Black Hills Trucking, Inc. v. North Dakota Industrial Commission, 2017 ND 284

Background

Black Hills Trucking (BHT), a Wyoming carrier, was observed (Feb 8, Feb 14, Mar 3, 2014) discharging produced saltwater onto public roads in Williams County; Commission staff collected samples confirming produced water.
BHT disciplined the driver after the Feb 14 incident but did not file spill reports, test contamination extent, or remediate affected areas.
The North Dakota Industrial Commission (NDIC) filed an administrative complaint seeking $950,000 in civil penalties ($12,500/day per violation) and $1,526 in costs for multiple counts alleging unlawful dumping, soil infiltration, and failure to remove discharged fluids.
The Department of Health (DOH) separately issued a notice of violation; BHT entered an administrative consent agreement with DOH agreeing to a $459,000 penalty (with part suspended) and other conditions.
An ALJ recommended dismissal; the NDIC rejected most recommendations and assessed the $950,000 penalty. The district court and the North Dakota Supreme Court (majority) affirmed; Justice Crothers dissented.

Issues

Issue	Plaintiff's Argument (BHT)	Defendant's Argument (NDIC)	Held
Jurisdiction to regulate dumping on public roads	NDIC lacks jurisdiction over produced water discharged away from well sites, disposal wells, plants, or associated facilities	NDIC has broad, continuous authority over disposal of saltwater and oilfield wastes including transport between generation and disposal	Held: NDIC has jurisdiction; statute and regs give broad authority over saltwater disposal and related persons/property
Applicability of spill-cleanup duty to non-operators	2014 rule imposed cleanup obligations only on “operators,” and BHT was not an operator	Rule’s first two sentences impose a general duty to remove discharged fluids; third sentence re: operators concerns resources — later amendment clarified responsibility of non-operators	Held: The regulation imposed duties to properly remove discharges regardless of operator status; amendment only clarified resources requirement
Encroachment on Department of Health (primary jurisdiction)	DOH has primary jurisdiction over transportation of solid waste (produced water); NDIC’s action improperly duplicates/conflicts with DOH enforcement and remedies	Overlapping jurisdiction is permissible; no positive repugnancy between NDIC and DOH authority	Held: No exclusive primary jurisdiction for DOH here; both agencies may exercise jurisdiction without conflict
Excessive fines / Due process (daily accruals)	The $950,000 penalty is grossly disproportional given limited proven environmental harm; NDIC allowed daily penalties to accrue without timely notice of other incidents (fundamental unfairness)	Penalties are within statutory range; deterrence and environmental protection justify penalties; BHT had burden to prove minimal harm	Held: Penalties upheld — within statutory authorization and BHT failed to prove disproportionality or fundamental unfairness; Commission’s investigatory conduct did not violate basic fairness

Key Cases Cited

Langved v. Cont’l Res., Inc., 899 N.W.2d 267 (N.D. 2017) (describing NDIC’s broad regulatory authority and standard of review)
Dunn Cty. v. Envtl. Driven Solutions, 890 N.W.2d 841 (N.D. 2017) (recognizing NDIC’s authority to regulate oilfield waste disposal)
Hanson v. Industrial Comm’n, 466 N.W.2d 587 (N.D. 1991) (defining substantial evidence standard for Commission findings)
Amoco Prod. Co. v. North Dakota Indus. Comm’n, 307 N.W.2d 839 (N.D. 1981) (applying statutory review standard for Commission orders)
United States v. Borden Co., 308 U.S. 188 (U.S. 1939) (principle that overlapping statutes should both be given effect when not positively repugnant)
Connecticut Nat’l Bank v. Germain, 503 U.S. 249 (U.S. 1992) (courts should give effect to both statutes when possible)
United States v. Bajakajian, 524 U.S. 321 (U.S. 1998) (excessive fines analysis: fine grossly disproportional to gravity of offense)