Dakota Resource Council - Where We Stand

Coal Bed Methane Development in North Dakota:

Questions and Answers

Is there Coal Bed Methane (CBM) in North Dakota?

No producing CBM wells have yet been sited in North Dakota. The extent of CBM deposits in North Dakota is unknown, although there are large deposits of lignite coal throughout the central and western parts of the state. Several exploratory wells have been drilled in Slope County, but they have been capped, and no production has begun

Is CBM leasing going on in North Dakota?

Federal leasing in western North Dakota, especially McKenzie County, increased dramatically beginning about two years ago. A Bismarck company secured a number of contiguous leases from private mineral owners near Beach in Golden Valley County about a year ago. The company said they were for CBM exploration. However, any new or existing conventional oil and gas leases could also be used to drill for CBM unless the mineral owners have specified no CBM drilling.

Is North Dakota adequately protected against damages from CBM wells?

Probably not. Anticipating CBM development, the 2001 North Dakota State Legislature acted to place it under the regulation of the state's Oil and Gas Division of the Industrial Commission. Under this legislation, CBM wells are to be permitted in the same way as conventional oil and gas wells. Specifically:

• The state requires (but can permit variances to) 160-acre spacing. (CBM wells in some states have been sited with 10-acre density).

• The state prohibits salty water from being discharged onto the surface, but again, it can permit variances.

• The state's proposed pilot project for Slope County includes 40-acre spacing and experimentation with surface discharge, setting a dangerous precedent.

• Required bonds for wells under 2,000 feet are $5,000 per well or $100,000 blanket bond per company for all wells drilled. Considering that a Wyoming jury awarded $800,000 in CBM damages to a single ranch family, North Dakota's bonding looks woefully inadequate.

Moreover, the state can issue variances to these rules for CBM developers.

What has North Dakota done to promote CBM development?

State lawmakers are ready to give big handouts to the CBM industry. Specifically:

• HB 1145 has now been signed into law. It gives a 2-year production tax exemption to CBM and other shallow gas wells, taking directly away from counties money that could be used to address CBM impacts.

• SB 2311 set up an Oil and Gas Research Fund, siphoning off state tax money to pay for CBM research.

In addition, the state is applying again, after being turned down the first time, for a federal grant to set up a CBM pilot project in Slope County.

Are there federal protections for landowners from CBM damages?

Not many. The federal government is also eager to promote CBM development. In the energy bill passed in early April by the U. S. House of Representatives, amendments to assure surface owner rights and require water protection in connection with CBM development met with defeat. A recent court decision in a Montana case said surface discharge of water produced from CBM wells must be treated as a pollutant under the federal Clean Water Act. The industry will probably appeal this decision to the U. S. Supreme Court.

How can I best protect myself and my community?

If you own your own minerals, don't sign the first lease put in front of you. Carefully examine the provisions of the lease before signing. Whether or not you own the minerals, insist on a surface use agreement that spells out what developers can and can't do on your land. Counties and other political subdivisions can enact protections for their communities that are lacking in state and federal law.

Will CBM development help or hurt rural North Dakota?

It will help some individuals who own their own mineral rights. Some of them may get rich. However, those who do not own their minerals will not benefit. CBM drilling may also harm those who depend on shallow aquifers for watering livestock or for domestic consumption, unless the state or federal government requires replacement of lost water resources as it does in the case of surface mining. It may also harm agricultural surface use of adjacent land, especially if the state allows surface discharge of saline water or close spacing of wells. Like other forms of oil and gas exploration and extraction, CBM's potential for economic enhancement is often exaggerated by its proponents. Actually, extraction industries have the lowest “new wealth co-efficient” of any industry in the state. That is, wages paid by the industry make a smaller contribution to the local economy per dollar that wages from any other type of job.

What is Dakota Resource Council doing on this issue?

Country-of-Origin Labeling:

Questions and Answers

What is country-of-origin labeling?

