Attorney General Stenehjem Disputes Treasurer Schmidt’s Claim That His Office Told Her to Continue Erroneous Oil Tax Allocations


North Dakota governor candidate Wayne Stenehjem and his lieutenant governor running mate, Nicole Poolman, talk to the Herald Editorial Board Thursday afternoon. Jesse Trelstad/ Grand Forks Herald

Earlier this year it was revealed that oil tax allocations to various state funds weren’t being made properly. This was revealed during negotiations the state had with the Three Affiliated Tribes of the Fort Berthold reservation over a new oil tax agreement.

State officials now believe revenues from the state’s share of oil taxes levied on production taking place on tribal lands was not properly allocated to state funds to the tune of over $250 million (some say it’s even more).

The Legislature is currently debating what to do with this matter, while interested parties (such as North Dakota United, the combined public worker and teacher unions) look on and consider litigation should any approved fix not sufficiently make these funds whole.

It was Treasurer Kelly Schmidt’s job to ensure those allocations were made appropriately, and she has said repeatedly that she relied on advice from the Attorney General’s office in addressing what she has described as ambiguity in the law.

In fact, here are Schmidt’s words from prepared testimony she delivered to the Senate Finance and Tax  Committee on March 13. Schmidt provided me a copy of her remarks. The emphasis below is mine, and you can read the full copy of her remarks here (PDF):

During our research, it became clear there were numerous conflicts among the related chapters which could lead to differing interpretations of the law. With these conflicts in mind, we sought guidance from the Attorney General’s office. Upon reviewing the statutes in question and the pertinent legislative history, the Attorney General’s office concluded the statute was indeed ambiguous and multiple conflicting interpretations could be reached. He also determined that we had reached a reasonable conclusion which did not contradict clear and unambiguous statutory language. The Attorney General’s Office also advised we continue to make the allocations in this matter until clarification was received from the legislature.

Today, in a letter to Legislative leaders, Attorney General Wayne Stenehjem tells a somewhat different story. You can read the full letter below, but here’s the pertinent excerpt:

Article X, Section 24 of the state constitution deals with oil tax distributions to the Common Schools and Foundation Aid Stabilization trust funds. Those two funds, among others, have been at the heart of this controversy.

You can read the 2012 email being referenced here (PDF). It was sent by Assistant Attorney General Edward Erickson, who does acknowledge that he advised the Treasurer’s office to “continue making distributions as they had” while seeking clarification from the legislature:

Schmidt has built the defense of her office over these allocations on this 2012 email, saying she was just following the advice of the AG’s office, but the Attorney General himself is now denying that based, it seems, on the fact that this email summarizing a conversation from years before it was sent was not a formal legal opinion.

Schmidt isn’t wrong she says the AG’s office advised her to continue the allocations, as this email shows. The implication from the AG, it seems, is that the Treasurer should have been more rigorous in pursuing a solution to this ambiguity. He’s also pointing out that the email dealt with statutory questions, and not the state constitution.

I reached out to Schmidt for comment this morning, and as of the time of publication she said she had not seen Stenehjem’s letter. I provided her with the copy I obtained via an open records request. I’ll update the post with any comment Schmidt has.

Here’s Stenehjem’s full letter:

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