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Updated: Judge denies legal challenge to PSC campaign contributions

BISMARCK -- A federal judge has ruled against two environmental groups alleging that campaign contributions from people tied to the coal industry to state regulators were illegal, but the judge says their argument "raises legitimate questions as to the appearance of impropriety."

The Dacotah Chapter of the Sierra Club and the Dakota Resource Council asserted that donations from people affiliated with coal companies to the campaigns of two North Dakota Public Service Commission members violated a conflict-of-interest provision in federal law.

In his ruling filed Tuesday, U.S. District Court Judge Daniel Hovland concluded that "the authority to undertake an enforcement action of the state program is discretionary and unreviewable," and as such, the federal court lacks jurisdiction in the matter.

However, he added in a footnote: "This order should in no manner be construed as an endorsement of the practice of PSC Commissioners accepting campaign contributions from individuals or political action committees closely associated with coal companies and coal mining activities.

"Although the acceptance of campaign contributions from such entities may be lawful ... the decision to do so is ill-advised, devoid of common sense, and raises legitimate questions as to the appearance of impropriety," Hovland wrote.

Hovland heard arguments in August in the case, which was filed in May 2012 by the environmental groups against the U.S. secretary of the interior in federal court in Bismarck.

The lawsuit asked the judge to compel Interior Secretary Sally Jewell to withdraw approval of North Dakota's surface mining program until it was brought into full compliance with the federal Surface Mining Control and Reclamation Act of 1977.

The act allows states to assume responsibility for regulating coal mining as long as their regulations are at least as stringent as federal regulations. North Dakota began regulating coal mining operations in the state in 1983.

"Obviously, the judge ruled on a technicality of the law rather than the intent and spirit of the law," Linda Weiss of Belfield, chairwoman of the Dakota Resource Council's board of directors, said in a news release after the ruling. "Federal law is clear that regulators are prohibited from accepting gifts from coal companies. In North Dakota they apparently found a way to get around the law."

The Sierra Club claimed that thousands of dollars in campaign contributions to North Dakota Public Service Commissioners Brian Kalk and Kevin Cramer violated the federal act. But Hovland wrote that by providing states the exclusive regulatory control through enforcement of their own approved laws, Congress intended that the federal law establishing minimum standards would "drop out" as the operative law and leave it in the hands of states.

"To construe SMCRA in the manner urged by the Plaintiffs would circumvent the carefully designed balance Congress established between the federal government and the states," Hovland wrote. "... If the Plaintiffs wished to challenge the enacted state program, the appropriate time for doing so has now long passed."

Hovland granted summary judgment in favor of Jewell and the PSC, which intervened in the lawsuit and sought to have it dismissed, and denied summary judgment for the Sierra Club.

Cramer, now a congressman representing North Dakota, said in a statement that the ruling "reaffirms North Dakota's right to regulate its own energy interests while rejecting the claims to the contrary made by radical environmental groups."