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Are ND Oil & Gas Officials Lying About Another Oil Spill?
Written by Chet   
Friday, 11 October 2013 08:34

OilSpillIt was funny, yesterday (October 10th), when North Dakota Public Radio broke in on their pre-recorded program to report "Breaking News" that another massive oil pipeline spill had occured in Northwestern North Dakota. Why was it funny?  Because the spill was discovered on September 29th.  Because the oil company responsible for the spill -- Tesoro -- and North Dakota's corrupt Oil & Gas officials have been quietly, secretly trying to deal with it.  They "initially burned oil from the surface but have since dug ditches and recovery wells." They also have vacuum oil recovery trucks on the scene, sucking the oil from the ditches and wells.  All this went on for 10 days without the public ever being made aware of the spill, at all.

Here's a snippet from one of the newspapers that is most responsible for bringing us the corrupt government that does this sort of thing:

Farmer Steve Jensen says he smelled the crude for days before the tires on his combines were coated in it. At the apparent break in the Tesoro Corp.'s underground pipeline, the oil was "spewing and bubbling 6 inches high," he said in a telephone interview Thursday.

What Jensen had found on Sept. 29 turned out it was one of the largest spills recorded in the state. At 20,600 barrels it was four times the size of a pipeline rupture in late March that forced the evacuation of more than 20 homes in Arkansas.

But it was 12 days after Jensen reported the spill before state officials told the public what had happened, raising questions about how North Dakota, which is in the midst of an oil boom, reports such incidents.

Bismarck Teabune

Other stories have some quotes from a state environmental geologist named "Kris Roberts."  Here's some of what Roberts has told reporters:

Roberts said state and federal regulators are monitoring the cleanup, and Tesoro estimated it would cost $4 million.

A natural layer of clay more than 40 feet thick underlies the spill site and has "held the oil up" so that it does not spread to underground water sources, Roberts said.

"It is completely contained and under control," Roberts said Thursday. "They got very lucky." 

Yahoo.com (AP)

Now, I don't know Roberts.  I also don't know if Roberts, or anybody else in North Dakota's state government, can be trusted when it comes to providing truthful information about oil spills.  

Remember our story on the understated impact of the oil rig blow-out at Van Hook (near New Town)? (Click here to read it.)  In that NorthDecoder exclusive, we quoted excerpts from news stories where Roberts provided misleading information to the "journalists" writing those stories. Roberts, for example, told Amy Dalrymple, of the Fargo Forum papers, that the oil mist drifted more than 2,000 feet to the southwest.  Well that's sort of true. 4,100 feet is "more than 2,000 feet."  It's a lot more. Double. And then some. So it seems misleading to say "more than 2,000 feet."  

In a story by Eloise Ogden of the Minot Daily News, Ogden says "State officials said the wind was blowing the mist away from the lake. Roberts said they were ready to put booms on the lake if needed."  

Okay... some things about that.  Who were the "state officials" who said the wind was blowing the mist away from the lake?  Was Roberts one of them? If so, he was lying. We later learned (and reported here, first) that the wind was blowing the mist over and onto the lake. And... It was December. Lake Sakakawea was frozen. Why would they put booms on a frozen lake? It doesn't make any sense. The initial reports from state officials were all lies. Then, when the truth came out about the significance of the spill, it only got covered here on NorthDecoder, out of state and in the Garrison-based newspapers.  Nobody in the media ever did a story focused on the lies and half-truths told by state officials at the time of the original blow-out.  

Why?  Next time you look through your local paper, count the completely pointless adds from oil companies.  Tens of thousands of dollars in ad revenue is why the local news isn't covering this stuff.

Maybe Roberts is a good person. Maybe Roberts was misquoted in the Van Hook stories.  These guys all work for North Dakota's corrupt governor, attorney general and ag commissioner, so I don't trust any of them.  And they only make themselves seem more and more corrupt when they cover this stuff up for 12 days.  Again.

We still deserve better.

Oil Patch Justice
Written by Jim Fuglie   
Saturday, 28 September 2013 05:52

Badlands(Cross-posted, with permission, from The Prairie Blog.)

