Local officials dealing themselves a piece of frac sand boom

In a desperate effort to prevent foreclosure on his parents' farm, Kyle Slaby applied to his local township board last year for permission to mine frac sand. He dreamed of erasing more than $600,000 in debt and getting rich from deposits of high-grade crystalline silica, which is in hot demand because of the national boom in hydro-fracking for oil and gas.What he never saw coming, he says, was one of the township's three elected officers derailing his plan -- and then going into the sand business himself.

"When there's a lot of money to be made, this just shows how people use their political powers to manipulate the situation for financial gain," Slaby said.

As frac sand prospecting surges across western Wisconsin and southeastern Minnesota, local officials are dealing themselves into the lucrative business in several counties and townships -- often just skirting the law to do it. At least five public officials in three counties are trying to make money from frac sand, according to public records reviewed by the Star Tribune.

While the officeholders have been careful to abstain from voting on their own deals -- staying within a key legal boundary -- their ethics are being called into question by constituents and other elected leaders. And because sand mining is regulated almost exclusively by local governments in Minnesota and Wisconsin, the trend raises questions about who is looking after the larger public interest, including the region's environment and quality of life.

"We're coming dangerously close to crossing the line, and everyone has their head in the sand," said Wisconsin State Sen. Kathleen Vinehout, who studied the issue after constituents complained. "No one wants to talk about this."

At the table

Trempealeau County, just across the Mississippi River from Winona, has decided more frac sand applications than any other locality in Wisconsin or Minnesota, and illustrates the tangled interests that can develop.

The committee member, David Quarne, abstained from voting in May when the committee approved a 20-year permit for a rail siding to accommodate a sand company. But Quarne remained at the table while his colleagues debated the application, and he has now applied for a second frac sand rail loadout.

"I've asked him twice to resign and he refuses," said Kevin Lien, Trempealeau County's director of land management. "I don't feel he's meeting his obligation to the people he represents nor my department, and the public perception isn't well."

Lien said that while Quarne is careful to abstain on frac sand matters, he will occasionally voice his view that county regulations are too restrictive.

Quarne, a lifelong resident of the county, acknowledged that his financial interest in frac sand is keeping him from voting on a dominant issue. But he said he was appointed to represent the views of livestock producers, and "there's other things that go on besides sand mining."

Quarne said he doesn't think his membership on the board swayed others to vote for his sand business. Counters Lien: "I think it's harder for a committee to go against someone who is essentially one of your own."

"To be such a proponent of the industry and now to be seeking a permit himself kind of smelled funny to me, and in talking to the public, they had the same perception," Lien said.

But Tenneson said his support for the frac sand industry was founded on valid economic and public safety issues. When he first voiced support for large-scale mining, he says, he and his wife were under the impression that they didn't own proper mineral rights to mine sand on their own land.

"Preston [Township] did not start out pro-sand," said Tenneson's wife, Lorna. "We really did our homework."

Tenneson abstained earlier this year when his two fellow township officers -- men who have served with him for a dozen years -- voted to support two sizable frac sand mines that could put up to 200 trucks a day on the roads around property owned by Tenneson, his wife, other family members and a neighbor.

Townships often add restrictions to sand mining proposals, but not in the Tennesons' case. The township sent a supportive letter to the county that contained no recommended conditions. The applications are scheduled for county action in early January.

Wisconsin conflict-of-interest law bans local government officials from using their position for financial benefit to themselves, immediate relatives or any of their organizations. In addition, local officials can't act "officially" in a matter in which they are privately interested. County prosecutors are in charge of enforcement.

With or without prosecutions, Vinehout said, voters are watching. "I think it will be a big political issue" in next year's elections, she said. "I've had a lot of inquiries."

Dennis Bork is chairman of Montana Township in neighboring Buffalo County. Earlier this year he joined with six other farmers in a bid to start a $15 million frac sand operation in their scenic valley of about 600 residents.

The so-called Seven Sands proposal was denied a mining permit by Buffalo County's Board of Adjustment, in part because the township's land-use plan was incompatible with industrial sand mining. But now Bork has the township considering changes to the land-use plan while he and other members of Seven Sands are suing the Board of Adjustment over the permit denial. It's possible, Bork said, that the Seven Sands proposal could be revived.

"You can't just be in favor of something just because it's good for you," Bork said. "You have to be in favor of something because it's good for everybody."

But opponents say Bork crossed a line at a township board meeting last summer when he attempted to block a discussion of his own conflict of interest. The town clerk added the item to the agenda at the request of a local landowner -- a practice she said is ordinary even though it's the chairman's legal responsibility to set the agenda. She called Bork about the change, but he didn't get the message until shortly before the meeting.

"I told the board it was illegal," Bork said.

Bork's attempt to kill the agenda item was overruled by the two other board members and the discussion proceeded. The next day, Town Clerk Karen Pronschinske wrote a letter to the board expressing concern about Bork's "controlling input" on such a divisive issue.

"I am really sad that these conditions exist on our board," she wrote.

'Free country?'

But before the meeting broke up, Slaby says, one of the board members -- his neighbor Ivan Pronschinske -- openly encouraged the company, Kaw Valley Cos. Inc., to mine sand on his property, which has direct access to a state highway.

Now Pronschinske and a neighbor who publicly opposed the Slaby mine are partnered with Kaw Valley on their own sand mining proposal, which received a critical vote of support from Arcadia Township this fall. When the deal went before the county's land use committee recently, members tabled it for a month after Slaby told his version of events and another neighbor complained that he has unsettled business with Kaw Valley.

Pronschinske says he doesn't remember making a business pitch to Kaw Valley at the meeting that Slaby remembers. He also says Kaw Valley approached him -- not vice versa.

"Isn't this a free country?" Pronschinske said. "Just because I'm a town official, then I can't participate?"

Slaby said the family farm is now in bankruptcy and his frac sand dream is in limbo. Kaw Valley still has a contract for the mineral rights on the property and the family is waiting to see how it plays out.