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Published August 17 2012

Forum Special Report: Industry donations to ND Public Service Commission widespread

BISMARCK – NextEra energy needed approval for a wind farm. BNI Coal was facing penalties for environmental rules. The Arthur Companies needed a license for a grain elevator.

All of them went before the North Dakota Public Service Commission to state their cases.

And all of them, whether via political action committees or campaign contributions from executives, have given the commissioners money. They’re joined by dozens of other companies, similarly overseen by the commission, that collectively have funneled tens of thousands of dollars to commissioners.

The contributions, which technically are amalgamated individual donations, not money from corporate coffers, are legal. Commissioners say the money does not affect their work or win the companies undue influence.

But the issue of cozy ties between regulators and industry has become a flashpoint in this year’s commission race, pitting those who say the system isn’t broken against a reform-minded candidate who decries it as corrupt.

A review by The Forum of known PSC donations tied to regulated industries shows that the practice – whatever one thinks of it – is indeed extensive.

A common practice

The candidate raising the issue, energy policy consultant and environmental advocate Brad Crabtree, a Democrat, has gone hard in particular at two of the commissioners on the three-person board: Kevin Cramer and Brian Kalk, who are both Republicans.

To assess his claims, The Forum compiled and reviewed all PSC campaign finance records from Cramer, who was first elected in 2004, and Kalk, who was elected in 2008.

The Forum also reviewed all records of PSC campaign donations to Crabtree, his Republican opponent Randy Christmann and Tony Clark, a former commissioner who stepped down this year to take a spot on the Federal Energy Regulatory Commission.

Those donations records were cross-checked against companies that appeared before the commission while the commissioner they gave to was campaigning or in office.

Cramer and Kalk together have collected at least $57,000 in PSC campaign funds from political action committees and executives of companies that had cases before the board. About two-thirds of that money went to Cramer.

Companies with energy interests, including coal and wind, were among the biggest contributors. Others included telecommunications firms, agriculture companies and power companies.

The commission also oversees pipelines, railroads, auctions, and weights and measures in a variety of capacities.

Political contributors in North Dakota are not required to disclose their employers unless they give $5,000. They are not required to disclose their identities at all unless they give more than $200 – meaning the tally of donations tied to industry is understated, unless none of the other donors to either candidate had ties to regulated companies.

There is no upper limit to what contributors in state races can give.

Of the $104,000 Kalk has raised in PSC campaign contributions large enough to require disclosure, about 17 percent came from sources he regulates.

For Cramer, who is now running for U.S. Congress, that figure is 24 percent of about $169,000 in PSC contributions that had to be disclosed.

Kalk also ran for Congress this year, losing to Cramer in the primary. Both men also drew contributions in that race from a handful of regulated sources, totaling a few thousand dollars each.

Kalk and Cramer were not alone in the practice. Clark, the now-departed commissioner, took about $23,000 from regulated interests in his decade in office.

Susan Wefald, a 16-year former public service commissioner, said she set a personal limit on how much money she would accept from regulated groups to head off insinuations of impropriety.

“I didn’t want questions about those,” she said.

She declined to say what the limit was.

Wefald, a Republican, declined to comment on the funds raised by current commissioners.

Bruce Hagen, a 39-year former commissioner and a Democrat, was more forthcoming.

“I just think it’s wrong,” he said. “They may still be making perfectly good, sound decisions. It’s just not the wisest thing to have.”

A pledge for reform

Neither Kalk nor Cramer is up for re-election this fall. Their terms do not expire until 2014 and 2016, respectively.

Crabtree, who is running for the seat vacated by Clark, has likened their fundraising tactics to bribery. He has vowed to seek reforms like more frequent and more thorough disclosure requirements, and a rule that would require commissioners to recuse themselves from any decision involving a company tied to a donation.

“If that were the law today,” he said, “Kevin Cramer and Brian Kalk could scarcely function as public service commissioners.”

Crabtree also has pledged not to accept campaign money from regulated interests.

