Gadeco, LLC v. Industrial Commission

Summary

The North Dakota Supreme Court affirmed a district court judgment upholding the Industrial Commission’s authorization of a 200 percent risk penalty against Gadeco, LLC. The court held that Slawson’s invitation to participate in drilling complied with the applicable regulation despite changes to the surface location, estimated costs, and approximate spud date, because the changes were informational and insubstantial. The court also held that Gadeco’s election had to be received within the mandatory 30-day period.

Holdings

1. N.D. Admin. Code § 43-02-03-16.3(1)(a)(1) requires an invitation to state the surface location of the proposed or existing well, its proposed depth, and its objective zone.
2. The changes to the surface location, estimated costs, and approximate spud date were informational and insubstantial; therefore, Slawson was not required to issue Gadeco a new invitation to participate.
3. An election to participate must be received by the inviting owner within 30 days of the participating party's receipt of the invitation, and the deadline is mandatory rather than directory.
4. The Commission's order authorizing Slawson to assess the 200 percent risk penalty was supported by the law and by substantial and credible evidence.

Questions Presented

1. Whether Slawson's invitation to participate complied with N.D. Admin. Code § 43-02-03-16.3 despite subsequent changes to the well's surface location, estimated costs, and approximate spud date.
2. Whether the applicable regulation required Gadeco's written election to participate to be received within 30 days of Gadeco's receipt of the invitation.
3. Whether the Industrial Commission's findings and conclusions were supported by the law and by substantial and credible evidence.

Disposition

affirmed