February arrived at the Capitol with low clouds and dense fog, but a cold front swept in Wednesday clearing the sky and ushering in what's forecast to be a week of sub-zero weather.
"Biggest Problem Since Great Depression"
It seems "counter-intuitive," but there is a growing movement in the United States to reject investments in the food and fuels that are essential to modern society.
Members of the Senate Energy and Natural Resources Committee heard testimony this week on SB 2291, a bill aimed at countering the effects of the ESG - Environmental and Social Governance - movement. The measure, introduced by Beulah Senator Jessica Bell, directs state agencies to avoid contracting with companies that support ESG practices, and to study the impact of divesting state funds from companies that boycott energy or ag commodities. Bell said the movement is coordinated by activists, but it's difficult to understand its broad appeal when it makes no sense to stop the production of essential energy and ag products.
Click here to listen to Bell's comments.
Bell said turnabout is fair play, so the state should look for ways to avoid supporting companies that oppose North Dakota's leading industries.
Click here to listen to Bell's comments.
Ron Ness, president of the ND Petroleum Council, said the attack on fossil fuels is an "extremely serious" problem.
Click here to listen to Ness' comments.
Ness said working together, the state's oil and ag commodity producers can begin to address the issue.
Click here to listen to Ness' comments.
James Lieman, Strategic Initiatives & Special Projects Director in the Department of Commerce, told committee members that the seriousness of the problem cannot be overstated, but that North Dakota can set an example for other producing states who are confronted with the same problem.
Click here to listen to Leiman's comments.
An amendment was proposed during yesterday's committee hearing, but no action was taken on the bill. Click here to read or download testimony on the bill. Click here to read WDEA's testimony in support of the legislation.
Senate Approves Coal Insurance Study
The North Dakota Senate gave its approval this week to SB 2287, a bill that provides for an interim study of the availability, cost, and risks associated with insurance coverage in the lignite coal industry.
The study is to be completed in consultation with the ND Insurance Reserve Fund and the ND Insurance Commissioner. The bill specifies that the study must include consideration of whether the current insurance market adequately calculates the risk factors connected to the coal industry, and whether there is a need for a state-based insurance product that insures against current risk factors at an appropriate cost.
The bill was heard Wednesday in the Senate Industry, Business and Labor Committee. Its sponsor, Senate Majority Leader Rich Wardner, described the negative impact the Environmental and Social and Governance (ESG) movement is having on the lignite industry.
Click here to listen to Wardner's comments.
Jason Bohrer, President of the Lignite Energy Council, told the committee that ESG has been a key factor in sharply rising costs for the energy industry.
Click here to listen to Bohrer's comments.
If the bill becomes law, the insurance commissioner would be required to report findings and implement any necessary recommendations by June 1, 2022. SB 2287 will now move to the House for consideration.
Committee Hears Grid Reliability Concerns
If a utility is planning to shut down a coal-fired power plant, citizens of the affected communities should have a right to know and be provided an opportunity to comment on the decision.
That's the gist of HB 1455, which was heard this week by the House Energy and Natural Resources Committee. Its sponsor, Bismarck Rep. Dave Nehring, said the bill simply sets up a process for utilities to follow upon making a decision to retire a coal plant. The legislation is partly a response to last year's announcement by Minnesota-based Great River Energy that it planned to shut down the 1,100-megawatt Coal Creek Station between Underwood and Washburn, which shocked residents of the two communities.
McLean County State's Attorney Ladd Erickson told committee members a process was needed to inform the public because they haven't been getting the facts surrounding the plan to close Coal Creek Station.
Click here to listen to Erickson's comments.
Erickson said it's important that the Public Service Commission be empowered to review the impact that shutting down a plan may have on reliability. He described to the committee the research he's conducted, including reviewing the work of the legislature's Interim Energy Development and Transmission Committee. He said the public doesn't realize that the loss of baseload plants poses a serious risk to grid reliability.
Click here to listen to Erickson's comments.
Committee members also heard from Hazen resident Anna Novak, whose husband works in the lignite industry. Novak said the announced closing of Coal Creek was a shock not just to McLean County, but to others engaged in the coal industry in Mercer and Oliver Counties. She described the importance of the industry to the region, citing specifically the benefits to the employees, to local businesses, schools and churches. Novak said when companies plan to make decisions that will upset the lives of people who depend on them, the public has a right to know and the state should scrutinize that decision.
Click here to listen to Novak's comments.
Novak said she felt "compelled to testify" at the Capitol because she had heard that employees in the industry had been discouraged from offering their comments on the legislation. The committee took no action on the bill this week, and will consider amendments during discussions next week.
Click here to read written testimony on the bill. Click here to read WDEA's testimony in support of the legislation. Click here to watch video of the hearing.