Some things to catch up on from earlier reports on goings-on in the oil patch:


We reported a couple weeks ago on the case of Nathan Garber, the fellow who dumped 800,000 gallons of contaminated water down a well shaft out by Dickinson. The technical charge against him was “violation of the rules and regulations of the North Dakota Industrial Commission,” a Class C Felony, punishable by five years in prison or a $5,000 fine, or both. Well, his hearing was last Monday. Case closed. Pleaded guilty. Now, I am tempted to have a little contest here, and have people guess how many years he will spend in prison, and how much he will pay. I’m pretty sure no one knows the answer except Garber, his lawyer, the Attorney General (actually his assistant), the judge and me. Because no one in North Dakota’s vaunted news media has bothered to report what happens to a man who  dumps 800,000 gallons of contaminated water down an abandoned well. I only know because I made enough phone calls that someone finally had to tell me. Actually, I only found out this morning. I probably could have found out earlier, but duck season opened this week and I’ve been a little busy. Priorities

But I’m going out to the Badlands for the weekend, so I’m not going to be around to judge a contest, so I’m just going to tell you. Garber, who was working the well under the auspices of a company called Halek Operating, the company recently fined $1.5 million by the Industrial Commission for the same crime (more about that in a minute) actually submitted an Alford plea, which as I read about them all the time in the paper means he is not actually admitting guilt but concedes that the assistant attorney general probably has enough evidence to convict him (about 800,000 gallons worth), so he’s going to stand up and take his punishment fair and square, like a man. And that punishment is:

A two-year suspended sentence and a $2,500 fine.

He’s gone back home to Montana where he will be on unsupervised probation for the length of his suspended term—two years. Then he’s free to go, assuming he has written a check for $2,500 plus court and investigation fees, probably another grand or so. And a nice fat check to his lawyer, who deserves a nice fat check for his work convincing Wayne Stenehjem that dumping 800,000 gallons of contaminated water down an abandoned well, threatening Dickinson’s drinking water source, really isn’t such a big deal.

Well, it was considered a big deal at one point in time, even by Lynn Helms, the oil industry’s top cop and head cheerleader in North Dakota. Helms said that if the contaminated water reached the groundwater supply, it would “take years to clean up, if it even could be cleaned up.” The Dickinson Press reported in August: “The violations admitted by Halek are among the most egregious violations ever pursued by the commission,” Administrative Law Judge Allen Hoberg wrote in findings earlier this year. The groundwater in the area hasn’t been contaminated, but after evaluating evidence in the case, Hoberg found there is a “real future risk of contamination.

I assume the North Dakota Health Department will monitor this site for years to make sure Dickinson’s drinking water isn’t contaminated. If I lived in Dickinson, or anywhere near there, I’d sure hope so, anyway.

Meanwhile, after all the headlines about how the Governor and the Attorney General and the Agriculture Commissioner and the Industrial Commission are really cracking down on these bad guys, the $1.5 million fine levied against the company, Halek, goes unpaid. I asked the Attorney General’s office this week if they are moving to collect that. Haven’t heard back yet. But here’s a little hint of what’s to come. A lawyer friend of mine says they probably aren’t going to get anything but an abandoned well, because there ain’t no $1.5 million in the bank to pay that. An abandoned well full of contaminated water which, if it leaks, is going to have to be cleaned up by the well’s new owner, I suppose.

And that, folks, is how justice is served in North Dakota’s oil patch. If there’s any news about the payment, or non-payment, of the fine, you’ll probably read it here first. And Nathan Garber will never show his face in Dickinson again. He’s nervous about the water.


We also reported a couple weeks ago about the case of the mineral lease auction of 40 acres up in the Lewis and Clark Game Management Area. This was the online auction to complete the spacing unit, the rest of which was owned by Harold Hamm, and where Hamm is ready to drill some wells. Well, the auction came and went and I didn’t report the results, because I was in the Bad Lands for a few days, and then out canoeing in Montana all last week, and then duck season, and, well, you know, I was just busy. Retirement is hard when you’re healthy enough to enjoy it.

Well, anyway, the minerals were leased for five years to a company called Beall Investments LP, for $11,610 an acre, a total of $474,954.25. A nice little chunk of change for the state of North Dakota, which will turn into a nice big chunk of change for Mr. Beall, who’s betting on a sure thing. Actually, my best guess is that Mr. Beall, who is from Texas and has close ties to the University of Oklahoma, as does his friend Harold Hamm, probably just had someone in his company fronting for old Harold, and Harold has all of it now—no partners. Because that’s how things work in the North Dakota Oil Patch.


