JIM FUGLIE: View From The Prairie — The Halcyon Days Are Gone

In the halcyon days of the 1970s in North Dakota, when the state was a quieter, kinder, friendlier, more thoughtful place, the Legislature passed a bill, and the governor signed it, designating the Little Missouri River as our state’s only official State Scenic River and creating a commission to look out for it.

The Little Missouri Scenic River Commission did its job through the administrations of four governors who cared about the Bad Lands and its river — Art Link, Allen Olson, George Sinner and Ed Schafer — two Democrats and two Republicans. It met regularly, rerouted proposed pipelines to protect trees, kept gravel miners, oil drillers, seismologists and road builders out of the river valley, made sure oil wells and tank batteries were above the bluff line well away from the river and even passed rules regulating barbed-wire fences across the river.

Then came the administrations of John “Good-Paying Jobs Uber Alles” Hoeven and Jack Dalrymple, and the commission faded into obscurity. It ceased to meet, and its rules ceased to be enforced, and soon the industrialization of the Little Missouri State Scenic River Valley began.

Oil wells started showing up on the riverbank, just yards from the river. The state engineer began issuing industrial water permits to take water from the river for fracking, in direct violation of the law (600 of them at last count). The roar of diesel trucks and jake brakes, and the steady thump, thump of one lung pumpjacks, echoed throughout the valley.

With the election of Doug Burgum, who was an easterner, but owned a Bad Lands ranch, there was some hope that the state’s only Scenic River might once again get some special attention at the highest levels of government. Didn’t happen. Oh, Burgum reformulated the commission, but then he asked it, as its first official act, to ratify a policy making it legal, for the first time in more than 40 years, to use Little Missouri State Scenic River water for industrial purposes — read: fracking. They did that this week.

The commission is an interesting mix of folks. By law, it is composed of six Bad Lands ranchers, one from each of the six Bad Lands counties, and three bureaucrats — the state engineer, the state health officer and the state parks director. For the first 25 years of its existence, it carried out its mission, with reasonable ranchers who really cared about the river valley, and dedicated state employees from the State Parks and Health Departments and state engineer’s office, teaming up to fulfill its mission, as outlined in Chapter 61-29 of the North Dakota Century Code: “to maintain the scenic, historic, and recreational qualities of the Little Missouri River and its tributary streams.”

The law also says the commission “shall also have the power and duties of promulgating management policies to coordinate all activities within the confines of the Little Missouri River when such action is deemed necessary.”

One of the things they did with that authority, to help “maintain the recreation quality” of the river, was to adopt a fencing policy, which said that fences across the river “must have a gated opening of at least 8 feet.” They adopted that policy at a meeting in April 1995.

Now, I’ve been canoeing the Little Missouri for more than 40 years, and for the first 35 years, I rarely encountered a fence across the river. Once or twice in all those years. But a few years ago, Lillian and I canoed from the Logging Camp Ranch, south of Medora, into Medora, a trip we’ve done probably half a dozen times. And in that 40 or so river miles, we encountered eight fences across the river, none of which had gates. We were forced to get out and portage around every one of them. On about fence No. 6, I angrily vowed to bring a wire cutter with me the next time I canoed that stretch of the river. I cooled down after a couple of beers in Medora, and instead just decided to never canoe that stretch of the river again. And I haven’t. Which is too bad, since it is the stretch that goes around Bullion Butte, one of the nicest places on the entire river. Entire planet, for that matter.

Later, I asked a rancher down in that country why there were so many fences all of a sudden. He said, “Jim, neighbors don’t get along like they used to.”

Well, he’s right, of course. In the halcyon days, cattle along that stretch ran free and were rounded up and sorted in the spring for branding. Now, fences keep everyone’s herds separate.

I’m writing all this on the heels of this week’s Scenic River Commission meeting in Dickinson, at which the commission was asked to weigh in on three issues.

The first was Burgum’s policy of allowing for industrial use of water from the river for fracking. The policy was adopted by the State Water Commission, which Burgum chairs, about a year ago, but the Scenic River Commission mulled it over for a while before finally giving it the okay this week.

