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N.D. House rejects oil tax reform bill

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BISMARCK — House legislators Wednesday rejected an oil tax reform bill that would have lowered the oil extraction tax, closed a tax loophole for low-producing wells and set up guidelines for a new tribal tax agreement.

Rep. David Drovdal, R-Arnegard, said the conference committee met 17 times to reach a compromise on House Bill 1234, which aimed to reform several oil tax provisions while staying close to revenue neutral for the state. The bill failed 71-21.

The bill would have increased taxes on the oil and gas industry by $65 million but would have resulted in a $9.9 million loss in revenue to the state of North Dakota because more tax dollars would go to the Three Affiliated Tribes, Drovdal said.

Rep. Scot Kelsh, D-Fargo, said the bill had some good provisions, but reducing the oil extraction tax from 6.5 percent to 6 percent was a deal-breaker.

Earlier Wednesday, Democrats called the proposal, which would have applied to new oil production, a “thoughtless, unnecessary shortchanging of North Dakota’s future” that would cost the state $280 million in the first four years.

“The industry is flourishing under that current tax rate,” Kelsh said. “As the industry grows, the need for infrastructure continues to grow.”

Other legislators who voted against the bill had concerns about the guidelines it established for a new agreement with the Three Affiliated Tribes that would equally divide oil taxes generated on the Fort Berthold Reservation between the tribes and the state.

No one spoke in opposition to dividing the tax revenues equally, but several said they wanted more assurance that the tribes would spend the new dollars on roads on infrastructure. The bill requires the Three Affiliated Tribes to report how the money is spent, but does not have any other requirements.

Rep. Mark Dosch, R-Bismarck, called it “a shame” that tribal leaders will not commit to spending the money on infrastructure and said he would oppose the bill.

“This should benefit all people of North Dakota and not just the tribal government,” Dosch said.

Others said it’s wrong for state legislators to tell a sovereign nation how to spend its money.

“You have to look at their wisdom and how they’re going to use their dollars and put a little bit of trust in them,” said Ken Onstad, D-Parshall.

Drovdal said he received a lot of emails from oil companies working on the reservation who support the bill.

The oil companies “absolutely need this bill to pass,” Drovdal said.

If a new agreement with the tribe is not reached, tribal leaders have indicated they could break the existing agreement and charge a tax on top of the state’s tax, making it too costly for companies to drill on the reservation.

Most legislators spoke in favor of the bill’s provision that would eliminate a tax loophole for low-producing well properties.

Low-producing wells, known as stripper wells, can receive tax exemptions if they fall below a designated production value. A tax loophole, however, exists for wells that are high-producing wells that are located near the weaker wells.

Eliminating that loophole would increase tax revenue by about $105 million for the 2013-15 biennium.

Republican legislators said during their caucus meeting before the vote that closing that loophole could be addressed in the budget bill for the Office of Management and Budget.

Rep. Vicky Steiner, R-Dickinson, said she supported the bill because while it wasn’t perfect, it cleaned up some old tax provisions that aren’t relevant with today’s technology.

“There were some things that we needed to update and match our tax policy to the Bakken and not what we did in the ’80s,” Steiner said.

Accountability for tribal oil taxes still an issue

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BISMARCK – An amendment to a bill that includes parameters for a new oil tax agreement with the Three Affiliated Tribes moved forward Friday, but legislators indicated it may get more scrutiny at a future hearing.

Members of the state Senate adopted several amendments Friday to House Bill 1234, an oil bill that includes an amendment that would equally divide oil taxes generated on the Fort Berthold Reservation between the tribes and the state.

Sen. John Andrist, R-Crosby, requested to consider the tribal tax agreement separately from other amendments in the bill.

“I hear a lot of talk about there’s no accounting for the money they’re getting right now,” Andrist said. “I think this should have more daylight.”

Andrist withdrew his request after other legislators suggested it could be dealt with at a future hearing. The bill will be discussed by the Senate Appropriations Committee on Monday.

Other amendments adopted Friday include an elimination of a tax loophole for some wells in the same area as low-producing wells, known as stripper wells.

