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Environmental group calls out conflicts of interest on North Dakota energy board as $160M funding approved

Multiple appointees to the Clean Sustainable Energy Authority disclosed conflicts of interest at the start of last week’s meeting.

PHOTO: Coal Creek Station
Negotiations continue in the search for a new owner for Coal Creek Station, North Dakota's largest coal-fired power plant. The effort faces a looming summer deadline for completion.
Contributed / Great River Energy
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BISMARCK — An environmental group is calling out a new arm of the North Dakota government for allegedly mismanaging its conflicts of interest when it convened last week to recommend more than $160 million in state funds for fossil fuel-sector grants and loans.

The Dakota Resource Council, a conservationist group, raised concerns about the handling of conflicts of interest on the Clean Sustainable Energy Authority in a letter sent to the state Ethics Commission and Gov. Doug Burgum on Monday, Dec. 20, in which the organization asked for more stringent rules regulating such conflicts in the future.

The letter comes as the $28 million in grants and $135 million in loans that the Clean Sustainable Energy Authority recommended last week received final approval on Monday from the North Dakota Industrial Commission, the three-member business regulatory board chaired by Gov. Doug Burgum.

The Clean Sustainable Energy Authority, which was established by lawmakers earlier this year, consists of members nominated by energy industry groups to oversee a new fund of $45 million in grants and $250 million in loans. Lawmakers created the board with the aim of kick-starting “game changing” lower-emissions energy projects in the state’s fossil fuel and agriculture sectors, which are facing mounting investor pressures to mitigate their contributions to climate change.

Among the top recipients of the Clean Sustainable Energy Authority’s inaugural funding round was a project to build a $2.8 billion natural gas-to-liquids plant in Williams County, a $1.8 billion effort to retrofit a coal gasification facility into a hub for the production of hydrogen fuel, and an early engineering study into the plans to retrofit the state's largest coal-fired power plant, Coal Creek Station, for carbon capture.

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Members on the Industrial Commission unanimously approved the funding recommendations set by the Clean Sustainable Energy Authority last week . Officials left $17 million in grants and $115 million in loans untouched in the Clean Sustainable Energy fund for application rounds next year.

Conflicts of interest

Multiple appointees to the Clean Sustainable Energy Authority disclosed conflicts of interest at the start of last week’s meeting. Voting members of the board have worked in a variety of energy sector jobs, including in oil, coal, ethanol and utility co-op roles, and in each case the authority decided to allow members to vote on the projects for which they were conflicted.

Those decisions raised concerns for the Dakota Resource Council, which argued in its letter Monday that members should not have been allowed to cast votes on whether or not to fund projects that would have direct or indirect financial benefits for them or their employer.

Among the most serious conflicts, the Dakota Resource Council said, was one disclosed by Kathleen Neset, the president of an oilfield consultancy that she disclosed contracts with the company Wellspring Hydro, which the Clean Sustainable Energy Authority recommended for $1 million in grant funding. The conservationist group also highlighted the conflicts of Al Christianson, who told authority members that he sits on the board of Midwest AgEnergy, which received a $3 million grant, and works for Great River Energy, which is in the process of selling Coal Creek Station.

“It is long overdue for North Dakota to adopt strong conflict of interest rules that prevent appointed or elected officials from using their office to enrich themselves, their employer, or business interests,” wrote Scott Skokos, executive director of the Dakota Resource Council. The events that transpired at the Clean Sustainable Energy Authority meeting earlier this month “spotlight the need for rules to be developed as soon as possible,” he said.

In all, the Dakota Resource Council noted conflicts of interest disclosed by five of the authority's eight voting members, all of whom were allowed to vote.

Al Anderson, the president of the Clean Sustainable Energy Authority, told Burgum and Industrial Commission leaders on Monday that he believes the new state board handled each of its conflicts appropriately.

“These folks are technical experts in their fields. With that and the size of our state, you’re going to have quite a few conflicts,” Anderson told the Industrial Commission. “We had those identified.”

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Though Anderson said that conflicts of interest are “one of the key challenges” for the newly formed board, he added that they abided by guidance received earlier this year from the Ethics Commission.

Ethics Commission director Dave Thiele said in an interview that to his knowledge the Clean Sustainable Energy Authority followed the directions that his panel provided, noting that members disclosed their conflicts at the start of last week's meeting.

Thiele said he could not comment on the severity of individual conflicts disclosed by board members. The Ethics Commission is in the process of developing new conflict of interest rules that would, in part, require public officials to disclose any financial interests or family connections before voting on a matter.

Though such conflicts can be common in the small world of North Dakota politics, Skokos wrote in the letter that allowing conflicted Clean Sustainable Energy Authority members to vote is particularly problematic because the board makes direct decisions on where the state's money is invested.

The only instance in which the the Clean Sustainable Energy Authority recused a member from voting was at a meeting of its technical advisory committee earlier this month, in which a representative from the University of North Dakota's Energy and Environmental Resource Center did not cast a vote on the application for a study into carbon capture at Coal Creek Station since it was submitted by his organization.

Funded projects

All but one of the applicants that the Clean Sustainable Energy Authority recommended for funding received unanimous approval by the board during their meeting last week.

The one exception was the project submitted by Bakken Energy to retrofit the financially troubled Great Plains Synfuels Plant near Beulah to produce hydrogen energy. Funding for that project, which has received pushback from coal industry advocates in the state, was approved on a 7-1 vote, with Christopher Friez of North American Coal providing the lone nay vote.

All three members of the Industrial Commission voted to approve the authority's funding recommendations at their meeting on Monday. Funding was awarded to the following projects:

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  • $10 million in grants and $80 million in loans for Bakken Energy’s proposed hydrogen hub at Great Plains Synfuels. 
  • $7 million in grants and $40 million in loans for the Canadian company Cerilon’s plans to construct a gas-to-liquids plant in Williams County, the first of its kind in North Dakota.
  • $7 million in grants for the University of North Dakota’s Energy and Environmental Research Center for a preliminary engineering study into the carbon capture at Coal Creek Station.
  • $3 million for Midwest AgEnergy’s plans to pursue carbon capture at the Blue Flint Ethanol facility in McLean County.
  • $1 million in grants or Wellspring Hydro’s plans to use produced water waste in the oilfields to extract products like lithium, which can be used to make the batteries that power electric vehicles.
  • $15 million in loans for Valence Natural Gas Solutions to deploy mobile gas capture units in the oilfields to help solve the state’s flaring problem.

Burgum said that all of the projects would combine to slash more than 18 million tons of North Dakota's carbon dioxide output, or nearly a third of the state's carbon emissions.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com .

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