2026 Round Three
Please note: This case is self-contained and provides the context needed to analyze the ethical and business issues presented. It is intentionally simplified and uses realistic elements to frame dilemmas for discussion, not to serve as a comprehensive or definitive portrayal of any industry, company, or situation. Extensive outside research is neither required nor expected.
ROUND THREE
Your team has been engaged by Harlan Hills Energy (HHE), an oil and gas company with strong local roots in Williston, North Dakota. Its headquarters is a modest three-story office building on the outskirts of town, a converted warehouse from the 1980s mining boom. Its field operations are based out of a satellite office in Bowman, ND, a small town of about 1,000 people near the primary extraction sites, with most drilling now extending into neighboring McKenzie and Dunn Counties in North Dakota.
The History of Harlan Hills Energy
HHE was founded in 2016 by the Harlan family, a third-generation North Dakotan clan with a long history of ranching and small-scale mining. Brothers Tom and Mike Harlan, both in their late 40s at the time, started HHE as a family venture soon after inheriting 2,000 acres of mineral-rich land in Bowman County from their father, a retired farmer. Tom, a petroleum engineer who cut his teeth working for a Denver-based firm, handled operations; Mike, with a business degree from the University of North Dakota, managed finances. Their wives and a cousin rounded out the initial board, keeping the company very tightly knit. From the beginning, the Harlans have viewed the company’s sole duty as maximizing returns for the good of the family (as stewards of family’s assets acquired over generations) and for the company’s investors while operating an efficient organization fully within legal and ethical bounds. Traditionally, the Harlans have done this at HHE without diverting company resources to broader social aims.
HHE began as a tiny outfit with just $2 million in seed capital provided from within the family (the Harlans’ entire savings) and a local bank loan. HHE’s first employees were eight locals from Bowman and nearby Marmarth—these were mostly high school buddies, ranch hands, and laid-off miners eager for steady work. Mike and Tom drilled their inaugural well, “Harlan No. 1,” using second-hand rigs and frack pumps bought at auction from North Dakota’s Bakken bust, completing it with outsourced fracking services to unlock initial flows. Early days were bootstrapped: employees shared trucks, and the only “office” was a trailer on-site. From the outset, the company adopted a comprehensive and consistent cost-cutting mindset that extended to maintenance, deferring invasive inspections and unnecessary repairs on rigs and pumps to stretch their limited funds, a practice that became habitual as operations grew. Revenue came from selling raw crude to truckers who hauled it to refineries in Billings, Montana. A mild uptick in oil prices around 2018 (post-2014 crash) allowed expansion. By 2020, they’d acquired five more leases through deals with aging landowners in North Dakota, doubling production with improved frack designs that boosted initial well output.
However, even during this growth phase, HHE consistently neglected investments in newer drilling technologies, sticking with second-hand equipment rather than upgrading to more efficient horizontal rigs or automated monitoring systems that competitors were adopting. Maintenance logs from this period show skipped overhauls on key assets like wellheads and separators, with repairs only addressed when breakdowns threatened immediate shutdowns. The COVID-19 dip tested them, but federal PPP loans (legally obtained, of course) kept payroll afloat without layoffs—though they had to delay upkeep, slashing non-essential maintenance budgets entirely, postponing upgrades to gas processing units and forgoing investments in water recycling tech that could have mitigated drought risks.
The Harlan Hills Energy Marketplace
HHE focuses on horizontal drilling in shale formations, producing light sweet crude (low sulfur, easy to refine) at rates of about 10,000-12,000 barrels per day across 180-20 active wells. Propane and other NGL output is around 1,500-2,000 barrels per day equivalent, extracted via on-site gas processing units that separate natural gas liquids (NGLs) like propane, butane, and ethane. The company leases mineral rights from private landowners and the state, often on marginal lands that larger players overlook.