The elimination of that tax exemption is estimated to bring an additional $104 million in revenue during the next biennium. Currently, a productive oil well in the same spacing unit as a low-producing well can qualify for the same tax exemption as the weaker wells.

While the loophole will close for some wells, others may now fall under the definition of a low-producing well and be exempt from taxes.

Another amendment would change the criteria for Bakken and Three Forks stripper wells from those that produce fewer than 30 barrels to fewer than 40 barrels. That would mean a projected loss of $13.5 million in state revenue.

Sen. Jim Dotzenrod, D-Wyndmere, said he’s concerned that changing the definition of a stripper well could cost the state significant future revenue.

Sen. Dwight Cook, R-Mandan, said the cost of drilling an oil well in the Bakken has risen 20 percent since 2008, so he feels the change is good way of encouraging continued oil exploration.

“I think it’s justifiable when you look at the cost of drilling out there,” Cook said.

Another amendment includes a tax incentive to encourage companies to drill in formations other than the Bakken and Three Forks.

In addition, the bill would withhold taxes on royalty payments to non-North Dakota residents, generating an estimated $4.2 million for the state.

State, tribal leaders work on new oil tax agreement

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NEW TOWN, N.D. — Oil drilling on the Fort Berthold Reservation could be in danger if state legislators and tribal leaders can’t reach an agreement on how to share the oil tax revenue.

Leaders of the Three Affiliated Tribes are working with state legislators to amend a 2008 agreement that Chairman Tex Hall says is unfair to the reservation.

A proposal would send more money to the reservation, but Senate Majority Leader Rich Wardner said it has an “uphill climb” in the state Legislature if it doesn’t include a stipulation that the tribes spend a portion of the tax dollars on improving roads.

Hall and tribal leaders strongly object to the state telling the tribes how to spend their money and trying to exert jurisdiction over trust lands. One proposal called for the tribes to use 10 percent of new revenue for infrastructure, but the state has not committed to do the same with dollars generated on the reservation, Hall said.

“Why doesn’t the state be accountable for $314 million?” Hall said, referring to the amount of tax revenue the state has collected from oil wells on the reservation. “Why don’t they do 10 percent? It works both ways.”

The issue is critical for the entire state because tribal leaders have indicated in negotiations that they would break the existing agreement if a compromise isn’t reached, Wardner said. That could result in the tribes charging a tax on top of the state’s tax, making it too costly for companies to drill on the reservation.

“If the oil companies stop drilling, we all lose,” Wardner said.

The major oil companies that operate on the reservation have signed a letter supporting the tribes.

“We want more of our dollars going back to the tribal entities to address issues on the reservation,” said Ron Ness, executive director for the North Dakota Petroleum Council, an industry trade group.

Prior to the 2008 agreement, there had not been a well drilled on Fort Berthold trust lands in 27 years because of the unstable and unpredictable tax and regulatory structure, Ness said.

In 2008, the state and tribes agreed to have one tax structure with oil companies paying a 6.5 percent extraction tax and a 5 percent production tax, the same taxes that companies pay in the rest of the state.

For wells drilled on trust lands, that revenue is divided equally between the state and the tribe.

On fee lands, which are privately owned lands on the reservation, the state receives 80 percent of the production tax and the tribes receive 20 percent of that tax.

The agreement has a five-year exemption on the extraction tax on fee land, with the state receiving 100 percent of that tax after the exemption expires. Because the agreement is about five years old, the state is just starting to collect extraction tax on fee lands, Wardner said.

Under the new proposal, that five-year tax holiday would be eliminated and the state and tribes would equally split the extraction and production taxes on fee lands.

A projection by the North Dakota Tax Department estimates the tribes would receive an additional $81 million in 2013-15 and nearly $232 million in the 2015-17 biennium under the proposal.

The state is estimated to gain $6 million in 2013-15 but lose nearly $76 million in 2015-17 compared to the current agreement, according to the projections.

Legislators are in favor of dividing the tax revenue equally, but they want to see a portion of the dollars targeted for improving roads, said Wardner, R-Dickinson.

