Blue Appaloosa, Inc., Appellant v. North Dakota Industrial Commission, Appellee
No. 20210292
IN THE SUPREME COURT STATE OF NORTH DAKOTA
JUNE 8, 2022
2022 ND 119
Appeal from the District Court of Dunn County, Southwest Judicial District, the Honorable James D. Gion, Judge.
AFFIRMED.
Opinion of the Court by Tufte, Justice.
Matthew A. Sagsveen, Solicitor General, and David R. Phillips, Assistant Attorney General, Bismarck, N.D., for appellee; submitted on brief.
Tufte, Justice.
[¶1] Blue Appaloosa, Inc., appeals from a judgment affirming an Industrial Commission order determining it violated
I
[¶2] In January 2018, Blue Appaloosa purchased undeveloped land in Dunn County, North Dakota. A few days after its purchase, Blue Appaloosa stated in an email to the oil and gas division of the Commission that it intended to construct a waste disposal plant on the land. Blue Appaloosa had the land surveyed by Advanced Engineering and Environmental Services, Inc. (AE2S). In October and November of 2018, Badlands Energy Services performed the heavy equipment work on the road leading up to the land. In addition to the road work, Blue Appaloosa‘s manager, Jeff Bennett, requested Badlands Energy to level the land. The dirt work performed included leveling the site, constructing a perimeter dike, stockpiling topsoil, building an entrance road, and removing trees and shrubs. After the dirt work was completed, Bennett hired individuals experienced in constructing and operating treating plants to assist with developing a treating plant.
[¶3] In March 2019, the Commission received Blue Appaloosa‘s application to construct and operate a treating plant. After a hearing on the application, the Commission brought an administrative action against Blue Appaloosa, alleging it violated
II
[¶4] Blue Appaloosa challenges the Commission‘s jurisdiction and its interpretation of
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.” ThisCourt applies the same standard of review in appeals from district court involving orders of the Commission. 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 . “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.” The Commission‘s decisions on questions of law are fully reviewable on appeal.
Langved v. Cont‘l Res., Inc., 2017 ND 179, ¶ 8, 899 N.W.2d 267 (citations omitted).
A
[¶5] Blue Appaloosa argues the Commission lacked jurisdiction over its land prior to submitting its application to construct and operate a treating plant.
[¶6] The Commission has “extremely broad and comprehensive powers to regulate oil and gas development in the state.” Langved, 2017 ND 179, ¶ 12. The Commission‘s jurisdiction is provided under
- 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 authority:
- To require:
- The furnishing of a reasonable bond with good and sufficient surety, conditioned upon the full compliance with this chapter, and the rules and orders of the industrial commission. . . .
- To regulate:
- 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.
. . .
- Disposal of saltwater and oilfield wastes.
. . .
- 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.
- 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.
- To require:
See also Envtl. Driven Sols., LLC v. Dunn Cty., 2017 ND 45, ¶ 13, 890 N.W.2d 841 (concluding Commission has statutory authority to regulate treating plants).
[¶7] Blue Appaloosa argues the Commission lacked jurisdiction prior to filing its treating plant application with the Commission in March 2019. This argument is premised on Blue Appaloosa‘s assertion that prior to submitting the application, the uncontroverted evidence showed no decision had been made about what to build on the site. Blue Appaloosa acknowledges that activity consistent with anticipated construction of a treating plant had begun on the site, but relied on testimony to the effect that the dirt work was also consistent with other contemplated uses such as truck and trailer parking. The Commission‘s jurisdiction does not depend solely on the filing of an application, but instead on the jurisdictional fact of intent. Intent
B
[¶8] Blue Appaloosa argues the Commission erroneously found it began construction of a treating plant in violation of
Administrative regulations are derivatives of statutes and are construed under rules of statutory construction. Statutory interpretation is a question of law, fully reviewable on appeal. The objective in interpreting regulations is to determine the drafter‘s intent by first looking at the language itself. Words are given their plain, ordinary, and commonly understood meaning, unless defined or unless a contrary intent plainly appears. Regulations are construed as a whole and are harmonized to give meaning to related provisions. If the relevant language is clear and unambiguous, the letter of it is not to be disregarded under the pretext of pursuing its spirit.
Gadeco, LLC v. Indus. Comm‘n, 2013 ND 72, ¶ 10, 830 N.W.2d 535 (cleaned up). When interpreting and applying its own regulations, an agency has a reasonable range of informed discretion. Americana Healthcare Ctr. v. N.D. Dep‘t of Human Servs., 540 N.W.2d 151, 153 (N.D. 1995). When the subject matter is complex or technical, the agency‘s expertise is entitled to special deference. Id. (citing Hanson v. Indus. Comm‘n, 466 N.W.2d 587, 590-91 (N.D. 1991)).
[¶9] The permit regulation at the time provided: “No treating plant may be constructed without obtaining a permit from the commission after notice and hearing.”
[¶10] “Treating plant” is defined as “any plant permanently constructed or portable used for the purpose of wholly or partially reclaiming, treating, processing, or recycling tank bottoms, waste oils, drilling mud, waste from drilling operations, produced water, and other wastes related to crude oil and natural gas exploration and production. . . .”
[¶12] The information required to be included on an application for a treating plant permit supports the Commission‘s interpretation of its regulations that construction includes dirt work. The application requires a schematic drawing of the proposed treating plant site, detailing all facilities and equipment, including the location of tanks, dikes, flow lines, topsoil stockpile, and road access.
[¶13] Additionally, the Commission found that Blue Appaloosa‘s intent to construct a treating plant was clear from its initial contact. In January 2018, soon after purchasing the land, Bennett emailed Bohrer to express Blue Appaloosa‘s intent to construct a waste disposal plant. In February 2018, Bennett provided Bohrer “a legal description of the land where [it] would like to build a waste transfer station” and a “rough sketch of the facility.” AE2S then surveyed the land. The Commission found the dirt work performed by Badlands Energy “matched the depictions on the survey and the survey was used a year later to support Blue Appaloosa‘s application for a treating plant permit.”
[¶14] We conclude the Commission has regularly pursued its authority, and its findings and conclusions that Blue Appaloosa began construction on a treating plant are sustained by the law and by substantial and credible evidence.
III
[¶15] Count 2 of the administrative complaint alleged two separate and independent violations of the bond requirement. Because we conclude Blue Appaloosa violated
[¶16] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte