Northern reaches of the state received several inches of snow this week, but there's only brown grass at the Capitol. The dry conditions will produce temps in the 50s next week.
Legacy Fund Bills Get House Approval
Crossover arrived this week for the 2021 North Dakota Legislature, the midway point in the session when all bills must have cleared their house of origin. The Senate completed its work Tuesday morning, and the House finished its list of bills just before 5:00 p.m. Wednesday.
Some of the more significant bills saw action in the final week, including HB 1380, the so-called "streams bill" that directs the use of future Legacy Fund earnings, as well as HB 1425, that would require a portion of the Legacy Fund principal to be invested in North Dakota. Another of the more significant bills of the session, HB 1431, a $680 million bonding bill, received House approval last Friday.
The Legacy Fund, approved by voters in 2010, receives 30 percent of all oil tax revenue collected in North Dakota. The fund balance is currently around $8 billion, which is invested in a combination of equities, fixed income funds and real assets.
The streams bill sets up a formula for calculating a predictable sum of Legacy Fund earnings that would be available for the legislature to spend. Underwood Rep. Jeff Delzer, chairman of the House Appropriations Committee, said the amount would be equal to six percent of the five-year average value of the Legacy Fund. The legislation also directs where the money would go in the coming biennium. Delzer said the first $100 million would go toward repayment of the bonds issued under HB 1431.
Click here to listen to Delzer's comments.
The bill also earmarks $40 million to the clean sustainable energy fund embodied in HB 1452 (see story in Jan. 29 newsletter), and $40 million to the existing infrastructure revolving loan fund. Delzer said any remaining earnings would be available for other purposes designated by the legislature. He said the last section of the bill includes a statement of intent about those potential uses, including the highway tax distribution fund, value-added agricultural programs, the innovation loan fund to support technology advancement, state building maintenance and improvements, and projects to diversify the state's economy.
Bismarck Rep. Glenn Bosch pitched HB 1425 to fellow House members, explaining that the bill directs that up to 20% of future Legacy Fund deposits be invested in income and equity investments in the state. Bosch said a portion of the funds would support local government through a Legacy Fund infrastructure loan fund.
Click here to listen to Bosch's comments.
The legislation also provides for investment in in-state equity projects. Bosch said analysis presented to the House Finance and Taxation Committee projected that from 2021 to 2025, the state would see an annual increase of $322 million in economic output, a $101 million increase in personal income, $79 million in wages and salaries, and would create 3,859 new jobs.
First Step to a Petrochemical Facility in ND
This was a big week for a potential petrochemical industry in North Dakota. With the Senate’s unanimous approval of SB 2014, funds were appropriated for test wells and “proof of concept” of salt cavern storage, which is necessary infrastructure to support petrochemical processing.
SB 2014 is the 21-page budget bill of the ND Industrial Commission which includes funding for all state-operated businesses including the Mill & Elevator, Lignite Energy Research Council, Bank of North Dakota, Housing & Finance Authority, ND Pipeline Authority and the ND Department of Mineral Resources.
Included in the budget is $14 million for a study of the potential capacity of salt caverns in geological formations in North Dakota for the development of underground storage of energy resources. Fargo Sen. Ronald Sorvaag said the money will fund additional research into salt caverns.
Click here to listen to Sorvaag's comments.
In his presentation on the Senate floor, Sen. Sorvaag acknowledged there is some risk salt caverns won't pan out, but if they are successful the potential upside is huge.
Click here to listen to Sorvaag's comments.
Williston Sen. Brad Bekkedahl said private companies and the state are working together to bring value to the byproducts of natural gas produced in the Bakken. He said some projects are already underway, and work is proceeding to develop associated petrochemical facilities.
Click here to listen to Bekkedahl's comments.
The step beyond an ethane power plant is petrochemical processing. In remarks on the Senate floor, Bekkedahl said there is coordination occurring between the state and private companies.
Click here to listen to Bekkedahl's comments.
