ND Senate approves fines for oil companies that fail to comply with audits

BISMARCK -- Oil companies that fail to cooperate with Department of Trust Lands audits could face fines of up to $1,000 per day under a bill unanimously approved Friday, Feb. 15, by the North Dakota Senate.

The Department of Trust Lands has been struggling to complete audits of royalty payments because 20 percent of oil and gas operators have not provided documents requested by the state agency. In some cases, the department has been waiting years for the information, Land Commissioner Jodi Smith has said.

Senate Bill 2212 would authorize the department to charge fines to energy companies that are not in compliance after 90 days. Sen. Merrill Piepkorn, D-Fargo, said the department’s only other recourse is to file a lawsuit or terminate a lease.

The North Dakota Petroleum Council opposed the legislation. The bill as introduced would have levied fines of up to $5,000 per day after an operator was out of compliance for 30 days, but the department agreed to compromise on the fine and time frame.

Also this week, the Senate unanimously approved Senate Concurrent Resolution 4010, which seeks a formal study of deductions taken from oil and gas royalty payments.

Both pieces of legislation now move to the House for consideration.