INDUSTRIAL COMMISSION STUDY - BACKGROUND MEMORANDUM

Senate Concurrent Resolution No. 4030 (attached as an appendix) directs the Legislative Council to study:

1. The management responsibilities of the Industrial Commission.
2. The mission and location of each entity within and under the direction of the Industrial Commission.
3. The membership of the Industrial Commission.
4. The voting structure of the Industrial Commission.

Members of the Industrial Commission include the Governor, Attorney General, and Agriculture Commissioner. Entities the Industrial Commission is responsible for include:

1. Bank of North Dakota.
2. Mill and Elevator.
3. Municipal Bond Bank.
4. Housing Finance Agency.
5. Oil and Gas Division.
6. Geological Survey.
7. North Dakota Building Authority.
8. Lignite research, development, and marketing program.

PREVIOUS STUDIES AND REPORTS

The 1993-94 Budget Section heard a report from the Industrial Commission on its development of a conflict of interest policy for its members. The Budget Section was informed that the policy addressed the use of state-owned property, private interests in matters before the commission, prohibition on the use of confidential information for personal gain, loans at the Bank of North Dakota and Housing Finance Agency, employment issues, definitions regarding family involvement, and a compilation of current laws which may affect how an employee of the commission does his or her job.

The 1991-92 Industry, Business and Labor Committee studied the collocation of the Bank of North Dakota and the Department of Economic Development and Finance pursuant to a provision included in Senate Bill No. 2058. Although the committee made no recommendation regarding the collocation of the Department of Economic Development and Finance and the Bank of North Dakota, the committee determined that collocation of the two agencies was not necessary, would not produce the results desired, and would be at great expense to the state.

The 1989-90 Budget Committee on Government Finance studied, pursuant to Senate Concurrent Resolution No. 4035, the purposes, powers, duties, management, and operations of the Bank of North Dakota. The committee recommended Senate Bill No. 2029, which was not approved by the 1991 Legislative Assembly, but which would have allocated the Bank's profits on a percentage basis to the general fund, various loan programs, and to the Bank of North Dakota.

This committee also recommended that the Legislative Assembly be encouraged to include in the Bank's appropriations bill a separate section providing for a contingency appropriation allowing the Bank to respond to unforeseen events, including profit enhancement programs, subject to Budget Section approval. The committee made this recommendation to provide the Bank flexibility for enhancing its services and profits potential.

RELATED STATUTORY PROVISIONS

North Dakota Century Code Chapter 54-17 provides the statutory references relating to the Industrial Commission. Major provisions of the chapter provide that:

1. The Governor is the chairman of the commission and that its attorney is the Attorney General.
2. All orders, rules, regulations, bylaws, and written contracts adopted or authorized by the commission, before becoming effective, must be approved by a majority of the commission.
3. The Industrial Commission must appoint a six-member advisory board consisting of representatives of lenders, the residential real estate industry, the mobile home and manufactured housing industry, and homeowners and buyers, and in consultation with such board may adopt rules and regulations for the conduct of its housing finance program.
4. The Industrial Commission is authorized to determine the location of all utilities, industries, enterprises, and businesses and business projects established, owned, undertaken, administered, or operated by the state and to make the rules, regulations, orders, and bylaws for the management and operation, and for the transaction of the business, of such utilities, industries, enterprises, and business projects. In the management and operation of its industries, the Industrial Commission shall:
   1. Acquire by purchase, lease, or by the exercise of the right of eminent domain, all necessary property or property rights, and hold and possess or sell the whole or any part thereof.
   2. Construct and reconstruct necessary buildings on the properties required.
   3. Equip, maintain, repair, and alter any and all properties acquired and the improvements.
   4. Use the properties acquired and improvements made to promote the enterprise.

The following table identifies the entities that the Industrial Commission is responsible for and each entity's mission and location.

STUDY PLAN

1. Receive testimony from the Industrial Commission members regarding its management responsibilities, the mission and location of each entity under its control, the membership of the commission, and its voting structure.
2. Receive testimony from representatives of the entities within and under the direction of the Industrial Commission regarding their mission and location.
3. Receive testimony from interested persons regarding the Industrial Commission study, including its management responsibilities, the mission and location of each entity under its control, the membership of the commission, and its voting structure.
4. Review the powers, responsibilities, and duties of the Industrial Commission and its related entities and consider the effectiveness of its management responsibilities, the appropriateness of the mission and location of each entity under its control, and evaluate the commission membership and its voting structure.
5. Develop committee recommendations and prepare the necessary legislation to implement committee recommendations.

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