Last Spring we were following a story about XTO energy, a subsidiary of Exxon Mobil, wanting to drill an oil well at the gate of Theodore Roosevelt’s Elkhorn Ranch, now owned by the National Park Service. We raised enough hell to scare them off, but we knew they would come back, because they’ve got a bunch of money tied up in a mineral lease that they don’t want to lose. Well, XTO regrouped and this week they were back in front of the North Dakota Industrial Commission with a new plan. They’ve put together a new spacing unit and it looks like they will move the well two miles west. It won’t be at the Elkhorn any more, but now it will be at the turnoff from the main road onto the trail that goes down toward the Little Missouri River and the Elkhorn, and the nearby Forest Service campground at the Maah Daah Hey trailhead. So if you’re going to the Elkhorn in the next year or so, or going camping at the Forest Service Campground, or hiking the Maah Daah Hey Trail, be darned careful. There’s going to be a lot of truck traffic there for a while.


(ND-ALL) Kevin Cramer Deletes Controversial Facebook Exchange With Constituent
Written by Chet   
Tuesday, 24 September 2013 08:11

And Things Are Getting Ugly on Congressman Cramer's Own Facebook Wall


On Friday of last week, North Dakota Congressman Kevin Cramer's constituent, Kevin R. Tengesdal, posted some important Bible passages on Cramer's Facebook wall. The passages related to the basic Christian values of providing for the poor, elderly, orphans, etc. You know; stuff Jesus liked to do. Cramer responded, in essence, by saying he thinks everyone who receives food assistance (SNAP or "food stamps") is lazy and should starve. Here's the exchange (again):

Cramer Exchange

After NorthDecoder broadcast Cramer's exchange with his constituent to a larger audience, the story of the exchange went viral. We got hit with a massive amount of web traffic from all over. I'm quite glad I stopped hosting NorthDecoder on a box in my basement a couple years ago because my little web server and its gerbils couldn't have handled all the traffic.  Here's a list of some of the websites that picked up the story:

Fox News

Political Wire

Raw Story

Talking Points Memo

Digby's Blog (Hullabaloo)

Balloon Juice


A Wee Blether (Adam J. Copeland)

One News Page


The Last of the Millenniums

99% News


The Daily Banter

Common Dreams

Alan Colmes' Liberaland

The Reaction


The Daily Hurricane



There are many, many others who have written about this. That's just a sample. I also got blasted with traffic that came from people's posts (that I can't see) on their own Facebook walls.

Suffice it to say that based upon the amount of traffic NorthDecoder.com has gotten since Friday of last week, this story is a nationally-significant story that has gone amazingly viral. When a story shows up on RawStory and Fox News and Talking Points Memo and the Political Wire, it's a big deal.

But have you heard anything about it in ANY North Dakota news?  I haven't. Someone told me a question was asked of Cramer on KFGO (Fargo) yesterday morning, but I wasn't able to listen. I don't know what the question was, or what the answer was (though I heard Cramer tried to deflect the issue, entirely.)  

Here's what I know. You can tell a lot about a member of Congress by looking at what's happening on the Congressperson's Facebook wall.  Cramer's Facebook wall is U.G.L.Y. right now.  It's gotten so viral and so bad for Cramer now, Cramer has completely deleted his exchange with Mr. Tengesdal from his Facebook wall.  It has vanished from Cramer's Facebook wall, entirely. Gone. Mr. Tengesdal's Bible passages and Cramer's response to those Bible passages apparently aren't worthy of being saved. So they're gone. Too bad for Cramer that everybody on the internet has already seen the screen grab (above) as it's been shared by Fox News, Talking Points Memo, and countless other websites.

For what it's worth, here's a link to where Cramer's exchange with his constituent used to be:  LINK 

Cramer's message to his constituent:  "You're not worthy."

Cramer's message to the Bible passages quoted by his constituent:  "You're not worthy."

That's amazing, but here's what's REALLY amazing about this: Cramer is getting the crap beat out of him by commenters on Cramer's own Facebook wall.  You really should go check this out.  I'll provide a link, but I'm also fairly confident that Cramer will show his stripes and delete all those comments, too.  So I'm also going to provide you with a graphic.  Going to his Facebook page -- for now -- is a better way to read them, but I'll keep it here so it's still publically available after Cramer deletes all his constituent's unworthy comments.

Here's a link to his Wall:  LINK

Below you'll find what Kevin Cramer's Facebook wall looks like right now.  You should read through some or all of it. It's pretty amazing. Consider going to the link and adding your own voice.

