North Dakota Does Not Restrict the Oil Industry From Taking Mineral Owners’ Earnings.

Pumping. (Sarahbeth Maney/ProPublica)via the North Dakota Monitor)

This article was produced for ProPublica’s Local Reporting Network in partnership with the North Dakota Monitor. Sign up for Dispatches to get stories in your inbox every week.

(North Dakota Monitor) – Millions of Americans own the rights to oil and gas underground. When they’re approached by an energy company to lease out those rights, they’re offered a cut of the revenue, called a royalty.

“Royalties saved our place,” said James Horob, a farmer in northwest North Dakota, who used oil royalties to rescue his family’s farm from bankruptcy in 2008 and replace equipment that had been auctioned off. “We’re lucky to have what we got.”

This is the third story in a series. Read the collection here.

However, the royalty income that mineral owners like Horob get can depend in part on the state where they live. In North Dakota, estimates show that in recent years companies have been deducting hundreds of millions of dollars annually to help cover the costs incurred once oil and gas leave the ground on their way to being sold. North Dakota officials have not stepped in to help royalty owners, even though the state, in its own leases, has explicitly prohibited oil and gas companies from taking deductions from government royalty payments since 1979, as the North Dakota Monitor and ProPublica reported this month.

“It’s tough to think that there isn’t some better solution out there than what we currently have,” said Aaron Weber, a Watford City-based attorney who represents mineral owners in North Dakota.