With funding for potential development of underground energy storage in North Dakota comes the need for a regulatory structure of such facilities. Establishing that authority is the intent of a companion bill, SB 2065, that also passed the Senate this week.
Change Contingent on New Drilling
Legislation that would change the tax-sharing agreement on so-called straddle wells around the perimeter of the Ft. Berthold Reservation appeared headed for defeat this week, but instead narrowly passed the Senate 25-22 after its effective date was amended.
SB 2319 came out of the Senate Appropriations Committee with a 12-2 Do Not Pass recommendation, but the chamber flipped after an amendment was offered that moved the bill's effective date to June 2023. The legislation has been characterized as a bet that the MHA Nation would be able to obtain leases on federal land outside the reservation boundary in McKenzie and Dunn Counties, despite the Biden administration's federal leasing ban. MHA had also indicated the tax agree would incentivize its lobbying for continued operation of the Dakota Access Pipeline.
The state and the affected counties would be betting that revenue from new wells would offset the estimated $15 million in tax revenue they would give up from wells that are outside Ft. Berthold, but have laterals that penetrate the reservation underground. All of the revenue from those wells now goes to the state and counties, but if the bill is enacted, it would change to a 50-50 split.
Tioga Senator David Rust, who pitched the Do Not Pass recommendation on the Senate floor, said committee members were concerned about the price of the bet, and felt that MHA could seek federal permits and lobby for DAPL without the bill.
Click here to listen to Rust's comments.
The legislation would apply to 132 wells, 83 of which are in McKenzie County, 40 are in Mountrail County, and nine are in Dunn County. A fiscal note attached to the bill indicates McKenzie County would stand to lose $1.5 million in tax revenue, Dunn County $492,000, and Mountrail County $348,000.
Watford City Senator Dale Patten offered a floor amendment that delayed the bill's effective date, and conditioned the agreement on the completion of at least one new well that taps the federal minerals. Patten's amendment also removed Mountrail County's financial risk because there are no federal areas to be drilled, thus no upside for the county. Patten urged his colleagues to pass the measure to allow more time to analyze the potential financial impact it could have.
Click here to listen to Patten's comments.
The federal leasing areas in question are in an area known as Blue Buttes on the eastern edge of McKenzie County, and an area of bighorn sheep habitat in the Badlands of northern Dunn County.
Simons Accused of Harassment, Abusive Conduct
North Dakota Republican House leaders issued a statement today, calling for the resignation of Dickinson Rep. Luke Simons, following revelations of inappropriate conduct.
Legislative Council released a 14-page document with emails documenting accusations of sexual and verbally abusive conduct. Simons denied the allegations, and posted an hour-long Facebook video of an interview conducted with the Dickinson Press.
House Majority Leader Chet Pollert, Assistant Leader Scott Louser and GOP Caucus Chairman Glenn Bosch issued a joint statement today, calling on Simons to step down.
"Sexual harassment in any form is unacceptable and accusing staff and fellow legislators of lying about harassment is inexcusable," the statement read. "Information provided to us by Legislative Council this week, as well as Representative Simons’ subsequent actions, show a pattern of behavior that we do not tolerate and that violate our rules against workplace harassment."
"While we have previously worked with various individuals to resolve issues with Representative Simons' inappropriate behavior, it is clear further action must be taken," Pollert said. "Therefore, as of today, we are calling on Representative Simons to resign from his seat."
Pollert went on to say if Simons refuses, the legislature will consider other options including expulsion. Article 4, Section 12 of the state constitution provides that the legislature may punish its members for "contempt or disorderly behavior." Members may be expelled with a two-thirds vote of elected members.
Report to Study Grid Generation Resources
Separate measures aimed at addressing growing concerns about grid reliability and the future operation of the state's lignite-fired coal plants were approved this week by the North Dakota Senate.
