FARGO -- Federal lawyers concede that thousands of dollars of campaign donations from coal-mining interests to members of the North Dakota Public Service Commission "risk creating an appearance of impropriety."
But lawyers for the U.S. Interior Department, charged with overseeing regulation of coal mines, argue in court filings that the contributions violated no laws and a lawsuit has not proven any harm.
Two environmental groups, the Dacotah Chapter of the Sierra Club and the Dakota Resource Council, filed a lawsuit last year in U.S. District Court in Bismarck asking a judge to compel federal regulators to ban the coal-mining contributions as illegal "gifts and gratuities."
The dispute, which dates back to 2008, arose when opponents of a proposed coal mine near South Heart in Stark County in southwest North Dakota claimed campaign contributions to two members of the Public Service Commission were a conflict of interest.
A letter by the environmental groups to the federal Office of Surface Mining Reclamation and Enforcement said Kevin Cramer, a former PSC member and now North Dakota's lone member of the U.S. House, accepted $11,500 in donations from 2008 to 2010, and Brian Kalk, PSC member, received $5,500 between 2008 and 2009.
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Both Cramer and Kalk said there was nothing improper in their campaigns accepting the contributions from coal interests they regulate. They said the allegations were politically motivated.
The financial interest issues raised in the lawsuit are unprecedented, and federal officials charged with overseeing coal mining grappled with the case because "this is the first known incident of this nature," according to a brief by federal lawyers.
Lawyers for the Interior Department, the defendant in the lawsuit, and the Public Service Commission, an intervener in the case, said the contributions were made to the campaigns for Cramer and Kalk, not to the members themselves, and therefore were not improper.
But the Sierra Club and Dakota Resource Council, in a brief filed last week, rejected that argument, and asserted that the indirect contributions are banned under federal law.
"The fact that the Commissioners have discovered a novel way to accept financial contributions from coal companies does not undermine or weaken the (federal) regulation they have violated in so doing -- nor does it make the now-apparent inadequacy of the North Dakota program any less serious," the environmental groups said in their brief.
North Dakota assumed responsibility for enforcement of coal mining regulation in 1983 through an agreement with the U.S. Department of Interior under a federal law passed in 1977, the Surface Mining Control and Reclamation Act, or SMCRA.
States that assume responsibility for coal mining regulation can be more stringent than federal regulations but must not be less stringent. The lawsuit alleges that North Dakota's financial interest regulations are less stringent than those required by the federal law.
By permitting campaign contributions from owners, employees, spouses or lawyers of coal companies, North Dakota subverts the intent of federal regulations banning direct or indirect financial conflicts by coal regulators, the plaintiffs argue in their brief.
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"Coal companies could effortlessly evade such a toothless standard, an outcome SMCRA's drafters took pains to avoid," the Sierra Club and Dakota Resource Council brief said.
Lawyers for the Public Service Commission argue that North Dakota complies with federal regulations, and the campaign contributions are legal.
SMCRA does not prohibit elected officials from accepting campaign contributions, the brief for the PSC said. Even if campaign contributions qualified as "gifts" under the regulations, the contributions went to the commissioners' campaigns, not to Cramer or Kalk personally.
Also, the PSC argues, the South Heart Mine has not been permitted, and there has been no "legally cognizable injury" or even a threatened injury.
Besides denying any illegalities, both the Public Service Commission and Department of Interior are asking for the case to be dismissed.
Oral arguments have not been scheduled.