“The roads are shot up there,” Wardner said, referring to the reservation. “It (the proposal) will not pass muster in these chambers unless there’s some accountability.”

Hall said he’s asked the state to account for how it spent oil taxes generated on the reservation and didn’t get an answer.

“If you ask us how we spend our money, we get to ask you,” Hall said.

Hall points out that the reservation is not eligible to apply for state energy-impact grants, even though the reservation generates oil revenue and is experiencing the same impacts that other Oil Patch communities are.

“That’s a slap in the face,” Hall said.

Wardner said the city of New Town is eligible for the grants but has never applied.

The industry is following the negotiations closely because companies could not afford to operate on the reservation if the tribes and the state can’t agree on a single tax structure, Ness said. Already companies have additional costs to drill on tribal lands, Ness said.

“The costs become pretty much prohibitive as you add potential additional taxes on top of that,” Ness said.

House Bill 1234, which deals with several oil issues, includes a recommendation to split the oil tax revenue equally, but it does not include a requirement for the tribes to spend money on roads, Wardner said.

The Senate Finance and Taxation Committee voted 7-0 to give the bill a do pass recommendation Thursday. The amendments will be discussed on the Senate floor today, and then the bill will go to Senate Appropriations next week, Wardner said.

If the bill is approved, it will give Gov. Jack Dalrymple some parameters to work with and he will meet with tribal leaders to renegotiate the agreement, Wardner said.

Hall said tribal leaders also want to remove a clause in the agreement that gives the state jurisdiction to regulate oil and gas activities on the reservation.

If a compromise cannot be reached, the issue would come back to the tribal council and leaders would decide whether they can live with it or they could vote to terminate the agreement with the state, Hall said.

Fort Berthold had 28 drilling rigs operating during the most recent monthly update from the state Department of Mineral Resources.

Faces of the Boom: Leaders of landowner group active at Capitol

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Myron Hanson, left, and Troy Coons, pictured March 28, 2013, in Bismarck, represent farmers and ranchers at the Capitol through the Northwest Landowners Association. Amy Dalrymple/Forum News Service

BISMARCK – Farmers Myron Hanson and Troy Coons miss the rural North Dakota they used to know.

That’s why they’re volunteering their time at the state Capitol this legislative session to advocate for farmers and ranchers who are being significantly affected by the oil boom.

“The impact on a small number of people that are bearing the burden of this is huge,” said Hanson, a third-generation farmer who lives near Souris. “There are some pretty serious consequences on the lifestyles of some of these individuals.”

Hanson and Coons are chairman and vice chairman of the Northwest Landowners Association, a group that was informally established six years ago and is now more organized than ever with about 400 members.

The group supports oil development but wants to see it managed in a way that is fair to landowners and preserves natural resources. The association has worked to introduce and support several bills this session, with Hanson and Coons attending hearings at the Capitol almost every week of the session.

“We as individuals cannot match the budgets these oil companies have. They have armies of lawyers and deep pockets,” Hanson said. “If you are going to effect change, the easiest way to do it is through the legislative process.”

One of their priorities has been working to get oversight of pipelines that carry salt water, a byproduct of oil and gas development that can be very damaging to cropland if it’s spilled or a pipeline breaks.

They also supported proposals to require oil wells to be located farther away from homes than the current setback of 500 feet. That effort was not receiving support, so they’re now in favor of a compromise that would require the flare and production equipment to be farther away.

Coons, who farms near Donnybrook, said he worries about how the land that’s being developed for oil wells and associated facilities will be restored in the future. He advocated for a bill that would have added more standards for land reclamation for private land.

The bill was defeated, but the landowner group plans to continue working on improving land reclamation standards by working with soil experts in the state, Coons said.

Although they often disagree with the oil industry, the association leaders said they aim to work with industry representatives to find common ground.

“It’s really important that we become recognized as a group that can talk to people, that we’re not just throwing stones at everything,” Hanson said.

