Port: North Dakota Land Board owes oil companies an apology
Whether or not Newfield violated its contracts is still in doubt as far as North Dakota's courts are concerned.
MINOT, N.D. -- Earlier this year the North Dakota Land Board sent out ugly demand letters to oil companies who had leased mineral rights on state-owned lands for oil and gas exploration.
It's more clear now than ever that those letters were a mistake, and the state of North Dakota owes the companies which received them a sincere apology.
The Land Board -- made up of Gov. Doug Burgum, Attorney General Wayne Stenehjem and other statewide officials -- oversees oil and gas leases for the state.
There has been a legal dispute over how gas royalties were calculated for certain leases, including some involving Newfield Exploration, and after the state Supreme Court weighed in on the leases, Land Board Commissioner Jodi Smith sent out the threatening letters to all oil companies with similar leases demanding back payments on a ludicrously short timeline.
Companies not meeting the timeline, Smith wrote, would face severe financial penalties.
She did that despite lingering legal questions.
Ron Ness of the North Dakota Petroleum Council ripped Smith in a letter to the Land Board, noting among other arguments that the legal dispute between Newfield and the state was far from over.
Last month the Land Board backed down from the hardline position Smith took, noting that they'd still continue with collection efforts, but approving a friendlier timeline for repayment efforts .
Yet Ness was absolutely right when he argued that the legal dispute over these royalties is not over yet, and the Land Board really has no business trying to collect these royalties at all.
At least not yet.
In a recent hearing in the case, District Court Judge Robin Schmidt told the attorneys for the state and Newfield that the state Supreme Court's decision "does not resolve Newfield's defenses."
"We still have issues to resolve," Schmidt said.
"The Supreme Court directed me how to interpret the lease," she continued, "but it didn't say anything about the defenses."
"We need a trial on this," Schmidt concluded, adding that the Supreme Court "did not determine that Newfield breached the contracts."
Got that? Whether or not Newfield violated its contracts is still in doubt as far as North Dakota's courts are concerned.
So why in the world was Smith trying to bully the oil industry into paying prematurely?
Again, the folks sitting on the Land Board, the people ultimately responsible for the Land Board's decisions, are all statewide elected officials. Yet in recent years it seems like the bureaucrats at the Land Board, people like Smith, are the ones actually calling the shots.
That's wrong. Nobody elected Smith. We did, however, elect the governor, the attorney general and the rest of the Land Board, and it's high time they took the reins at this particular government agency.
They could begin with an apology for the utterly unprofessional manner in which this matter with Newfield has been handled.
The Land Board meets this week. Maybe this could be on their agenda.
Rob Port, founder of SayAnythingBlog.com, is a Forum Communications commentator. Reach him on Twitter at @robport or via email at email@example.com .