By a vote of 45-2, the Senate gave its approval to a "watered-down" version of SB 2313, a bill originally intended to require operators of intermittent sources of electric generation to secure firming capacity to demonstrate sufficient backup to maintain grid reliability. The amended version, as explained by Mott Senator Don Schaible, will require the state transmission authority to gather information from utilities for a report to the legislature on the adequacy of the state's generation resources.
Click here to listen to Schaible's comments.
The Senate also approved on a voice vote SCR 4012, a resolution that points out that subsidized "nondispatchable energy" presents major challenges to grid operators, and that "electric power markets have been distorted by direct and indirect subsidies which has resulted in the undervaluation of dispatchable thermal electric power plants that are now at risk of early retirement that will further erode electric grid reliability." The sponsor of the measure, Beulah Senator Jessica Bell, said the resolution's purpose is to call attention to growing concerns about power outages by gathering more information about the problem.
Click here to listen to Bell's comments.
The resolution also notes that developing carbon capture utilization and storage projects in North Dakota will result in significant state and local revenue and employment benefits by preserving lignite mines and plants while creating new employment and revenue opportunities that include enhanced oil recovery projects.
Employment & Safety Concerns Raised
A measure advanced in the House this week would legalize adult use of recreational marijuana, limiting its use to people over age 21 who use the substance on private property.
HB 1420, which passed on a vote of 56-38, is seen by proponents as a way to head off future citizen-initiated efforts to legalize marijuana with a constitutional measure. Bismarck Rep. Jason Dockter of Bismarck said he is personally opposed to usage but nevertheless introduced the bill acknowledging the fact that recreational use is already happening. He said the bill is a proactive response to that reality.
Click here to listen to Dockter's comments.
Hurdsfield Rep. Robin Weisz, who chairs the House Human Services Committee, credited a subcommittee with crafting strong legislation to protect businesses and state residents.
Click here to listen to Weisz's comments.
Workplace safety and employment challenges were the primary points of opposition from business interests represented by the Greater North Dakota Chamber.
“Industries ranging from health care to transportation to energy, which have strict drug and alcohol policies for both employee and public safety, have had increasing challenges finding employees in states that have legalized recreational marijuana such as Colorado and Oregon," said GNDC President Arik Spencer in prepared testimony.
“Failed employer drug tests have nearly doubled in both Colorado and Oregon since legalization," Spencer wrote. "North Dakota's employers cannot afford this same fate, with unemployment among the nation's lowest."
In testimony before the Human Services Committee, Spencer said marijuana is still a federal Class 1 drug, which presents a significant problem for regulated businesses.
Click here to listen to Spencer's comments.
A companion bill also passed the House this week. HB 1501 would place a 10% tax on growers and a 15% tax on dispensary sales while sending 3% of the collected tax to cities and counties with dispensaries. Manufacturers and retailers would also need to be permitted by the state.
Click here for a Bismarck Tribune article about passage of the House bills.
State Relying on Federal Dollars to Help
The North Dakota House of Representatives approved a lean K-12 funding bill this week that does not increase the current per pupil payment in the state's Foundation Aid funding formula.
The House had initially proposed a "1-and-1," meaning a one percent increase each year of the biennium in the current $10,036 per pupil payment to the state's public school districts. But Osnabrock Rep. David Monson said because the state expects districts will be receiving federal assistance through ESSER - the Elementary and Secondary School Emergency Relief fund - the House Appropriations Committee eliminated the increase. Monson said funding in several other areas was also eliminated from HB 1013, the budget bill of the Department of Public Instruction, because lawmakers believe districts will be able to use ESSER dollars to pick up the slack.
Click here to listen to Monson's comments.
Monson said the federal COVID-19 relief assistance can be both a blessing and a curse. He said lawmakers should be particularly concerned about provisions that require "maintenance of effort."
Click here to listen to Monson's comments.
The DPI budget, the second largest in state government behind Health and Human Services, contains just under $2.1 billion to support K-12 districts through the school funding formula. In addition to K-12 funding, the DPI bill also includes the budget of the state library, the school for the deaf, and the North Dakota vision services - school for the blind.