Country-of-origin labeling (COOL) is product labeling that tells consumers what country their food came from. Many states, including North Dakota, and over 30 countries have some form of COOL.

What is the federal COOL law?

Congress enacted COOL as part of the 2002 Farm Bill. It covers beef, lamb, pork, fish, nuts, and fruits and vegetables. Meat covered by the law must come from animals born, raised and slaughtered in the United States. The U. S. Department of Agriculture (USDA) is currently developing enforcement rules that must be in place by September 2004.

Who will benefit from this law?

Consumers will benefit by knowing where their food comes from and having the ability to make informed purchases. U. S. food producers will benefit by being able to meet consumer demand for products they trust.

Will the federal COOL law be enforced?

That remains to be seen. Meat packers and other agribusiness giants are waging a strong campaign to prevent enforcement. U. S. Secretary of Agriculture Ann Veneman spoke out against COOL during the Congressional debate. Her first suggestion after it passed was to develop a “North American” label instead. USDA later published ridiculously high estimates of the cost of enforcement. Since then, the U. S. House of Representatives voted to remove funding for COOL enforcement from the Agriculture Appropriations bill. The Senate, however, voted to include it. Without enforcement funding, the law will be a dead letter. Whether the government has the funds to enforce COOL depends on final Congressional action on appropriations.

How will U. S. international trade agreements affect COOL?

This also remains to be seen. Veneman has argued that the U. S. COOL law will hamper trade negotiations. World Trade Organization rules currently allow countries to have their own labeling laws. However, U. S. trade negotiators probably want the freedom to give up COOL as a bargaining chip for other trade concessions. International agribusiness does not like labeling laws because it wants to obtain the cheapest commodities on a worldwide basis without having to report to customers where the food came from.

Is North Dakota enforcing its COOL law?

Yes. State inspectors have added COOL to their checklist for grocery store inspections, and the state reports good levels of compliance. However, North Dakota's law is not as strong as the federal. The state law covers fewer products—only beef, lamb and pork. Also, many grocers can't be certain what country their meat came from, since animals imported for slaughter currently bear the USDA grade stamp.

What is Dakota Resource Council doing on this issue?

• DRC has submitted comments to USDA urging full and prompt enforcement of COOL;

• DRC sent members to testify at a USDA COOL “listening session” in St. Paul in June;

• DRC worked with Marketplace Foods in Minot to become the first grocery store in the state to comply with the state COOL law in 2002, and has prompted letters to USDA in support of COOL from other grocers;

• DRC prompted 16 County Commissions and two municipalities to pass resolutions asking the U. S. Trade Representative not to compromise COOL in trade negotiations.

What else has DRC done to promote better livestock markets for our ranchers?

Along with WORC, DRC submitted a petition to USDA in 1996 to ban anti-competitive forward contracts that have no fixed base price. Meat packers use these contracts to control supply and keep cattle prices low. USDA has never acted on the petition, but six Senators (including Senators Dorgan and Conrad) have submitted a bill (S. 1044) to achieve the same result.

Genetically-Modified Wheat:

Questions and Answers

What are genetically-modified crops?

Genetically-modified (GM) crops are new varieties created by inserting genes from an unrelated species into the genetic make-up of a crop variety for the purpose of giving the crop a particular characteristic. For example, Monsanto created Roundup Ready varieties of corn, canola and soybeans by inserting a bacteria gene into existing crop varieties. The gene makes these crops resistant to Monsanto's herbicide Roundup. Spraying these GM crops with Roundup will kill weeds without damaging the crop. These varieties are widely planted in North Dakota and other states.

Does GM wheat exist today?

Monsanto is working through several land-grant universities, including North Dakota State University, to develop Roundup Ready wheat. So far, GM wheat is grown only in test plots. Monsanto applied in December 2002 for the deregulation of GM wheat in the United States and Canada. The U. S. government found flaws in the application, and Monsanto has not yet reapplied. GM wheat will probably not be available for commercial sale until at least the 2005 planting season.

