House passes bill to define critical minerals in coal, sets 2.5% minimum royalty amid legal disputes

The North Dakota House of Representatives passed House Bill 14-59, a measure the Legislature’s conference committee says would define critical minerals and rare earth elements found in coal seams and set a minimum royalty for mineral interest owners, after a floor debate that centered on retroactive application to existing coal leases and legal clarity.

Supporters said the bill provides a statutory framework that would pay mineral interest owners when critical minerals are recovered from coal before the coal is consumed; opponents said the measure improperly alters existing contracts and risks litigation. Representative D Anderson, the bill carrier, told the House that “the bill ensures that the mineral owners receive a minimum royalty of at least 2 and a half percent.” Representative Novak, a member of the conference committee, added that “If we are not going to pass a law that determines policy, it will be up to the court to determine policy,” and said the bill seeks to put state policy in statute so courts would have legislative guidance.

The bill, as reported by the conference committee, would (1) create a new section in chapter 38-12 of the North Dakota Century Code defining critical minerals and rare earth elements in the coal context; (2) amend related definitions in sections of the Century Code to allow retroactive application tied to mineral royalty rights; and (3) establish a minimum royalty payment of 2.5% to mineral interest owners when extraction occurs prior to sale or processing of coal.

Opponents on the floor raised constitutional and contract concerns. Representative Holverson said the bill “is retroactive” and urged that the House accept the report but “kill the bill,” arguing the measure would alter preexisting private contracts and private rights. Representative S. Olson warned the House that court decisions cited to justify retroactivity may not be controlling here and characterized some floor claims that mineral owners would otherwise receive nothing as “alarmist.” Representative Quimin and others pressed for precise statutory language and preservation of long-standing terms used in mineral conveyances, and noted a historic practice of prospective application of such statutes.

Several lawmakers described technical aspects of extracting minerals from coal. Representative Dressler asked whether a refinery could handle minerals from both in-situ coal and from coal ash; Representative Porter replied that “this type of refinery can, refine any of the minerals, whether they’re in clay, whether they’re in the ash, or whether they’re in the coal seam,” though by different processes. Representative D Anderson and others referenced academic research and said extraction technology is improving and that federal funding opportunities exist for refinery construction.

Floor action and outcome: Representative D Anderson moved adoption of the conference committee report; the House adopted the report and later declared House Bill 14-59 passed. The final recorded vote on passage was 63 yeas and 26 nays. The House also approved the bill’s emergency clause during earlier floor action.

Why it matters: Supporters framed the bill as a way to create a state policy and statutory certainty to attract private investment and federal grants for processing rare earth and critical minerals, and to ensure mineral interest owners receive royalties. Opponents said the retroactive effect could impair private contracts and is likely to prompt litigation, potentially requiring the state to defend the law in court.

What remains unsettled: Multiple speakers acknowledged litigation is likely; the bill’s retroactivity and its constitutionality under contract impairment principles were repeatedly raised. The bill also leaves many regulatory details and implementing rules to future action, and supporters said further statutory refinements may follow after court decisions or in future sessions.