Kevin Cramer's Facebook Wall by northdecoder


Okay, so someone whose email address looks like it might be the constituent's email address posted a comment under an earlier blog post here. I didn't see the comment until someone sent me a note about it a little bit ago.  The comment comes from someone identifying him/herself as "krten1966" and says, "I had removed the initial posting from Cramer's wall as my 'Notifications' button was going almost non-stop on my own Facebook wall."  Now, I can't tell who this comment came from, so I don't know if it's the constituent. If it is, then you can just ignore the stuff, above, about Cramer deleting the original exchange. Regardless, the activity on Cramer's Facebook wall is still freaking amazing. Go check that out.

(ND-ALL) Congressman Kevin Cramer To People Who Can't Find Jobs or Aren't Able To Work: Don't Eat
Written by Chet   
Friday, 20 September 2013 13:52

Kevin CramerEarlier today, a constituent of North Dakota Congressman Kevin Cramer posted a comment on Cramer's Facebook wall.  The constituent apparently wanted to make sure that -- after Cramer's vote to take food out of the mouths of hungry children, disabled people, the elderly and many military veterans -- Cramer was aware of some of the Biblical passages supporting the idea of helping the least of these.  Cramer's response is kind of stunning. His response is, essentially, to let those people starve.  Citing a different Biblical passage, here's what Cramer wrote:

Congressman Kevin Cramer 2 Thessalonians 3:10 English Standard Version (ESV) 10 For even when we were with you, we would give you this command: If anyone is not willing to work, let him not eat.

Facebook (source)

So there you go folks.  The hungry children of veterans who can't find jobs or who are disabled; those kids can just starve.  See, Cramer's a good Christian, and Thessalonians says we need to let the children of people who can't work or who can't find jobs starve. 

Now, to be clear, I'm not some great Biblical scholar. And I don't know very many great Biblical scholars. I'm quite certain Kevin Cramer isn't a great Biblical scholar.  Why?  Because his quote makes clear that he thinks the Bible has told him that everyone who is poor is also lazy.

Cramer assumes everybody who receives SNAP assistance is lazy. Because, of course, the Christian thing to do is to assume that everyone who isn't working isn't willing to work. And we should hate those people and let them "not eat."  Let's just forget all that crap the Bible says about helping poor people.  Why not?!?  He forgets that many who receive SNAP assistance work. Many work full-time. Many work multiple jobs. It's not that they're lazy, Kevin; it's that our economy needs a lot of working poor people. WalMart needs a lot of working poor. Kevin's owner -- the Man Who Bought North Dakota -- needs a lot of working poor people.  How would the Walton family make so much money if they weren't able to pay so many people so little?!?

You want to know who's lazy?  Let's talk about the U.S. House of Representatives. Do you know how many days they're in session this year?  126 days. That's 10.5 days per month. Congressman Cramer works an average of 19.4 hours per week, and he's suggesting lazy people shouldn't get to eat?!?  Maybe Cramer (and the family member he has working in his official Congressional office) shouldn't eat.

And -- speaking of not working -- what is our Congressman doing responding to messages on his Facebook wall at 2:00 p.m. on a Friday? We're paying $174,000 per year to work less than half-time AND he's hangin' out on the Facebook?  Doesn't Congressman Cramer have anything better to do?

We deserve better.

NOTE:  Here's the entire exchange:

Kevin Cramer's Facebook Wall

Syria and the News
Written by Chet   
Thursday, 05 September 2013 08:57

ChertoffI've got mixed feelings about Syria and so I'm going to cautiously dip my toe into the debate, here.  

This morning I watched MSNBC's Morning Joe program. Their special guest was retired Airforce General Michael Hayden.  What Hayden said was that dropping bombs on Syria "is the least worst option we now have.  It would be near catastrophic... for American influence in the world for the the American Congress not to support this."  (Source, including video)  As I watched I honestly wondered to my self what the "retired" general is doing these days, besides appearing on TV talk shows. Does he fish?  Does he paint?  What's he up to?

In his intro, they told us he was the former director of the NSA and the CIA. They mentiond he's involved with the "Chertoff Group," a "global security advisory firm." 

Moments later (literally) that segment ended and MSNBC went to a commercial.  What was the commercial?  Here's what it was:


Suddenly I was more curious about General Hayden.  So I googled him.  

Turns out the good general serves on the Board of Directors for Motorola Solutions, Inc.  He gets a total annual compensation package worth over a quarter of a million dollars for sitting on the Board.  Motorola is #75 on the list of the "Top 100" military contractors, collecting nearly $53 million in defense contract revenue each year.  (Source.)  

