Panel hears contentious and technical testimony on bill to deem rare minerals part of coal leases

BISMARCK — The House Energy and Natural Resources Committee held an extended hearing on House Bill 14‑59, a first‑in‑the‑nation proposal that would deem critical minerals and rare earth elements embedded in coal to be included in coal leases unless explicitly excluded.

Representative **** Anderson, sponsor of the bill, described the national strategic importance of rare earth elements and critical minerals and urged lawmakers to provide legal clarity so industry can pursue extraction technologies. He said rare minerals are used in electronics, refining and defense applications and argued the United States needs domestic supplies.

David Straley of North American Coal, representing three North Dakota lignite mines, testified in support and laid out the bill’s central legal bargain: the draft would treat coal leases as including rare earths and critical minerals in the coal seam, and it would require a royalty of 2.5% of net profits from minerals mined and sold during extraction. Straley said the statutory certainty is needed to attract private investment and recommended Industrial Commission rulemaking if the bill passes. He acknowledged that “it is not a perfect bill, but it’s a pretty darn good bill,” and said the measure is intended to enable pre‑combustion extraction techniques.

Brian Biella, a natural‑resources attorney testifying for the sponsor, argued the legislature is exercising its police power for a public policy purpose and pointed to precedent in North Dakota law where forced pooling, commingling and other statutory frameworks were upheld to enable development of scarce resources. Biella cited existing statutes and case law about pooling and compensation and said a statutory compensation mechanism (the 2.5% net profit royalty in the draft) is consistent with prior practice.

The Department of Trust Lands expressed concerns about the 2.5% net‑profits approach, noting that deductions and “net profits” can be subjective and argued a royalty tied to gross proceeds is clearer and more transparent; the department also recommended a five‑year sunset on the royalty percentage to allow reassessment. The Department of Mineral Resources and other proponents noted federal and national security developments — including recent executive actions and export controls — that have heightened interest in domestic critical mineral supply chains.

Nathan Anderson, director of the Department of Mineral Resources, described state sampling and survey work (more than 2,000 rock samples) and said the agency supports a process to enable extraction of critical minerals from coal, while acknowledging regulatory complexity.

Dan Lobdoll of the University of North Dakota detailed laboratory and pilot‑scale results: rare earth elements in North Dakota lignite are often concentrated in thin layers at seam margins and are largely organically bound to coal, making independent surface mining unlikely and favoring pre‑combustion processing tied to coal mining operations. Lobdoll said UND has built a 500‑kilogram‑per‑hour pilot plant and developed patented and pending technologies to extract and concentrate lanthanides from lignite.

Several committee members and witnesses warned that global market dynamics — notably Chinese production and export controls — could depress prices and affect project economics. The Department of Trust Lands recommended clearer royalty mechanics and more precise attribution of royalties to owners whose minerals are actually mined.

The committee closed the hearing after extensive testimony; no committee vote was recorded at this meeting.

Ending: Proponents urged a due‑pass recommendation to provide legal certainty to investors; several state agencies and stakeholders requested clearer royalty language and attribution rules before the committee advances the bill.