In its early years, HHE employed hydraulic fracturing (fracking) to stimulate production from tight shale rock, but in 2023, the company publicly announced a “pause” on all fracking activities to ease the pressure from growing environmental controversies, community complaints (about water sourcing and usage, and truck traffic / noise), and negative press surrounding water usage and seismic risks in the region. Publicly, it was framed as a commitment to “sustainable practices,” though internally seen as a tactical move to protect profitability rather than a social concession. While the fracking pause is publicly touted as an ethical stance, there are contingency plans to restart when bad press inevitably subsides or prices spike. Internally, leadership views the pause as temporary, remaining open to resuming fracking if market conditions or regulatory pressures ease, seeing it as a pragmatic tool for boosting output when needed. This shift has led to a reliance on conventional completion techniques and enhanced recovery methods for new wells, though production is largely sustained by the decline curves of previously fracked wells.
At the current time, crude oil extracted by HHE is trucked or pipelined to regional refineries in North Dakota (e.g., near Mandan) or Montana, where it’s processed into gasoline, diesel, and jet fuel. End uses for HHE products include fueling agricultural machinery across the Midwest (North Dakota’s farms rely heavily on diesel for tractors and combines), transportation (semi-trucks on I-94), and even export to Canadian markets. The single largest consumer (about 30% of HHE’s output) is Sunflower Corp., a manufacturer of wind turbines and solar panels. Wind turbine blades and engine housings are typically made from durable composites like epoxy resins, unsaturated polyester resins, and adhesives, which are produced using base petrochemicals such as ethylene, propylene, and xylene from refined petroleum. Similarly, solar panels use layers of ethylene-vinyl acetate (a copolymer derived from ethylene) to encapsulate photovoltaic cells, protecting them while allowing sunlight to pass through, along with other petrochemical-based sealants and frames. The propane extracted is sold wholesale to local distributors for residential and commercial heating in rural North Dakota, where natural gas lines are sparse. HHE’s output is commonly used for heating homes during brutal winters (propane furnaces are a staple in off-grid areas), powering grain dryers on farms, and fueling forklifts in warehouses. Some is blended into autogas for vehicles or exported to neighboring states like Minnesota for BBQ grills and RVs. HHE doesn’t refine further—they extract and sell it raw, letting buyers handle downstream processing to keep operations lean.
The Financial Context of Harlan Hills Energy
HHE is valued at around $600-700 million, with annual revenues of $300-350 million (depending on oil prices). HHE went public in 2021 via an IPO raising $60-70 million, listing on NASDAQ to fund new wells and a propane processing upgrade. Much of the capital was directed toward lease acquisitions rather than equipment modernization; post-IPO, the company continued to operate with aging tanker trucks and processing units from the late 2010s, avoiding expenditures on digital sensors for real-time well monitoring or advanced enhanced recovery tools like CO2 injection systems. Shares debuted at $8 and now hover around $12-14, appealing to value investors in the energy sector. It’s not a Wall Street darling—no flashy reports or “green” initiatives.
In the past few years, HHE invested in a small fleet of tanker trucks for propane distribution and partnered with a pipeline operator for crude transport to avoid rail dependency, but even these assets show signs of prolonged neglect—trucks from the early expansion era run with patched-up engines and minimal tech upgrades like GPS tracking. Despite a decade of minimal maintenance and few new equipment investments—from ignoring rig refurbishments in 2017 to bypassing AI-driven predictive analytics in 2024—the company has not experienced any significant negative events, such as major spills or significant accidents, employee injuries, equipment failures, or regulatory penalties, allowing it to maintain steady profitability through 2026. The founders credit a stable, informed workforce and solid front-line management for the company’s good track record. Because most of HHE’s investors are institutional (retirement funds), HHE’s steady dividends are a huge appeal. These shareholders invest in HHE precisely because HHE’s lean approach has delivered superior returns vs. its competitors, maximizing profit that is distributed to investors.
In the last year, there has been a growing and vocal group of shareholders who have asked the company to do more to improve the share price. There is an increasing level of concern among the company’s management (and board) that if something isn’t done soon to address the company’s share price, demand for HHE stock will go down, and the ability to raise capital for growth or improvements will be dramatically reduced.
