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Watchdog group questions ethics of energy loans, grants :: WRAL.com

Watchdog group questions ethics of energy loans, grants :: WRAL.com
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— State regulators have approved $28 million in grants and $135 million in loans for six energy projects, while a watchdog group raised concerns about conflicts of interest at the Clean Energy Board it recommended applicants fund.

At a meeting last week, the North Dakota Industrial Commission approved funding assistance for projects ranging from hydrogen production to lithium extraction as recommended by the Sustainable Clean Energy Commission.

At the Energy Authority meeting earlier this month, several members disclosed conflicts of interest based on their or employer relationships with some of the applicants.

Disputes ranged from business consulting relationships to employers investing in applicants’ projects, as well as a member of the applicant’s board of directors. The Bismarck Tribune reported that every time a member revealed a conflict at the meeting, the other members decided to let them vote anyway.

The Dakota Resource Board opposed this process in a letter the group sent to the North Dakota Ethics Committee. Scott Scokos, executive director of the Dakota Resource Council, wrote that EA members who engage in conflicts of interest “can use their vote or technical recommendation to influence a decision to allow funds to flow directly to them, or directly to their company or organization.”

Created by the legislature earlier this year, the Energy Authority is tasked with examining projects vying for funding assistance approved by lawmakers, including $45 million in grants and $250 million in loans through a bank line of credit. North Dakota.

Skokos said the ethics committee should require the Sustainable Clean Energy Commission to follow similar ethical standards to banks by prohibiting members from voting or advising on projects in which they have a stake.

“In our view, the ethics committee should adopt rules that prohibit any designated or elected official from voting on a matter of direct or indirect financial benefit to him or his employer,” he said. “The rules should also include penalties for individuals who fail to disclose a conflict or fail to disqualify themselves” even after the conflict has been disclosed.

Of the eight voting members of the Energy Authority, the letter stated that five had conflicts of interest: Kathy Nessette, Al Christenson, Joel Brown, Jim Arthod and Chris Freeze. He also appointed technical advisor Charles Jurici, CEO of the Center for Energy and Environmental Research at the University of North Dakota. The director of the Sustainable Clean Energy Authority, Al Anderson, said Jureki’s representative, Tom Erickson, took a vote earlier this month when a conflict arose because the think tank was an applicant on a project involving carbon sequestration at the Cole Creek plant.

Anderson discussed the conflict of interest issue with the industry committee at a meeting last week, saying he was comfortable with the process the energy authority had followed. He added that more people involved in the program revealed more conflicts than those named in the Dakota Resource Board’s letter. He said he sought guidance from the ethics committee last summer on how to handle such situations.

Ethics Committee Executive Director Dave Thiele said in an interview that he encouraged the Energy Authority to use the Industry Committee’s Code of Conduct as a starting point.

Anderson said he took Thiele’s advice and the guidance given to members of the Energy Authority was to err on the side of disclosure, that “if any of these people have a problem, they should raise it, even if it’s not necessarily a big one.”

Governor Doug Burgum chairs the three-member Industrial Committee and asked at the meeting if any of the recommendations would have been different had the conflicting ones not been voted on.

“It didn’t change any of the discussions that had taken place,” Anderson said. “It wouldn’t have changed any of the voting results that happened either.”

The Energy Authority’s recommendations were unanimous except for one vote against Bakken Energy’s request for a grant and loan for its hydrogen center project.

Anderson said he would address the Dakota Resource Board’s concerns with the Ethics Committee, and Attorney General Wayne Stingem encouraged him to visit with his office as well.

Thiel said he was not surprised that a conflict of interest emerged, given that the energy authority’s experts are businessmen.

“You can almost expect that given the nature of what they do,” he said. “These are the kinds of people we want out there because they really understand the industry, but what they (the Dakota Resource Board) are bringing up is legit.”

He said the Ethics Committee is developing uniform rules surrounding conflicts of interest for state boards and committees, and these rules will apply to the Energy Authority.

“The key here is that you score it, you get all the facts, and as a group determine if stepping down is appropriate,” he said, adding that councils need to balance the need for member involvement with the scale of a dispute.

He said he appreciates the feedback from the Dakota Resource Board as the Ethics Committee looks to finalize its rules.

The projects approved by the Industrial Authority are as follows:

A $10 million grant and $80 million loan for Bakken Energy’s proposal to construct a hydrogen center that would include the Great Plains Synfuels near Beulah.

A $7 million grant and $40 million loan to Cerillon, which is developing a plant in Trenton that will convert natural gas into liquid fuels.

— A $7 million grant to the Center for Energy and Environmental Research, which is engineering and designing a system to capture carbon dioxide emissions from Cole Creek, the state’s largest coal-fired power plant.

A $3 million grant to Midwest AgEnergy for its Blue Flint Ethanol carbon capture and storage project in McLean County.

A $1 million grant to Wellspring Hydro to acquire lithium and other products from oilfield brine. Lithium is used to make batteries and other products.

A $15 million loan to Valence Natural Gas Solutions to expand the use of its portable devices that capture natural gas that would otherwise be burned.

Combined, Burgum said, the projects will capture more than 18 million tons of carbon dioxide annually, which is equivalent to about a third of the state’s carbon emissions. Carbon dioxide is a greenhouse gas that contributes to climate change.

“This is a program that I know every other energy state would wish they had,” Burgum said. “All of these things could be game-changers in North Dakota, and I think they’re going to have a huge impact beyond the boundaries of this state to shape these industries.”

The Energy Authority is expected to make recommendations on the remaining $17 million in grants and $115 million in loans during additional funding rounds next year.

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