Petroleum Council opposes conservation groups' proposed fund

FARGO - The president of the North Dakota Petroleum Council said its members will likely vote next week to oppose a proposed constitutional amendment that if approved would set aside 5 percent of the state's oil extraction taxes to fund tens of m...

FARGO - The president of the North Dakota Petroleum Council said its members will likely vote next week to oppose a proposed constitutional amendment that if approved would set aside 5 percent of the state's oil extraction taxes to fund tens of millions of dollars in water, wildlife and parks projects.

Ron Ness said he expects members to pass a formal resolution opposing the initiated measure during their annual meeting Monday through Wednesday at the Alerus Center in Grand Forks.

"We think this is a wrong approach," he said Friday, adding the measure "would take away from other critical needs across the state without any legislative prioritization."

A coalition of concerned citizens and conservation organizations is sponsoring the measure. The group must collect 26,904 signatures to put the issue on the November 2014 ballot and amend the state constitution to create a Clean Water, Wildlife and Parks Fund and Trust.

Stephen Adair of Bismarck, chairman of the sponsoring committee, said the state is going through "unprecedented changes" amid pressure from agricultural and energy development, with the loss of grasslands occurring at its highest rate since the 1930s Dust Bowl and the loss of habitat affecting populations of deer, pheasants and other wildlife.


"It's more than just sort of predictions ... they're coming true, and when you lose millions of acres of habitat, you're going to have impacts, we know that," he told The Forum's editorial board on Thursday. "Minnesota and Iowa have done those experiments, and we know the outcome.

"So we feel a real sense of urgency. We feel a real sense that this has to be a big, bold investment," Adair said.

Based on current oil extraction tax collections, the State Tax Commissioner's Office estimates the proposed fund and trust would receive $75 million per year, or $150 million per biennium.

Ninety percent of the annual revenues would be deposited into the fund and allocated as grants to public and private groups for projects benefiting water quality, natural flood control, fish and wildlife habitat, parks and outdoor recreation areas, hunting and fishing access, land acquisition for parks and outdoor education for children, according to the petition title.

No less than 75 percent of the money would have to be spent each year.

The other 10 percent of annual revenue would be deposited into a trust. Its earnings would be transferred to the fund to be spent on programs after Jan. 1, 2019.

Ness said the $75 million per year equates to about $1.4 million per week that would have to be spent on as-yet-unidentified projects.

"Those oil tax dollars are allocated to the Legislature, and every time you earmark substantial funds out of those, that means there's less discretionary funds for roads, flood relief, tax relief, school funding, human service issues" and other needs, he said.


Currently, 70 percent of oil extraction tax revenue is locked up in four funds as required by the state constitution, leaving the other 30 percent to be used at lawmakers' discretion. The proposed measure's 5 percent take would leave lawmakers with 25 percent.

Adair said calling the measure too costly is "uninformed." He noted the fund would tap only the oil extraction tax and not the oil production tax, which collected $1.1 billion for the year ending June 30, according to the tax commissioner's office. The extraction tax collected $1.26 billion during the same time period.

Adair also recalled that oil industry officials wanted the extraction tax lowered last session, suggesting there's room to give.

"We don't really understand their opposition," he said.

He also noted that a similar fund in Minnesota, the Legacy Fund, generated nearly $270 million last year. The Legacy Fund, supported by a sales tax increase of three-eighths of one percent approved by Minnesota voters in 2008, is divvied up between four funds to support outdoor heritage, parks and trails, clean water projects and arts and cultural heritage.

Adair said the coalition also made other concessions to make the measure more palatable to those who raised concerns when a similar proposal was floated last year, only to be disqualified from the ballot after the discovery of fraudulent petition signatures gathered by paid workers, including several North Dakota State University football players. The coalition plans to use only volunteers to gather signatures this time around, he said.

Among the concessions: a three-member commission comprised of the governor, attorney general and agriculture commissioner - the same makeup as the state's Industrial Commission - that would govern the fund. Projects would be recommended to the commission by a "citizen accountability board" with 13 members, all appointed by state elected officials.

The proposed amendment also bars the commission from using the funds for litigation, lobbying or activities "that would unduly interfere, disrupt, or prevent the development of mineral rights," a provision intended to pacify energy interests. It also prohibits the acquisition of land through condemnation or eminent domain, and Adair noted that any land acquisition by a nonprofit would still require the governor's approval under state law.


"There's not going to be massive land acquisitions. Hopefully strategic land acquisitions," he said.

Adair said Friday he's not surprised that the Petroleum Council opposes the measure. But he said polling conducted by the coalition's member groups has found the majority of people working in the state's oil industry are in favor of it.

Ness said the Petroleum Council, which lobbies on behalf of more than 350 companies involved in all aspects of the oil and gas industry, recognizes the need for the outdoors and conservation, which is why it was among a broad coalition that supported the Legislature's creation of the Outdoor Heritage Fund last spring. Gov. Jack Dalrymple on Thursday announced his appointments to the fund's 12-member advisory board that will review and recommend conservation project proposals for Industrial Commission approval.

The Outdoor Heritage Fund is set up to receive up to $30 million per biennium from the oil and gas gross production tax, though Adair noted the bill's fiscal note estimated it will generate only $17.62 million in the 2013-2015 biennium.

Ness called the $30 million a "substantial" start with which the state "can do great things."

Related Topics: WILDLIFE
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