Governor’s energy stocks, contributions raise questions

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Gov. Jack Dalrymple speaks during the groundbreaking ceremony for the Dakota Prairie Refinery in Dickinson, N.D., on Tuesday, March 26, 2013. Dustin Monke/Dickinson Press

BISMARCK –  When an oil company wanted to drill for oil near a beloved North Dakota landmark, it brought to light a possible ethical question for Gov. Jack Dalrymple.

Dalrymple owns stock in ExxonMobil, the parent company of XTO, that applied for a permit to drill near a ranch once owned by Teddy Roosevelt. As governor, Dalrymple also is chairman of the state’s Industrial Commission, which could have made the final ruling on the drilling permit.

Amid the cries of preservationists, XTO withdrew its drilling application, at least for now, but the larger questions of whether Dalrymple should rule on a case where he has a potential or perceived financial interest and how much influence the oil industry has on state government remained unanswered.

Although the situation is hypothetical at this point, Dalrymple said last week he would disclose the stock ownership and abstain from voting on a proposal from XTO to drill for oil near Elkhorn Ranch.

“I would have said ‘I doubt if this has any significant impact on them financially whether you put a well here or over there,’” Dalrymple said. “But out of the sake of appearances, I think I probably would have said I’m more comfortable not voting.”

Dalrymple said his Exxon stock is worth more than $5,000, but he declined to say the specific amount out of principle of not disclosing his personal finances.

“If I owned $5, I would probably still bring it up to avoid any bad appearances,” Dalrymple said.

Rep. Corey Mock, D-Grand Forks, said if an elected official did let a conflict of interest get in the way of acting in the best interest of the state, there is virtually no course of investigation or place for citizens to bring a complaint.

“It reiterates the need to have an independent ethics commission in North Dakota,” Mock said.

Earlier this legislative session, Mock pushed for the development of an ethics commission that could investigate complaints. North Dakota is one of three states without a form of ethics commission. The bill failed in the House.

The idea of drilling for oil near Elkhorn Ranch, where Roosevelt raised cattle in the mid-1880s before becoming the 26th U.S. president, created a lot of public anxiety, said Attorney General Wayne Stenehjem, who also serves on the three-member Industrial Commission along with Agriculture Commissioner Doug Goehring.

But members of the public aren’t the only ones concerned. All three members of the Industrial Commission said in interviews last week they would not support putting an oil well near Elkhorn Ranch.

“A lot of people were shocked, but so was the governor,” Dalrymple said. “We would never have sited a well there. It would have never happened.”

Members of the Industrial Commission are working on a way to identify areas that “no matter what happens, they should not be directly impacted,” Dalrymple said.

The effort is in preliminary stages until the legislative session is over, but will likely involve taking a tour or holding a meeting in the Badlands area and gathering public input, Dalrymple said.

XTO asked for the matter to be removed from the hearing docket of the Oil and Gas Division of the North Dakota Industrial Commission, but company officials continue to work with the U.S. Forest Service to identify a drilling site in the area, XTO spokesman Jeff Neu said Friday.


Statement of interest

ExxonMobil is one of 16 energy-related stocks Dalrymple lists on his statement of interest on file with the Secretary of State. Dalrymple and his wife own stock in more than 90 companies. He said he has not acquired stocks in additional companies since filing his statement of interest about a year ago.

Mock said he and another legislator pushed for greater disclosure by public officials during the last legislative session but the effort was defeated. Elected officials file a statement of interest with the Secretary of State disclosing financial information but it doesn’t specify how much stock is owned and is not required to be updated, Mock said.

“It is a weak document that provides very little explanation as to where a conflict may arise,” Mock said.

Stenehjem and Goehring do not list oil and gas stock on their statements of interest. Both said their statements are current.

Even though Dalrymple says he would recuse himself from voting on an issue involving a company he owns stock in, it’s not clear that he could.

Stenehjem said the Industrial Commission’s ethics policy needs to be updated because it conflicts with an opinion he issued to a county commission. The commission was deadlocked on 2-2 vote with one member abstaining. Stenehjem ruled that once a member of a body discloses a conflict of interest he or she must vote.

“At some point, we need to make it clear that you have to vote,” Stenehjem said.