So instead of looking out for the river, maintaining its “scenic, historic and recreational qualities,” the first official action of the newly formed commission was to give its blessing to the industrialization of the Little Missouri State Scenic River. There are already approved industrial water permits at 10 ranches on the river right now. Who knows how many there will be in a year, or five years.

The second was a request for support for the new bridge across the Little Missouri River north of Medora. The group discussed it for more than an hour before commission member Gene Allen from Beach made a motion to support the “no-build” alternative laid out in the Environmental Impact Statement, which would have put the commission on record as opposing the new bridge. That brought Billings County Commission chairman Jim Arthaud roaring from the audience to the front of the room, where he took over the meeting and said in no uncertain terms that Billings County needed and deserved the bridge.

Well, after more discussion, the motion failed on a 5-3 vote, with only Allen, Slope County rancher John Hanson and Parks Director Melissa Baker voting in favor of it.  Then there was silence while commission chairman Joe Schettler, Dunn County’s representative on the commission waited for a motion to support the bridge. No motion was forthcoming. So, after a long pause, Schettler recessed the meeting for a bathroom break. So the commission took no position on the bridge.

The third was a discussion of the illegal bridge already built over the river in Dunn County by Wylie Bice, which I wrote about the other day. After some discussion, the group decided that since the bridge is already there, not much can be done about it. So they gave it tacit approval.

But the discussion turned to the idea that it was actually the Corps of Engineers fault the bridge was there because they signed off on the bridge but hadn’t checked with the Bureau of Land Management, on whose land the bridge is located, to see if it was OK with them. So the group passed a motion to send a letter to the Corps asking them to please share information on things like this.

I found it a bit ironic that a bunch of conservative ranchers were urging the government agencies to share personal information with each other. Guess it depends on the situation.

So now, the commission moves on to other things — what other things I am not sure. It’s an interesting group. The county representatives are appointed by the county commissioners. They must be ranchers who live on the river, except for the Golden Valley County representative (lawyer Gene Allen from Beach). (Golden Valley is one of the Bad Lands counties even though the river doesn’t flow through it.)

A couple of them take their responsibility to protect the river seriously. More of them are there to protect their county’s economic interests by not letting environmental protection get in the way of the industry that fuels their county’s economy — oil. The chairman himself has an industrial water permit and sells water from the river to the frackers. To be fair, he hasn’t been voting on these things, saying he will only vote to break a tie.

State Parks director Melissa Baker is there to protect the river. State Engineer Garland Erbele is there to do what engineers do — build things. He’s no friend of the river. The Health Department is represented by Dave Glatt, head of the state’s Department of Environmental Quality. He’s a lackey for the energy industry, Burgum’s worst appointment to date, who can’t be trusted to stick up for the river. He voted FOR the industrial water permit policy and AGAINST the motion to oppose the new bridge in Billings County, even though it has the potential to be the worst environmental problem ever to face the river if the oil trucks start crossing through the valley by the hundreds, or thousands, as the county has predicted. I told him after Monday’s meeting that, as the state’s top environmental officer, he ought to be ashamed of himself.

So what we’ve got, I was moaning to a friend of mine who knows these issues, is what we asked for: an active Little Missouri Scenic River Commission. I guess we have to be more careful about what we ask for. It’s just a rubber stamp for the energy industry, I complained to my friend. And that is bad because their approval of things like industrial water permits and bridges (and who knows what else in the future) gives those who would abuse the Little Missouri State Scenic River the credibility of having been approved and endorsed by an official state government commission.

A couple of years ago I began writing about the need to reactivate the commission. I really, really wanted to bring it back and put it to work protecting the river from industrial development. I remember those halcyon days when the Little Missouri Scenic River Commission members really, really cared about the river. And I really, really long for those days again, I told my friend.

“Jim,” he said, “things are different now. You need to lower your expectations.”

I guess.

