Listen to any recent Newt Gingrich stump speech and you will be sure to hear him cite oil production in North Dakota as a shining example of the United States’ energy potential.
North Dakota, Gingrich is fond of saying, has emerged as the country’s third largest oil producer by eschewing the Environmental Protection Agency (EPA), as most of the drilling has occurred on private land. But the regulatory environment there is about to change with sweeping new rules — instituted not by liberal environmentalists but rather through collaboration between regulators and legislators from both parties — set to take effect on Sunday.
The most salient part of the regulations will bring about changes to so-called reserve pits, which oil companies have used to store waste generated from drilling. That system drew criticism last year when spring flooding — an annual phenomenon in North Dakota — inundated nearly 30 reserve pits, leading to $3 million in fines against the companies that used them to dispose of waste. The reserve pits were notable for their size, which made waste removal cumbersome. Waste disposal will now shift to much smaller designated sites, while the new rules will require the old pits to be emptied within one year.
Alison Ritter, public information officer for the Bureau of Mineral Resources, said that the regulations were an essential and logical response to North Dakota’s burgeoning oil industry, which has transformed once-sparsely populated communities into boom towns seemingly overnight.
“With the increase in activity and the increase in production that our state has seen, there was a need to keep up,” Ritter told TPM. “You have to evolve as industry evolves. If industry is growing and we’re still doing the same old thing, we’re not doing our jobs.”
The petroleum industry in North Dakota has taken off in recent years due to renewed interest in the Bakken formation, an oil-rich rock unit in the western part of the state where roughly 95 percent of drilling is targeted. Gingrich, who has seized rising gas prices as a wedge issue more than any other Republican presidential candidate, has used North Dakota as a central part of his energy pitch. In a half-hour campaign video released last month that detailed his now-ubiquitous pledge to reduce the price of gas to $2.50 per gallon, Gingrich made heavy reference to North Dakota, particularly the fact that much of the Bakken formation exists on private land and is free of regulatory interference. As Gingrich puts it, “liberals weren’t able to block us from developing [the Bakken formation].”
Gingrich is correct when he says that the lion’s share of North Dakota’s oil production has taken place on private land, but it should be noted that nearly 90 percent of the state is comprised of private land (also known as “fee land”). Moreover, the new rules will apply to production on privately owned land after receiving widespread support from members of both parties.
After earning unanimous approval from the North Dakota Industrial Commission, of which Gov. Jack Dalrymple (R) is a member, the regulations were brought before the Legislature’s Administrative Rules Committee. While the rules committee, which is made up of 13 Republicans and seven Democrats, does not explicitly approve regulations, it retains final authority to either request modification or void the proposals completely.
State House Rep. Kim Koppelman (R), the chair of the committee, said the panel saw no reason not to allow the regulations to proceed. “The committee did not find any legal missteps or any way in which the regulators overstepped the law or what the law authorizes them to do,” Koppelman, who is currently running for North Dakota’s lone Congressional seat, told TPM.
“We’re experiencing an oil boom unlike any before and that makes the job of regulators larger and presents issues that we haven’t faced before, which regulation needs to address.”
Ritter said the robust political support reflects the public’s own sense that there was a growing need for these changes, which will also include a $30,000 increase in the bond requirement for oil wells.
“The public understood that these rule changes needed to be done,” Ritter said. “We received a lot of comments from people and they were all about making the rules better, not that we didn’t need them.”
Regulations could eventually get even tougher in North Dakota, where oil companies have relied heavily on the controversial practice of hydraulic fracturing. The EPA is currently engaged in a closely watched investigation on the safety of “fracking.” But some industry representatives are already expressing staunch opposition to the state regulations. Ron Ness, president of the North Dakota Petroleum Council, told the Associated Press that the rules will impose undue cost on industry and might deter new businesses from starting up in North Dakota.
“They are the most onerous regulatory changes we’ve ever seen,” Ness said. “I’m a bit concerned about the cost of doing business in the state and that it could begin to discourage activity.”
Ritter disputes the notion that the new regulations are unfriendly to business, but admitted that if oil companies were universally pleased with the rules “that would probably mean that we hadn’t done a very good job.”
The North Dakota Petroleum Council represents over 200 oil companies working in the state. Ness would figure to have a natural ally in Gingrich, who relishes taking aim at President Barack Obama and the EPA for advocating purportedly unreasonable regulations that hurt business, but the former House Speaker has thus far been silent on the issue.
The Gingrich campaign did not respond to TPM’s request for comment.
Tom Kludt is a newswriter for TPM. A former research intern and polling fellow for TPM, he lives and works in New York City. Tom graduated summa cum laude from the University of South Dakota in May of 2010 with a B.A. in Political Science and History. He can be reached at Tom (at) talkingpointsmemo.com.