Urges Citizens to Sign Pledge of Support
When running for Governor, Doug Burgum said he would challenge federal overreach when it was necessary and now he is putting action behind those words.
Gov. Burgum signed an executive order this week directing state Cabinet agencies to determine the impacts of recent executive orders issued by the Biden administration on North Dakota’s energy industry.
Burgum also issued an online appeal for a “pledge to stand with our energy workers” and to “tell President Biden to reverse this decision."
Click here to sign and submit the pledge in support of North Dakota’s energy workers.
Since taking office, Biden has signed dozens of executive orders, one of which withdrew a permit for the Keystone XL pipeline and another imposed a “pause” on oil leasing for federal lands.
“The Biden administration’s recent executive orders pose a serious threat to American energy security, our nation’s economic growth and the tens of thousands of North Dakotans whose livelihoods depend on the oil, gas and coal industries,” Burgum said in a news release.
Lt. Governor Brent Sanford, in an interview on the radio program Energy Matters, said North Dakotans should be offended by the President's actions.
Click here to listen to Sanford's comments.
Sanford said the governor wants to gather data documenting the devastation that Biden's actions will have on North Dakota's economy and its citizens, so that state officials can make their case with members of Biden's cabinet.
Click here to listen to Sanford's comments.
Click here to read Burgum's news release and here for a Bismarck Tribune article on Burgum’s action.
Senate Vote Protects Schools Hit by Drilling Ban
By an overwhelming vote of 98-2, the U.S. Senate approved an amendment offered by Wyoming Senator John Barrasso aimed at protecting schools negatively impacted by the Biden Administration’s moratorium on oil and gas leasing.
"The overwhelming support for this proposal is an admission by Senate Democrats of how much damage the moratorium could inflict," said ND Senator Kevin Cramer in a Tweet.
Barrasso’s budget amendment would allow for the hundreds of millions of dollars in lost revenue that states currently receive for public education to be replaced. That funding will be slashed in states like New Mexico, Colorado, North Dakota and Wyoming because of President Biden’s executive order to ban new oil and gas leasing on federal lands and waters.
In 2019 alone, revenues from oil and gas production contributed $1.37 billion to New Mexico and $669 million to Colorado public schools.
“The Democrats’ reckless energy plan is going to cost states hundreds of millions of dollars," Barrasso said. "This is revenue states use to fund schools from kindergarten to college. It pays teachers and helps students."
The amendment establishes a deficit-neutral reserve fund relating to supporting schools in states with lost revenue. Read the text of the amendment here.
House Measure Reduces Coal Conversion Tax
North Dakota's House Finance and Taxation Committee has given its blessing to a partial temporary reduction of the state's coal conversion tax, providing financial relief to the coal industry struggling to cope with an electricity market distorted by warped federal energy policy.
Underwood Rep. Jeff Delzer introduced HB 1412, which reduces the severance tax 60 percent, or roughly $30 million over the coming two-year biennium. The measure only impacts tax revenue earmarked for the general fund, and does not impact tax dollars that go to communities in the coal-producing counties or the lignite research fund. Delzer said the state cannot afford to ignore the challenges the industry faces.
Click here to listen to Delzer's comments.
The "tax holiday" would remain in effect for five years. Jason Bohrer, president of the Lignite Energy Council, said the tax reduction will provide temporary financial relief while the industry tries to address unfavorable market forces, including anti-fossil fuel investment pressure related to ESG - the Environmental, Social Governance movement.
Click here to listen to Bohrer's comments.
The committee approved the bill on a unanimous 13-0 vote. It was re-referred to the House Appropriations Committee. Click here to read WDEA's testimony in support of the bill. Click here to read a Bismarck Tribune article about the hearing.
Western North Dakota Interests Presented
An $800 million bonding bill introduced by Republican leaders received its first hearing this week before the House Appropriations Committee.
Lawmakers spent more than three hours scrutinizing the proposed expenditures, cross-examining witnesses who testified in support of various spending proposals. With low interest rates currently the norm, the legislation provides a way to finance infrastructure projects today, while preserving revenue sources for other projects without increasing taxes.
The proposal embodied in HB 1431 would pay off the bonds over 20 years using earnings from the Legacy Fund. Governor Doug Burgum previously proposed a $1.25 billion bonding plan in December, and Republicans leaders earlier in the legislative session suggested a $1.1 billion package. But a couple weeks later, GOP leaders withdrew the earlier proposal in favor of the scaled-down version.
The largest chunk of the $800 billion package, more than $435 million, would be earmarked for the Fargo flood diversion project. Click here to read an Associated Press article on the proposal.
The key section of HB 1431 for western North Dakota is a $70 million appropriation to repay loans issued to the Western Area Water Supply Authority from the Resources Trust Fund, as well as funding for flood control efforts in the Mouse River Valley. Minot Mayor Shaun Sipma urged the committee to focus on completion of the project rather than just reaching the next milestone.
