Filed 11/26/19 by Clerk of Supreme Court

IN THE SUPREME COURT

STATE OF NORTH DAKOTA

2019 ND 280

Continental Resources, Inc., Plaintiff and Appellant

v.

North Dakota Department of 

Environmental Quality, Defendant and Appellee

No. 20190087

Appeal from the District Court of Burleigh County, South Central Judicial 

District, the Honorable Bruce A. Romanick, Judge.

AFFIRMED.

Opinion of the Court by Jensen, Justice.

Jason B. Hutt (argued) and Kevin M. Voelkel (appeared), Washington, DC, 

Lawrence Bender (appeared), Bismarck, ND, and Matthew G. Paulson (on 

brief), Austin, TX, for plaintiff and appellant.

Margaret I. Olson (argued) and Jennifer L. Verleger (appeared), Assistant 

Attorneys General, Bismarck, ND, for defendant and appellee. 
1

Continental Resources v. N.D. Dep’t of Environmental Quality

No. 20190087

Jensen, Justice.

[¶1] Continental Resources, Inc. (“Continental”) appeals from the judgment 

of the district court dismissing its declaratory judgment action against the 

North Dakota Department of Environmental Quality (“Department”). The 

district court dismissed Continental’s declaratory judgment action after 

finding the Environmental Protection Agency was an indispensable party, the 

district court lacked subject matter jurisdiction, and the matter was not ripe 

for judicial review. While this appeal was pending, the Department moved to 

dismiss the appeal as moot. We affirm the judgment dismissing Continental’s 

request for declaratory judgment as not ripe for judicial review.

I

[¶2] Continental initiated its action for declaratory judgment pursuant to 

N.D.C.C. ch. 32-23. Continental seeks to eliminate uncertainty it contends is

created by the Department’s enforcement of N.D. Admin. Code § 33-15-07-

02(1). Section 33-15-07-02(1) reads as follows:

No person may cause or permit the emission of organic compounds, 

gases and vapors, except from an emergency vapor blowdown 

system or emergency relief system, unless these gases and vapors 

are burned by flares, or an equally effective control device as 

approved by the department.

Continental’s action for declaratory judgment requests the district court to find 

“that if an approved control device is installed and operating at an oil and gas 

production facility, the mere presence of an emission from a closed tank hatch 

or control device does not, in and of itself, establish a violation of N.D. Admin. 

Code § 33-15-07-2(1).”

[¶3] Section 33-15-07-2(1) prohibits uncontrolled emissions of organic 

compounds, gases and vapors into the air. The Department’s rules require all 

facilities with the potential to emit organic compounds, gases and vapors into 

the air to have emission control devices installed unless the facility is exempt 
2

from the requirement by the Department. Continental argues current 

technology cannot provide complete containment of all organic compounds, 

gases and vapors. If N.D. Admin. Code § 33-15-07-2(1) is applied to require 

complete containment of organic compounds, gases and vapors, Continental 

asserts it would be impossible to meet the standard set by the rule.

[¶4] The Department has issued Notices of Violation to operators, including 

Continental, asserting the Department “has reason to believe” Continental has 

violated N.D. Admin. Code § 33-15-07-2(1). The Notices of Violation also note 

the notice “is not a final action” and Continental would be notified if “a formal 

enforcement action” is determined to be appropriate. 

[¶5] Continental contends the Department, after decades of applying N.D. 

Admin. Code § 33-15-07-2(1) consistent with other Department rules and not 

requiring complete containment of organic compounds, gases and vapors, has 

abruptly changed course in its enforcement of N.D. Admin. Code § 33-15-07-

2(1) by issuing Notices of Violation upon the observation of any level of organic 

compounds, gases and vapors leaking into the air. The Department does not 

agree with Continental’s assertion there has been a change to how N.D. Admin 

Code § 33-15-07-2(1) is being enforced.

[¶6] The Department has not taken final administrative action on the Notices 

of Violation. The lack of final administrative action prevents operators from 

administratively challenging the Notices of Violation. Continental contends 

the Department has used the significant potential liability represented by the 

Notices of Violation as leverage to force operators to acquiesce to settlements. 

Continental argues a refusal to settle with the objective of forcing the 

Department to initiate final action on the Notices of Violation would place the 

operators in an untenable position because the delay would cause a significant 

potential liability to accumulate.

