BISMARCK — Royalty owners have long quarreled with North Dakota’s powerful oil industry over access to information and disputed fees, but recently approved legislation means the feuds will soon be channeled to a state-contracted mediator.
Gov. Doug Burgum on Wednesday, April 12, signed Senate Bill 2194, which passed through the Legislature with broad support.
The bill sponsored by Sen. Dale Patten, R-Watford City, will create an ombudsman program to help sort out payment issues between royalty owners and oil companies.
Starting this summer, Agriculture Commissioner Doug Goehring will be allowed to contract with “local individuals, deemed trustworthy by the mineral owners, lease owners, and mineral companies, to be ombudsmen.” The program comes with a price tag of $500,000 over the next two-year budget cycle.
Lawmakers and oil lobbyists said an independent intermediary could help improve relations between royalty owners and companies by bridging gaps in communication.
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Patten previously said he’s hopeful the proposed ombudsman program would address most of royalty owners’ complaints outside of court.
Advocates for royalty owners contended that installing a middleman probably won’t do them much good. They argued the ombudsman program will likely fall under the sway of the petroleum industry, which exerts massive influence on state government.
In February, the Patten-led Senate Energy and Natural Resources Committee shot down legislation that would have compelled oil and gas companies to provide royalty owners with payment details in electronic format and with contact information.
The proposal backed by mineral owners also would have established penalties for firms that withhold payment records or make late royalty payments.
Royalty owners like Shane Leverenz and Bob Skarphol said the legislation aimed to put some teeth into the state’s existing laws so companies couldn’t continue ignoring royalty owners’ concerns. They argued that the firms frequently withhold basic information they should be providing to royalty owners.
Lawmakers sided with oil lobbyists, who said the royalty owners’ bill would have imposed overly harsh penalties and time restraints on companies.
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