Additional Context
The company now employs 200-250 people full-time, plus seasonal contractors, and draws workers from oil hotspots like Texas, Oklahoma, and even Alberta, Canada. Workers are attracted by HHE’s competitive wages that currently exceed regional averages for roughnecks and engineers. Many are transient roughnecks who bunk in man camps near the fields, sending remittances home to families in the Midwest or South—think wire transfers funding kids’ college or mortgages in Tulsa. While paychecks are solid enough to attract and retain talent in a competitive labor market, HHE has not prioritized employee benefits or comforts, offering the legal minimums in health insurance, 401(k) matching, and time off, with no investments in perks like on- site daycare, wellness programs, gym reimbursements, or even basic comforts such as upgraded break rooms or climate-controlled field trailers. The company has demonstrated that by remaining lean – by not spending on initiatives that do not directly support profits – it can leave salaries relatively high and maintain the stable workforce that has minimized other risks.
Over the years, this minimalism extended to employee tools; field crews have long worked with older safety gear and instruments, with no budget allocated for updated replacements, training on emerging safety technologies, or comforts like ergonomic equipment that might ease the physical toll of long shifts in harsh weather—reflecting the view that such expenditures, since they are not directly tied to enhancing profit, are an improper and inefficient use of the shareholder’s limited resources. Recent employee surveys have demonstrated to management that – while paid well – employees want to share more in the financial success of the company, and are asking HHE to implement
a bonus program to compensate employees even better than they are paid today. HHE adheres strictly to North Dakota’s Department of Mineral Resources (DMR) and Industrial Commission regulations, including past frack fluid disclosures and wastewater permits, submitting timely well reports and environmental audits.
A 2022 drought forced water recycling mandates, which they met via the cheapest tech available; this also factored into the fracking pause decision, as water-intensive frack jobs drew extra scrutiny during shortages. HHE is the epitome of “essential” ethics—they pay fines promptly if minor violations occur (e.g., a small spill quickly contained) but invest nothing in extras like solar-powered pumps or community scholarships. The company does not participate in voluntary initiatives like habitat restoration or carbon offset programs. The company staunchly avoids any form of sponsorships, charitable initiatives, or “good” corporate social responsibility programs that could even marginally reduce profits, viewing such expenditures as unnecessary dilutions of shareholder value. This approach mirrors their long-standing pattern of neglecting preventive maintenance on infrastructure, such as delaying pipeline integrity tests since 2019, without facing operational disruptions to date, as well as their consistent approach to employee benefits that do not extend much beyond competitive base wages.
Over the last five years, company growth has changed the company culture: early family picnics have given way to a less personal, more transactional, shift-based grind. Because the company avoids any corporate sponsorships or community engagements that might impact the bottom line, while locals frequently grumble about out-of-town workers straining housing and past frack-related truck convoys kicking up dust on rural roads, they never see any offsetting goodwill gestures from HHE itself.
In contrast, Founders Tom and Mike still live modestly in Williston, driving pickups rather than luxury SUVs, personally maintaining a family-business vibe amid growth. The Harlan family as a whole—who remain the company’s largest stockholders—personally contribute generously to local causes, such as funding scholarships for Bowman County students, supporting the annual rodeo through private donations, and contributing significantly to food banks in Williston during harsh winters, drawing a clear line between their individual philanthropy and the company’s profit-first ethos. The family sees itself as an important part of their community, and acts on their longstanding belief that social responsibilities belong to individuals (owners and employees alike) using their own personal resources, not to business organizations that waste or otherwise divert shareholder assets. While simultaneously desiring a lasting and humane organization, shareholders very much embrace this perspective, seeing dividends and share price growth as the true measure of corporate success, and do not articulate demands for social expenditures that could erode profits.
The Future
In 2026, HHE eyes modest expansion into carbon capture (if this is mandated by new federal rules), along with potential resumption of fracking if regulatory winds shift favorably. For now, it’s steady as she goes—profitable, unflashy, and emblematic of the understated energy scene in North Dakota’s Bakken region.
The company generated about $50 million in profit this year, driven by efficient operations and favorable mid-year price rebounds, even as their equipment ages without renewal—a testament to the Harlan family’s and shareholders’ unwavering focus on ensuring the business is profitable, is growing, and serves its owners’ interests above all else.