JIM FUGLIE: View From The Prairie — Refinery Company To PSC: ‘Screw You’

Of all the sleazy companies to show up in North Dakota’s oil patch in the nearly 10 years since the Bakken Boom began, the sleaziest of them all has to be Meridian Energy, the company proposing to build an oil refinery called the Davis Refinery just three miles from Theodore Roosevelt National Park.  Here’s why I say that.

Normally, when a company wants to build a large energy plant, like a refinery, it applies for a siting permit from the North Dakota Public Service Commission.  Most good companies do that. It’s the law. In the case of oil refineries, if the refinery is going to be capable of processing more than 50,000 barrels of oil per day, they have to obtain a site compatibility permit from the PSC.

Here’s Section 49-22 of the North Dakota Century Code:

“The legislative assembly finds that the construction of energy conversion facilities and transmission facilities affects the environment and the welfare of the citizens of this state. Therefore, it is necessary to ensure that the location, construction, and operation of energy conversion facilities and transmission facilities will produce minimal adverse effects on the environment and upon the welfare of the citizens of this state by providing that no energy conversion facility or transmission facility shall be located, constructed, and operated within this state without a certificate of site compatibility or a route permit acquired pursuant to this chapter. The legislative assembly hereby declares it to be the policy of this state to site energy conversion facilities and to route transmission facilities in an orderly manner compatible with environmental preservation and the efficient use of resources. In accordance with this policy, sites and routes shall be chosen which minimize adverse human and environmental impact while ensuring continuing system reliability and integrity and ensuring that energy needs are met and fulfilled in an orderly and timely fashion.” (My emphasis added.)

Well, that’s reasonable enough, I guess. Take care of the people and their environment while providing the energy we need. The two should be compatible. You’d think that it might also keep a refinery away from the boundary of a national park.

The proposed Meridian refinery is a 55,000-bpd facility. The Davis Refinery stock offering from January 2017 says: “Meridian Energy Group Inc. (“Meridian” or the “Company”) is a closely held South Dakota corporation that will construct and operate the Davis Refinery, a 55,000 barrel per day high conversion crude oil refinery on a 715-acre site in Billings County, near Belfield, North Dakota, in the heart of the Bakken formation.”

In its application for a state water permit, Meridian is requesting enough water — 645 acre feet per year — to supply a refinery processing 55,000 barrels of oil per day.

In its application for an air quality permit from the North Dakota Health Department, the company makes its projections on how much pollution they will be producing based on a 55,000 barrel per day refinery.

Well, OK then, it’s going to build a refinery processing more than 50,000 bpd. So the company has to get a siting permit from the PSC, right? Well, not according to the company’s lawyer, Lawrence Bender (I’m going to stop just short of calling him sleazy, too, but I will say the sleazy company found the right lawyer).

Bender wrote a letter to the PSC in which he says, “Please be advised that at this time, Meridian is designing its refinery to be capable of refining twenty seven thousand five hundred (27,500) barrels per day. Further, at this time, there is no design in existence nor plans to propose a design for more than 27,500 barrels.”

Huh? The company had told two other state agencies and all potential investors that the refinery is going to process 55,000 bpd. Oh, he does go on to say, “Though Meridian does not presently have any designs or plans to propose a Refinery with capacity beyond 27,500 barrels of oil per day, Meridian considers it a possibility that such addition could be made at a later date.”

Good grief. A “possibility?” Somebody better tell those investors looking at the stock prospectus for Meridian Energy that the refinery they’re investing in is only a “possibility.”

The PSC members and their staff ain’t stupid. They took note of that and wrote back, “The Commission has received information that Meridian’s application to the State Water Commission for a Water Appropriation Permit is based on a facility capable of refining 55,000 barrels per day. Further, Meridian’s applications to the North Dakota Department of Health for the construction of a new crude oil refinery are based on a facility with a nominal processing capability of fifty five thousand (55,000) barrels per day.”