Why are farmers worred about GM wheat introduction?

Many international markets, especially in Europe and Asia, do not want GM wheat. Millers in many countries have said they will stop buying U. S. wheat if GM wheat is approved for sale. Much of North Dakota's wheat is sold overseas. Professor Robert Wisner, an agricultural economist from Iowa State University, produced a study showing that the United States will lose up to 50% of its foreign wheat markets, and that the price of wheat will fall 30 to 40% as soon as GM wheat is approved.

Why don't other countries want GM wheat?

Strong consumer movements against GM foods have emerged in many countries because of health concerns. Loss of international markets for GM crops has already lowered their price. Consumers are even more concerned about GM wheat and its potential health impacts, since they are more likely to eat the grain itself rather than a processed oil or syrup derived from the grain.

Aren't GM foods just as wholesome as non-GM foods?

No one knows. Very few studies have been done to determine the safety of GM foods, especially over the long term. It is not clear whether GM foods provide the same nutritional value as non-GM foods. It is also not clear how GM foods might affect allergies.

Doesn't the federal government make sure GM products are safe?

No. Three federal agencies must approve new GM varieties. However, the federal government decided in 1986, without any scientific basis, that GM crops are “substantially equivalent” to other crops. The federal government does not test GM foods for their effect on human health—or their effect on markets. (Nor can they require the companies developing these technologies to provide information on the safety of GM products.)

Isn't there a long history of genetic modification in plant breeding?

No. New crop varieties, including hybrids, are traditionally developed by cross-breeding existing varieties to obtain characteristics like drought and pest resistance and high yields. Genetic modification combines genes from different species in ways that would not occur in nature—a completely new and different process.

Can't farmers prevent market losses by choosing not to plant GM crops?

Not forever. Within a few years of introduction, existing GM varieties have severely contaminated seed stocks for non-GM varieties. Some contamination occurs in the field through cross-pollination. Since grain handlers cannot adequately segregate GM and non-GM varieties, additional contamination occurs between farm and market. Non-GM farmers have already lost contracts and seen crops devalued because of GM contamination.

What is the effect on organic producers?

There is zero tolerance for GM characteristics in organic markets. Contamination has already ended organic canola production in North Dakota, and organic soybean production has declined dramatically. Wheat accounts for 27% of the state's growing and profitable organic production. Organic producers stand to lose their biggest market if GM wheat is introduced.

Are there other problems with GM food production?

Yes. For farmers who rotate two or more GM crops, Roundup is no longer effective in controlling unwanted “volunteer” crops in their fields. There is also a high risk that cross-pollination will result in “superweeds” that are Roundup-resistant. Use of GM varieties throughout the world will eventually contaminate many non-GM varieties, destroying the international “seed bank” used by conventional plant breeders. Universities have already drastically curtailed experimentation with non-GM varieties. NDSU's Natto soybean variety, developed for mostly Asian human consumption markets, was contaminated in testing, making it unusable for its original purpose. Eventually, widespread contamination will leave farmers with little choice but to plant GM varieties. Finally, GM developers patent their seeds, meaning that farmers will no longer be able to save and plant their own seeds, making them more dependent on the biotech industry. Monsanto and other companies have already sued many farmers, often unjustly, for illegally planting GM seeds.

What has DRC done on the GM wheat issue?

• DRC has held numerous public meetings around the state to make farmers and consumers aware of the dangers of GM wheat introduction, and drawn national attention to the issue.

• DRC urged state lawmakers in 2001 and 2003 to give North Dakota authority over GM wheat introduction in our state, but they have refused to act.

• DRC and several other groups have petitioned the federal government to conduct a full Environmental Impact Study on GM wheat's health and market impacts before its approval for commercial introduction. The petition is pending.

North Dakota and the EPA on State Air Quality:

Questions and Answers

What is the conflict between the state and EPA all about?

