from the District Court of Williams County, Northwest
Judicial District, the Honorable Paul W. Jacobson, Judge.
W. Morrison Jr. (argued) and Anthony J. Ford (appeared),
Bismarck, ND, for appellant.
L. Hogan (argued) and David P. Garner (appeared), Office of
the Attorney General, Bismarck, ND, for appellee.
KAPSNER, SURROGATE JUDGE.
1] Black Hills Trucking, Inc., appeals from a judgment
affirming an Industrial Commission order assessing a $950,
000 civil penalty and costs and expenses against it for
illegally dumping saltwater on roads in Williams County. We
conclude the Commission regularly pursued its authority and
its findings and conclusions are sustained by the law and by
substantial and credible evidence. We affirm.
2] Black Hills is a Wyoming corporation that is in the
business of transporting crude oil, produced saltwater,
petroleum products, oilfield equipment and other materials.
During 2014 Black Hills owned and operated trucks in North
Dakota for the purpose of transporting oilfield waste. On
February 11, 2014, the Commission received a report from a
security officer for Continental Resources, Inc., that he had
photos and video of a Black Hills truck dumping substantial
amounts of fluids onto roads near a saltwater disposal well
in Williams County. Commission staff examined the affected
roads and collected a soil sample. The Commission also
collected logs from the well which indicated a Black Hills
driver had transported saltwater to the well on February 8,
3] On February 14, 2014, a Commission field technician
observed a Black Hills truck leave the same well site and
stop on the road. The driver opened the valves on the tractor
trailer and drove away discharging produced fluids on the
road. The technician followed the truck until it pulled off
of the highway and into a truck yard where it continued to
discharge fluids on the ground that pooled under the open
valves. The technician took a sample directly from the
discharging fluids and took soil samples from the road.
Commission staff then requested a meeting with Black Hills to
discuss the incident, and a meeting was held on February 28,
4] At the meeting, Commission staff discussed Black
Hills' understanding of the February 14 incident and the
company's response to it. The February 8 incident was not
discussed because the Commission was continuing to
investigate what occurred. Black Hills placed the truck
driver on probation and reprimanded him through the loss of
his safety award and bonus.
5] On March 3, 2014, the Commission confirmed through lab
analysis that the soil sample from the February 8 incident
contained elevated levels of electrical conductivity and
chlorides consistent with saltwater. On the same day the
Commission received another report of a Black Hills truck
improperly dumping fluids. Employees at the same well site
observed the truck unloading saltwater and exiting, leaving a
trail of saltwater from the disposal well, continuing off the
well site and onto a county road until it intersected a
highway. One of the employees confirmed that the discharged
fluids contained saltwater. On March 6, 2014, the Commission
received the lab analysis of the samples related to the
February 14 incident which also indicated high levels of
electrical conductivity and chlorides consistent with
saltwater. Black Hills did not file a spill report, test to
determine the extent of contamination, develop a remediation
plan or take any further actions to clean up or remediate the
areas affected by the improper discharge of saltwater from
the three incidents.
6] On March 13, 2014, the Commission issued an administrative
complaint against Black Hills for the three incidents and
requested penalties in the amount of $950, 000 and costs and
expenses of $1, 526. Counts one through three of the
complaint claimed violations of N.D. Admin. Code §
43-02-03-19.2 for dumping the produced fluids on three
occasions. Counts four through six alleged violations of N.D.
Admin. Code § 43-02-03-30.1 for allowing the fluids to
infiltrate the soils on three occasions. Counts seven through
nine alleged violations of N.D. Admin. Code §
43-02-03-30.1 for failing to properly remove the discharged
fluids from the roads. Count 10 sought the Commission's
investigative costs and expenses under N.D.C.C. §
28-32-26. The Commission sought fines of $12, 500 per day for
each violation. The vast majority of the Commission's
proposed fine related to the violations alleged in counts
seven through nine.