Because the Industrial Commission has only three members, one abstention could become problematic if the other two members have opposing views, Stenehjem said.

Karlene Fine, executive director of the Industrial Commission, said former Gov. John Hoeven would abstain from votes that related his ownership of a Minot bank and former Gov. Art Link would abstain when an issue involved his mineral interests.

Based on the attorney general’s opinion, the policy will need to be revised, Fine said.

“With a three-member commission, it gets to be a challenge when you have somebody abstaining,” Fine said.


Oil and money

Jim Fuglie, a longtime state political observer who worried about the Elkhorn Ranch proposal, said he’s not concerned about the governor’s ExxonMobil stock as long as it’s disclosed.

“When you have a rich governor, these kinds of things are going to happen,” said Fuglie, who once led the state Democratic party. “That’s why we have campaign (finance) disclosure.”

Peg Perl, attorney for the watchdog group Colorado Ethics Watch that monitors government accountability, said many states provide ranges on disclosure forms to give the public a sense of how much stock an elected official holds. States typically don’t have rules that restrict a governor’s stock ownership, said Perl, who often deals with oil and gas issues in Colorado.

“The governor is going to have so many issues from so many companies and so many sectors

that he touches that to say he can’t own stock in any of that is generally seen as going too far,” Perl said. “No state really goes that far.”

Fuglie said he worries more about how much influence campaign contributions have.

“He’s taken so much money from the oil companies that when a questionable issue arises in front of him, you have to wonder, ‘What does he owe in return for all that cash?’” Fuglie said.

Residents of Dunn County petitioned for a grand jury investigation of Dalrymple over $81,600 in oil industry campaign contributions he accepted around the same time the Industrial Commission was considering a controversial case that involved designating a large area for oil development.

Commissioners unanimously approved the mega-unit, which included Little Missouri State Park, because it was the best way to preserve the area, Dalrymple said.

“That’s the whole reason it was done and there was no other reason,” Dalrymple said.

Burlington Resources Oil & Gas Co. has about 68 percent of the working interest in the unit and petitioned to have it developed as one large unit.

XTO had 2 percent of the working interest in the unit at the time it was approved. Today XTO’s interest is about 6 percent.

Dalrymple said last week he didn’t know that XTO was part of that unit.

Jim Stenslie, a member of the Dakota Resource Council who lives near New Town, said citizens are worried about how much influence money has on oil and gas development.

“People are feeling so powerless, and I think a lot of that is our whole political system has become so much in bed with the oil industry,” said Stenslie, a retired Lutheran pastor.

Carol Booth, communications manager for Interstate Oil and Gas Compact Commission, which consists of the oil- and gas-producing states, said North Dakota has strict and fair regulations.

“North Dakota has some of the best state regulations and they stay on top of the regulations better than just about any other state,” Booth said.

Dalrymple points to his track record of public service, which began in 1984.

“I have never in my entire career in public service ever had a situation where I felt that I let any kind of personal interest or personal conflict enter into my decision-making whatsoever,” Dalrymple said.

Energy-related stocks held by Gov. Jack Dalrymple

ABB Ltd
BHP Billiton
BP
CNOOC Limited
Chevron
Cloud Peak Energy
Edison Intl
Emerson Electric
ExxonMobil
General Electric
Noble Energy
Oceaneering
Taiwan Semiconductor
Tesco
Transocean
UGI Corp

Dunn residents try again for investigation of governor

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WILLISTON, N.D. – A second petition seeking a grand jury investigation of Gov. Jack Dalrymple related to oil industry campaign contributions was filed Monday in Dunn County District Court, signed by more than 250 people.

The case is assigned to Southwest Judicial District Court Judge William Herauf, the same judge who dismissed a similar petition because it failed to have enough signatures. Herauf also ruled that the appropriate venue for such a petition would be Burleigh County.

In this second attempt, organizers needed signatures of 202 residents and they gathered 267 signatures, said Ellen Chaffee, who submitted the petition Monday. Most of the people who signed were not the same individuals who signed the original petition, she said.

