The Land Board is charging a lesser amount of interest and waived any penalties if companies meet the April deadline.
Oil and gas companies owe hundreds of millions of dollars in deductions taken out of royalties on state-owned minerals, Land Commissioner Jodi Smith told the committee. The deductions account for costs related to oil transportation, as well as gathering and removing impurities from gas to get it ready for sale further down the processing chain. Royalty money collected by the state benefits education and public institutions.
The bill, sponsored by Rep. Jason Dockter, R-Bismarck, aims to reduce the maximum amount of interest and penalties the state can charge for late royalties. The measure would reduce the level to a base interest rate set by the Bank of North Dakota plus 4%, which is equal to the minimal amount of interest the Land Board is charging through April. The base rate is now 3.25% but can fluctuate.
Ness characterized the maximum rate of 30% as “a significant hammer” for oil and gas companies. He indicated that the oil industry faces more fights in the future as Democrats assume greater power in Washington, D.C., and are likely to enact tougher legislation and rules for the fossil fuel industry. President-elect Joe Biden, a Democrat, is about to take office, and Democrats will assume control of the Senate.
Read More: Oil industry seeks relief on late royalty payments to state | Govt-and-politics