Monson said the Appropriations Committee added an interim study to the bill which will investigate the feasibility of using up to one percent of Common Schools Trust Fund assets to provide school construction grants. Previous attempts to pass legislation to establish a grant program have been defeated.
The ND House passed legislation this week to raise the state's motor fuel taxes three cents a gallon, which would generate an estimated $44 million for roads and bridges in the coming biennium.
The measure received surprisingly strong support, passing easily on a 62-32 vote. Bismarck Rep. Jason Dockter, who pitched HB 1464 on the House floor, said the tax rate hasn't changed since 2005, and there are many needs for the additional revenue.
Click here to listen to Dockter's comments.
Dickinson Rep. Vicky Steiner also spoke in favor of the tax increase, noting that at one point the legislation sought a six-cent increase that was dropped back to three cents.
Click here to listen to Steiner's comments.
HB 1464 also increases the user fee for electric vehicles from $120 to $200 annually, while the fee for hybrid vehicles jumps from $50 to $100. West Fargo Rep. Ben Koppelman said the charges amount to “in lieu of” fees for the missing or reduced gas tax revenue from the vehicles. Koppelman opposed the fuel tax increase, saying he would have preferred tax reform legislation that would account for inflationary impacts.
Click here to listen to Koppelman's comments.
If approved by the Senate and signed by the governor, the state's tax would be 26 cents per gallon, still lower than all surrounding states.
to Pass State Constitutional Amendment
A resolution approved this week by the ND Senate, if also approved by voters, would raise the threshold required for voter approval of a state constitutional amendment to 60 percent.
SCR 4005, introduced by Grand Forks Senator Ray Holmberg, passed the Senate 39-7 on a nearly party line vote. Six Democrats voted against the measure, along with Wahpeton Sen. Jason Heitkamp, the lone Republican to oppose the resolution.
In addition to requiring 60 percent approval on the ballot, the measure would also require a 60 percent vote of approval from the legislature to place a constitutional amendment on the ballot. It would also require that constitutional measures only be considered on the general election ballot.
In testimony before the Senate Government and Veterans Affairs Committee last month, Holmberg pointed out that of the eight constitutional measures the legislature has put on the ballot since 2014, only three passed, and all three had received overwhelming approval in the legislature. Considering that outcome, he said it makes sense to require a higher margin of approval by the legislature.
Click here to listen to Holmberg's comments.
A recent example cited by Holmberg was a measure passed by the 2019 Legislature that would have expanded the composition of the Board of Higher Education. SCR 4016 passed the House by just a 50-41 margin, and was soundly defeated by voters with more than 72 percent voting against it.
If Holmberg's measure is also approved by the House, it would appear on the 2022 general election ballot.
Great News for Bowman, Southwest ND
Denbury, Inc. announced its 2021 capital budget this week, which includes $150 million for a CO2-enhanced oil recovery project in the Cedar Creek Anticline (CCA) in southwestern North Dakota and southeastern Montana.
The project includes a 105-mile extension of the Greencore CO2 pipeline from the Bell Creek Field to the CCA. Denbury expects the bulk of pipeline construction to take place in the second half of 2021 with injection of CO2 into the anticline expected to begin in early 2022.
The expansion of the Greencore CO2 Pipeline to the CCA is a strategic long-term capital investment needed to unlock over 400 million barrels of tertiary oil potential in the Cedar Creek Anticline.
“We are thrilled to continue progress on our Cedar Creek Anticline enhanced oil recovery project in 2021,” said Chris Kendall, Denbury’s president and CEO in the news release. "This will be one of the largest EOR projects ever undertaken in the United States, using 100% industrial-sourced CO2 to recover over 400 million barrels of oil.”
The Cedar Creek Anticline is approximately 100 miles long starting just north of Glendive, Mont., and running through the far southwestern corner of North Dakota. See map. Denbury also announced it expects to complete the acquisition of the Big Sand Draw and Beaver Creek tertiary oil fields in central Wyoming for approximately $12 million.