Click here to listen to Sipma's comments.
Sipma noted accelerating the completion schedule will save significant money.
Click here to listen to his comments.
The bill would also provide $92.5 million for career and technical education (CTE), specifically allocating $15 million to Dickinson, $9 million to Watford City and $9 million to Minot.
Dickinson State University President Stephen Easton said the bill provides substantial funding that will “boost the efforts that have been underway for over a year in southwestern North Dakota to start a career and technical education center.”
McKenzie County School Superintendent Steve Holen told the committee his school district has been focused on developing career and technical education for several years. Holen said McKenzie County’s Job Development Authority launched a feasibility study to quantify the need and value for a career academy/CTE center, training from which is important to retain workers displaced by the downturn in oil prices.
Click here to listen to Holen's comments.
HB 1431 is one of the major bills facing lawmakers this session, evidenced by the marathon House Appropriations Committee meeting. A total of 19 individuals presented testimony at the hearing with another 42 submitting written testimony. Click here to watch video of the lengthy committee hearing and here to read or download the written testimony.
Measure Would Raise Tax Six Cents/Gallon
Lawmakers in the House Finance and Taxation Committee by a vote of 9-5 gave their approval this week to a bill that would raise the state's gas tax to help pay for much needed improvements to roads and bridges.
The legislation, HB 1464, would raise the motor fuel user fee six cents a gallon. In addition, the bill would more than double the road user fee for electric cars from $120 to $250 annually. The fee for hybrid vehicles jumps from $50 to $150.
The bill's sponsor, Dickinson Rep. Vicky Steiner, said the time was right for the gas tax hike since current rates have been in place since 2005.
Click here to listen to Steiner's comments.
Committee Chairman Craig Headland, R-Montpelier, was quoted in a Bismarck Tribune article that nobody enjoys raising taxes, but “we have roads that are crumbling and we haven’t had an increase in 16 years.”
Terry Traynor, Executive Director of the North Dakota Association of Counties (NDACo), testified that a bump in the gas tax would help address county and township road repair needs which he said are considerable.
Click here to listen to Traynor's comments.
Click here to see to a list prepared by NDACo that shows the projected revenue that the bill would generate for individual counties. HB 1464 will be considered by the full House next week. Click here to read a Bismarck Tribune article about the hearing.
Revenue Would Promote Grid Reliability
In an attempt to level the playing field between wind farms and lignite-fired electricity, North Dakota lawmakers are considering a bill that would impose a tax on new wind generation equal to one-half of the federal production tax credit (PTC) the wind farm would collect.
HB 1458 would deposit revenue from the tax in a grid reliability and resiliency fund administered by the Public Service Commission. The tax would apply only to wind farms that begin operating in 2021 and beyond.
The federal production tax credit was launched in 1992 in order to foster growth of wind energy. Even though the intent was not long-term, the subsidy has been extended 13 times, most recently in December 2020. Some lawmakers and coal industry leaders feel the subsidy gives wind an unfair advantage over other energy sources. Bismarck Rep. Dave Nehring pitched the bill to the House Finance and Taxation Committee this week, noting that most of the federal tax subsidy ends up going to out-of-state corporations.
Click here to listen to Nehring's comments.
Nehring said the bill is a way to bring some of the federal money back to the state to support lignite generation that is "the backbone of our grid.”
Click here to listen to Nehring's comments.
Carlee McLeod, representing a working group of North Dakota electric utilities, spoke in opposition to the bill. McLeod said the bill represents a punitive tax policy that will not be good for North Dakota.
Click here to listen to McLeod's comments.
Click here to read WDEA's testimony in support of the legislation. The committee did not take action on the bill this week.
Click here for Amy Sisk's article on the proposed legislation in the Bismarck Tribune.
Measure Would Provide "1 and 1" Increase
Legislation that contains provisions modifying North Dakota's Foundation Aid formula for K-12 schools came out of the House Education Committee this week, and now moves to the Appropriations Committee for its scrutiny.
The measure, HB 1388, contains a proposed one percent increase in the per-pupil state aid payment each year of the biennium. Public schools currently receive $10,036 for each student, covering about 75 percent of the average district's budget. The bill also has a new provision aimed at getting "transition maximum" schools, those districts that now receive less than the standard per-pupil payment, on the Foundation Aid formula.
A similar phase-in provision was enacted by the 2019 Legislature to get transition minimum schools on the formula. There are currently 94 districts in that category, that collectively receive about $49 million per year above the standard per-pupil payment.
Dr. Aimee Copas, executive director of the ND Council of Educational Leaders, testified in support of the funding bill. Copas said the additional funding proposed by the 1-and-1 increase is important to North Dakota schools.
Click here to listen to Copas' comments.