Your Assignment:
The Harlan Hills board has hired your team to evaluate a range of voluntary actions proposed by company management to allocate this year’s $50 million profit. You can recommend accepting as many proposals as $50 million allows. (There is one exception to this rule: If you decline all other proposals, you can exceed $50 million by accepting the proposal below to acquire Sunflower.)
Which proposals should Harlan Hills Energy accept, and why?
Proposals:
Proposal One: Employee Cold-Weather Gear and Training Program:
Provide insulated safety gear (boots, jackets, gloves) to all 250 field employees – but not contractors. To
keep costs low, the gear will be acquired from a manufacturer in Xinjiang, China. HHE will also provide immersive VR-based training modules, on-site weather shelters, and personalized health monitoring devices for winter hazard response, distributed via mobile apps for man camp residents from out-of-state. Estimated cost: $5 million initial outlay for gear and tech plus $1 million for training and maintenance, totaling about 12% of profits.
Proposal Two: Seek to improve market perception (with the intention to increase HHE
market share) by promoting “green” marketing of HHE propane:
Market HHE’s propane as “eco-friendly” and “carbon neutral” (based on HHE’s purchase of offset credits) through a nationwide ad campaign, a celebrity endorsement (Sam Elliott), and custom branding for Minnesota distributors, highlighting the recent fracking pause. Estimated cost if pursued: $9 million for marketing materials and promotions, about 18% of profits.
Proposal Three: Produced Water Recycling System Upgrade:
Upgrade on-site gas processing units at Bowman County sites to include state-of-the-art filtration, evaporation, and zero-discharge tech for recycling 100% of the 5,000-7,000 barrels of daily produced water from 150 wells, including building dedicated storage facilities and integrating with regional water-sharing networks to eliminate freshwater sourcing and deep-well injection disposal entirely. This technology is currently unproven, patented by a competitor, and will require a licensing agreement that includes sharing HHE’s proprietary data on shale formations, potentially giving this rival an edge in lease acquisitions. This voluntary step builds on 2022 drought mandates HHE met minimally, preventing contamination risks in rural areas without fracking resumption. Estimated cost: $8 million initial investment plus $2 million annual maintenance, or roughly 20% of profits.
Proposal Four: Sponsorship of Annual Bowman Rodeo:
Sponsor the Bowman County rodeo as the title partner (replacing the current sponsor: a local hardware chain that is currently experiencing tough times), including arena naming rights, premium prizes, VIP hospitality tents, and a year-round, state-wide promotional campaign with digital ads and community events. This would replace the Harlan family’s personal contributions at the corporate level. This voluntary PR effort is about boosting local visibility and generating community goodwill without measurable business returns. Estimated cost: $500,000 annually for sponsorship fees, events, and marketing, about 1% of profits.
Proposal Five: Employee Volunteer Days for Regional Cleanup:
Offer up to five paid days off per employee for volunteering in expanded Missouri River cleanups or statewide park restorations outside extraction areas, with company-provided transportation, equipment rentals, and post-event retreats. Estimated cost: $9 million yearly in lost productivity, logistics, and support, about 18% of profits.
Proposal Six: Pipeline Integrity Testing Overhaul:
This involves contracting a third-party firm to conduct ultrasonic corrosion scans, pressure testing, full replacements of high-risk segments, and advanced AI-driven predictive maintenance software for HHE’s fleet of 10-15 aging tanker trucks and partnered crude/NGL pipelines spanning McKenzie and Dunn Counties. (The third party will be paid – in part – based on the number of issues it finds.) This would include installing comprehensive GPS and sensor networks for real-time monitoring to prevent leaks during transport to refineries in Mandan or Billings. Voluntarily undertaking this would mitigate direct harms from potential spills on marginal lands leased from local ranchers, ensuring safer operations amid drought risks. Estimated cost: $10 million annually (including full infrastructure upgrades and ongoing monitoring), representing about 20% of annual profits.
