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A fracking operation in the Bakken. Photo: Josh Doubek via Wikimedia Commons.

Minot legislators stand on principle against taxing frack water

The Minot Daily News reported yesterday that some Minot legislators have been taking some heat for voting against the Water Commission Budget (HB 1020), but they are standing their ground on principle to oppose the Water (Royalty) Tax on frack water for the oil industry.

Reps. Larry Bellew and Dan and Matt Ruby, all R-Minot, explained their reasons for voting against the State Water Commission funding bill during a legislative forum in Minot Saturday.

Bellew said he opposed the bill’s water tax on private water rights holders who draw from the Missouri River system for commercial, non-irrigation purposes. The bill imposes a royalty of 75 cents per 1,000 gallons on fresh water dispensed to an oil and gas industry user at a privately owned water depot or water-dispensing point in the state. Income from royalties would go to repay state-guaranteed loans to entities that sell fresh water to oil and gas industry users, particularly the publicly-owned Western Area Water Supply system.

Dan Ruby said WAWS was to be self-sustaining as a water supply system for communities, rural residents and industry in northwestern North Dakota. He said he was skeptical of the project when it was proposed because he questioned the sustainability. Selling water to the oil industry was part of the project’s funding mechanism. He said:

Every session they keep coming back and saying they can’t make it on what they are charging. I think they sold a bill of goods that was flawed from the beginning.

Ruby said taxing private water sellers to pay for WAWS is not a good idea. He said he concedes the water is a public resource, but so is the water used for irrigation that is not subject to the royalty.

WAWS defender questions its longevity

Even Rep. Roscoe Streyle, who has been one of the most ardent defenders of the socialist state-backed Western Area Water Supply stated he thinks the Water (Royalty) Tax will not make it to the governor’s desk.

As for the royalty fee, Streyle expects it may go away in conference committee following more discussion on a proposed study in the bill. The study would look at leasing WAWS’ industrial infrastructure to private parties and using lease payments to pay down debt.

“I would like to privatize the whole darn thing, and the way we will do that is basically on a 30-year lease – lease the infrastructure, guarantee the water source to whoever the company is. There are number of them that are interested,” Streyle said. He said privatization could drive the cost of water and fracking down.

This is good news for the North Dakota’s economy. However, legislators must figure out a way to operate without constantly attacking the very resource that allows them to have any oil tax revenue at all – frack water.

For more information on WAWS, click here.

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