North Dakota Legislature Rejects Oil Royalty Protections, Creates Toothless Oversight Program

After mineral owners present evidence to the North Dakota Legislature that oil companies are deducting approximately $1 billion annually in royalty payments without adequate oversight or transparency, lawmakers reject bipartisan legislation requiring companies to provide electronic payment details and reimburse legal fees for successful lawsuits, instead creating a voluntary oversight program with no enforcement authority. The defeated 2023 legislation would have required oil companies to explain royalty deductions in detail and mandated electronic access to payment spreadsheets, building on failed 2021 efforts by Republican Senator Brad Bekkedahl to ban deductions unless leases explicitly authorize them. XTO Energy disclosed to legislators that it alone deducts an average $30 million annually representing 21 percent of private royalties, while forensic accountant Mary Ellen Denomy estimates industry-wide deductions average 22 percent, totaling $1 billion in 2023 from an industry generating $32 billion in taxes between 2008 and 2024. The compromise “postproduction royalty oversight program” created instead operates entirely voluntarily within the Department of Agriculture, with coordinator Ron Webb acknowledging “oil companies are not required to work with us” and the program lacking authority to compel information disclosure or deduction changes. Legislators from both parties attribute repeated legislative failures to the oil industry’s economic dominance and political influence, with one lawmaker stating industry impact “has curtailed any investigation or legislation regarding looking into the validity of the deductions.” Industry lobbyist Ron Ness describes his “trusted and respected voice” with policymakers as “hard earned” over 27 years, exemplifying the revolving door between industry and government that prevents meaningful regulation. The state itself owns 6 percent of North Dakota minerals and maintains audit rights and electronic data access denied to private mineral owners, creating a two-tiered system favoring government interests while abandoning private citizens to corporate exploitation despite generating half of all local tax collections from oil and gas.