[¶7] The Department moved to dismiss Continental’s action asserting three 

arguments: (1) the EPA was an indispensable party; (2) the district court 

lacked subject matter jurisdiction to hear the case; and (3) Continental’s 

argument was not ripe for judicial review. The district court dismissed 
3

Continental’s declaratory judgment action after finding in favor of the 

Department on all three arguments. 

II

[¶8] The district court dismissed Continental’s action, in part, pursuant to 

N.D.R.Civ.P. 12(b)(6) for failing to state a claim upon which relief can be

granted after finding the claim was not ripe for judicial review. This Court 

reviews the dismissal of a complaint for failure to state a claim de novo. 

Brandvold v. Lewis & Clark Pub. Sch. Dist. No. 161, 2011 ND 185, ¶ 6, 803 

N.W.2d 827. Under Rule 12(b)(6), a complaint should not be dismissed unless 

it is disclosed with certainty the impossibility of proving a claim upon which 

relief can be granted. Moseng v. Frey, 2012 ND 220, ¶ 5, 822 N.W.2d 464. 

[¶9] “[A] necessary prerequisite to a proper declaratory judgment action is 

that there be a justiciable controversy underlying the declaration sought.” 

Brandvold, at ¶ 8. The absence of a justiciable controversy results in a claim 

which is not ripe for judicial review, is a claim upon which relief cannot be 

granted, and requires the action to be dismissed. See Saefke v. Stenehjem, 2003 

ND 202, ¶ 11, 673 N.W.2d 41.

III

[¶10] Ripeness is a corollary to the exhaustion of administrative remedies. 

Medcenter One, Inc. v. North Dakota State Bd. of Pharmacy, 1997 ND 54, ¶ 10, 

561 N.W.2d 634. The exhaustion of administrative remedies is a prerequisite 

to seeking declaratory relief. Id. at ¶ 11. (citing Tooley v. Alm, 515 N.W.2d 137 

(N.D. 1994)). We noted the following in Medcenter One:

Before someone may sue for declaratory relief, generally, the 

exhaustion of administrative remedies is required. E.g., Tooley v. 

Alm, 515 N.W.2d 137 (N.D. 1994). The exhaustion requirement 

serves the dual objectives of preserving agency authority and 

promoting judicial efficiency. See 5 Stein, Mitchell, Mezines, 

Administrative Law § 49.01 (1997). The doctrine preserves agency 

authority by recognizing the agency’s initial decision making 

responsibility. Id. The requirement for exhaustion is particularly 

weighty when the agency’s decision involves factual issues or 
4

administrative expertise. See Medical Arts Clinic, P.C. v. 

Franciscan Initiatives, Inc., 531 N.W.2d 289 (N.D. 1995). The 

exhaustion prerequisite establishes an efficient method for dispute 

resolution by giving the agency a chance to correct its mistakes 

before being sued. Id. If the agency has an opportunity to correct 

its own errors, a judicial controversy may be mooted or, at a 

minimum, piecemeal appeals may be avoided. See 5 Stein, 

Mitchell, Mezines at § 49.01. And, where the dispute is not 

resolved at the administrative level, the exhaustion of remedies 

will generally develop a complete record for judicial review, 

especially in technical or complex factual situations. See Medical 

Arts. These factors recognize a vital role for exhaustion of 

administrative remedies in the relationship between the executive 

and the judicial branches of government.

Notwithstanding these institutional justifications, the 

exhaustion doctrine has several well-recognized exceptions, 

including when a legal question simply involves statutory 

interpretation and does not need the exercise of an agency's 

expertise in making factual decisions. See generally 2 Am.Jur.2d 

Administrative Law at § 511; 5 Stein, Mitchell, Mezines at § 49.02. 

In Shark Brothers, Inc. v. Cass County, 256 N.W.2d 701

(N.D.1977), we explained that application of the exhaustion 

doctrine depends upon a bundle of considerations, including 

whether the issues need the expertise of an administrative body, 

the interpretation of a statute, or the resolution of a pure question 

of law. See also Kessler v. Board of Educ. of City of Fessenden, 87 

N.W.2d 743 (N.D.1958) (no requirement for exhaustion of 

administrative remedies where construction of statute involved 

pure legal question customarily decided by courts). Shark Brothers

acknowledges that exhaustion of administrative remedies is not a 

rigid prerequisite for a statutory interpretation that does not 

infringe on an agency's factual decisionmaking process.