As General Hayden talked about the unfortunate need to bomb Syria, nobody asked him what the "Chertoff Group" does.  I googled that, too.  Turns out, the Chertoff Group does consulting and lobbying work for companies looking to get defense contracts, and lobbying to change policy so that their defense contracting clients can get more and bigger government defense contracts.  (Source One and Source Two)  

So the best expert Joe Scarborough and Company could find to talk about whether we should bomb Syria was a guy who's cashing in on the military industrial complex?  


You'd think they could find a better expert. Or, better yet, you'd think someone on the show would have had the stones to expose Hayden for the shill he is.  

And someone should have talked about how much ad revenue MSNBC gets from Northrup Grummond.

I listened to President Obama, yesterday, as he answered a question from a journalist during a press conference in Sweden. It was actually the first time I'd heard a coherent argument for why something has to be done in Syria. The president pointed out that the idea of banning chemical weapons, internationally, wasn't his original idea. The United Nations did that. He pointed out that the U.S. Congress has enacted laws demanding that the Syrian government be held accountable for its violations of human rights laws and treaties.  He pointed out that when he talked about a "red line" being drawn, he was essentially talking about the fact that others -- namely Congress -- have adopted these policies and ratified these treaties, and its his job to "execute" those policies, as he's the head of the "executive" branch.  He said that -- because of what they've done -- he thinks he has to "go" into Syria to preserve their credibility.  It's not his credibility on the line; it's the credibility of all the chicken hawks who've given lip service to being tough on people who violate the human rights treaties and laws that have been enacted by Congress and international entities.  

(Click here to watch the question and answer.)

Yeah, I get all that. It kinda sounds good.  

I still don't like the idea of America being the world police. It shouldn't be our job to pay (in blood and money) for policies adopted internationally. If other countries want to have any credibility, they ALL need to step up with their own money. And blood.

I also still don't like the idea of bombing a country because it's government bombed its citizens during a civil war.  I'd like to know how many civilians the American military killed in Iraq, and there's no big outcry about that. Sure, I get that chemical weapons are awful.  But what difference is there between the Syrian government gassing 1,500 innocent civilians, and American drones and bombs taking out 20,000 innocent Iraqi civilians?  

I also still have questions/doubts about whether the Syrian government really bombed its own people. It seems -- in a sick and tisted way -- like the Syrian rebels benefit more from gassing their own citizens than does the Assad government. I get that satellites tracked the missiles coming from Assad's bases.  But how do we know what was on those missiles? Isn't it possible the missiles hit a rebel forces chemical weapons stockpile?  Yeah, I know that sounds crazy, but it all sounds crazy.  [UPDATE:  Read this, too. I'm not the only crazy one.]

I just don't think a convincing case has been made for America "going it alone."  Or even "going it" with the French and a couple other countries. I felt the same way about Iraq, even though Bush pretended we had international backing.

But the thing that's bothering me the most this morning is that mainstream news is pounding the "Drums of War" and they're so ridiculously biased about it. If they were responsible journalists, they'd lay all their cards out on the table so their viewers knew whose pocket they're in. That is what's frustrating today.

Frankly, at this point, I'm still not convinced.  If I were on the Senate Armed Services Committee, I'd either have voted "no" or "present."  I'd want more information.  

North Dakota: Business Insider's Second Most Corrupt State
Written by Chet   
Tuesday, 03 September 2013 14:44

Congratulations to Governor Jack Dalrymple and Top Cop Wayne Stenehjem, and all the folks who voted for all of North Dakota's Republican elected officials. North Dakota has been honored with the title "Second Most Corrupt State In The Union."  

Here's how it's broken down:



You've worked hard for this distinction, North Dakota.  And you've earned it.  

Steal yourself a beer.

More Illegal North Dakota Republican Corporate Cash?
Written by Chet   
Wednesday, 28 August 2013 21:32

There's a political organization in Grand Forks, North Dakota, called "Grand Forks Republican Women" (GFRW)  About two months ago, GFRW held its annual "golf outing" fundraiser. From the many photos they've posted on their Facebook page, it looks like it was a pleasant enough event with lots of pleasant-enough people having fun.  While browsing through the photos the other day, a couple photos stood out to me, as did a "thank you" they posted, acknowledging their sponsors.

Here's the first photo that jumped out at me:


I don't know if you can see this, but just below the Republican Party logo elephant in the lower right-hand corner it says, "THANK YOU To Our Sponsors."  Above, obviously, are the logos for the GF Republican Women's event sponsors.  The sponsor list surprised me as it's illegal for corporations to sponsor political organizations like this.  Several of the sponsors appeared to be corporations.