Proposal Seven: Veteran Hiring and Mentorship Initiative:
Recruit 50 veterans annually for roughneck and engineering roles through nationwide job fairs, pairing them with senior staff like Tom Harlan (who is also a veteran) for year-long mentorship on shale operations, including subsidized housing in man camps and specialized certification courses. This voluntary program is in line with local community values, aiding retention amid transient workers, without imposing quotas. Estimated cost: $8 million yearly for recruitment, housing, and program administration, or 16% of profits.
Proposal Eight: Local Rancher Partnership for Land Reclamation:
Partner with 50+ Bowman County landowners to reclaim 2,000 acres of post-drilling land through comprehensive soil nutrient testing, erosion control, wildlife habitat restoration, and long-term monitoring programs, including installing irrigation systems and shared renewable energy setups for ranching compatibility. This voluntary program ties into the Harlan family’s heritage, addressing minor harms like dust from truck traffic while potentially securing favorable lease renewals. Estimated cost: $6 million annually for materials, labor, and infrastructure, or 12% of profits.
Proposal Nine: General Donations to North Dakota Food Banks:
Donate substantial funds, surplus propane, and build dedicated distribution centers for winter heating and food supplies to food banks in Williston, Marmarth, and statewide networks. To execute this proposal, HHE would ask their own employees to volunteer their personal time to provide logistics support. Estimated cost: $7.5 million annually in cash, product value, and infrastructure, about 15% of profits.
Proposal Ten: Wellhead Monitoring Sensor Installation:
Install enterprise-grade wireless IoT sensors, satellite backups, and automated shutdown systems on all 150 active wellheads to monitor pressure, flow rates, methane emissions, and structural integrity in real-time, replacing outdated uncalibrated instruments and integrating with a centralized AI analytics platform for predictive alerts. This addresses maintenance deferred from the company’s early bootstrapped days, voluntarily seeking to prevent blowouts or gas releases in shale formations. Estimated cost: $7.5 million for sensors, installation, and platform development, plus $1.5 million yearly for data services and upgrades, equating to about 18% of profits.
Proposal Eleven: Community Drought Resilience Workshops:
Organize 12 annual workshops across Williston, Bowman, and neighboring counties for local farmers and
residents, sharing HHE’s water management insights with hands-on demos, distributing advanced soil moisture sensors and drip irrigation kits to 500 participants reliant on propane for grain dryers, and funding follow-up consultations. This voluntary effort intends to build goodwill in off-grid areas affected by operations, without broad philanthropy. Estimated cost: $1 million per year for venues, materials, kits, and experts, about 2% of profits.
Proposal Twelve: Diversity Quotas in Administrative Hiring:
Set voluntary targets to hire 50% from underrepresented groups (e.g., women and specific minorities, such as Native Americans) for 20-30 headquarters roles in Williston, including extensive recruitment campaigns, diversity consulting firms, and ongoing equity training programs for all staff. Estimated cost: $1 million per year for recruitment, consultants, and training, plus relocation costs for candidates, or 2% of profits.
Proposal Thirteen: Lobbying for Fracking Resumption:
Fund a coalition of North Dakota advocacy groups and consultants to lobby for eased water and seismic regs through multimedia campaigns and political donations, to enable fracking to restart more profitably amid price spikes. Estimated cost if pursued: $10 million annually for contributions and campaigns, about 20% of profits.
Proposal Fourteen: Strategic Acquisition of Sunflower Corp.:
[If you decline every other proposal, you can accept this one, even though it is more than $50 million.]
Launch an acquisition bid for Sunflower Corp. through a combination of a cash offer and stock sale. This proposal would value the target at a premium to secure control, and include due diligence by external advisors, integration planning for supply chain synergies (e.g., dedicated petrochemical pipelines from HHE’s NGL processing), and rebranding to emphasize “energy transition” narratives. This voluntary action would secure a captive buyer for HHE’s light sweet crude and propane derivatives, reducing dependency on spot markets, while diversifying into renewables to access green subsidies and mitigate risks from the fracking pause or future regulations. This proposal demands sacrificing all current-year profits and more, prioritizing growth over the company’s historical minimalism. Estimated cost: $100 million (including bid premium, legal fees, and integration), representing 200% of annual profits, forcing complete elimination of dividends, suspension of stock buybacks (see below) and deep cuts to maintenance or expansion budgets for at least two years.
