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New rules require more transparency for royalty statements

BISMARCK, N.D. (AP) — Oil operators in North Dakota will be required to provide more details to mineral owners about deductions taken from their royalty checks.

The state Industrial Commission unanimously approved the rules Monday to address frustration among royalty owners who struggle to get answers from oil companies about the purpose of the charges, The Bismarck Tribune reported.

The new rule will require standardized royalty statements that identify the amount and purpose of each deduction. The deductions also will be identified under the categories of transportation, processing, compression and administrative costs.

The North Dakota Petroleum Council testified against the rule change, saying it will require expensive software upgrades.

It will cost up to $1 million for each software package — potentially several million dollars for the industry statewide, according to Brady Pelton, the industry group's government affairs manager.

State Mineral Resources Director Lynn Helms said the cost of compliance should be considered in the context of the amount of royalties distributed by the oil industry, which he said was $8 million per day in September.

The rule changes need to be reviewed by the Attorney General's Office and the Legislature's Administrative Rules Committee before they can go into effect in July 2019. The state Legislature could address the issue during its 2019 session, which will conclude before July of that year.

Information from: Bismarck Tribune, http://www.bismarcktribune.com