Panel scales back new oil rules for North Dakota reservation

BISMARCK, N.D. (AP) – Tribal leaders from a prolific portion of North Dakota's oil-rich Fort Berthold Reservation are scaling back proposed drilling regulations that industry officials warned could slow crude production.

Leaders of a section of the reservation that produces the most oil recently formed the West Segment Regulatory Commission, based in Mandaree, to impose its own regulations on oil drilling activity in its region. The idea was not well received by industry officials, existing regulators or overall leadership of the Three Affiliated Tribes, which represents the Mandan, Hidatsa and Arikara people on the million-acre reservation in western North Dakota.

John Mahoney, an attorney for the commission, said Tuesday that it agreed to back off on most of the proposed rules. The commission will continue to require companies working in the area to register and pay a “nominal fee” and will “supplement and enhance” state, federal and tribal laws already in place, he said.

“We're being very cautious and easing into this,” said Mahoney, who also is a part-time tribal judge on the reservation. “We're not going into this with a big club.”

The reservation is divided into six sections, and the west segment, home to about 1,000 tribal members, is the busiest region for drilling. Leaders from the west segment had said the additional rules were proposed because residents had become fed up with increased environmental and crime problems.

“The objective was purely altruistic,” Mahoney said. “We don't want to be a big brother to oil. We're only trying to protect what we have.”

A full tribal council met last week and discussed the new regulatory commission in a closed-door session. Mahoney said the panel has since “suspended some of the implementation of regulations.”

North Dakota is the nation's No. 2 oil producer behind Texas. The reservation alone produces more than 300,000 barrels daily, or about equal to Colorado, the nation's seventh-biggest oil producer.

North Dakota Mineral Resources Director Lynn Helms, the state's top energy regulator, said the west segment of the reservation accounts for about 12 percent of the more than 1.1 million barrels of oil produced daily in North Dakota.

Helms said he was pleased the commission has decided to scale back on imposing additional rules, which he said would “create a whole new regulation paradigm.”

Industry officials have said additional rules would have added layers of costly and time-consuming bureaucracy.

“Companies need regulatory certainty,” said Kari Cutting, vice president of the North Dakota Petroleum Council, which represents more than 500 companies in North Dakota.

Shane Johnson, a tribal member who lives in the west segment and operates an oilfield services company, said he also was pleased that the proposed regulations were tabled.

“We already have every rule you can think of right now,” Johnson said.