North Dakota Supreme Court rules in state’s favor on royalty dispute with company

BISMARCK — The North Dakota Supreme Courtroom has dominated within the state’s favor and towards an oil firm in a posh, longstanding dispute over outdated royalty funds.

The unanimous determination launched Thursday, Sept. 1, reversed a decrease court docket ruling and mentioned Newfield Exploration ought to pay again the North Dakota Division of Belief Lands for improper deductions the corporate comprised of its gasoline royalty payments after extracting state-owned minerals.

The excessive court docket despatched the case again right down to a district court docket to find out the sum of cash Newfield owes the state and to type out any particular defenses the corporate may declare.

If recovered by the state, the outdated royalties would go to trusts that fund public Okay-12 faculties and faculties.

State Land Commissioner Joseph Heringer mentioned he’s happy by what he believes is a precedent-setting ruling. The choice made clear that oil and gasoline firms are accountable for the fee of royalties, together with these which can be overdue, he mentioned.

North Dakota Petroleum Council President Ron Ness characterised the Newfield case as “a one firm problem” that might not set the necessities for all royalty-paying oil corporations. He added that the Supreme Courtroom’s determination didn’t handle the central problem of royalty deductions.

An lawyer for Newfield, which is now owned by Denver-based Ovintiv, didn’t reply to a request for remark.

On the coronary heart of Newfield’s 2018 lawsuit towards North Dakota lies a disagreement over whether or not firms ought to have the ability to take deductions from their royalty payments to cowl the prices of transporting and purifying oil.

The Division of Belief Lands mentioned the deductions taken for a few years have been improper and violated the lease settlement between the state and the corporate. Newfield, which argued the deductions have been all the time allowed, sued the state after the division demanded that the corporate and

about 40 different corporations pay again the thousands and thousands of {dollars}

they’d taken in deductions.

The state Supreme Courtroom initially dominated within the state’s favor three years in the past, however the case was returned to Decide Robin Schmidt’s Watford Metropolis district court docket to be additional adjudicated. Final 12 months, Schmidt

sided with Newfield,

ruling that North Dakota did not show it had a lease settlement with Newfield. The three-page ruling didn’t handle main questions posed by the lawsuit and left some observers baffled.

The Board of College and College Lands, which incorporates Gov. Doug Burgum and 4 different statewide elected officers,

opted to attraction Schmidt’s determination,

prompting the Supreme Courtroom’s Thursday ruling.

A spokesman for Gov. Burgum declined to touch upon the ruling, noting that the case remains to be pending.

Heringer mentioned on Thursday his division has efficiently reached monetary settlements with most of the firms that took improper deductions from their royalty funds.

Nevertheless, he mentioned that about 10 firms nonetheless owe the state outdated gasoline royalty funds and one other 10 owe the state for outdated oil royalty funds. Continental Sources, one of many state’s largest oil producers,

is locked in a authorized battle

with the state over oil royalty deductions.

“Now that the North Dakota Supreme Courtroom has supplied extra authorized readability in help of our place, we sit up for persevering with negotiations with hopes of resolving all remaining claims in a well timed method,” Heringer mentioned in an electronic mail.