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Jack Dalrymple And His Big Oil Money "Coincidence" PDF Print E-mail
Written by Chet   
Monday, 08 October 2012 03:22

This question was presented to me not too long ago:  "Is there any chance Jack Dalrymple is accepting bribes from big oil in exchange for special favors and, specifically, approval of the Corral Creek Bakken Mega Unit unitization?" A couple law-trained gentlemen in Grand Forks have looked at the issue pretty closely. Until someone in law enforcement conducts a legitimate investigation, the answer has to be "I don't know."  But, considering North Dakota's state government's history of ignoring (or round-filing) investigations of crimes committed by friends and donors of Republicans, we shouldn't expect such an investigation to happen.  Until that happens, though, all I can say is, "Something smells rotten."  Because the timing of nearly $82,000 in campaign contributions to Jack Dalrymple as he pushed a lucrative administrative proceeding along to benefit some of his oil industry donors, is nothing if not disturbing.

Someone should address the question, and invite an investigation; whether by law enforcement, or by our state's weak mainstream media. If bribes are being made, this should be a national story, as one of the players in this story has been described by the New York Times as "Mitt Romney's top energy advisor," Harold Hamm. But North Dakotans might never know whether there's been any bribery here unless something drastic changes in the control of some component of our state's one-party-dominated government. We need a Democrat in a position of authority to look into things like this.

With that said, in the event someone should come along and wonder whether it's happening, the authors of the report have put together a bit of a "background document" outlining the issue, and inviting North Dakotans to judge for themselves, since our state's law enforcement people most certainly do not have the stones to pursue an investigation.  I'm going to summarize my interpretation of what they've put together, and then I'm just gonna give you their whole report to review...

Here's the story:  Late last year, the North Dakota Industrial Commission (NDIC) -- made up of Governor Jack Dalrymple, Attorney General Wayne Stenehjem and Ag Commissioner Doug Goehring -- approved the creation of an unprecedented oil development "spacing unit" (or, in this case, "Mega-Unit") just south of the Lost Bridge area in Dunn County, and including the Little Missouri State Park.  Here's a map showing the area we're talking about:


(click graphic to see location on Google Maps)

I'll take the blame for making that map. If you click on the above map, you'll go to the same area on Google Maps.  You'll see Highway 22 -- which runs from Killdeer to near New Town, passing through the Lost Bridge area of the badlands -- forms part of the western edge of the mega-unit.  On the Google Map of the area, you can see that this spacing unit includes most or all of the Little Missouri State Park, too.

What's unprecedented about this mega-unit is that it's over 37,000 acres of land -- roughly 48 sections of land -- while most spacing units used to be a couple hundred acres, maybe, but had previously grown to just under 1,300 acres. There are lots of benefits to "working interest owners" to "unitizing" mineral acres, one of which is that it can, by operation of law, extend the lease term for the mineral lease holder for longer than the period of time agreed to by the mineral rights owner. So, for example, say you've leased a quarter section of mineral acres (160 acres) for $1,000 per acre, for three years to XYZ Company.  They pay you $160,000. They have 3 years to start developing a well. If they don't, the lease expires at the end of 3 years, and you're able to negotiate new lease terms with XYZ Company, or anybody else.  That means you might get another $160,000, or more.  Or, possibly, less.  The point is, you control how long your lease lasts.  If, after you've entered into a lease agreement, your mineral acres are "unitized," the lease can be extended to 10 years by Jack, Wayne and Doug, so long as an oil company has started working on a well somewhere on the spacing unit.  A Stripper Well (i.e. a low-producing well) goes in 15 miles west of your mineral acres, but in the same spacing unit?  You get nothing for 10 years.  The oil company (or companies) with working interests can move on to tie up some other huge mega-unit while your mineral acres sit there, undeveloped.  Thanks, Jack. Thanks, Wayne.  Thanks, Doug.  

But there's more.  If there's a Stripper Well on the spacing unit, there's an oil extraction tax exemption (or reduction) that probably kicks in for the entire spacing unit, regardless of how intensely productive the rest of the fracked wells on the mega-unit are.  Why do you care?  Well... the state extraction tax revenue you were hoping would trickle back to your area to develop the roads the oil companies have destroyed? Gone. The state oil extraction tax revenue you were hoping would trickle back to your area to help pay for law enforcement, fire safety, schools, bridges, teachers, etc.?  All that disappears.  The oil companies basically get to come in, destroy a massive part of the state, and they can avoid paying much of anything for the devastating impact on the region.