A corporation, cooperative corporation, limited liability company, or association may not make a contribution for a political purpose.

NDCC 16.1-08.1-03.5(1)

Violation of that provision appears to be a Class A misdemeanor.  (NDCC § 16.1-08.1-07)  (We've been through this before, recently.)

I took a few minutes to look all of them up on the North Dakota Secretary of State's website, and at least 12 of the sponsors are corporations.  Another two or three might be corporations, but I'm just not certain.  Another one or two are probably individuals, and their sponsorship/donations are probably okay.  

Here's a list as it appears on the GFRW's Facebook page:

Abby at Pure Image, Vaaler Insurance, Prudential Crary Real Estate, Studio South: Lynn & Amber Stegman, Culver's, Wild Hog, Speedway Bar & Grill, Plains Chiropractic, Lifetime Vision Center, Waterfront Kitchen & Bath, abooboo design, Jordyn James Photography, Automated Financial Systems, Hong Farms, Sadie's Couture Floral and Event Design, Ferguson Books and Media and Valley Dairy!


Some of the sponsors' "corporateness" is obvious.  Vaaler Insurance.  Prudential.  Some of the other ones are not so obvious.  For example, "Studio South" -- the logo you can see one or two logos above the elephant -- shows up on the SOS website as being a "trade name" owned by "LDS, Inc.," but ""Amber at Studio South" shows up as a Trade Name owned by "Amber Strand."  So, with the "Studio South" logo on the "thank you" sign, but the text thank you on Facebook thanking "Amber at...", it's a little hard to tell whether the LDS corporation was a sponsor, or just Amber. Either way, at least 12 of the sponsors of the Grand Forks Republican Women's golf tournament absolutely are corporations and appear to have made illegal campaign contributions to the Republican political organization.

I'd suggest "someone should do something about this," but what can anybody do when the corrupt party that has a stranglehold on this state breaks the law?  

Not much.

Another photo caught my attention, too. This one.


Can anybody guess why that caught my eye?

Maybe Mike Marcil can explain all of these away for us, too.  Maybe Republican Women didn't get anything (i.e. money or in-kind contributions) from the event sponsors.  Maybe they're also waiting for invoices from someone.

I probably need to point this out, too: I would be the last person in the world to tell you that I think everybody who breaks the law is a bad person. I know a lot of really great people who have broken the law in their lives. In most cases, I don't hold it against them. But, at the same time, our jails are full of poor people and minorities who've broken laws many of us might view to be fairly insignificant. If we're going to throw poor people and minorities in jail for committing Class A misdemeanors, I don't see why we shouldn't fill the jails with Grand Forks Republican Women when they commit Class A misdemeanors.  I don't see why we shouldn't hold wealthy and powerful people to the same absurd standard. Some might even argue they should be held to a higher standard.

But that's all hand wringing.  Republicans are above the law in North Dakota.  They can and will do what they want and will not be held accountable until there is balance in our government.  

Deal with it.

ND State Treasurer Kelly Schmidt: The Imprudent Investor, Part 2
Written by Chet   
Wednesday, 28 August 2013 12:21

ShrineI am not a financial advisor. I'm just not. As such, I do not have access to the kinds of tools a financial professional should have available for analyzing investments. That said, because of her track record, I still think North Dakota veterans would be well advised to scrutinize what North Dakota State Treasurer Kelly Schmidt is doing with money the legislature has set aside for some basic services for veterans.  

Last week Wednesday, Kelly Schmidt issued a press release gloating about the return on investment for the Veterans Postwar Trust Fund. She apparently claims "credit" for that return.  Here's part of her press release:

State Treasurer Kelly Schmidt announced the earnings of nearly $576,000 from the Veteran’s Postwar Trust Fund for the 2011-13 biennium.  The Veterans Post War Trust Fund provides income which is used to provide grants and other benefits to North Dakota veterans.

Schmidt Press Release (August 21, 2013) [emphasis added]

I'm not the only one who struggles with math, apparently.  Schmidt screwed up the numbers in that press release.  She issued a second press release the following day, Thursday, last week. Here's what the corrected press release said:

State Treasurer Kelly Schmidt announced the earnings of over $315,000 from the Veteran’s Postwar Trust Fund for the 2011-13 biennium. The Veterans Post War Trust Fund provides income which is used to provide grants and other benefits to North Dakota veterans.