The petition alleges that contributions to Dalrymple’s campaign accepted could be considered bribery. Dalrymple serves as chairman of the North Dakota Industrial Commission, which was considering a controversial “mega-unit” for drilling oil in Dunn County about the same time he received some of the contributions from individuals or groups tied to some of the oil companies involved. The unit received unanimous approval from the commission.

Dalrymple’s campaign called the allegations “baseless” and politically motivated.

Chaffee, a recent candidate for lieutenant governor with Democrat Ryan Taylor, did not sign the petition herself because she doesn’t live in Dunn County. But Chaffee’s husband is a Dunn County native and his family is affected by the decision, which is why she assisted with the petition, Chaffee said.

“This has nothing to do with politics. It has to do with what’s right.” Chaffee said Monday. “Law enforcement is supposed to prosecute crimes. All we’re asking is that law enforcement investigate and, if appropriate, prosecute what we believe is a crime.”

Herauf’s ruling said the petition should be filed in Burleigh County because that is where the Industrial Commission meets and there is no indication that contributions were received in Dunn County.

Grand Forks attorney David Thompson who drafted the petition said North Dakota Century Code indicates that Dunn County is the appropriate venue for the grand jury investigation because the consequences of the actions occurred there.

After Herauf dismissed the case, the North Dakota Supreme Court dismissed an appeal.

Meanwhile, a Williams County petition for a grand jury investigation against two officials has been dismissed. A petition using the same statute alleged that Williams County Auditor Beth Innis and state Sen. John Andrist, R-Crosby, violated the state’s “corrupt practices act” by making statements about a measure to abolish property taxes. Northwest Judicial

District Judge Richard Hagar ruled that 23 people who signed the petition didn’t live in Williams County and the number of signatures fell two short of the necessary 935 qualified signatures.

Bill seeks to raise bar for citizen-initiated grand juries

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BISMARCK – A bill in the North Dakota House seeks to change the process for citizen-initiated grand juries, a statute few were aware was on the books until Dunn County residents petitioned to investigate the governor last year.

Rep. Jim Kasper, R-Fargo, the prime sponsor, said he didn’t want to eliminate the ability for citizens to convene a grand jury, but he wanted to raise the bar by increasing the number of signatures required.

“I take the power of the grand jury very seriously, and in looking at the current law, I believe that there is a possibility for abuse of the grand jury function based upon ideology, political agenda and many, many other aspects of what people’s viewpoints are,” Kasper said.

Kasper said his bill is not in response to the Dunn County petition, which sought a grand jury investigation of Gov. Jack Dalrymple related to campaign contributions he received from oil companies.

The bill would require a number of signatures equal to at least 25 percent of the county’s Census population, but not greater than 5,000 signatures. The current statute requires signatures from 10 percent of the number of voters in the most recent general election in the county.

Kasper said a woman who testified during a hearing last week said she knows of six petitions for grand jury investigations that are being circulated in the state.

His bill seeks to provide more citizen input so the process can’t be abused for a political agenda, Kasper said.

Grand Forks attorney David Thompson, who drafted the Dunn County petition that was later dismissed, said the Republican sponsors of the bill ought to be ashamed of themselves.

“This is obviously a cynical attempt to make it more difficult to have public officials investigated by citizen petitioned-for grand juries,” Thompson said.

One reason a judge dismissed the petition was because it didn’t have enough signatures from qualified voters. A second petition has been circulating and is expected to be filed next week.

The governor’s campaign called the petition that was filed shortly before November’s election “baseless” and politically motivated.

Aaron Birst, executive director for the North Dakota State’s Attorney’s Association, said state’s attorneys have been discussing an update to the grand jury chapter for about four years.

“It’s an extremely archaic statute,” Birst said. “Because it’s archaic, it makes it unusable in North Dakota.”

Birst submitted an amendment to the bill that updates the outdated language to make the grand jury process available to state’s attorneys to use for certain cases. His amendment did not address the citizen petitions.

“On very difficult cases, the grand jury would be a useful tool,” Birst said.

The bill has been assigned to a subcommittee.