Last week, the state Republican Party released a list of five names it claimed violated that pledge. Crabtree said only one presented a potential conflict and that he would return the money – $250 from a Massachusetts businessman – if that turned out to be the case.

Crabtree also ran for the commission in 2010, when he lost to Cramer. In that race, he accepted money from all sources, and estimates he has cost himself $20,000 in potential contributions this year by not doing so again. He said he decided to forego those contributions in this election to be consistent with his reform goals.

It’s difficult to say precisely how much money Crabtree took from regulated companies in 2010 because he took $70,000 – about half of his fundraising – from the state Democratic Party PAC, which itself draws from a wide range of sources.

He also took about $20,000 that year from other candidates’ PACs. He has not taken money from the Democratic Party PAC this year, though he did accept $7,500 from U.S. Sen. Kent Conrad’s PAC.

Impossible standard?

Crabtree has challenged Christmann, his opponent in the PSC race, to adhere to the same campaign finance standards Crabtree has adopted.

Christmann has not agreed to those terms, saying they’re unnecessary and exclude many citizens.

Taken to its logical conclusion, Christmann said, the philosophy would also bar farmers and ranchers from giving to agricultural commissioner candidates, or teachers from giving to gubernatorial hopefuls.

“I just can’t imagine where you would ever draw the line,” he said. “It’s a standard that really can’t be met.”

He rejected the notion money buys influence. But if it does, he said, then Crabtree – who was once a registered lobbyist for two clean energy groups – is equally beholden to the environmental groups that back him.

About 40 percent of the $19,700 in campaign contributions Christmann has reported in this race is tied to companies the PSC regulates.

The bulk has come from the PAC of the North Dakota Association of Telecommunications Cooperatives, which represents many companies that appear before the PSC.

Christmann has also been a board member of one of those companies, West River Telecommunications Cooperative, since 1999. Last year, he was paid about $13,000 for his board work, he said. He said he plans to resign if he wins the election – not because it would be a major conflict of interest but because he doesn’t think he’d have time to do both.

The company has sought PSC approval for its dealings on eight separate occasions this year.

Along with Cramer, he also sits on the Lignite Research Council, a private-public partnership that promotes the state’s coal industry. The PSC regulates mine permitting and land reclamation.

‘A business decision’

Contributions from coal interests to commissioners prompted a lawsuit this year from the Dakota Resource Council and the local chapter of the Sierra Club, who said the money creates a conflict of interest and asked federal regulators to assume oversight of the state. In a separate lawsuit, the Dakota Resource Council accused the commission of not complying with many aspects of federal regulatory law.

Both lawsuits are pending. Cramer said he expects both to be dismissed.

He said his campaign donors don’t ask him for anything other than “a fair shake,” and hold no sway over his decisions.

“How many times do you know somebody that discloses bribes on the secretary of state’s website?” he said.

Limiting donations from certain groups, he said, amounts to “putting a cap on somebody else’s freedom.”

Kalk said contributions he gets are a reflection of his values, not a payoff.

“If people want to give you money, it’s because they believe in you,” he said, borrowing a line from Ronald Reagan.

Robert Wood, an associate professor of political science at the University of North Dakota, said that’s what makes it so difficult to measure the effect of campaign contributions: It’s hard to say if the values followed the money or the money followed the values.

He said a company probably wouldn’t use a campaign contribution to try to secure a quid pro quo decision – anyone seeking to do so would likely use more illicit channels. But companies do use contributions to improve their access to elected officials, he said.

“If someone has given you a fat campaign contribution, you’re less likely to ignore them when you want to talk to them,” he said.

Ed Bender, executive director for the National Institute on Money in State Politics, said ideology is less important to companies than finding a sympathetic ear with a winner.

“It’s a business decision, not a political decision,” said Bender, whose Montana-based group tracks the influence of campaign money at the state level.

Regardless of whether the contributions actually work, he said, “it doesn’t look good.”


Readers can reach Forum reporter Marino Eccher at (701) 241-5502