Bob Skarphol

Bob Skarphol

I believe the time has come to organize a new and effective “mineral royalty owners” association to represent the interests of the Williston Basin royalty owners. There are several issues that warrant the need for a strong unified voice in the public arena. The association should be active in questioning candidates for elective office about their willingness to protect the interests of the mineral royalty owners, as well as monitor the actions of the next legislative session to ensure there are appropriate protections of mineral royalty owners’ interests. The intent would not be to be “anti-oil” but rather “pro-mineral owner.”

Some, but not all, North Dakota oil and gas operators are charging what is perceived to be, by many mineral royalty owners (and working interest owners), grossly excessive “other deductions” for costs associated with the gathering, compressing, treating, marketing, etc of the gas produced. The North Dakota Supreme Court ruled in 2012, in Bice vs Petro Hunt, that a gas processor had the right to charge for making the produced gas “marketable.” Some gas gathering and processing companies have obviously decided that gives them “carte blanche” to confiscate whatever fees they deem appropriate without explanation.

Some time back the North Dakota Industrial Commission began the process of promulgating more well-defined requirements on what needs to be shown on the royalty owners monthly statements. This can and often is a laborious process that can take several months. After submitting the proposed rule changes, a process that is required by specific Century Code statutes, and holding four public hearings at which the public could comment, the NDIC evaluated the testimony received along with the intended changes and finalized the rules that they will submit to the Legislative Administrative Rules Committee. If approved as submitted the new rules become part of the North Dakota Administrative Code (vs North Dakota Century Code) and have the same force and effect as the laws passed by the Legislature (North Dakota Century Code). These new rules would provide the royalty interest owner a more adequate and comparable definition of the product code, production, price, other deductions, taxes, etc than in the past.

The caveat is that the NDIC appears to have again acquiesced to the request (or demands) of the oil and gas industry (represented by the North Dakota Petroleum Council) by delaying the implementation of the new rule changes until after the 2019 legislative session to allow the lobbying of the Legislature on this issue. This is a truly unfortunate decision. The decision strongly indicates that the executive branch of North Dakota would rather acquiesce to the NDPC, and their interests, than take the right and appropriate actions to support the mineral owners, taxpayers, and citizens wronged by these ambiguous and abusive costs.

Because of the unwillingness of some of our elected officials to protect the interests of mineral royalty owners, I am helping start an association to lobby and advocate for the interests of mineral royalty owners. Over the next six months, be on the lookout for meetings and opportunities to get involved. Even though I am retired from the North Dakota Legislature, I am not done working with other North Dakotans to ensure a good future for our children and grandchildren.

Bob Skarphol is a former Republican House member from Tioga.

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