Id. at ¶¶ 11-12.

[¶11] The district court found Continental had not exhausted its 

administrative remedies. Continental does not contend the Department has 

taken final administrative action on the Notices of Violation. The Department 

asserts Continental, although claiming to be seeking declaratory judgment on 
5

an unambiguous rule, is actually attempting to change the rule and has not 

exhausted its administrative remedies by either seeking review and revision 

of the rule under N.D.C.C. § 23.1-01-04(3), or seeking reconsideration and 

amendment of the rule under N.D.C.C. § 28-32-16. “[T]he exhaustion of 

remedies will generally develop a complete record for judicial review, especially 

in technical or complex factual situations.” Medcenter One, at ¶ 11. We 

conclude the district court did not err finding Continental has not exhausted 

its administrative remedies.

[¶12] Although Continental has not exhausted its administrative remedies, an 

action for declaratory judgment may still be appropriate if the exhaustion of 

administrative remedies would be futile or the request involves purely a 

question of law. Medcenter One, at ¶ 12. Relying on our decision in Medcenter 

One, Continental contends its request for declaratory judgment involves a pure 

question of law, the resolution of which would eliminate the uncertainty 

created by the Department’s enforcement of N.D. Admin. Code § 33-15-07-2(1).

IV

[¶13] In Medcenter One, this Court considered whether the failure to exhaust 

administrative remedies precluded an action for declaratory judgment. Id. at 

¶ 1. In Medcenter One, the declaratory judgment action sought interpretation 

of the unambiguous language of a statute providing exemptions from the 

pharmacist-ownership requirements of N.D.C.C. § 43-15-35(5). Id. We held 

“the doctrine of exhaustion of administrative remedies does not require 

deferring a decision on the interpretation of the unambiguous language of 

N.D.C.C. § 43-15-35 until after the administrative process has been

completed.” Id. at ¶ 21. 

[¶14] This case is distinguishable from the circumstances presented in 

Medcenter One. In Medcenter One, we recognized an exception to the 

exhaustion doctrine when a legal question involves statutory interpretation 

and does not need the exercise of an agency’s expertise in making factual 

decisions. Medcenter One, at ¶ 12. In the present case, Continental argues 

N.D. Admin. Code § 33-15-07-2(1) doesn’t mean what the words clearly express

because “technology does not exist and compliance with such a legal standard 
6

would be impossible.” Continental wants the district court to read ambiguity 

into the Rule where it doesn’t otherwise exist and apply other provisions in the 

Administrative Code to interpret the rule differently than the express words. 

The Agency is the appropriate venue to determine if the technology exists to 

comply under the rule, to determine if the presence of an emission from a closed 

tank hatch or control device establishes a violation of the rule, and whether 

other provisions of the Administrative Code addressing “fugitive emissions” 

include the same emissions addressed in N.D. Admin. Code § 33-15-07-2(1). 

We agree with the Department and conclude Continental is not seeking a 

declaratory judgment on an unambiguous rule, but is attempting to change the 

rule without exhausting its administrative remedies.

[¶15] The requirement to exhaust administrative remedies before seeking 

declaratory judgment is particularly weighty when the agency’s decision 

involves factual issues or administrative expertise. Medcenter One, at ¶ 12. 

We conclude, where a party seeks to modify an existing statute or agency rule, 

the “purely legal question” exception to the exhaustion of administrative 

remedies does not apply.

V 

[¶16] We conclude Continental’s action for declaratory judgment of the 

Department’s administrative rule is not ripe for judicial review and we affirm 

the district court’s judgment dismissing Continental’s action. Having 

concluded the matter is not ripe for review the remaining arguments and 

pending motion to dismiss the appeal as moot are unnecessary to our 

decision.

¶17] Jon J. Jensen 

Daniel S. El-Dweek, D.J. 

Dale V. Sandstrom, S.J. 

Daniel J. Crothers 

Lisa Fair McEvers
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[¶18] The Honorable Dale V. Sandstrom, Surrogate Judge, and the Honorable 

Daniel S. El-Dweek, D.J., sitting in place of VandeWalle, C.J., and Tufte, J., 

disqualified.