Refinery backers trying to fix tax exemption ‘fiasco’

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BISMARCK – Backers of a new refinery in North Dakota say a bill asking for a tax exemption for oil refined in the state was a “fiasco,” but a corrected bill expected to be filed today would benefit the state.

Chester Trabucco, chairman and CEO of Dakota Oil Processing, which is developing a diesel refinery near Trenton, said a bill that was unanimously rejected in the House seeking an exemption from the 6.5 percent oil extraction tax for oil refined in North Dakota should not have been introduced.

Instead, Dakota Oil Processing is seeking an exemption that would only occur during months when the average profit margin for a refinery in the state dropped below $11 a barrel – a situation that has not occurred in the past three years, Trabucco said.

Dakota Oil Processing is in the final stages of financing the $200 million refinery and the exemption they’re working with legislators to propose would help secure private funding.

“It’s sure comforting to a bank or other lenders to know that if you did dip below (the profit margin) that there is some assistance,” Trabucco said.

The Dakota Oil Processing facility, which is not far from the heart of oil activity in Williston, would receive up to 20,000 barrels of crude oil per day and distribute between 6,000 and 8,000 barrels of diesel daily for use in North Dakota.

“Diesel is running your state,” said Trabucco, who is based in Seattle. “The ag sector depends on it heavily and the oil sector depends on it heavily.”

Mel Falcon, a Trenton native who serves as vice chairman of Dakota Oil Processing and has been working to develop this refinery since 2007, said a one-sentence bill draft that got sent to the House was a mix-up.

“That was a fiasco to start with,” Falcon said. “It failed miserably because it wasn’t a very good bill. It was just lousy.”

The North Dakota Chamber of Commerce testified against the bill, which was House Bill 1032. The state Tax Department estimated that North Dakota would lose more than $258 million in revenue over the next two years based on production at the Tesoro refinery in Mandan, currently the only refinery in the state.

Falcon said the bill was perceived as giving Tesoro a windfall, but that’s not what proponents intended.

“Poor Tesoro got the brunt of it and had nothing to do with it,” Falcon said.

Sen. Stan Lyson, R-Williston, said he expects to file a new bill today that calls for an exemption in the oil extraction tax only when the profit margin – known as a crack spread in the oil industry – hits a certain trigger.

Lyson said he’s introducing the bill for a constituent and he believes it deserves a hearing.

“Anything that we can do that is going to benefit the state of North Dakota, I’m willing to give it a shot, take a look at it and see if it’s the right thing for us,” Lyson said.

Sen. John Andrist, R-Crosby, said he plans to sign as a co-sponsor.

“Anything we do to encourage building refineries takes some of those trucks off the road,” Andrist said.

Although the bill is backed by Dakota Oil Processing, it would benefit all refineries in North Dakota. At least two other refineries are in the works – one involving the Three Affiliated Tribes on the Fort Berthold Reservation and the other near Dickinson involving a partnership with WBI Energy, a business arm of MDU Resources Group, and Calumet Refining LLC.

The last major refinery built in the lower 48 states of the United States began operating in 1977 in Garyville, La., according to the U.S. Energy Information Administration.

North Dakota currently imports about 40 percent of its diesel, Trabucco said.

“Even if all three of the refineries are successful, the total amount of new diesel production will not equal what is now being imported into the state,” he said.

A second piece of legislation supported by Dakota Oil Processing also is key to making the project more attractive to lenders, Trabucco said.

House Bill 1031, which has been unanimously approved by the House, adds “refinery” to the definition of “pipeline” for the purpose of falling under the North Dakota Pipeline Authority. That’s significant because the Pipeline Authority has the ability to issue bonds up to $800 million.

However, Dakota Oil Processing also is pushing to establish $200 million in a reserve fund under the Pipeline Authority that would provide leverage to help the refinery and other projects secure private loans.

Craig Richards, an Alaska attorney who is working with Dakota Oil Processing, said Alaska has set up similar reserve funds with revenue from oil exploration for economic development.

But the $200 million reserve fund is not currently included in House Bill 1031.

