A North Dakota conservation effort has turned into a bidding war between the oil and gas industry and environmentalists that likely will make the ballot initiative the priciest in state history.
At issue is a proposed constitutional amendment to divert a portion of the state’s annual $10 billion in oil and gas tax revenues to a 25-year fund to pay for conservation projects around the state. Observers say it’s an issue that will drive voters to the polls on Nov. 4.
“[The oil and gas industry] should be leading this legacy funding,” Tom France, regional executive director for the National Wildlife Federation’s Northern Rockies and Prairies Regional Center, told the Washington Examiner. “All of us recognize the contributions the oil and gas industry is making to North Dakota. But there has to be a balance.”
A coalition of environmental groups leading the effort has spent $2.9 million so far, according to state filings. That has outpaced opponents, a collection of agriculture, business, and oil and natural gas groups that has spent $2.2 million to defeat the ballot initiative.
The measure is giving the oil and gas industry jitters. The American Petroleum Institute recently entered the fray by putting $1 million into the fight.
The measure’s opponents say North Dakota has more pressing needs to keep people in the state and to keep its booming energy industry viable.
Housing shortages have pushed rents sky-high for the thousands of new energy workers pouring into the state. In Williston, N.D., at the heart of the Bakken shale that has produced more than 1 billion barrels of oil, the average rent for a 700-square-foot, one-bedroom apartment is the highest in the nation at $2,394 per month. Roads are sorely needed. Workers and their families are demanding improvements in law enforcement and services.
“[The ballot measure] is a critical issue facing all of the state’s industries, including oil and natural gas, that have helped to make North Dakota a model of job creation and economic success for the entire country,” Eric Wohlschlegel, an API spokesman, told the Examiner in an email.
Much of the state’s tax revenue is already being used to handle the influx of energy workers. About 30 percent of it goes to a rainy day fund that the legislature can’t touch until 2017, while other chunks go to schools, local governments, infrastructure projects and a roster of special funds the state has created.
Opponents see the ballot measure as a way for other interests to piggyback off the oil and gas industry’s success in the state — a move that shows potential for future skirmishes in other states benefiting from the energy boom.
“They look at the wealth we’ve got and the economic situation we’re sitting in and they say, hey, wouldn’t it be great to have a piece of that pie?” Jon Godfread, vice president of government affairs for the Greater North Dakota Chamber, told the Examiner.
That pie is large. Godfread said the chamber estimates that the conservation fund would draw about $5 billion from oil and gas tax revenues over its 25-year lifetime, though others offer a more conservative estimate of just above $3 billion. Opponents are concerned about the fund being enshrined in the state’s constitution, an inflexible approach that leaves no room for other pressing needs that may arise.
The ballot measure wouldn’t raise taxes on the oil and gas industry. And despite opponents’ claims, the state wouldn’t be forced to spend the estimated $150 million the program would raise each year. Ten percent of the money must go into a “trust” and another 75 percent must be “allocated,” but that could mean allocating it to the trust as well. “It’s really the industry throwing its weight around because it can,” France said.
The energy industry has almost single-handedly reversed the state’s fortunes and helped drive its unemployment rate down to 2.8 percent, the lowest in the nation, but recent polling shows proponents of the ballot measure have a slight lead.
A landline and cellphone poll released Oct. 11 showed 44 percent of residents would support the measure, with 37 percent opposed and 18 percent undecided. The poll of 505 randomly selected North Dakotans, conducted by Forum Communications Co. and the North Dakota College of Business and Public Administration, contained a 5 percent margin of error.
Environmentalists want the measure because the shale boom has spread rapidly across the state as drillers seek to draw hydrocarbons out of the ground.
“We’re seeing changes to our landscape at rates that are really unprecedented,” said Steve Adair, director of operations for the Ducks Unlimited Great Plains Region Office. The group has spent about $2 million promoting the initiative.
While some of the funds would be used for land acquisition — primarily to build or expand state parks, as North Dakota ranks next to last nationwide in state park acreage — the measure’s proponents say plenty of safeguards exist to make sure environmental groups won’t run roughshod over landowners.
The chief check is that the state’s Industrial Commission must approve all projects funded by the trust. That commission is comprised solely of the governor (currently a Republican), the agricultural commissioner, and the attorney general.
“The governor would never let that happen,” Adair said of using the funds to go on a land grab.
Countering claims that the program would work as a slush fund to outbid farmers and ranchers for valued agricultural land, the measure’s backers note that it could be used to fund a wide range of conservation projects including restoring wetlands, planting environmentally friendly crops and boosting buffers along the flood-prone Red River of the North.
Adair said there is a need for such programs. Many of the state’s farmers and ranchers are still grappling with cuts to a prominent Agriculture Department program that paid them to convert spent farmland into wildlife habitats, he said. Those payments have dried up, taking about 2 million acres of potential conservation land out of play.
The ballot measure has been years in the making. France said it was first conceived in 2010. It might have made it onto the ballot in 2012, were it not for a dozen North Dakota State University football players who found it “easier to sit in a dorm room and make up signatures” that were invalidated instead of collecting them, France said.
“With the boom, the opportunity existed to build a really large conservation fund,” France said. “The ballot initiative was the only way to get that.”
