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Panel takes no action on energy company settlement offers

June 24, 2021 GMT

BISMARCK, N.D. (AP) — A panel led by Republican Gov. Doug Burgum took no action Thursday on settlement offers from some of the energy companies that owe North Dakota millions of dollars in unpaid oil and gas royalties, the biggest portion of which is meant to support public education.

The five-member Land Board met with lawyers and other officials to discuss the settlement offers for about an hour. The board also includes the attorney general, secretary of state, state superintendent and state treasurer — all elected Republicans.

Burgum referred reporters to a statement that said the panel “is willing to consider all reasonable offers,” saying he would not comment further.

Land Commissioner Jodi Smith said before the closed-door meeting that 19 companies had submitted settlement offers but that only five would be discussed.

The Department of Trust Lands leases rights for grazing and oil, coal and gravel production from state lands. The agency manages several state trust funds including a fund that benefits public schools.

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Smith’s agency notified more than two dozen energy companies last year that they must pay money they had deducted from royalties owed to the state for developing its minerals. An earlier audit found that some oil companies took improper deductions for transportation, processing and other costs out of royalties owed to the state, Smith said.

Smith said “hundreds of millions” of dollars are owed to the state but did not provide an exact sum. She said almost 30 companies, most of them natural gas firms, owe the state for unpaid royalties.

The North Dakota Supreme Court in 2019 sided with the state in a lawsuit filed by an operator after the state determined that companies were taking improper deductions.

Burgum signed industry-pushed legislation this year that reduces the amount of interest and penalties the state can charge companies for unpaid oil and gas royalties, from 30% to 15%. The law, which sailed through the GOP-led Legislature and takes effect in August, also does not allow the state to collect unpaid royalties before August 2013.

Smith said the legislation will cost the state about $70 million in royalty reimbursements.

It’s unclear how the new legislation will affect future negotiations for unpaid royalties.