Mixing gas and oil: Energy stocks, contributions raise questions
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, which 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 that 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 a 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 to 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, which 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 that 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.