Denbury Resources changed its name to Denbury, Inc., after emerging from bankruptcy in September 2020.
Release Showed "Lack of Professionalism"
The Mountrail County Commission issued a news release today, clarifying information issued earlier this week by State Auditor Josh Gallion regarding the findings of an audit of Mountrail County.
The county had requested the state conduct an audit of Mountrail County for the years 2018 and 2019 because the commission was not satisfied with the previous auditors that had prepared audits for Mountrail County.
“We had concerns regarding the county finances and the accounting processes to be applied, and the first step to addressing those issues is to identify what those issues are,” said Mountrail County Commission Chair Trudy Ruland.
Ruland said the county commission is "deeply disappointed" with the process conducted by Gallion, who released the findings from the audit to the media and posted it on the State Auditor’s website before a copy was provided to the county commission. She said the Mountrail County Auditor has addressed each of the concerns identified in the state audit, which noted that fund balances exceed the amount allowed by state law by $17.6 million. It also cited concerns over estimated cash documentation in the annual budget.
Ruland responded that the county has acted "very conservatively as we know that we need to be prepared for the expected downturn in oil revenue, which downturn has come to fruition over the past few years.” She said the overage in the county's road and bridge fund is related to delays in several road projects, which have been postponed due to permitting issues with the Army Corps of Engineers, acquisition of right-of-way, and uncertainty regarding state oil and gas revenues received by the county.
"The county is very disappointed with the lack of professionalism of the State Auditor’s office," Ruland said. "We requested the audit in good faith and knew there could be issues that needed to be addressed, but to air our shortcomings in the media before addressing them with the county was just wrong.”
The county commission will meet next Tuesday to review, discuss and begin the process to correct the issues discovered in the audit. Click here to read or download the 65-page audit.
Public Hearings Coming Next Week
Three Opportunities to Participate
The ND Department of Transportation will hold public hearings next week on the environmental assessment for the proposed Williston Northeast Truck Reliever Route from Highway 1804 east of Williston to the intersection of Highway 2 and Highway 85 on the north.
Anyone wishing to attend and participate have three opportunities to do so. The first is virtual and will be held March 2 from 5:00 to 7:00 p.m. on the ND Department of Transportation (NDDOT) website. Once on the site, click "Public Meetings" under Quick Links. If joining by phone, dial 1-888-424-8151, pass code 8515820. The Public Hearing will consist of the prerecorded presentation that was shown at the August 31, 2020, public hearing with an opportunity to comment or ask questions live.
The second and third opportunities will be in-person and will be held on March 4 from 10:00 a.m. to Noon and from 5:00 to 7:00 p.m. at the Hampton Inn & Suites in Williston. The public hearings are being facilitated by the NDDOT, the City of Williston, Williams County, FHWA and Ulteig Engineers.
The environmental assessment is available online here or by appointment for public inspection at the NDDOT Williston District Office.
Registration Now Open for In-Person Event
The Lignite Energy Council has announced that registration is now open for an in-person OR virtual annual meeting in Bismarck.
A Lignite Reception is set for Wednesday, April 21, to be followed with LEC's annual meeting on April 22.
“We haven't seen many of you in so long and we are very much looking forward to seeing you in person OR virtually at either or both of our two events that will comprise the two-day membership gathering and informational sessions,” the group said in an email announcing that registration is open.
The Lignite Reception is new this year and will feature light hors d'oeuvres, two complimentary beverages, dinner and entertainment as well as networking.
Conference to be Live & In-Person
The Williston Basin Petroleum Conference is coming up in May, and hopefully it’s a sign of things to come since it will be a “live and in-person” event.
North Dakota Petroleum Council President Ron Ness said the conference will be an important time to get industry professionals together to talk about the future of energy and to share ideas and make valuable contacts.
For those unable to travel, the conference will be available to virtual attendees. Click here to register for the Williston Basin Petroleum Conference.
