BISMARCK — The North Dakota Emergency Commission voted Friday, Oct. 23, in favor of reallocating more than $221 million in federal coronavirus stimulus funds to more than a dozen different state agencies, including $16 million in oil industry fracking grants that have drawn pushback from critics.
The funds voted on Friday are the unused leftovers of the total $1.25 billion pot originally allotted for North Dakota by Congress through the CARES Act early in the pandemic. For final approval of how those leftover funds will be spent, the Legislative Budget Section is expected to take an up-or-down vote at its meeting next week.
With the Dec. 30 deadline to spend all CARES Act money looming, the state is looking to repurpose the large swath of federal money before the funds expire. While the tens of millions of dollars were designated for K-12 schools, the Department of Commerce, and cities and towns across the state, one relatively small piece of the pie has drawn scrutiny: $16 million in grant funding for oil companies to frack wells.
The proposal, announced last week by Department of Mineral Resources Director Lynn Helms, would use leftover money from the original $66 million apportioned to the department to plug and reclaim oil wells across the state. Helms said that program has fallen short of its original goal to reclaim some 380 wells, with winter weather set to interrupt the process before about half of the reclamations can be completed.
The state's solution is to fund fracking work in an otherwise stalled Bakken region, but, to some critics, the $16 million in fracking grants is a gift to the oil industry.
“We should not be doing direct bailouts to the oil industry, and this is a direct bailout,” said Scott Skokos, director of the Dakota Resource Council, equating the fracking grants to "corporate welfare."
Democratic lawmakers have also objected. "This money is supposed to help North Dakotans recover from the pandemic and support working families, not serve as another handout to an industry that is already at full workforce," Sen. Tim Mathern, D-Fargo, said in a statement. "This is more of the same insider spending that gave us the world-leading COVID-19 outbreak. It’s a misuse of taxpayer dollars in the middle of a crisis."
The program would give $200,000 grants to companies to frack about 80 wells, and Helms estimated that it would employ between 500 and 1,000 people between now and the end of the year.
Skokos raised skepticism about the original allocation to use federal taxpayer money for well reclamation, rather than holding the industry accountable for the work. But Skokos called fracking grants "much, much worse," and said the state may have to reckon with the legitimacy of this program in a possible audit.
Still, the all-Republican Emergency Commission, which includes Gov. Doug Burgum, Secretary of State Al Jaeger and four legislative leaders, voted unanimously in favor of the grant funding for fracking. Burgum praised the fracking grants, arguing that they will provide significant returns needed to help balance state budgets in the coming legislative session.
"I think it’s probably pretty safe to say that this is the highest return on investment of any of the dollars that we spent out of the ($1.25 billion) because this is money that we get back and a lot more," Burgum said.
The reallocation of CARES Act funding also comes under more dire circumstances from when the Emergency Commission last gathered in early September. North Dakota has regularly set new records for active COVID-19 cases over the last two months, and September and October have been by far the deadliest months of the pandemic so far.
About $10 million of the reallocation approved Friday would go to the Department of Health for distribution to hospitals in the state's medical hubs of Fargo, Bismarck, Grand Forks and Minot, aimed at incentivizing staff retention and attracting flex nurses from out of state to address the statewide health care staffing shortage.
Among the other significant allocations on Friday, $33 million would go to K-12 schools, $29 million would go to the Department of Commerce for continuation of its business stimulus grants and about $61 million would go to the state treasurer's office for distribution to cities and towns. About 43% of the reallocated funds would go to public health and safety projects, 38% to economic stimulus and 19% to government services, according to the state's analysis.
The largest cut of turned-back money came from the Bank of North Dakota, which pitched $90 million back into the pot, while Job Service returned $50 million and the Department of Health contributed $33 million.
Readers can reach reporter Adam Willis, a Report for America corps member, at email@example.com.