Schmidt Press Release (August 22, 2013) [emphasis added]

Oops. She was only off by a quarter of a million dollars. That's only 5% of the total corpus of the fund. It's just a quarter of a million dollar difference.  What's a quarter mil between friends, right?

Okay, so maybe that's another sign of Schmidt's incompetence. Maybe it isn't. Maybe it was just a typo. $576,000 is right next to $315,000 on my keyboard, too.

But I think there's a bigger question that should come out of this.  Let's talk about that.

According to the press release (and you might want to cross-check this against Schmidt's Veterans Postwar Trust Fund (VPWTF) spreadsheets online (2012) and online (2013) because there seem to be some discrepencies there, too), the starting balance for the fund at the beginning of the biennium was somewhere in the neighborhood of $4,235,000.  

(NOTE:  $4,235,000 is the $4.8 million end balance she talks about, minus $250,000 added by the legislature and $315,000 in earnings from her press release. There are other expenses that should arguably be subtracted out, but I'm going to leave them in. If one of you is smarter than me, you can re-do my math and explain why doing so is more or less fair to readers' search for the truth.)

If my abacus is working correctly $315,000 in earnings on $4,225,000 is roughly a 13.4% return on investment.  If you were to compare the Trust Fund's return to one of the major indexes (Dow, S&P, etc.), I think you'd see that those funds earned closer to 20% during the same period.



Side note:  The Dow gaining 20% in two years is indisputable proof of what Barack Obama is:  Worst. Socialist. Ever.

Let's look at some of Kelly Schmidt's other numbers, too, while we're at it.  Over the two years, Schmidt paid "managed fee expenses" of $60,151.53 ($25,425.02 in 2012 plus $34,726.51 in 2013). That looks like a fee to Kelly's friend, Troy, at the retail brokerage firm -- Edward Jones -- of about 19% of the return on investment (ROI). (I know nobody pays fees based upon the ROI. But, still…) That's an investment management fee of 1.55% of the principal. [Correction: Maybe it's only 1.4%].  I think that’s equal to 1.55 basis points.  [or 1.4].  If memory serves, she (on veterans' behalf) was paying the North Dakota State Investment Board (SIB) .33 basis points when it was managing the VPWTF.  

In fairness to SIB, and in its defense, I should note that Schmidt is also on the SIB, and her investment skills and input have likely impacted their performance, as well. With all her help, the State Investment Board probably isn't doing much better than she's doing.  And they're likely continuing to pay irresponsibly high basis points for the high-risk investments they dabble in.  Keep in mind, too, that auditors have described Schmidt's investment strategies as having "taken on more risk than a prudent investor would be willing to take on."  (Source)  Schmidt's investment performance outcomes should surprise nobody.

Bottom line is this: It appears Kelly Schmidt has smartly invested money for veterans' benefits in a high-risk fund, that's paying 6 or 7 percentage points less than the money would have earned in a conservative index fund, and she's paying nearly FIVE [or four] times more in fees to get that brilliant bargain.

Again, I'd invite someone smarter at this stuff to explain what I'm missing.

If I'm close, Schmidt issued a press release to brag about the return on investment she's helping veterans earn, even though their money would have done significantly better if she'd put it in a conservative index fund or maybe even if she'd left it at SIB.

What am I missing?

It seems like Schmidt's office should be due for another audit report from the State Auditor's Office soon.  Maybe they'll look at this stuff and explain this better. Or maybe they won't.

(Click here for Part 1)

Big One?
Written by Jill Denning Gackle (BHG News Service)   
Tuesday, 27 August 2013 09:08


Agencies make plans for potential big spill

(Reprinted with permission from BHG News Service and Jill Denning Gackle)

A fresh water tank near an oil drilling rig less than one mile from Lake Sakakawea ruptured in mid-June, spewing 374,000 gallons of water into and near Lake Sakakawea.

Fresh water into fresh water doesn't sound alarming, but Ryan Newman, lake manager for the U.S. Army Corps of Engineers, said it's just a matter of time before a catastrophic oil spill impacts Lake Sakakawea.

“It's not a matter of if, it's when,” he said.

He said the goal of the oil industry partners – federal and state agencies – is to be prepared.

“Let's get organized for when the big one comes,” he said.

IMG_0783Wake up call

A spill in December at Van Hook was an eye opener for many in the region. More than 66,000 gallons of oil and brine misted over a stubble field. The ice covered lake was mostly spared because of the time of year and the winds were mild and headed the right direction.