Proposal Fifteen:
If any profit remains after making your recommendations, you can Distribute Profit to Employees and Shareholders. Under this plan you will a) create a bonus program that gives x% of the remaining money to employees, b) declare a one-time dividend payout of y% of the redirected amount, distributed proportionally to all shareholders (which includes the Harlan family as largest holders), and c) allocate the remaining z% to a capped stock repurchase program (attempting to raise the stock price) executed over six months through open-market purchases. If you return any profit to shareholders and / or employees, you should articulate your reasoning: Why are you executing this proposal in these proportions?
Now what?
Overall, your objective is to articulate a clear recommendation to the board about what should be done with HHE’s $50 million profit. Your recommendation must be accompanied by the sound ethical and business justification that supports your guidance.
Identify and clearly articulate the central ethical and free market dilemmas in this case, such as the tension between maximizing shareholder value and broader stakeholder responsibilities, the conflict between short-term profit motives and long-term sustainability, and questions such as (but not limited to): Does HHE have an obligation to go beyond legal compliance if doing so risks shareholder disapproval? What principles are in conflict here, and how do they impact the free market’s inherent value in promoting efficiency, innovation, and voluntary exchange? Discuss business and ethical considerations for the company’s leadership, founders, shareholders, employees, and community. What are the interests of each, and are they aligned or in conflict? Apply frameworks like Milton Friedman’s shareholder theory alongside broader stakeholder approaches (and others) to evaluate the dilemmas.
Demonstrate that you have applied a principle-based ethical framework, such as the one emphasized in the National Ethics Case Competition. This requires you to identify ethical principles (e.g., integrity, trust, accountability, transparency, fairness, respect, rule of law, viability), evaluate the ethical and business dilemmas through these lenses, and propose resolutions that balance moral imperatives with practical outcomes.
Clarify the business and ethical risks, benefits and drawbacks, and in particular, the impacts on shareholders and other stakeholders of your plan. Be explicit: if you recommend the acceptance of a proposal, explain why the expenditure on that proposal is more ethically justified than distributing the profit to shareholders and employees. If HHE is already complying with every law, articulate why the leadership of HHE has a responsibility to do more, particularly when the shareholders disapprove.
Demonstrate a comprehensive understanding of (and alignment with) the free market and profit motive by articulating their value: the free-market drives prosperity through competition and innovation, while the profit motive incentivizes efficient resource allocation and risk-taking, but ethical lapses can undermine market integrity over time, leading to interventions that stifle freedom. Highlight the courage in your recommendations by proposing bold, creative solutions.
Explicitly acknowledge and respectfully address alternate viewpoints, such as strict Friedman adherents who might argue all proposals dilute shareholder primacy, or progressive stakeholder advocates who prioritize social equity over profits. Discuss how these perspectives could lead to different resolutions, and justify your stance with evidence from the case, demonstrating appreciation for their validity while explaining why your approach better serves HHE’s context. How might you address alternate viewpoints in a way that shows courage, boldness, and creativity in resolving the dilemmas?
Present your work in a clear, logical, persuasive manner suitable for an executive audience: Prepare a 10-minute presentation to the HHE board (the judges) tailored to an executive audience. Use professional, collaborative language that invites dialogue, anticipating critiques (e.g., on cost justifications) with thoughtful responses grounded in case facts. Maintain civility and respect throughout, framing disagreements as opportunities for balanced decision-making.
As part of your competition presentation, you may include one visual aid in the form of a single 8.5” x 11” slide. This slide will be projected during your presentation on the morning of April 17, 2026.
Please ensure your visual is submitted by April 10, 2026 to NECC@tamu.edu.
This case was prepared for the National Ethics Case Competition by John Truslow. Mr. Truslow has been a leader and practitioner in the ethics field for 25 years, and currently directs an ethics program for a global defense manufacturer. He has coached collegiate ethics bowl teams that have won competitions hosted by the Association for Practical and Professional Ethics and the International Business Ethics Case Competition.