residential responsibility, N. D. C. C. § 14-09-06.6 does not apply. The Court noted its decision in this case overrules prior caselaw to the contrary. Because N. D. C. C. § 14-09-06.6 does not apply, the Supreme Court held the district court must make an original determination regarding primary responsibility based on the best interest factors and without consideration of N. D. C. C. § 14-09- 06.6. The Court affirmed.
Equinor Energy, LP v. N. Dakota Indus. Comm’ n, 2025 ND 126. Filed on 7 / 3 / 25.
On appeal, the Court reversed and vacated the district court’ s order affirming an order from the Industrial Commission regarding saltwater gathering costs, concluding the commission lacked jurisdiction to adjudicate the dispute between Equinor Energy and Versa Energy, who held a non-operating working interest in the subject wells.
Equinor argued the commission erred in concluding it had jurisdiction to decide a dispute between private parties, Equinor and Versa, regarding saltwater gathering costs. From 2011 to 2021, Equinor operated oil and gas wells in 16 spacing units in McKenzie, Williams, and Mountrail Counties. Versa acquired its non-operating working interest in the wells in 2013. As the operator, Equinor contracted with Equinor Pipeline for the transportation of saltwater through its pipeline system. Equinor determined the prices it paid Equinor Pipeline( EPL) for its saltwater gathering services by getting bids from trucking companies for saltwater transport and disposal, and then used those bids to determine a rate for EPL’ s services. In June 2021, Versa petitioned the commission to determine the proper costs against Equinor pursuant to N. D. C. C. § 38-08-08( 2), claiming Equinor charged Versa more than the“ reasonable actual cost” in violation of N. D. C. C. § 38-08-08. Equinor filed a motion to dismiss Versa’ s petition, arguing the commission lacked jurisdiction over Versa’ s claim because N. D. C. C. § 38-08-08( 2) was not applicable to private-rights disputes governed by private contracts. The Commission determined it had jurisdiction under N. D. C. C. § 38-08-08( 2) and denied Equinor’ s motion to dismiss. Equinor appealed to the district court, which affirmed the commission’ s order, and then appealed to the Court.
While noting the limited review of commission orders, and the“ extremely broad and comprehensive powers to regulate oil and gas development in the state,” the court explained that adjudicatory jurisdiction does not necessarily inhere in an agency’ s regulatory jurisdiction. Without a specific statutory grant of adjudicatory authority, an administrative agency generally cannot adjudicate disputes over contractual rights between parties because an agency only has such powers as are granted by the legislature. Unless the commission was specifically granted the power to settle and adjudicate rights and obligations between parties to a contract, it lacks adjudicatory power. The Court held N. D. C. C 38-08-04 did not expressly or by necessary implication grant jurisdiction to adjudicate disputes arising under contracts relating to saltwater disposal. As such, the Court concluded the commission lacked jurisdiction under N. D. C. C. § 38-08-04 to decide the dispute between Equinor and Versa as to saltwater gathering costs.
Versa also petitioned the commission to determine the reasonable actual costs it owed to Equinor under N. D. C. C. § 38-08-08( 2),
arguing the commission has express jurisdiction under the statute to determine the proper costs as the“ operation of a well” encompasses saltwater gathering. The Court held that whether the commission had jurisdiction to determine proper costs for saltwater gathering depended on whether“ operation of a well on the spacing unit” included saltwater gathering. Key to the Court’ s analysis was its determination of the threshold issue of what costs fell within the scope of“ operation” costs under § 38-08-08( 2). The Court noted that Federal courts considering the question, and the commission itself, had addressed the scope of“ operation” costs under North Dakota law, concluding that“ operation” costs included production costs but did not include post-production costs. In a prior order, the commission interpreted“ operation” under § 38-08-08( 2) to exclude post-production costs, relying on a United States District Court for North Dakota decision, affirmed by the Eighth Circuit, that distinguished between“ production costs” and“ post-production costs” as those terms are“ commonly understood in the oil and gas industry.”
Agreeing with the federal court’ s analysis, the Court held the“ costs” of“ operation of a well on a spacing unit” under § 38-08- 08( 2) included production costs but excluded post-production costs. As such, the commission’ s jurisdiction to determine proper costs under the statute extended only to production costs and not post-production costs. The Court concluded that saltwater gathering was a post-production cost outside of the commission’ s jurisdiction under § 38-08-08( 2), which was consistent with North Dakota law distinguishing between production and post-production costs in royalty calculations as well as the terminology of the oil and gas industry.
SCOTT D. JENSEN
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