There are other benefits for working interest owners, too. Sharing in profits from others' wells, is one.  Read the memo at the end of this blog post for the rest.

Oh, and there are some significant negative impacts for surface rights owners.  

 1. Owners with wells – Royalty payments down 75% - the state has approved confiscation of the rest to give to others.

2. Owners without wells – Begin to get a share of royalties from existing wells.

3. Owners with leases – Unable to lease again. Delayed royalties - Industry has no incentive to drill here until they have secured everything else they want. Oil in the field becomes an eternal underground storage unit.

4. Surface owners – No restrictions on how industry accesses and uses the surface land.

To the extent this matters (or to the extent you believe it), oil industry folks and -- I'm guessing -- the people at NDIC will tell you there's an oil filed development "plan" on file with the NDIC, and it addresses many concerns surface owners might have. But you decide for yourself whose interests you think the NDIC will be protecting as this oil field is (or isn't) developed.

So... where's the money these guys say is flowing to Jack Dalrymple?  Let's take a look at a chart that shows the progress of the State Industrial Commission's administrative hearing process on the approval of the Corral Creek Bakken Unit, as it "coincides" with campaign contributions received by Dalrymple:


(click graphic to enlarge)

Check that graphic out. On the left side you've got the steps in the processing of the application for creation of the Corral Creek Mega Unit (CCMU).  Down the right side, you've got a list of donations to Jack Dalrymple's election campaign from people with mineral interests within the CCMU.  Notice how -- on December 5, 2012 -- the NDIC "continued" (which you might interpret as meaning "tabled") the issue for 45 days? Then the notice of that continuance doesn't go out for 9 days. And between those two dates, Harold Hamm -- the man who bought North Dakota -- contributes $20,000 to Jack Dalrymple. Then, fifteen (15) days -- which, I would note, is less than forty-five (45) days -- after the proceeding is "continued," without giving any notice they're going to address the isssue, the NDIC meets, quickly and quietly rubber stamps the unitization approval, and the next day, Dalrymple's campaign gets a $5,000 "campaign contribution" from Harold Hamm's company's attorney, Lawrence Bender.

Amazing series of coincidences, don't you think?

Here's a map showing exactly where each of these "campaign donors" (see the above graphic) have their mineral interests (click the map to enlarge):


(click graphic to enlarge)

See how most of the Unit is tied up by people (or affiliated entities, such as PACs) that have made substantial campaign contributions to Jack Dalrymple, who chairs the State Industrial Commission, while this massive, unprecedented, oil-company-lucrative unitization process was pending? No big deal, right? It's just $81,600 among friends, right?  And it’s $81,600 Dalrymple’s campaign received over a 17 month period of time. As is pointed out in the report (below), we have no idea how much more has been received from the players since the end of May, 2012.  Though we’ll find out soon. But maybe not soon enough.

Well, some folks who look at the timeline -- and, in particular, the way a 45 day continuance mysteriously transformed into 15 days when $20,000 in campaign contributions came in -- and wonder if maybe there's a connection between the money, and the decision-making process. Do they have a secret recording of a "quid pro quo" conversation? Nope. But does anybody need such a recording?  Good question. Probably not.

See, we have an interesting public official bribery law in North Dakota.  Here's how it reads:

1.    A person is guilty of bribery, a class C felony, if he knowingly offers, gives, or agrees to give to another, or solicits, accepts, or agrees to accept from another, a thing of value as consideration for:

a.    The recipient's official action as a public servant; or

b.    The recipient's violation of a known legal duty as a public servant.

2.    It is no defense to a prosecution under this section that a recipient was not qualified to act in the desired way whether because he had not yet assumed office, or lacked jurisdiction, or for any other reason.

3.    A prima facie case is established under this section upon proof that the actor knew that a thing of pecuniary value was offered, given, or agreed to be given by, or solicited, accepted, or agreed to be accepted from, a person having an interest in an imminent or pending: a. examination, investigation, arrest, or judicial or administrative proceeding; or b. bid, contract, claim, or application, and that interest could be affected by the recipient's performance or nonperformance of his official action or violation of his known legal duty as a public servant.

