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Published February 04, 2011, 11:44 AM

ND senator wants mediation for oil land disputes

BISMARCK, N.D. — North Dakota landowner and oil industry groups sparred Thursday about a proposed independent mediation board that would referee disputes between oil producers and landowners.

By: Dale Wetzel, Associated Press

BISMARCK, N.D. — North Dakota landowner and oil industry groups sparred Thursday about a proposed independent mediation board that would referee disputes between oil producers and landowners.

Those arguments will become more frequent as western North Dakota’s oil industry continues its development, Sen. John Warner, D-Ryder, said during a Senate Natural Resources Committee hearing on the legislation Thursday.

For a property owner to profit from oil production, he or she must own the land’s mineral rights, which can be sold or leased to an energy developer. It is common in western North Dakota for the ownership of surface rights and mineral rights to a parcel of land to be in different hands.

A mineral rights owner also has the right to go onto the land’s surface to drill for oil or dig for coal. North Dakota law already requires that landowners be compensated for farm production losses and damage to their property, but supporters of Warner’s bill say surface owners are still at a disadvantage in negotiations over damage payments, which the senator compared to “negotiating rent with a squatter in your living room.”

His proposed mediation board, which would be appointed by the governor and have at least three members, would be a quicker and less expensive alternative than taking disputes to court, he said. His legislation is fashioned after a board that handles landowner-oil company arguments in the neighboring Canadian province of Manitoba, he said.

“It would provide an avenue for surface owners to engage in a fair and equitable dialogue with oil and gas companies, and with mineral interests,” Warner said.

Ron Ness, president of the North Dakota Petroleum Council, said the board would “create an entirely new level of bureaucracy” that would cost about $1 million annually.

The industry is supporting other legislation that is aimed at remedying landowner unease, Ness said.

The alternative proposals include tax credits for property owners who have one or more oil wells on their land; giving property owners more say about where oil wells are located; and broadening the jurisdiction of a state Agriculture Department mediation board to handle disputes between landowners and oil companies, Ness said.

The Agriculture Department board now concentrates on arguments between farmers and ranchers and their lenders. North Dakota’s agriculture commissioner, Doug Goehring, is also a member of the state Industrial Commission, which oversees oil and gas regulation.

Ness said oil companies already have plenty of incentive to get along with surface rights owners.

“The last thing the oil company wants, over a few thousand dollars, is a longstanding, 20-plus-year dispute, potentially, with that surface owner,” he said.

The Natural Resources Committee did not take immediate action on the bill Thursday.

Greg Tank, a rancher from Keene, a McKenzie County community in west-central North Dakota, said he sees “problems of every sort” from oil development.

“There just isn’t enough time to take on, if it’s under $10,000, to really spend the time or the money to try to solve a case, or litigate it,” Tank said. “Each year, a lot of damages . are just overlooked because we just don’t want to waste the time to try to collect . We need a board that’s impartial, something like a jury system.”

Ashley Lauth, an oil and gas organizer for the Dakota Resource Council, a landowner and environmental group based in Dickinson, said North Dakota’s oil boom has the potential to touch almost every surface landowner in the state’s western oil-producing counties.

“In order to be prepared to address the grievances, a board that exclusively handles surface-related disagreements is necessary,” Lauth said. “It is only appropriate for a board specifically designated for that purpose to handle surface-related cases.”

The bill is SB2274.

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