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Doug Goehring

With grain trader owing millions, ND Legislature moves regulation from PSC to Ag Department

BISMARCK — Last fall, state Rep. Dennis Johnson knew something would have to change when he heard and read about upstart Hunter Hanson — a recent high school graduate from the New Rockford area, with no training or experience in grain marketing — who had stiffed farmers and savvy grain elevators for millions of dollars in grain transactions.

A few months later, in one of its last actions before adjourning, the North Dakota Legislature approved removing grain regulatory authority from the Public Service Commission. As of July 1, funding for the regulation of grain will be placed in the hands of the North Dakota Department of Agriculture, which will take over the program Aug. 1, according to Agriculture Commissioner Doug Goehring.

The Legislature delayed substantive changes for two years and recommended a major study of grain regulation in the meantime.

The move was not without controversy.

While Johnson worked to move regulation to the Ag Department, Senate Agriculture Committee Chairman Larry Luick, R-Fairmount, and Sen. Terry Wanzek, R-Jamestown, initially backed a bill that would have increased funding for grain regulation authority but would have kept it in the PSC.

Wanzek wanted to increase PSC’s authority to study grain marketers’ books -- more frequent reporting, with confidentiality to keep proprietary information from competitors. He wanted to expand a state indemnity fund that covers credit-sale contracts (price-later and deferred pricing) to include cash-sale contracts, but with coverage at lower amounts.

Luick said the Ag Department will do a good job, but he agreed with PSC commissioners who said they were “very much slighted” in the previous three legislative sessions when asking the Legislature for funding and authority to fix the problem. The PSC had been doing the work with 1.75 full-time-equivalent job positions, Johnson said.

Goehring said he’s been promised four people, including three inspectors, one in-house auditor, and one in-house operations employee. Further, the Ag Department received up to $100,000 appropriation to deal with the Hanson case.

Goehring said the Hanson case will remain with the PSC until it is closed, so the Ag Department will pay the PSC for that work. If that is insufficient through the biennium, Goehring could request emergency funding.

Johnson is a Republican who represents the Devils Lake area, the home base for Hanson’s two businesses. From 2017 to 2018, Hanson did business as Midwest Grain Trading as a “roving grain buyer” and in 2018 added NoDak Grain, with a warehouse license with rural facilities at Tunbridge, near Rugby, and at Rohrville, northeast of Devils Lake.

Johnson said he was appalled when Hanson’s unpaid bills climbed to $8.6 million for grain delivered and unpaid for or paid for with bounced checks. Total claims against Hanson’s businesses, still in the process of being verified, are at $11.5 million.

“How did the PSC give this guy a license in the first place?” Johnson wondered.