Three bills designed to monitor South Dakota’s oil and gas exploration and drilling met three different fates in the House Agriculture and Natural Resources Committee. The proposed laws are recommendations of the oil and gas interim committee that met this summer. The laws are designed to protect landowners’ rights in dealings with oil and gas industries.
The legislative committee made short work of a bill regulating fracking, a process of extracting oil or natural gas by injecting fluid into the ground. The bill was tabled after the committee learned that the Board of Minerals and Environment held a public meeting a week earlier and set rules for fracking by that process.
Two other bills survived. One of them, House Bill 1002, mimics a North Dakota law providing a process for oil and gas development on land owned in part by someone who can’t be located. The developer pays into a trust administered by the county treasurer, and if the part-owner is later found, payment is available.
But Roger Tellinghuisen, lobbyist for the state Association of Counties, says that plan puts too much burden on county treasurers: “Requiring the trustee, i.e., the county treasurer, to invest the funds in a prudent manner… [We’re] concerned about the exposure that this might create for county treasurers in terms of claims of failing to adhere to or follow through with a fiduciary responsibility.”
The committee postponed action on that bill so that sponsors can fix some problems.
Committee members repaired another bill during the hearing and passed it forward with amendments.
House Bill 1004 provides for an award three times larger than the damages in lawsuits between landowners and developers.
Dakota Rural Action lobbyist Sabrina King tells the committee that a treble award for the landowner encourages oil companies to deal fairly from the outset. But she says a landowner having to pay treble damages is unbalanced.
“If the companies know that the landowner might be able to get treble damages if they end up having to go to court, it just creates the incentive to not even get there in the first place,” King says. “But when you’re looking at a landowner potentially being liable for treble damages against an oil company, that could be their farm. That could be their ranch.”
The House committee agreed and amended the bill before passing it on for further action.
SDPB Radio Coverage of the South Dakota Legislature. See all coverage and find links to audio and video streams live from the Capitol at www.sdpb.org/statehouse