7] On March 19, 2014, the Department of Health issued a
notice of violation against Black Hills concerning the three
incidents and its failure to report them, as well as its
failure to have a valid waste transporter's permit for
the previous six years. The Department alleged Black Hills
"placed wastes where they may cause pollution of waters
of the state" in violation of N.D.C.C. §
61-28-06(1). To resolve that proceeding, Black Hills entered
into an administrative consent agreement with the Department
under which Black Hills admitted responsibility for the
oilfield waste illegally discharged during the three
incidents. Black Hills agreed to an administrative penalty of
$459, 000, with $259, 000 of that amount suspended.
8] An evidentiary hearing on the Commission's
administrative complaint was held in December 2015 before an
administrative law judge ("ALJ"). In February 2016,
the ALJ recommended that the complaint against Black Hills be
dismissed with prejudice. The ALJ's decision was
presented to the Commission at its March 2016 meeting, and
after an executive session with its legal counsel, the
Commission rejected most of the ALJ's recommendations and
directed its legal counsel to draft an alternative order for
consideration. At its April 2016 meeting, the Commission
approved an alternative decision by unanimous vote finding
Black Hills violated the regulations and assessing against it
a $950, 000 civil penalty and $1, 526 in costs and expenses.
The district court affirmed the Commission's order.
9] On appeal, Black Hills challenges the Commission's
order on numerous grounds.
10] Our standard of review of Commission orders is very
limited. In Langved v. Cont'l Res., Inc., 2017
ND 179, ¶ 8, 899 N.W.2d 267, we explained:
The standard of judicial review of Commission orders is set
forth in N.D.C.C. § 38-08-14(3), which provides that
"[o]rders of the commission must be sustained by the
district court if the commission has regularly pursued its
authority and its findings and conclusions are sustained by
the law and by substantial and credible evidence." This
Court applies the same standard of review in appeals from
district court involving orders of the Commission. See
Amoco Prod. Co. v. North Dakota Indus. Comm'n, 307
N.W.2d 839, 842 (N.D. 1981). The "substantial
evidence" test "is something less" than the
greater weight of the evidence and the preponderance of the
evidence tests, and differs from the usual standard of review
for administrative decisions under N.D.C.C. § 28-32-46.
Hanson v. Industrial Comm'n, 466 N.W.2d 587, 590
(N.D. 1991). "Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion, " and we "accord greater
deference to Industrial Commission findings of fact than we
ordinarily accord to other administrative agencies'
findings of fact." Id. The Commission's
decisions on questions of law are fully reviewable on appeal.
See Imperial Oil of North Dakota, Inc. v.
Industrial Comm'n, 406 N.W.2d 700, 702 (N.D. 1987).
(quoting Gadeco, LLC v. Indus. Comm'n, 2012 ND
33, ¶ 15, 812 N.W.2d 405).
11] Black Hills argues the Commission lacks jurisdiction over
a discharge of produced saltwater on a public road occurring
away from an oil and gas well site, disposal site, treatment
plant, or other facility.
12] "Under N.D.C.C. ch. 38-08, the Commission has
extremely broad and comprehensive powers to regulate oil and
gas development in the state." Langved, 2017 ND
179, ¶ 12, 899 N.W.2d 267; see also Envtl.
Driven Solutions, LLC v. Dunn Cty., 2017 ND 45, ¶
9, 890 N.W.2d 841; GEM Razorback, LLC v. Zenergy,
Inc., 2017 ND 33, ¶ 10, 890 N.W.2d 544.
"'The Commission's powers are continuous... and
are exclusive.'" Dunn Cty., at ¶ 9
(quoting Egeland v. Cont'l Res., Inc., 2000 ND
169, ¶ 11, 616 N.W.2d 861). Section 38-08-04, N.D.C.C.,
provides in relevant part:
The commission has continuing jurisdiction and authority over
all persons and property, public and private, necessary to
enforce effectively the provisions of this chapter. The
commission has authority, and it is its duty, to make such
investigations as it deems proper to determine whether waste
exists or is imminent or whether other facts exist which
justify action by the commission. The commission has the
2. To regulate:
a. The drilling, producing, and plugging of wells, the
restoration of drilling and production sites, and all other
operations for the production of oil or gas.
e. Disposal of saltwater and oilfield wastes.