Copas noted that the measure continues a movement toward "on-time funding." Prior to last legislative session, each district's per-pupil payment was based on the previous year's enrollment, meaning that some rapidly-growing districts were not compensated for the students they were educating. The movement to on-time funding went halfway last session, and will advance to 60% in the 2021-22 school year and 70% in 2022-23.
Click here to read pre-filed testimony submitted to support or comment on the legislation.
School Bond Requirement Remains at 60%
A bill that would have lowered the vote requirement for passage of a school bond issue was defeated in the ND House of Representatives this week.
HB 1350 failed on a vote of 11-80. The legislation would have reduced the “supermajority” requirement of 60% of voters necessary to approve a school bond. Under the legislation, the threshold would have remained the same for districts with populations under 4,000, but would drop to 57% for those between 4,000 and 20,000, and to 55% for those with more than 20,000 people.
Click here for an article in the WDEA newsletter on the bill.
The bill was heard in the House Finance and Taxation Committee last week. Despite testimony from 12 proponents and only one opponent, the committee voted 10-2 for a “do not pass” recommendation.
Click here to see the roll call vote on the bill.
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.
Ness said at previous conferences, top-level government officials were invited including a then-candidate for president Donald Trump. Ness said for the last conference they invited Vice President Mike Pence, and "maybe we will send an invitation to President Biden."
Click here to listen to Ness' comments.
For those unable to travel, the conference will be available to virtual attendees. Click here to register for the Williston Basin Petroleum Conference.
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 one of the drives taking place in several western North Dakota communities.
February 6: Williston
February 9: Crosby
February 16: Beach
February 16 Williston
February 26: Tioga
March 6: Dickinson
For the specific event times and locations, click here. To search for other dates or locations, click here.
Quick Connect
- Western Energy Alliance sues President Biden over lease ban -- IER
- Innovative plans for ethane power plant will benefit Tioga -- Tioga Tribune
- Compromise reached in royalty dispute; lawmakers advance bill -- Bismarck Tribune
- Hoeven/Cramer request Biden meeting on energy actions -- Minot Daily News
- Appeals court refuses to stop construction of Line 3 pipeline -- Associated Press
- Hess Corp. gas plant expansion to finish in third quarter 2021 -- Tioga Tribune
- Republican bill to reauthorize Keystone, cut Biden out of process -- Washington Times
- Letter: My day without oil features no plastic and no electricity -- Fargo Forum
- State Lawmakers consider opposing Biden energy orders -- KXMB-TV
- Bill for in-state Legacy Fund investing gets wide support -- Associated Press
- Lawmakers propose using legacy funds to pay property taxes -- KFYR-TV
- Wardner: 'Straight lines' for redistricting with more districts discussed -- Prairie Public Radio
- Pollert talks bonding on water projects and future of lignite -- Prairie Public Radio
- Bill to ban governors from donating/endorsing in elections -- KFYR-TV
- Bekkedahl says seat belt proposal would make roads safer -- Williston Herald
- Proposal passed to study ND lawmaker expense reimbursements -- KXMB-TV
- Two West Fargo lawmakers bring most bills in 2021 Legislature -- Bismarck Tribune
- Speed Limit: Lawmakers consider increase to 80 mph on interstates -- KFYR-TV
- Voters okay Crosby Rural Fire District mill levy hike -- The Crosby Journal
- Partners in Planning grants available from ND Dept. of Commerce -- KXMB-TV
- Midwest economy improving, but pandemic still taking a bite -- Associated Press
- Scholarship bill would offer an incentive to teach in rural districts -- KFYR-TV
- Results vary in finetuning of ND's funding formula for higher ed -- Dickinson Press
- New Williston school district unveils curriculum plan -- KFYR-TV
- Biden's executive order puts educational budgets at risk -- Energy In Depth
- US rig count jumps 14 to 456, as oil outlooks buoy expectations -- Platts S&P Global
- Biden plan for energy sector would make OPEC great again -- FOX Business
- Biden's federal leasing ban will impact energy security -- Energy In Depth
- Once Biden supporters, environmentalists & unions clash over pipelines -- Reuters
- The Biden administration really needs an energy reality check -- The Hill
- Looking ahead at President Biden's anti-pipeline agenda -- Energy In Depth
- Rowe: Biden can turn his back on fossil fuels, but America can't -- FOX Business
- Tesla's little secret: Most profit doesn't come from selling cars -- CNN Business
- John Kerry took private jet to Iceland for environmental award -- FOX News
Factoid of the Week
Source: American Wind Energy Association
Upcoming Events
February 5, 2021
WTI Crude: $56.85
Brent Crude: $59.34
Natural Gas: $2.86
North Dakota Active Oil Rigs: 15 (Up 2) 2/5/2020 -- 54 rigs