The letter went on, “Since Meridian is filing applications with other state agencies for permits based on a facility that can refine up to 55,000 barrels per day of oil, and since an oil refinery of that capacity is jurisdictional to the Commission for siting under North Dakota Century Code chapter 49-22, it appears that the proposed refinery is jurisdictional under the siting law. Please let us know whether Meridian agrees, and if so, when we can expect an application.”

Well, good for Patrick Fahn, director of the PSC’s Public Utilities Division, who wrote that letter. He sent it March 1. It took lawyer Bender about three weeks to respond. He said, basically, “Screw you, PSC.”

Explaining the water permit request, Bender reiterated that Meridian only planned to build a 27,500 bpd, but again said again “it is a possibility” that the plan could expand in the future. And in response to the question on the air quality permit, he said basically, “the Health Department made us do it.” Well, of course, they did. They knew what Meridian was up to. They ain’t stupid either.

Bender then went on to say that under an old attorney general’s opinion, issued in 1976 by then-Attorney General Allen Olson, “applications to different state agencies concerning the same energy conversion facility need not be identical.”  What? That made no sense to me, so I went and read that opinion, and didn’t quite read it that way, but then I’m not a lawyer. I know former Attorney General (and Governor) Olson reads this blog. Maybe he’ll remember. Attorney General’s Opinion 76-130.

Bender’s conclusion: Meridian doesn’t believe those two applications trigger a site compatibility review by the PSC, and it will not seek a certificate of site compatibility. So it plans to just go ahead and start building a refinery, without PSC permission.

So we’ve got a standoff right now.

I’ve talked to two of the three PSC members about this, and they’re mulling it over. They gave it a run, and the company told them to get lost. So until Meridian puts a shovel in the ground, there’s not much the PSC can do. It’s pretty obvious that the reason Meridian doesn’t want to apply for a site compatibility permit  is that it believes the PSC might NOT issue a permit for this location if it applied for one. Well, that seems pretty stupid. Now Meridian has really pissed off the PSC. We’ll see how this plays out.

Meanwhile, Garland Erbele, the state engineer over at the Water Commission, did take some action, announcing he was granting a water permit for only 90 percent of the water Meridian had applied for. His logic: If he only gives Meridian enough water to build a refinery capable of processing 49,999 barrels of oil per day, then Meridian can’t build its 55,000 BPD refinery. There, take that, Meridian!

Cute. Real cute And pure pap. You don’t think Meridian might have a “fudge factor” of 10 percent or so in its request?

And what was Meridian’s reaction to that? Hey, no problem. Here’s a statement from their press release to potential investors: “William Prentice, Meridian CEO, commented on the Allocation Draft Permit, ‘We thank the Water Commission for the thoroughness and fairness of their review. While the recommended allocation is slightly less than we requested, I’m confident that we will employ our resources and determine how to make the Davis Refinery even more efficient, like we’ve done in so many areas thus far.’”

And the company’s engineer, Dan Hedrington, said in the same press release, “The Recommended Decision is the draft permit the Engineer’s Office has been working toward. The document appears very thorough and complete …”

In other words, Thanks, Mr. Erbele. That’ll be just fine.

Really, Erbele’s little stunt is beneath the dignity of a state government agency. That’s playing Meridian’s game. You want to send Meridian a REAL message, Mr. Erbele? Grant them a permit for enough water to process the 27,500 barrels per day.

Meridian says it “might” come back later and decide to expand its refinery capacity to 55,000 bpd, but right now, it’s at 27,500. So give them that much. And tell them if they decide to expand, you “might” give them more water.

There’s precedent for that. Way back in 1974, one of Erbele’s predecessors, Vern Fahy, who worked for Gov. Art Link and Agriculture Commissioner Myron Just (the two elected officials on the State Water Commission), got an application from Michigan Wisconsin Pipeline Co. for water to build a whole bunch of coal gasification plants in western North Dakota. The company requested 68,000 acre feet (Yeah, kind of makes that refinery look like small change, doesn’t it?) and the Water Commission granted them just 17,000 acre feet — a fourth of what they wanted. Wise men, Link and Just. In the end, they didn’t even need that much for the one plant they built — which, by the way, is still in operation today.

