N.D. bill gives governor right to remove commodity directors
BISMARCK, N.D. — Commodity organizations in North Dakota are mulling the implications of a bill in the North Dakota House of Representatives that would allow the governor to remove board members on the recommendation of the agriculture commissioner.
The bill would restrict commodity groups from contracts "with any person to perform any activity that is so intimately related to the public interest as to mandate performance by a state officer or employee, including the procurement or the expenditure of funds, or any activity that requires the exercise of discretion in applying the authority of the state or the use of judgment in making a decision for or otherwise binding the state." And also, "Delegate the duty to determine the uses for which moneys raised by or appropriated to the commodity group are expended; engage in a commercial business enterprise; or contract with or employ any person that has a potential or actual conflict of interest."
Additionally, the bill adds that "upon the recommendation of the agriculture commissioner, the governor may remove a member of a commodity group for cause."
Rep. Dennis Johnson, D-Devils Lake, chairman of the House Agriculture Committee, on Wednesday said he hadn't yet scheduled the bill, which was introduced Monday, and he hadn't yet read it.
Brandenburg said the bill language would provide an outside control if a commodity council was improperly using its position.
"In the past there were some questionable activities — money taken and investments made and activities dealing with commodity groups that need to be addressed," Brandenburg said. "The Legislature is in charge of the money that goes into the checkoffs. The council is responsible for making good decisions and using that money to the benefit of whether it's corn or beans or wheat or whatever it may be."
There were ethical issues that arose with the North Dakota Corn Utilization Council about its relationships with the North Dakota Corn Growers Association, and investments in ethanol projects, he said. In 2015, the council voted to remove Tom Lilja of Fargo, N.D., from his position as executive director, and he later complained about conflicts of interest within the council, including the improper use of authority to promote investments by some council members.
Lilja was replaced by Dale Ihry, a former Farm Service Agency state specialist. Ihry said the organization is studying HB 1282 and is "working with other commodity groups to figure out what the bottom line direction is."
"These are questionable investments into things where you wonder where the money's at?" Brandenburg said. "Where's it going? How did that happen? Using membership lists to do that, that type of activity has to stop."
Brandenburg isn't saying the activities in the past were illegal, but said it is "questionable whether they were right." He said the problem comes if there are losses from investments with improper linkages. "Are checkoff dollars at risk of being impacted because of possible impacts on those investments?"
The bill should serve to further separate activities of the commodity councils — the check-off entities who work on commodity promotion and research — from grower associations, which are supported by membership fees and are involved in lobbying, Brandenburg said. "There needs to be separation between the councils and the growers," he said, and noted the Legislature only has oversight of the councils.
He said that makes it "really hard" for individuals working for both the council and the growers association. "Which hat do you have on?" Brandenburg said. "There's going to have to be separation — a director for the council and also a director for the growers (association)." The bill doesn't appear to separate that out, but "in essence it will do that," Brandenburg said.
He said he's received comments on the bill draft. "I'm getting both. There's no question some people like it; some people hate it. It's the responsibility of the Legislature to be in charge of those check off dollars, make sure they're done right. Nobody's going to say — down the road — that we didn't try to fix this, if it does fail."
Agriculture Commissioner Doug Goehring said he'd talked to legislators about what they were planning, but is not taking a position on the bill. He said it is intended in case "things go awry" on the boards the governor can remove a member. He likened the issue to a governor removing a sheriff.
Goehring said the agriculture commissioner has a more direct relationship with the commodity groups and is in a position to give a recommendation. "It's another level of accountability, and probably — to a degree — transparency," Goehring said, but that he has no position on the bill and doesn't know if he'd be called to testify on it.
Goehring didn't immediately know whether any other of the 13 elected state agriculture commissioners or secretaries around the country have any authority to recommend removal or remove a commodity council member.