“Fortunately there wasn't a lot of wind. We kept it largely confined to the pad and that field,” Newman said. He said if the spill had occurred between April 1 and Aug. 30, a prime piping plover nesting area would have had chicks, eggs or birds covered in an oil sheen. The endangered species of birds would have required a costly cleanup effort, Newman said.

“That spill opened a lot of eyes. If there is a diamond in the rough, it's that everyone became a lot more aware of what could happen,” he said.

“Industry experts say: start planning for it, it is going to happen. We need to start looking at this lake and work together.”

The fresh water spill June 12 near Mandaree was one of dozens of spills so far this year. In 2011 there were 1,100 spills statewide reported and last year there were 1,494 spills statewide reported, according to the Corps. Spills are any quantity of water, brine water, oil or anything that impacts soil or water, according to Alison Ritter of the N.D. Department of Mineral Resources.

Newman said the Corps isn't always made aware of spills. Eight days later someone notified the Corps about the June water spill.

“Somebody said, 'Oh, maybe we should call the Corps,' Newman said.

Since the spill was on private land, adjacent to Corps land, the violator is not legally required to call the Corps. But the water flowed “straight to the reservoir,” Newman said.

The Van Hook oil spill in December was learned by the Corps from TV news reports when pictures of the scene showed the lake in the background. Newman said, “I saw that and thought we gotta get over there.”

The Corps is working hard to be at the table with the state and federal agencies to be partners in preparing for the worst case scenario. He said the Corps needs to be intimately involved because they can be helpful with access and elevation information.

“Flowing water is far different than a reservoir. We can tell them where the boats and the pumper trucks can go in,” he said.  The EPA is currently working on a response plan in the event of major spill action, according to Newman.

Oil lines run under lake


Newman said the oil companies often avoid the volume of paperwork that is required to put a rig on federal land and instead place a rig just outside the Corps' boundary. Horizontal drilling creates 237 legs from the oil well snaking under Lake Sakakawea, buried at least two miles deep, according to the Corps' records mid-July. Today there are 13 lines 6-12 inches in diameter that convey crude oil, CO2, natural gas or gasoline across the lake, according to Newman. All of those 13 lines are in shallow trenches on the lake bed except for a gasoline line that is suspended on the Hwy. 23 New Town Bridge, Newman said.

The Corps promotes pipeline crossing corridors for the purpose of keeping pipelines grouped in the same region, Newman explained. He said spill detection and access to a spill will be easier.

Concerns have been raised about the age of some of the lines that run across Lake Sakakawea. He said Hess Corporation, the owner of many of the lines, is testing the walls' thickness and looking for anomalies, Newman said.

“They're doing their due diligence,” and finding that some of the lines are in good shape and some aren't. Some are gas lines that will be repurposed for oil, Newman said.

Beginning about three years ago the Corps started to require that all lines be bored 70-100 feet under the lake bed rather than just laid and sunk to rest on top of the lake bed.

Multiple requests come in, as often as weekly, to lay pipes on the lake bed or to drill on Corps property or to learn about how to drill on Corps property, he said. They say, “What's it take to get a line across Lake Sakakawea?” he said.
“Now the whole world's changed. We get requests weekly,” he said.

The change is disconcerting for some.

An industry expert who was a leader in the Exxon Valdez oil spill in Alaska cleanup guided the Corps during a training exercise this spring, Newman said. He said, “Make sure you're organized. It will happen. We were like great, that's what we want to hear.” (The industry expert declined to be interviewed for this story.)

The result, though, is planning.

“Let's get organized for when the big one comes,” Newman said.

Ritter said the N.D. Department of Mineral Resources agreed. She said, “Obviously state leaders and emergency responders do know there is a potential threat. Being prepared is the most important thing. The state and the operators are taking steps to be prepared.”

A group of 10 oil companies formed Sakakawea Area Spill Response LLC to share equipment, training and resources in the event of a spill.

Ritter said preparation by the state and industry leaders will help to minimize the impact. Newman agreed and hoped she's right.

[Photos courtesy of Jill Denning Gackle, BHG News Service.]

[Chet's Note: In visiting with the reporter I learned that the aerial map/graphic in her story was obtained by BHG from the USACOE and is from late in 2012. I've taken the liberty of obtaining a current, similar graphic of the same area from the North Dakota GIS Hub (see below).  You might want to right-click on both the graphics, open them in "new tabs" and compare the two graphics. There are now significant more laterals under the lake.]


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