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Compromise reached in oil, gas royalty dispute; lawmakers advance bill


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The House Finance and Taxation Committee voted 9-5 to amend the legislation and recommend it to the full House for further consideration.

The amendment contains one provision upon which the two sides did not agree. The Petroleum Council asked for a six-year limit on how far back the state can collect unpaid royalties, which the tax committee OK’d.

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“We believe the Legislature clearly has the authority to enact a specific statute of limitations period applicable to the Department of Trust Lands in its dealings” with oil companies, Pelton said.

The Land Board does not want a limit as it collects money from dozens of companies in the wake of the Supreme Court ruling, though it’s open to one going forward, Smith said.

The board felt that putting a limit on how far back it can collect the royalties could conflict with the North Dakota Constitution, which says the state cannot give credit or make donations to corporations, Smith said.

“Their interpretation of that is that this would essentially be a gift if we do not abide by the full look-back period,” she said.

Smith estimated the state would forgo $110 million if it could not collect money from deductions taken out of royalties more than six years ago. The deductions stem from costs associated with collecting oil and gas and transporting it further down the processing chain.

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