MINOT, N.D. — A bill introduced in Bismarck seeks to slash the interest rates the Land Board can charge oil and gas companies for overdue royalty payments.
The rates — as much as 18% interest with as much as 12% in penalties on top — are downright usurious. They would make a credit card executive blush.
The legislation would cut those down to 3.25% interest and 4% for penalties.
That would be sound reform on its own merits, but there’s more to the story.
Last year, under the direction of Commissioner Jodi Smith, the board sent letters to oil companies who worked on state lands informing them their royalty payments weren’t calculated correctly. The Land Board administered this leasing and provided the oil companies with guidance on calculating royalties.
The guidance was wrong.
This error, in some instances, goes back as far as four decades.