October 6, 2011

One of the bright spots in an otherwise difficult economy has been the domestic petroleum industry, particularly in North Dakota.  Increasing global oil prices have created opportunities to develop domestic resources.  As a result, oil production and all of the related business enterprises are booming.  Unemployment in North Dakota, which has ranged between 2.8 and 4.3 percent since 2007, is well below the national rate.  For information on growth in North Dakota, please see: http://www.npr.org/2011/09/25/140784004/new-boom-reshapes-oil-world-rocks-north-dakota

Any business involved in economic expansion, including the siting of new operations or the expansion of existing locations, needs to be aware of environmental permitting requirements. Often businesses need to have permits in hand prior to beginning construction.

When any business operation opens or expands, it is important to focus resources and time on permitting and approvals.  A thorough technical and legal review should be conducted to ensure all permits and approvals, especially environmental permits, have been applied for and received before operations are commenced.  If a business fails to obtain a required permit and commences operations, it could be subject to an enforcement action.

Efforts to maintain compliance should be an ongoing concern.  Once a business becomes operational, owners and managers need to take steps to maintain compliance with federal, state and local environmental requirements including specific terms that are contained in any permits. Ongoing compliance needs to be assigned to appropriate staff, staff may need to be trained and, finally, compliance measures need to be implemented.  Once again, failure to comply with technical requirements contained in permits (such as sampling, filing periodic reports with agencies, conducting inspections, or using other means to assess the status of a facility’s compliance), may result in a finding of noncompliance which could in turn lead to an enforcement action.

Federal and state agencies have a period of time (typically three to five years time) after any alleged violation has occurred, to initiate an enforcement action.

The importance of maintaining compliance with federal and state environmental laws was recently highlighted by Ignacia Moreno, an assistant attorney general for the U.S.  Department of Justice’s Environment and Natural Resources Division, which has more than 400 attorneys, in an address to the North Dakota Petroleum Council’s annual meeting.

Ms. Moreno previously served as counsel of corporate environmental programs at General Electric Corp. and in the Justice Department during President Bill Clinton’s administration.

In a mid September 2011 address Ms. Moreno told the assembled North Dakota petroleum industry executives and managers:

“It is not fair to law-abiding businesses who comply with the law to protect human health and safety when other businesses cut corners, gain an unfair advantage, and profit from noncompliance with the law.  Holding yourselves and each other accountable … makes the system work.”

North Dakota’s United States Attorney, Tim Purdon, is currently prosecuting seven oil companies for violating federal law that protects migratory birds after 28 ducks and other birds were allegedly discovered in oil well waste pits in May and June of this year.  The companies were scheduled to be arraigned in late September 2011 in U.S. District Court in Bismarck.

Moreno, in an interview, said the pending North Dakota case was unrelated to the timing of her remarks to the Petroleum Council.  See the following article for more on Moreno’s remarks:http://www.businessweek.com/ap/financialnews/D9PTJCQG0.htm.

The environmental law attorneys at Hessian & McKasy advise clients on permitting and enforcement matters.  We provide advice on business expansion and acquisition projects across the Upper Midwest including projects in Minnesota, North Dakota, South Dakota, Iowa, Wisconsin and Nebraska.  We conduct due diligence review in mergers and acquisitions and work closely with our clients staff and technical consultants on acquisition of businesses and real estate, permit applications for new and existing operations, as well as the transfer of existing permits.

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