NDCC § 12.1-12-01

See that last part?  Part 3?  What it seems to say is that, to make a "prima facie" showing a crime has been committed, the government doesn't need to prove there was a quid pro quo agreement; what has to be shown is that (1) a thing of value was given from a person having an imminent or pending administrative proceeding, and (2) that interest could be affected by the recipient's performance of his official action or duty as a public servant.  The government doesn't have to have recordings of secret phone calls. It appears that what would need to be proven is that something of value was given and it might impact the public servant's decision in a pending administrative matter.  (This statute is an issue unto itself, and I don't have time to take it up right now, but... maybe later.)

Regardless of any issues I might bring up about the law, here's the thing:  It’s the law. When a donor gives a public official money while the donor has a pending administrative action pending before the public official, if there is an appearance of influence, there is prima facie evidence of the crime of bribery. When there is prima facie evidence of a crime, and it's right out there in the open, don't you think there should be an investigation?

I haven't even gotten into all the issues in the report.  But I want to give it to you for your consideration, so we can talk about it.  Here it is…

Political Campaign Money From "Big Oil," Governor Jack Dalrymple, and North Dakota's Clas...

Comments (4)add comment

What the Heck said:

Probably the tip of the iceberg. How can these apparent conflicts or appearance of conflicts be happening with the AG sitting side by side at the same table?

This could use national media attention. A dime store magnifying glass is more illuminating than ND's media.
October 08, 2012
Votes: +7

Disgusted said:

Last spring I had a letter in the Fargo Forum about how the state had sold Little Missouri State Park to the oil industry. I got quite a bit of comment, pro and con. Lynn Helms, the Oil Czar, head of the Minerals Management Agency and defacto boss of many other state agencies such as Parks and Recreation, Game and Fish, and School Trust Lands, published letters in nearly all state papers proclaiming that I was irresponsible in saying what I said and that the creation of the Corral Creek Unit saved the park and was the result of hundreds of hours of difficult negotiations, all done in the interest of the people of North Dakota. It is now clear that while there may have been hundreds of hours of negotiation they were all to determine the best way to give the oil companies the most money possible from the taxpayers of North Dakota. The park was just an incidental casualty, collateral damage that required a few hours to tidy up. Interestingly neither the state Parks and Recreation Department, nor its director Robert Zimmerman, have ever once publicly commented on any of this even though they are losing the largest (40% of the total land area of the state system) and most spectacular state park in the system. It is like they had no part at all in the negotiations that opened the park to oil development. Very possibly they didn't. Mr. Helms would have taken care of that duty and simply informed Mr. Zimmerman of the results. The Parks web site continues to advertise the park as a wonderful place for horseback riding, hiking and camping and never mentions oil development. This summer it has been virtually impossible to get into the park due to the heavy road construction on Highway 22 which has totally blocked the entrance. I have tried twice myself. If you contact the parks department and ask they will tell you the park is open and staffed. However, the reply will come from Cross Ranch State Park over a hundred miles away. Apparently road building and drilling within the park will start this winter. I was correct in my original letter. Little Missouri State Park has been sold for $81,000, $18/acre.
October 08, 2012
Votes: +8

newark bears 65 said:

The comment by "Disgusted" above is right on -- and it describes a true outrage of the highest order. Multi-billionaire Harold Hamm -- Rommney's chief energy advisor -- on one hand secretly-financed the cynical "Fix the Tax" campaign back in 2011, fronted by pathetic former Governor Ed Schafer, whom Hamm paid off for his shameless "frontman" shilling with $1-million in Continental Resources stock in November of that year. On the other hand, Hamm simultaneously schemed in 2011 to deprive the State of North Dakota of 6.5 % Oil Extraction Tax revenue for the building of infrasctructure and mitigation of the devastating impacts of "Blitzkrieg" oil development over the Bakken Oil Formation Pool. Disgusting.
October 08, 2012
Votes: +6

nimrod said:

In the immortal words of a now-retired ND bank CEO - Greed breeds fraud.
October 09, 2012
Votes: +2

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