s idea, proposed to his two fellow Industrial Commission members Jack Dalrymple and Doug Goehring last winter, was to run a routine check on drilling permit applications, and if the request is for mineral development in or near these special areas, that they are subjected to some scrutiny, both by the public and by knowledgeable state and federal officials, to make sure that if a well is sited, the company developing it goes a bit out of its way to make sure it is placed in a spot where it will do the least amount of damage to those intrinsic values. Like tucking the well behind a butte, or keeping it out of woody draws that mule deer like for procreating, sleeping and eating, or out of sight and sound of an eagle’s nest. I published a list of those areas a week or so ago.

That policy took effect May 1. It generally says that when an application for a drilling permit arrives at the Oil and Gas Division, someone on the staff will check it against a list, and if it is on public land, and near one of these places, a process is triggered to enforce the policy. As far as I am concerned, that person—whoever it is—now has the most important job in North Dakota: Starting a process which will help protect the most important places in western North Dakota.

I don’t know who that person is, or if there are more than one of them. Alison Ritter, spokesperson for the Oil and Gas Division, outlined the process for me. To make it happen as efficiently as possible, the Division has compiled a pretty sophisticated GIS tool (you can actually look at the map by going here), and the application is checked against it both when it arrives and again during the evaluation process. If it scores a hit with the areas of interest list, a process begins which includes a review, public comment, agency comment and, hopefully, mitigation. Here’s the process outlined in the policy:

NDIC-PP 2.02. The director shall, within five calendar days after receiving an application to drill a well on public land within an area of interest identified under NDIC-PP 2.01: 

 A. Post on the daily activity reports (emphasis added) section of the Department of Mineral Resources website a notice including all non-confidential permit application information. The posted notice shall include all supporting information or records provided by the applicant which are not confidential. Public comments about public lands within the areas of interest regarding such issues as access road and well location, reclamation plans and timing, noise, traffic, and visual impact mitigation, will be accepted by the Industrial Commission executive director’s designee for 10 calendar days after the notice is posted. 

B. Forward the portions of the application that are not confidential to the Director of North Dakota Game and Fish Department, the State Historical Preservation Officer, the Director of North Dakota Parks and Recreation Department, the Director of North Dakota Department of Transportation, the Commissioner of North Dakota Department of Trust Lands, the State Engineer of the North Dakota Water Commission, the State Director of the Bureau of Land Management, the Park Superintendent of Theodore Roosevelt National Park, the Supervisor of Dakota Prairie Grasslands, the Field Supervisor of United States Fish and Wildlife Service North Dakota Field Office and the county auditor of the affected county. Any comments regarding the permit application may be accepted by the Industrial Commission executive director’s designee (Note: I wrote about this designee last week) within 10 calendar days after the information is sent. 

NDIC-PP 2.03. All comments shall be reviewed by the Industrial Commission executive director’s designee who shall summarize any comments received for the director of the Division of Mineral Resources. However, the Mineral Resources director is not bound to act upon any comments. (emphasis added)

NDIC-PP 2.04. The director may consider the comment summaries for the purposes of attaching conditions to any permit pursuant to NDAC 43-02-02, 43-02-02.2, 43-02-02.3, 43-02-02.4, 43-02-03 and 43-02-05 to mitigate potential impacts to the sites listed in NDIC-PP 2.01.

So, as you can see, the process can be used to write and attach special provisions to a drilling permit, designed to help protect these “Special Places.” The Division Director, Lynn Helms, can do that if he wants to, but he doesn’t have to.

It was a good idea Wayne Stenehjem had, and even though it was gutted to remove drilling on private land from consideration—only lands owned by the state, federal or local governments will get this scrutiny—it creates an awareness that we should be considering things other than maximization of wealth to drillers and mineral owners when we site an oil well—at least on public lands.

The problem with the policy is that there is a loophole in it big enough to drive an oil well fracking truck through. Or a thousand trucks, or, possibly fifty thousand or a hundred thousand trucks (I’ve been told it takes a thousand trucks full of water and fracking material to complete a well). Here’s the loophole which is the problem:

The policy only applies to drilling permit applications received by the Oil and Gas Division after May 1, 2014. Applications. Paperwork that comes into the Division office asking for permission to drill a new well. Paperwork that is coming into the Oil and Gas Division now, since the policy took effect May 1.

It does not apply to applications received before May 1. That’s the loophole. You see, one rainy day a couple of weeks ago I was looking at those “Daily Activity Reports” mentioned above (you can see them here), and I spotted approval of a drilling permit for a well to be drilled on state-owned land about half a mile from the boundary of Theodore Roosevelt National Park’s South Unit. Wait a minute, I said. That’s within the “Areas of Interest” boundaries. How come the new policy doesn’t apply?

Well, it doesn’t apply because the application came in before the policy took effect. So even though it is now the policy of the state of North Dakota to carefully examine all oil well sites for their impact on the neighborhood and those who live in it, it doesn’t apply if you beat the deadline.