(1) The commission shall give all affected counties written
notice of hearings in such matters at least fifteen days
before the hearing.
(2) The commission may consider, in addition to other
authority granted under this section, safety of the location
and road access to saltwater disposal wells, treating plants,
and all associated facilities.
13] Section 38-08-04(2)(a) and (e), N.D.C.C., unambiguously
give the Commission authority to regulate "all other
operations for the production of oil or gas" including
"[d]isposal of saltwater and oilfield wastes." We
have interpreted these provisions broadly in recognizing the
Commission's statutory authority to regulate "the
disposal of saltwater and oilfield wastes." Dunn
Cty., 2017 ND 45, ¶ 13, 890 N.W.2d 841. The
Commission has promulgated a regulation governing disposal of
waste material which provides "[a]ll waste material
associated with exploration or production of oil and gas must
be properly disposed of in an authorized facility in accord
with all applicable local, state, and federal laws and
regulations, " and "[a]ll waste material recovered
from spills, leaks, and other such events shall immediately
be disposed of in an authorized facility, although the
remediation of such material may be allowed onsite if
approved by the director." N.D. Admin. Code §
43-02-03-19.2. Although Black Hills suggests on appeal that
saltwater does not qualify as oilfield waste, Black Hills
admitted in the administrative proceedings that
"produced water is included within either 'saltwater
and oilfield wastes' [under N.D.C.C. §
38-08-04(2)(e)] or 'waste material associated with the
exploration or production of oil and gas' [under N.D.
Admin. Code § 43-02-03-19.2]." See also
N.D. Admin. Code § 43-02-03-19.3 ("no saltwater,
drilling mud, crude oil, waste oil, or other waste shall be
stored in earthen pits or open receptacles").
14] Black Hills argues that N.D.C.C. § 38-08-04(2)(e)
does not support the Commission's assertion of
jurisdiction because Williams County was not provided written
notice of the hearing in this case and because its
jurisdiction is limited to saltwater disposal wells, treating
plants, and facilities. First, Williams County is the entity
entitled to complain about lack of notice in this case, and
it has not done so. Black Hills has not alleged prejudice
from the county's lack of notice. A party "must
assert his own legal rights and interests, and cannot rest
his claim to relief on the legal rights and interests of
third parties." Flatt ex rel. Flatt v. Kantak,
2004 ND 173, ¶ 38, 687 N.W.2d 208 (internal citation
omitted). Second, Black Hills' narrow interpretation of
N.D.C.C. § 38-08-04(2)(a) and (e) conflicts with our
recognition of the broad and unambiguous authority the
legislature has given the Commission to "regulat[e] the
disposal of saltwater and oilfield wastes." Dunn
Cty., 2017 ND 45, ¶ 13, 890 N.W.2d 841. Black
Hills' argument limiting the Commission's
jurisdiction over saltwater or other oilfield waste disposal
to only the physical location of the facilities themselves,
and not to any property between the site the waste is
generated and the site the waste is disposed, ignores the
plain language of the statute and reality. Saltwater and
other oilfield wastes by necessity must often be transported
to a disposal site. The Commission has the authority to
regulate the disposal of saltwater and oilfield waste and has
continuing jurisdiction "over all persons and property,
public and private, necessary to enforce effectively the
provisions" of N.D.C.C. ch. 38-08. N.D.C.C. §
38-08-04; see also Dunn Cty., at ¶ 13.
15] Black Hills contends the Commission's jurisdictional
claims over the cleanup of a produced water spill occurring
away from a well site or disposal facility are contradicted