ProPublica
Follow
Some States Restrict the Oil Industry From Taking Mineral Owners’ Earnings. Not North Dakota.
Millions of Americans own oil and gas rights and receive royalties, but these payments can be significantly reduced by post-production deductions. In North Dakota, companies deduct hundreds of millions annually, a practice that state officials have not intervened to stop. This contrasts with at least seven other oil-producing states that have enacted laws or court rulings to limit such deductions. North Dakota's courts have largely sided with energy companies, allowing deductions unless leases explicitly prohibit them. Conversely, states like Colorado, Oklahoma, Kansas, and West Virginia have ruled that companies must make oil and gas marketable before passing costs onto royalty owners. West Virginia offers the most protection, requiring explicit lease language for any deductions. Some states have also passed legislation restricting specific post-production expenses, while West Virginia guarantees a minimum royalty and prohibits deductions from it. North Dakota legislators have deferred these disputes to the courts, rejecting measures to limit deductions. This approach places a burden on individual mineral owners to litigate, which is often financially prohibitive. The energy industry warns that regulations would harm investment in the state.