Well, that’s a bummer. We’ve got a policy in place, but it doesn’t apply right now. We’re going to go ahead and allow wells inside these “Special Places,” as long as they beat the deadline, defeating the purpose of the very policy we put in place to prevent that.

I just happened to look at the legal section of the Bismarck Tribune the very next day, and there was a legal notice posted by the U.S. Forest Service that they were signing off on a well about a mile and a half from the North Unit of the Park, again inside the two-mile boundary zone of the Park that the state wants to protect. Same story. The application came in before the deadline.

I began to wonder just how many of these applications were now on file with the Oil and Gas Division, awaiting approval. See, the Industrial Commission had been discussing this since back in December, so oil companies had four or five months to get their applications in before the policy took effect on May 1. So if they knew they were going to want to drill next to the national park, or beside a wildlife refuge, or snugged up against the shoreline of Lake Sakakawea, they just hurried up and got their applications in before May 1.

So I sent an e-mail to Alison Ritter, a very helpful spokesperson for the Oil and Gas Division, asking how many permit applications were on file when the policy took effect May 1.

1,062.

You read that right. On May 1, the day the new policy took effect, there were more than a thousand pending applications to drill for oil sitting on somebody’s desk at the Oil and Gas Division, and none of them were subject to the new policy, because they were submitted before the deadline. I don’t have any way to determine how many of them are inside the boundaries of the “areas of interest,” and I have a bit too much fishing and gardening and golfing to do to spend my time looking at a thousand applications to see how many are inside those “Areas of Interest” boundaries, but I do know there are at least two—the ones I just mentioned—and that there are probably more. Maybe a lot more.

Well, shit, that’s discouraging. The oil industry has plenty of time to screw up the “Special Places” before they have to start following the new rules. And there’s nothing we can do about it. Legally, at least.

Last Spring, when the Industrial Commission was putting the finishing touches on the policy, the Attorney General told me he’d like to have coffee and visit about this. So last week I took him up on that offer. I took him copies of the map that showed the locations of these two wells that are going to be drilled inside the two-mile boundary around Theodore Roosevelt National Park, and asked him if there was anything we could do about them, and the other 1,062 pending applications. He was interested in finding out. He said that he’d check to see what could be done with those 1,062 pending applications. We agreed that, legally, the oil companies can plunge ahead. But Wayne thought he might see if we could get some agreement about informally checking those permit applications to see if any of them would have the new policy applied to them if they had come in after May 1. And then, maybe, in good faith, the Oil and Gas Division director could ask the companies to work with him on siting those wells and the roads to them. I expect Wayne’s working on that right now. But I won’t hold my breath waiting for a positive outcome. I know those folks over at the Oil and Gas Division.

So, right now, the old rules still apply. If you’re an oil company and you got your application to drill a well on a school section next door to the National Park filed before May 1, you can just go right ahead. I don’t know how old those applications are, but Ms. Ritter told me it takes an average of 27 days from the time an application arrives until it is approved by the Oil and Gas Division. As I write this, May 1 was about 75 days ago, so all of those should have been approved and issued by now.

I don’t know how many of those 1,062 might have been inside the boundaries of the “Areas of Interest,” but my cursory look showed me there were two, so it’s likely there are more if you carefully scrutinize the daily activity reports. I’m not doing that. I’m going fishing.

I hope Wayne will ask three questions of his staff over at the Oil and Gas Division:

  1. How many of those 1,062 applications have yet to be acted on?
  2. Would you please check and see if any of those not yet acted on are inside the “Areas of Interest” boundaries?
  3. Would you see if you can get your experts, like wildlife or historic preservation staff , to take a look at them and see if there are any problems, and if there are, talk to the oil companies about rectifying them?

That would be a nice thing to have happen, and it would reassure all of us that the state is serious about this business of looking out for “Extraordinary Places.”

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2 Responses to A Loophole Big Enough To Drive A Fracking Truck Through

  1. Marvin Nelson says:

    You are on to something there. Note that the Dept of Mineral Resources has bragged for a long time about how fast they process applications compared to the feds. Unless their time of processing has gone way down and they haven’t bragged about that, they normally process everything in a month. So the backlog would normally only be one month and if one figured that roughly 12 times as many would be a year we suddenly see a year of 12,000 wells. Well that isn’t going to happen. It looks more like they suddenly have a backlog equal to about 6 months of drilling. So companies probably rushed in and permitted before the rule and of course they would be concerned most with the special places. If a fair percentage of those permits are concerning the special places they will have so many wells in the future that permits will probably be largely putting another well next to the existing wells.

  2. Tim Lamey says:

    I agree that some number of wells may be taking advantage of the loophole, However, the more important consideration is that the policy does not have any real teeth and there is little evidence that the Industrial Commission or the Dept. of Mineral resources are willing to do anything to get in the way of the profits for the oil companies, owners of the mineral rights, and ultimately the state (via the North Dakota Legacy Fund). The onus is on the commenting agencies to respond to permit applications quickly and hope that their arguments sway an administration that is unwilling to acknowledge the long-term costs of oil development. There is little reason to believe that even if all 1062 applications were subject to the new policy that there would be any affect on oil development in these areas.

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