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Iron Ranger pushes to open state agency's now-sealed books

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Taconite ready to go
Iron Range Resources, headquartered in Eveleth, is an economic development agency funded by a tax on the production of mining companies in the region.
MPR File Photo/Bob Kelleher

In 2007, members of a group opposed to a coal gasification plant on the Iron Range trooped to the Iron Range Resources headquarters in Eveleth. They had requested the public financial records for the company proposing the plant, to which the economic development agency Iron Range Resources had loaned $9.5 million.  The Iron Range Resources and Rehabilitation Board is widely known as Iron Range Resources. 

"They had them laid out on a big conference table, piles of stuff from forever," Charlotte Neigh, co-chair of Citizens Against the Mesaba Project, said of the paperwork, "Four of us went through it with three photocopiers."

The contents of those public documents about the proposed plant's owner, Excelsior Energy, led to a critical report from the Minnesota Office of the Legislative Auditor, which found that IRR had not adequately overseen its loans to the company.

In 2010, Neigh and her group again requested Excelsior's financial statements from IRR.

This time they were told that the financial documents were no longer available. The law had changed.

A provision slipped quietly into a conference bill at the State Capitol in 2008 exempts IRR from having to release borrowers' basic financial information to the public, as Minnesota law requires other agencies to do under the Data Practices Act.

What that provision basically does, said Rich Neumeister, a citizen lobbyist for open government, is "shut out public oversight, scrutiny and accountability of who's getting the loans."

A bill introduced this session would repeal IRR's exemption from public data requirements. Although the repeal bill moved quickly through the Minnesota House, its fate is uncertain because it does not have a Senate counterpart.

Neigh said the situation is frustrating.

"I didn't set out to police [Iron Range Resources]," she said. "I just got involved in this project and started finding all this nonsense."

PROVISION ADDED WITH NO PUBLIC DEBATE

IRR is an economic development agency in northeast Minnesota. It's funded by a tax on the production of mining companies in the region, and in turn funds many things from taconite companies to the renovation of a city's hockey arena.

On May 11, 2008, Sen. Tom Bakk, DFL-Cook, worked on a Senate-House conference committee to reconcile the different versions of the tax bill. He introduced the minerals portion of the bill, telling his colleagues that there is "nothing else in here except a bunch of provisions relative to the taconite production tax and how it gets paid out," according to a transcript of the meeting.

Bakk had included a provision that would exempt financial information that companies submit to IRR from the Data Practices Act. Then-IRR Commissioner Sandy Layman had requested the provision, according to agency spokesperson Sheryl Kochevar. Neither Layman nor Bakk responded to repeated requests for comment.

Tom Bakk
Sen. Tom Bakk, DFL-Cook, had included a provision that would exempt financial information that companies submit to IRRRB from the Data Practices Act.
MPR File Photo/Tim Pugmire

The conference bill that included the provision passed, and many members of the IRR board, which is made up mostly of state legislators including Rep. Tom Anzelc, DFL-Balsam Township, didn't know of its existence.

"I think some members were surprised that I uncovered this," Anzelc said recently. "I think some members were surprised that it was even done."

The agency based the provision on language that made personal health care records private, current Commissioner Tony Sertich said in an October 2011 IRR board meeting.

Amendments can be made at all parts of the legislative process. But in conference committee negotiations, the amendments are typically based on bills that came out of either the Senate or the House. Neumeister described the bipartisan practice of adding a completely new provision during conference committee negotiations on a bill as "basically a perversion of the process."

"Amendments can be done on bills. That's part of the process. It's done openly, people can see it, when an amendment is done on the floor people are aware of it," Neumeister said. "[It is] very different here."

CLOSING THE BOOKS

Three years after opponents of the Iron Range coal gasification plant had triggered a critical state report of Excelsior Energy with public documents, the Duluth News Tribune reported that the company still hadn't followed through on promises to build energy plants on the Iron Range.

But despite tens of millions of dollars in state, federal and IRR investment in the company, the public still could not access their yearly  audits or other financial documents because of the provision exempting IRR from public records requirements.

That's not the only project affected. In 2010, IRR gave out about $9 million in loans to private companies, some of which were forgivable, according to the agency's most recent annual report. None of the financial documents from those transactions are available to the public either under the exemption.

That situation spurred Anzelc to start working on a bill to repeal the agency's exemption.

"This is all public money, I don't know of any other public economic development agency that has this sort of privacy provision," Anzelc said. "It's inappropriate and I hope to get it fixed."

TRANSPARENCY VERSUS COMPETITION

Anzelc asked the IRR board to support his legislative effort in October 2011. But most members voted it down. None of the six legislators who serve on the IRR board who opposed the October motion responded to a request for comment.

But Bakk did pose a question about Anzelc's repeal effort at that October IRR meeting.

"As an economic development authority, how much do we expect a business that we want to participate financially with to disclose to the public, the newspaper, all of their financial data?" Bakk said at the board meeting. "I'm just wondering if it might deter some businesses from coming here because so much of the information we need to do for our due diligence would then become public in the newspaper."

Citizen IRR board member David Chura of Duluth Township told MPR News that he is concerned about the situation with Excelsior Energy but is not sure Anzelc's proposal is the way to deal with it.

"Generally, I'm in favor of more transparency," Chura said. "But I want to ensure that it's not job-killing action or puts businesses at a competitive disadvantage where they're forced to share information that provides an unfair advantage to their competitors."

A spokesperson for IRR, which opposed opening the financial books to the public as recently as last August, said the agency isn't taking a stance on Anzelc's repeal bill.

Anzelc's repeal passed out of House committees without opposition and has been rolled into the House data practices omnibus bill. In order to become law, the repeal will need to be incorporated into the conference version of the bill and passed by both bodies.