Hoeven urges Obama to approve Keystone XL pipeline

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WASHINGTON – Sen. John Hoeven is calling on President Barack Obama to approve the Keystone XL pipeline without further delay now that Nebraska has approved an alternative route through the state.

 

Nebraska Gov. Dave Heineman on Tuesday notified the Obama administration that he has approved the pipeline, saying its new route will avoid the environmentally sensitive Sand Hills region, according to a press release from Hoeven’s office.

 

In November, Hoeven, R-N.D., and Sen. Max Baucus, D-Mont., organized a letter signed by 18 senators, nine Republicans and nine Democrats, calling on Obama to approve the project once Nebraska’s concerns were addressed. Hoeven said he is now gathering signatures for a second bipartisan letter urging Obama to approve the Keystone XL pipeline without further delay.

 

Sen. Heidi Heitkamp, D-N.D., is among those who have signed. Hoeven also is preparing to reintroduce legislation enabling Congress to approve the pipeline if the president doesn’t.

 

“The president has long-cited Nebraska’s concerns as a reason not to approve the project, but now that those concerns have been addressed, there is no reason to further delay a project that will create thousands of jobs and billions of dollars in economic activity for the United States,” Hoeven said in a statement.

 

The pipeline would not run through North Dakota, but would transport crude oil pumped from the Bakken. The route runs from Canada through Montana, South Dakota and Nebraska to Cushing, Okla., where it would connect to the southern portion of the pipeline.

 

“In North Dakota, we know that the Keystone XL Pipeline means American jobs, increased energy security, and the certainty that comes from dealing with our neighbors to the north,” Heitkamp said in a statement.

Bill targets speeders with out-of-state license plates

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BISMARCK – Tioga Rep. Bob Skarphol is tired of seeing the same out-of-state license plates on vehicles driven by new western North Dakota workers.

The Republican who lives in the heart of North Dakota’s oil boom has introduced a bill that would require people with out-of-state license plates to pay speeding fines of their home state.

“I think it’s gotten to the point where something needs to change,” Skarphol said of the out-of-state license plates, which often seem to outnumber North Dakota plates in the Oil Patch.

Under House Bill 1189, law enforcement would have the discretion to determine if the driver caught speeding is living and working in North Dakota and issue a higher fine. The higher fines would not apply to people visiting the state, Skarphol said.

The bill aims to give drivers who are living in North Dakota an incentive to update their license plates and to promote more enforcement, Skarphol said.

“We are losing that revenue as a state and still providing the roads that those people drive on,” he said.

Fargo Rep. Ed Gruchalla, retired from the North Dakota Highway Patrol, said he supports increasing fines to deter speeding, but would prefer to see fines raised across the board.

Gruchalla supports House Bill 1048, which came out of the interim Transportation Committee, which would raise speeding fines for all drivers.

For example, a driver cited for driving 75 in a 65-mph zone would pay $20 today, but under the bill,  the fine would be $50.

“That’s maybe a more equitable way to go than to pick on the out-of-staters,” said Gruchalla, a Democrat.

The bill includes a sliding scale depending on the speed limit zone and how much over the limit the motorist is driving.  More severe violations lead to substantially higher fines.

The bill has a hearing scheduled Thursday.

Skarphol says his bill would funnel the extra revenue from the additional speeding fines back to the law enforcement agency that issued the citation.

Other bill sponsors are Reps. David Drovdal, Arnegard, Patrick Hatlestad, Williston, and Sens. Ron Carlisle, Bismarck, and Stan Lyson, Williston, all Republicans.

The North Dakota Highway Patrol has not taken a position on the bill, said Sgt. Tom Iverson.

Law enforcement does issue citations for drivers who don’t have the proper license plates or vehicle registration, Iverson said.

However, it can be difficult to enforce because troopers have to rely on the drivers to determine if they are temporary workers or long-term residents, Iverson said.

“A lot of times we have to take their word for it of what their situation is,” Iverson said.

For workers who are in North Dakota on a temporary basis, the North Dakota Department of Transportation issues temporary motor vehicle registrations.

For the first 18 months of the 2011-13 biennium, the state issued about 11,650 temporary motor vehicle registrations, according to the department.