The question is whether North Dakota is violating federal standards for Prevention of Significant Deterioration (PSD). PSD was part of the Clean Air Act amendments passed by Congress in 1977. It sets limits on the amount of additional pollution emitted in areas that meet current National Ambient Air Quality Standards. These limits are called “increments.” The state found numerous violations of sulfur dioxide “increments” in a 1999 study and denied a permit on the basis of the study.

What is sulfur dioxide?

Sulfur dioxide is one of several toxic emissions governed under the Clean Air Act. It is produced whenever fossil fuels (oil, gas, or coal) are burned to produce energy. Sulfur dioxide pollution is linked to asthma and other respiratory health problems. A state study conducted in 2000 showed that children in North Dakota's coal-burning counties suffered more asthma and respiratory illness than in unaffected counties.

Isn't our air getting cleaner?

Nationally, our air is cleaner than when the Clean Air Act was passed. Not in North Dakota, where sulfur dioxide emissions have nearly tripled since 1976.

Why hasn't North Dakota's air gotten cleaner?

Many of North Dakota's power plants are “grandfathered” under the Clean Air Act. That is, they don't have to comply with that law's tougher emissions standards. Some of the plants have increased their emissions since they were permitted. The U. S. Environmental Protection Agency (EPA) is currently taking action against the Milton R. Young Station, near Center, for failing to apply for the necessary federal permit when it added a larger boiler in 1995 that allowed it pollute more.

What has North Dakota done about its PSD problem?

According to the State Department of Health two of our power plants (Coal Creek Station near Underwood and Milton R. Young Station) have added or are adding pollution controls to reduce sulfur dioxide emissions. However, an EPA study released this year says these reduced emissions are not enough to remove the problem. North Dakota has so far refused to propose a new State Implementation Plan that would require further reductions of pollution. The state has also revised its 1999 study of PSD by changing its estimate of “baseline” emissions and current emissions, using data that doesn't conform to federal guidelines. EPA rejected the state's new study as a clear attempt to manipulate statistics in an effort to make the problem go away, yet the agency is still trying to reach an agreement with the state that will reportedly result in few if any emissions reductions.

How will North Dakota's PSD problem affect the ability to build new coal plants?

Any new plant would have to be much cleaner than our “grandfathered” plants. However, any new plant would also emit some pollution and add to the PSD “increment.” This situation will make it much harder to permit new plants in North Dakota. Instead of acting to remedy the situation, our state is threatening a costly lawsuit that will put off solving the PSD problem for years to come.

Doesn't the problem really revolve around computer modeling, not actual pollution?

No. Computer modeling is the only way to measure PSD, and both the state and EPA are using computer modeling to determine whether the law has been broken. There is no argument about the fact that sulfur dioxide emissions have increased since 1976.

Isn't North Dakota being unfairly singled out?

No. EPA has not done a good job of enforcing PSD in the past. Because of the state's own 1999 study, North Dakota became the first state to come under federal scrutiny for PSD violations. Other states, such as Montana, are also likely to have problems with EPA over PSD.

What is Dakota Resource Council doing on this issue?

Dakota Resource Council is a membership-based, democratically-run organization with seven active local affiliates, offices in Dickinson, Bismarck, and Fargo, and a 25-year history of community organizing and policy work related to oil, gas, and coal issues. DRC's reach on federal issues is extended by affiliation with the Western Organization of Resource Councils, which has other member groups in Montana, South Dakota, Wyoming, Colorado, Idaho, and Oregon. DRC won protection of North Dakota's ambient air quality standards for sulfur dioxide at the State Health Council in 1997, but the State Legislature overturned this decision. DRC has submitted testimony urging the state to address its PSD violations. DRC also filed suit against the EPA September 30, 2003 for failing to call for a State Implementation Plan to bring North Dakota into compliance with PSD law when violations first came to light in 1999. Reduced sulfur dioxide emissions required under a State Implementation Plan would improve health in North Dakota and save families money on medical expenses.

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