Some SD oil activity not being properly taxed, lawmaker saysIn many cases in northwestern South Dakota, where the North Dakota oil boom is expected to spread, mineral rights have been severed from surface land rights.
By: Ross Dolan, The Daily Republic
South Dakota has plentiful oil and gas supplies, but accessing those resources could mean untangling generations of property and mineral rights in northwestern South Dakota.
That’s the opinion of District 20 state Rep. Tona Rozum, R-Mitchell. She attended the first meeting Tuesday of the Legislature’s oil and gas summer study committee in Pierre. The session outlined potential conflicts between oil recovery efforts and property rights.
The committee’s chairman is Rep. Roger Solum, R-Watertown. Sen. Tom Nelson, R-Lead, is vice chairman.
In many cases in northwestern South Dakota, where the North Dakota oil boom is expected to spread, mineral rights have been severed from surface land rights.
“You end up with fractured mineral rights that are not being properly taxed,” Rozum said.
The state has a 4.5 percent severance tax on oil taken from the ground, which it splits with local counties. It also receives fees for exploration rights and a royalty equal to one-eighth of the value of oil and gas pumped from the ground.
Problems can arise for surface landowners when the owners of mineral rights seek to exercise those rights and drill for oil or gas.
People need to be adequately compensated for the loss of the use of their land in instances when land is rendered unusable, Rozum said.
“People are not anti-oil, but they want to make things fair for all concerned.”
South Dakota’s oil deposits, while not thought to be as large as North Dakota’s, are shallower and more accessible, Rozum said.
“For South Dakota, the really good thing is that we’re looking ahead,” she said. “Our issues may be different from those North Dakota is experiencing, but we’re trying to get our heads around what could transpire.”
The study group will have several future sessions and may recommend oil and gas legislation for consideration during the 2013 legislative session, she said.