Auditor Should Use Opportunity to Seek Performance Audit of Department of Mineral Resources

With this week’s Associated Press reporting “North Dakota oil drillers are falling far short of the state’s goals to limit the burning of excess natural gas at well heads, five years after the state adopted the rules to reduce the wasteful and environmentally harmful practice” I’m once again raising calls to undertake a performance audit of the Department of Mineral Resources. The outrageous waste is met with unacceptable shoulder shrugs from elected leaders. It is time to get to the bottom of it. It may also be a way for the embattled Auditor to prove that legislators are actually working in good faith with performance audit changes.

Flaring of natural gas, pardon me “freedom gas,” has been on the state’s radar for years. The industry has invested in infrastructure, but hasn’t been able to get ahead of the issue. Legislators have acknowledged it is a continuing problem but have refused to do anything about it. They even defeated a Republican-sponsored study to find ways to address the problem this session.

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Meanwhile, the Industrial Commission established rules and goals. The industry approved. Currently, “North Dakota oil producers can flare natural gas for a year without paying taxes or royalties on it. Companies can then ask state regulators for an extension because of the high costs of moving the gas to market. Almost all the extensions requested in recent years were granted, Tax Commissioner Ryan Rauschenberger said.” What the hell is the point of the rule? What about the royalties owed to owners?

The continued allowance of waste is just the latest example of questionable management when it comes to oil and gas development. The Department of Mineral Resources, led by Lynn Helms, utilizes a practice of dramatically reduces fines for lawbreakers. The most egregious was when the Department reduced a fine by $780,000 for a bad actor who illegally dumped radioactive filter socks in Noonan, ND. Explanations for the practice don’t pass the smell test.

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In 2017, the Bismarck Tribune reported approximately 38,000 emails were deleted in the Department. An attorney at the time said, “it’s possible the [oil and gas] division committed a Class C felony for destroying public records after employees hit the “delete” button in May 2016 on instruction from Lynn Helms.” More questionable behavior.

What better way to ensure best practices are being undertaken in the Department of Mineral Resources, specifically within the Oil and Gas Division, than undertaking the long overdue performance audit? It impacts billions of dollars of development and hundreds of millions in royalty owner payments. Shouldn’t we as taxpayers, the industry as partners, and royalty owners due their earnings want to make sure things are being handled to the best of our ability?

ND Auditor Josh Gallion (Prairie Public Radio)

State Auditor Josh Gallion, whose independent authority was stripped by a last second move by the Legislature, should seek a full performance audit of the Department of Mineral Resources. Under new legislative demands, Gallion now is required to bring these requests to the Legislative Audit and Fiscal Review Committee for their approval. Many lawmakers have publicly declared they don’t intend to reject a desired performance audit from the Auditor. In fact, some have suggested that the new procedure would allow for more public transparency because of the public meeting. Gallion should make them prove it.

The other component to this is Governor Doug Burgum. Burgum is the Chair of the Industrial Commission that oversees the Department of Mineral Resources. He publicly declared a full performance audit was in the best interest of North Dakota taxpayers during his primary battle with Attorney General Wayne Stenehjem. Gallion has the opportunity to see whether this was just another example of Burgum saying anything to get elected as was accused during that campaign by fellow Republicans.

The intent of the performance audit is to find areas of improvement and government efficiency by providing guidelines for agencies to adopt. There is no reason to not undertake this audit. Royalty owners, oil and gas companies, and taxpayers should demand it.