Iron Range board privacy provision repeal in Minnesota Legislature still uncertain

Talk about it

In his drive for increased accountability, DFL Rep. Tom Anzelc of Balsam Township announced that his top legislative priority in St. Paul this session would be to require the Iron Range Resources and Rehabilitation Board to disclose more fully how its money is used.

But the fate of his effort now appears to rest in the hands of Senate Republicans.

Anzelc aims to repeal a statutory change made in May 2008 when Sen. Tom Bakk, DFL-Virginia, introduced privacy provisions into an omnibus tax bill while it was in conference committee. Bakk said he inserted the new language at the request of Sandy Layman, who was then commissioner of the IRRRB.

Rich Neumeister, a citizen advocate for government transparency, said that introducing the change at such a late juncture in the session and during a conference committee allowed for no meaningful debate.

“There was no notice about it given, and no one — other than those people who might have been observing that tax conference committee — knew about it,” he said. “It was a disservice to the process. This was done sneakily.”

Bakk said he was simply acting on a request from the IRRRB and saw nothing unusual about it. He considers the change legislative housekeeping and said it wasn’t meant to boost any special interest.

But Anzelc suspects a more devious motivation. He noted the law change came directly on the heels of a legislative auditor’s report that found Excelsior Energy had used some of the $9.5 million it received in IRRRB loans for inappropriate purposes. The auditor’s report was prompted by a complaint filed by members of Citizens Against the Mesaba Project — called CAMP for short — a group opposed to Excelsior’s plans to build an Iron Range power plant running on gasified coal.

Despite receiving the IRRRB loans, another $10 million in Renewable Energy Fund grants from the state, and more than $20 million in aid from the U.S. Department of Energy, Excelsior has yet to begin construction of its power plant.

Members of CAMP were able to review financial statements Excelsior submitted to the IRRRB before the law change but were denied access to those same types of documents afterwards.

Likewise, the IRRRB denied a 2010 request by the Duluth News Tribune to view past financial records relating to Excelsior’s use of loan money. The agency cited the same revised statute: 298.22, subdivision 12.

Repeal hinges on GOP help

Anzelc seeks to repeal the portion of the code passed in 2008, restoring the agency to its former transparency. His bill, House File 1784, has been incorporated into the House omnibus data practices bill passed Tuesday.

But no companion bill has come forward in the Senate. If Anzelc succeeds, it probably will be because of Senate Republican leaders sympathetic to his cause who might be willing to include his provision in a conference-committee data practices bill.

Although Senate Majority Leader David Senjem, R-Rochester, was not familiar with the specifics of Anzelc’s IRRRB initiative, he said: “Generally speaking, I’m all for transparency in government and to the extent that this would be offering more of that rather than less, I would be supportive.”

Sen. Warren Limmer, R-Maple Grove, chairman of the Rules and Administration Committee, indicated he would be willing to consider Anzelc’s proposal, but said: “Like anything else, you need to find a balance point, where you weigh individual or corporate interests against the need for the state and the public to know about financial documents.”

Anzelc contends the IRRRB ought to be able to operate under the same disclosure guidelines as other state agencies.

“There is no other publicly funded economic development entity in the state that has this kind of language inserted into its charter or its organizational design,” he said.

But IRRRB Commissioner Tony Sertich said other state-funded economic development agencies give special privacy protections to their clients, too. As an example, he pointed to the Small Business Investment Tax Credit, administered by the Minnesota Department of Employment and Economic Development.

Neumeister said equating a loan to a tax-credit program is like comparing apples and oranges.

By and large, other economic development agencies in the state operate under a common set of privacy rules, according to Neumeister, who questioned why four years ago the IRRRB decided it needed special treatment.

Excelsior pressure denied

The stakes are high with the IRRRB. Since the rule change in June 2008, the agency has made an additional $20 million in loans to 24 businesses.

As for any suggestion that the privacy language had been expressly tailored to protect the interests of Excelsior Energy, Pat Micheletti, a spokesman for the company, said: “Excelsior Energy did not request the adoption of that legislation or advocate for its passage. In fact, we were completely unaware of it until after it was signed into law.”

Bakk said people are mistaken if they link the proposed statute change to Excelsior, which already has spent the $9.5 million it borrowed from the IRRRB.

“This has nothing to do with Excelsior,” he said. “Anyone who thinks this is going to have an impact on Excelsior is wrong.”

Bakk said he has no plans to weigh in on Anzelc’s efforts to change the IRRRB’s privacy provisions.

“It might drive some development away from us, but if that’s what people want … fine,” he said.

Public vs. private

Paul Moe, a deputy commissioner for Minnesota DEED, said businesses that choose to seek help from state agencies should recognize that accepting public money will require them to provide more details about their finances and dealings than they might like.

“Every business has to evaluate what their position is on that,” Moe said, noting that the business data disclosure law does protect certain sensitive pieces of information, such as trade secrets and business plans detailing sensitive market strategies.

Sertich said the privacy issue is one that he inherited, since Gov. Mark Dayton tapped him to lead the IRRRB 16 months ago.

“My position is that if we’re spending public money, the public has a right to know where it was spent,” he said, maintaining that the agency has been open and up-front about every loan it has made.

But he said the IRRRB also collects sensitive private data to do risk assessments that must be treated with care.

“I would like to see this whole issue resolved,” Sertich said. “I want to see if there is a way we can craft a solution that makes the use of public dollars public and that still allows private money to remain private.”

Sertich expressed his hope the issue can be resolved during the current session, in an effort to restore public trust in the IRRRB.

There’s not much time to spare. The Minnesota Legislature returned to action this past week, following its Easter recess, and could adjourn by the end of the month.

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