The North Dakota Department of Environmental Quality Compliance Alert 

On October 5, 2020, the North Dakota Department of Environmental Quality (“NDDEQ”) issued a Compliance Alert intended to explain ongoing compliance expectations within the state for the oil and gas production sector. The Compliance Alert initially notes that the “overall compliance rate” at North Dakota oil and gas production facilities has improved significantly following the issuance of the Environmental Protection Agency’s (“EPA”) September 2015 Compliance Alert. Broadly speaking, EPA’s 2015 Compliance Alert noted the potential compliance concerns associated with the design, maintenance, and operation of storage vessels at oil and gas production facilities. EPA has used its 2015 Compliance Alert as the basis for several high-profile enforcement actions within the last several years.

NDDEQ’s Compliance Alert notes several additional potential compliance concerns observed by NDDEQ inspectors in 2019 and 2020. Among other items, NDDEQ notes that inspectors observed:

• Inoperable air pollution control equipment;
• Open or leaking thief hatches on tanks; and
• Smoking flares.

In addition to the observations of inspectors, NDDEQ notes that EPA’s National Enforcement Investigations Center Division conducted a Geospatial Measurement of Air Pollution (GMAP) survey of North Dakota's oil and gas fields in August of 2020. According to NDDEQ, the initial findings are “consistent” with NDDEQ’s inspector observations. The Compliance Advisory notes that these are “preliminary findings.” NDDEQ’s interpretation of this study, while vague, seems to indicate that NDDEQ believes that oil and gas facilities are potentially out of compliance, specifically when flares are not in operation or facilities have “excessive” leakage.

The Compliance Alert encourages operators to “revisit” the EPA’s 2015 Compliance Alert and “identify and correct deficiencies at production facilities.” NDDEQ further encourages operators to ensure proper design of air pollution control equipment and proper maintenance at such facilities. Finally, NDDEQ also notes that it is open to continued dialogue with operators to discuss the Compliance Alert and associated issues.

Moving forward, the Compliance Alert puts operators on notice that there may be additional compliance issues within the categories identified by inspectors. This potentially creates compliance and enforcement liability from NDDEQ and EPA. Of particular note, a change in a presidential administration may allow EPA to use NDDEQ’s Compliance Alert in a manner similar to how it used EPA’s 2015 Compliance Alert for future enforcement. Operators may wish to consider beginning a self-audit of their current their compliance with EPA and NDDEQ requirements and regulations. Such an effort, followed by self-disclosure of potential violations, would likely be received by NDDEQ in the spirit of the agency's offer of continued discussion on the issues highlighted in the Compliance Alert.

DGS attorneys have substantial self-audit and disclosure experience and would be happy to provide additional guidance or further discuss these issues. If you have further questions, please contact Randy Dann, John Jacus, or Will Marshall.