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​Audits Necessary for State Regulators

by Rob Port | .(JavaScript must be enabled to view this email address) | Say Anything | January 16th, 2015

Rep. Kenton Onstad, a Democrat in North Dakota’s state House, has introduced a bill that would mandate an audit for the North Dakota Health Department as well as the Oil and Gas Division of the Industrial Commission.

With the legislation Onstad is seeking to force an audit of the two state departments with the most oversight over energy development in North Dakota.

In this matter he is the servant of the strident environmental activists at the Dakota Resource Council who have been calling for these audits for weeks now. The DRC claims that these departments -- one of which is overseen by a triumvirate of the governor, the agriculture commissioner, and the attorney general -- have been far too deferential to the oil industry.

There is plenty of evidence to demonstrate that this is untrue. Complainers have griped about the Industrial Commission and the Health Department waiving big fines for violators of state regulations, but fail to acknowledge that these fines are typically waived only after their targets expend great amounts of money cleaning up their messes and coming into compliance.

They also gloss over the fact that a collaborative sort of approach to regulation is what voters in this state have voted for over and over again. Philosophical objections to policy should be addressed at the ballot box, not through audits.

Though it’s pretty clear why the philosophy of groups like the Dakota Resource Council can’t win at the ballot box. Based on their filings with the Internal Revenue Service, they don’t seem to have much of a constituency.

According to the DRC’s latest Form 990 (a disclosure non-profit groups are required to file with the IRS) the group took in $338,155 in revenues in 2013, but just 6.6 percent or $22,365, was from membership dues and fundraising events. The rest was a giant lump sum categorized as grants and other revenues.

The amount taken in from membership dues and fundraising events was less than half the $49,800 yearly salary the group’s only disclosed employee, Don Morrison, receives in annual salary.

The DRC describes itself on its website as “a nonprofit, grassroots activist organization.” If that’s true, where are all the membership dues and fundraising revenues?

The attention the DRC receives seems far in excess of their actual constituency in the state.

Still, the Health Department and the Industrial Commission should submit to audits anyway. They request and schedule them immediately, making Onstad’s legislation unnecessary.

Perception is reality in the world of politics. Political activists at groups like the DRC do a good job of weaving a tapestry of false impressions for the public which often doesn’t grasp the complex regulatory issues put before them. I would suggest that’s the real motivation behind these calls for audits.

The best way to cut through a miasma of propaganda and half-truths is with the truth.

Of course, if an audit is conducted and the findings don’t fit the narrative shaped by the activists, they’ll find some way to move the goal posts as is their wont. But crass political maneuvering doesn’t necessarily undermine the case for an audit.

North Dakota has seen a massive spike in energy development activities. Despite griping from those motivated by politics, the state seems to have largely done an admirable job in response.

Still, after several years of policy makers scrambling to adjust, it would be a good time for a thorough review and debate to see what is working and what is not.

If the state’s elected officials are perceived as defensive in the face of calls for audits it is only going to feed the narrative from groups like the DRC. Since an audit at this juncture wouldn’t be unreasonable, officials should go for it.

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