March 6th Event in Dickinson
With blood banks around the region continuing to experience shortages, the ND Petroleum Foundation and Vitalant are stepping up to help organize several blood drives around the Bakken in the months to come.
The Foundation and the ND Petroleum Council are urging industry members and employees to help save a life by participating in the upcoming blood drive scheduled for Dickinson on March 6.
- Legislation aims to strengthen ND's coal industry -- Minot Daily News
- Buyer talks ongoing for Coal Creek Station; some optimistic -- Minot Daily News
- $2 billion project to store captured carbon from ethanol in ND -- Fargo Forum
- Train explosion in Texas triggers ND rail safety officials -- KFYR-TV
- Energy Transfer execs remain confident DAPL will stay open -- S&P Global
- Tribes have high hopes for Haaland, who participated in DAPL protest -- WBFF Fox45
- Interior nominee Haaland vows "balance" on energy, climate -- Associated Press
- Jailed DAPL protester released but faces new grand jury subpoena -- Bismarck Tribune
- Sheriff: Device thrown at Line 3 protest was not explosive -- Associated Press
- 'Water protectors' create blockades to Line 3 worksites in Minnesota -- Fargo Forum
- Wind farm hopes to install light dimming system under extension -- Bismarck Tribune
- PSC schedules input sessions for proposed MDU gas rate increase -- Williston Herald
- ND hopes to reduce impact of leasing ban; Native American exemption -- NG Intelligence
- Fire causes significant damage to Watford City oil service company -- McKenzie County Farmer
- The Crude Life: API talks environment and oil industry's future -- Dickinson Press
- ND House approves bill to allow infrastructure maintenance fees -- Bismarck Tribune
- House passes bill to merge Health, Human Services Departments -- Prairie Public Radio
- After 2019 flaps, ND House passes bill tweaking state audit practices -- Bismarck Tribune
- North Dakota GOP leaders make plans to end mask mandate on lawmakers -- Dickinson Press
- Bill for filling dead election victors' seats sails through North Dakota House -- Bismarck Tribune
- North Dakota's Senate approves measure for annual sessions ... again -- Associated Press
- Divide County School district looks at cutting board size -- Crosby Journal
- Innovation Academy took shape to solve two problems at once -- Williston Herald
- School leaders, including Baesler, send letter to Biden on lease bans -- Sweetwater Now
- Larger Scheels location coming to Minot's Dakota Square Mall in 2022 -- Minot Daily News
- Drew Wrigley resigns US attorney post effective Feb. 28 -- Bismarck Tribune
- Drastic decline in Williams County property assessments is on the way -- Tioga Tribune
- Teaming up to help keep elementary students warm -- McKenzie County Farmer
- Are we headed back to $3 per gallon gas? What will happen this summer? -- KXMB-TV
- The blackouts have only just begun; policy promotes grid fragility -- The Hill
- Texas lawmakers kick off investigation into deadly power blackout -- Reuters
- 17 governors send letter to Biden regarding federal leasing ban -- KFYR-TV
- Texas blackouts warning to Biden: Renewables play role in grid problems -- USA Today
- Oil holds close to 13-month high, supported by sharp drop in U.S. output -- Reuters
- Growth of green jobs are a big myth intended to distract attention -- Natural Gas Now
- Americans can't afford President Biden's green obsession -- RealClear Energy
- Senate approves Biden's pick Granholm to head Energy Department -- Reuters
Factoid of the Week
A total of 908 bills and resolutions have been introduced by North Dakota lawmakers in the current legislative session. That is slightly below the average of 919 for the last five sessions. In the last session in 2019, the bill count was slightly above the average with 984. The largest number of bills and resolutions ever considered occurred in the 1987 Legislature with 1,424. The lowest number ever considered was 833 in 2017.
via Zoom platform
via Microsoft Teams
February 26, 2021
WTI Crude: $61.50
Brent Crude: $66.13
Natural Gas: $2.77
North Dakota Active Oil Rigs: 15 (Unchanged 0) 2/26/2020 -- 51 rigs