North Dakota Court Dismisses Flaring Cases

You might recall that North Dakota achieved nationwide notoriety when photos of flaring Bakken wells visible from space circulated around the news. According to the U. S. Department of Energy, at times North Dakota has flared 33% of its gas production, compared to the 1% average nationwide.

You will not be surprised to know that mineral owners whose royalties are going up in flames are beginning to look to the civil justice system for redress. At least in North Dakota, the courthouse isn’t the place to start. A federal judge has dismissed 13 of 14 lawsuits filed against operators in North Dakota by mineral owners seeking damages for illegally flared gas.

The Statute

Under North Dakota law, flaring is generally permitted for one year from first production. Thereafter flaring must cease unless the producer obtains an exemption, which could be for reasons such as economic infeasibility. Producers must pay royalties and taxes on gas flared in violation of the statute.

The Cases

One case was Lawyer v. EOG Resources, Inc., in which the plaintiffs claimed royalties for illegally flared gas, waste and conversion, and claims under the Environmental Law Enforcement Act. The plaintiffs sought to certify a class consisting of similarly situated royalty owners.

The court granted EOG’s motion to dismiss. Plaintiffs failed to exhaust their administrative remedies.  Before making a federal case out of it, they should have petitioned the North Dakota Industrial Commission for relief, and no private right of action exists under the state flaring statute.  The court also found that the ELEA, which allows private lawsuits for violations of environmental statutes, could not be used to circumvent exhaustion of administrative remedies and that the flaring statute preempts common law conversion and waste claims and also precludes claims under North Dakota’s general waste statute.

Chapter 38-08 of the North Dakota Century Code sets forth comprehensive remedies and procedures in order to obtain relief for flaring violations. Interested parties may petition the North Dakota Industrial Commission for a determination of whether gas is being flared in violation of the flaring statute and seek judicial review of any adverse order. These plaintiffs did not fall within any recognized exception to the exhaustion doctrine, such as matters of purely statutory construction, or where exhaustion of administrative remedies would be futile.

I admit it. Today’s musical interlude is too clever, as obvious as a middle-school joke.

Coming Soon

Why is there flaring and what is the industry doing about it?

Maybe someone can explain why it called is the ”Century Code”.

To Conclude

Today is the 70th anniversary of D-Day. Be proud … and thankful!

 

Topics:  Bakken Shale, DOE, Oil & Gas, Royalties, Underground Injection Wells

Published In: Administrative Agency Updates, Civil Procedure Updates, Civil Remedies Updates, Energy & Utilities Updates, Environmental Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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