Further, they attached a whole list of conditions to the permit. At the time, North Dakota didn’t have much in the way of mined-land reclamation or air pollution laws, so they wrote some, and attached them as conditions to a water permit. Most of those conditions were eventually enacted by the Legislature and became law.

An aside — that water permit and its conditions became the entry point for then Tax Commissioner Byron Dorgan’s involvement in North Dakota environmental matters. Just and Link had Dorgan ask Attorney General Allen Olson if those conditions could stand the test of law. Olson opined that he thought they could, and so they were valid. Credit those four men for leading the way to protecting North Dakota’s environment. We could use four more of them today. Link’s gone, but the other three are still around. Wonder if they’re busy — today’s government leaders could use some advice about what to do with a rogue company like Meridian.

Meanwhile, today’s leaders need to do what those four great leaders did in the 1970s — circle the wagons and sit down and figure out what to do about this sleazy company. Gov. Doug Burgum and Public Service Commission president Julie Fedorchak need to display some leadership here. They need to get all the players in the room — the PSC, the Water Commission, the Health Department, and maybe even the State Securities commissioner (don’t be surprised if THAT office needs to engage at some point) — and figure out how to get this company in line. Surely, Dorgan, Link, Just and Olson would not allow a company such as this to build a refinery three miles from the national park named for our country’s greatest conservation president.

An oil refinery and a national park are not compatible. And we can’t move the national park.  we can move the proposed refinery. That’s why we have Section 49-22.1 of the North Dakota Century Code. Let’s enforce it.

Pretty much everybody would agree that building a refinery in North Dakota is a good idea. Pretty much everybody would agree that three miles from a national park  is the wrong place to build it (except for three people — the Billings County commissioners, who get to collect massive property taxes from it).

There’s going to be lots more to this story. I’ll try to keep you posted.

Meanwhile, there is now a 30-day comment period for people who commented on the application last year to submit more comments. Seems like a goofy law — anybody should be able to comment on action of a governmental body, any time. But then I was one of those who commented last year, so I get to comment again. Here’s my letter.

Garland Erbele, State Engineer

900 East Boulevard

Bismarck, ND 58505-0850

July 13, 2017

Dear Mr. Erbele,

As a follow-up to my earlier 2016 comments on the application of Meridian Energy for a water permit for 645.2 acre feet of water per year (enough to process 550,000 barrels of oil per day) for its proposed Davis Refinery, I want to tell you what I think of your decision to only grant them a permit for 90 percent of the water they requested.

It is pure pap. That’s what I think of your decision. It’s a cute little gambit that’s just as transparent as their request. Government shouldn’t be cute. Government should just stick to the numbers. Here are the numbers:

Meridian says it is going to build a 27,500 barrel per day refinery. In a letter to the PSC, the firm’s attorney states unequivocally, “Please be advised that at this time, Meridian is designing its refinery to be capable of refining twenty seven thousand five hundred (27,500) barrels per day. Further, at this time, there is no design in existence nor plans to propose a design for more than 27,500 barrels.”

So, Mr. Erbele, if that’s their plan “at the present time,” I suggest you give them enough water “at the present time” to operate a refinery capable of processing 27,500 barrels per day. If, as they also say in their letter, they may “sometime in the future” propose an addition to the refinery to process more than the 50,000 barrels per day which would trigger a site review, then they can come back to you “sometime in the future” and ask for more water.

Do you really believe that cutting their request by 10 percent will keep them from achieving the full potential of their proposed 55,000 barrels per day facility? No responsible engineer on their end would cut an estimate that close on a refinery not even completely designed yet. Surely they have built in a “fudge factor” in case their original water use estimates are too low. Just take a look at the press release they sent out to their investors — 90 percent will be just fine, thank you.

We all know the game Meridian is playing with North Dakota state agencies to avoid having to undergo an environmental assessment and plant siting review by the PSC. For a state agency, the North Dakota Water Commission, to join them in their game is beneath the dignity of government regulators.

Respectfully,

Jim Fuglie