North Dakota Producers, Regulators Spar over Rules

North Dakota's oil producers and their federal regulators sparred at an industry conference on Tuesday over a raft of new rules with broad implications for energy development, the latest escalation in a war of words that has both parties aiming to sway public opinion.

The public spat at the North Dakota Petroleum Council's annual meeting comes as federal agencies move to exert greater control over how oil companies extract crude from shale formations and how even small bodies of water are used nationwide.

Both proposals, from the Bureau of Land Management and U.S. Environmental Protection Agency (EPA), respectively, as well several other unrelated measures have sparked condemnation from energy executives, though environmentalists say they are crucial.

The oil industry sees such efforts as the egregious overreach of a group of regulators setting their sites on a new target after tightening oversight of coal-fired power plants.

"Now that that's over, they're going to be focusing on us," Dawn Coughlin, an environmental affairs manager at oil producer Hess Corp, said at the conference as federal regulators sat in the audience. "We're next."

Wayne Stenehjem, North Dakota's attorney general and a rumored candidate for governor in 2016, touted a dozen lawsuits opposing the new regulations that he said he would pursue "with zeal."

"We really don't need the EPA to tell us they love our land more than we do," Stenehjem said. "We're the ones who live here."

Regulators from five federal agencies then took the stage for a panel discussion where they politely shot back.

Dennis Neitzke of the U.S. Forest Service asked why oil producers couldn't work together more to construct shared pipelines rather than try to each build their own, a step that delays approval and heightens regulatory oversight.

"Right now we're reviewing three or four pipelines for three or four oil companies," Neitzke said. "What would it take for companies to say, 'I wonder if we could use the same pipe?'"

Wendy Hart Ross, superintendent of Theodore Roosevelt National Park, said the industry must do more to mitigate light and sound damage to national park land.

"I get more comments on a daily basis about oil and gas impacts on the park," said Ross.

Coughlin, the Hess manager, did cite one recent regulatory decision as signs of a possible detente: the Obama administration's decision on Tuesday to deny Endangered Species Act protection to the greater sage grouse.

Reporting by Ernest Scheyder