North Dakota's largest oil company butts heads with state over emissions regulations
BISMARCK — North Dakota's largest oil producer is fighting state regulators in court over what it sees as an overly strict reading of air pollution rules, which the state described as an effort to "weaken" those regulations.
Attorneys for the state and Oklahoma-based Continental Resources are scheduled to butt heads before the state Supreme Court Thursday, Sept. 5. The company is seeking to reverse a lower court decision dismissing its lawsuit against the North Dakota Department of Environmental Quality and is asking the justices to send the case back for further proceedings.
The legal spat pits the state against one of the flagship companies operating in North Dakota's oil patch. Continental Chairman and CEO Harold Hamm is seen as a pioneer of drilling technology that made North Dakota the country's No. 2 oil producer.
The dispute centers on state rules restricting the emission of volatile organic compounds, a broad category of air pollutants that can contribute to smog. In its brief to the Supreme Court, Continental said the rules are based on the understanding that flares and other emissions control equipment are not "leakless" and a "very small portion" escape from piping components.
But Continental argued state regulators have adopted a new stance by issuing notices of violation "based on the mere presence of an emission from closed tank hatches and control devices, without regard to whether an approved control device was installed and operating."
"Short of suspending operations completely, these fugitive emissions are unavoidable because, as the department itself recognizes, the leakless technology that would be required does not exist," the company wrote in its brief to the Supreme Court.
Continental said the DEQ's "flawed interpretation places a cloud of uncertainty over the compliance status" of more than 1,600 production facilities across the state. The company reported it produced about 149,000 barrels of oil per day in the Bakken during the second quarter of this year.
State regulators, however, dispute Continental's arguments.
"We believe that we're properly implementing state rules restricting emissions," said Jim Semerad, director of the air quality division at the DEQ.
In court filings, the DEQ outlined steps it has taken to reduce emissions in the years after state regulators found oil and gas production facilities here were emitting higher levels of organic compounds than their non-Bakken counterparts. The agency said the dispute with Continental began a few years ago, when regulators started using optical gas imaging cameras to inspect oil and gas production facilities.
"We believe that the (rule) interpretation hasn't changed and that we now see some things that are in violation of the rule," Semerad said.
The DEQ argued in court filings that Continental's rule interpretation would leave the department "powerless to act where a facility's control equipment was not working properly to control emissions." Semerad said Continental has paid "many tens of thousands" of dollars in fines over the emissions rule in the past several years.
Continental filed the lawsuit in state district court a year ago. Judge Bruce Romanick sided with the state in January in part because, he said, the dispute belonged in federal court.
A Continental spokesperson declined to comment on the lawsuit this week.