House Approves Missouri River Mineral Leasing Bill Estimated To Cost $187 Million

BISMARCK – House lawmakers voted 79-11 Thursday, April 6, to approve a plan that will change how minerals under Lake Sakakawea and the Missouri River are leased, estimated to cost the state $187 million.

Supporters of Senate Bill 2134 say the bill corrects what many see as a “land grab” by the state related to disputes over mineral ownership, returning royalty payments and other dollars to the rightful owners.

But opponents say the state leases minerals for the benefit of all North Dakotans and the greatest beneficiaries of the bill may be oil companies and the federal government.

The bill, which was amended significantly since the Senate approved it, sets up a process to review a 1950s federal survey of the Missouri River channel as it existed before the Garrison Dam, which created Lake Sakakawea.

The state, through the Board of University and School Lands, leases minerals based on a 2009 survey the state conducted to define the ordinary high water mark of the Missouri River.

Differences between the two surveys have led to multiple parties claiming ownership of the same minerals, in some cases leading to lawsuits and claims that the state is stealing private property.

“The reality is this is a moral issue, at least from the standpoint of some of our committee members,” said Rep. George Keiser, R-Bismarck, who advocated for the bill. “We took property that didn’t belong to us, in my opinion.”

The bill provides $800,000 for the Department of Mineral Resources to hire a consultant to review the 1950s survey and make recommendations to define the ordinary high water mark of the river. The public will have an opportunity to provide comment and the North Dakota Industrial Commission will take action on the findings.

Individuals would have two years to take their case to court if they disagree with the findings, Keiser said.

The bill sets up a timeline for the Land Board to distribute bonus, rent and royalty payments for an estimated 25,000 acres that would be surrendered. The changes in how the minerals are leased could cost the state an estimated $187 million from the Strategic Investment and Improvement Fund, but the precise impact won’t be known until the review is conducted.

In addition to the financial impact for 2017-19, the bill would cost the state an estimated $29.4 million in revenue for 2019-21.

The bill also includes $750,000 to reimburse individuals for legal fees incurred for suing the state over mineral title disputes.

Rep. Marvin Nelson, D-Rolla, called the bill a “huge mistake” and arguing the legal issues should be decided by the courts not the Legislature.

“This bill wants to spend hundreds of millions of dollars to give away billions and all it does is make it more messy,” said Nelson, referencing potential future revenue. “You can’t give it away if you own it. You can’t give away the trust.”

In written testimony to the House Appropriations Committee, Land Commissioner Lance Gaebe wrote that his department estimates that 7,300 of the 25,000 acres affected would be relinquished to the federal government.

An estimated $87 million in bonus and rent payments would be returned to oil companies and parties who hold state leases, not private mineral owners, the department estimates.

“The largest beneficiaries of this bill are likely the oil and gas operators and the federal government,” Gaebe wrote in written testimony.

Supporters of the bill who testified earlier in the session said many private individuals would benefit from the bill.

Rep. Pam Anderson, D-Fargo, said during floor debate Thursday that legislators have not been able to afford to fund many good ideas this session due to the state’s budget challenges.

“This is over $187 million and I say we can’t afford that this biennium. We’ll take it up next biennium or somewhere in the future,” Anderson said.

But Rep. Mike Lefor, R-Dickinson, argued, “There’s never a wrong time to do the right thing.”

Lefor added the bill will spur more oil development under Lake Sakakawea, where oil companies have slowed activity due to uncertainty over mineral ownership.

The changes to the bill will go back to the Senate for consideration.

The bill does not affect any mineral ownership within the Fort Berthold Indian Reservation.

Oil industry representatives and mineral owners voiced concern last fall over questions about the state’s policies involving minerals under Lake Sakakawea.

In October, under former Gov. Jack Dalrymple, the Board of University and School Lands approved a motion to clarify that it is not trying to claim ownership of minerals under Lake Sakakawea.