Tribe Seeks Greater Share Of Oil Tax Revenue In Final Weeks Of Session

BISMARCK — The Mandan, Hidatsa and Arikara Nation is seeking a greater share of oil tax revenue to offset impacts of energy development on the reservation.

Chairman Mark Fox said he continues to have concerns about changes North Dakota legislators made to the oil tax in 2015 and he’s meeting with the governor and legislators to find a solution in the final weeks of the legislative session.

“We’re greatly concerned with these unilateral changes that the state is attempting to make to our oil and gas agreement, yet it says right in there that they have to be done together, mutually,” Fox said in an interview this week.

The Three Affiliated Tribes have not signed a new tax sharing agreement with the state after legislators voted in 2015 to reduce the overall tax on oil production from 11½ percent to 10 percent, a change tribal leaders opposed.

Now Fox is advocating that the tribe receive a greater share of tax revenue for oil produced on trust lands.

“At a minimum, we should reformulate how revenue is shared so that revenue comes back to the tribes to deal with our problems,” Fox said.

Fort Berthold, which accounts for about one-sixth of the state’s oil production, struggles to have enough resources to fix roads, deal with increases of crime and other issues related to the increase in oil development, Fox said.

Currently, the state and the tribe each receive 50 percent of tax revenue for oil produced on trust and fee lands within Fort Berthold.

Prior to 2015, the state received 80 percent of the oil tax revenue from fee lands on the reservation and the tribe received 20 percent, while the trust revenue was split 50-50, said Tax Commissioner Ryan Rauschenberger.

For 2017-19, oil tax revenue on Fort Berthold trust lands is projected to be $468 million, which the state and tribe would split equally under the current agreement, Rauschenberger said.

MHA Nation Chairman Mark Fox testifies Tuesday, Jan. 10, 2017, to a legislative committee regarding the state’s oil tax agreement with the tribe. Amy Dalrymple/Forum News Service

Tribal leaders are seeking a share greater than 50 percent for oil production on trust lands and plan to work with state leaders on the details, Fox said.

But giving the tribe a greater share would have a negative impact for North Dakota’s budget, which legislators are already struggling to balance due to revenue shortfalls.

If the state and the tribe can’t reach an agreement this legislative session, the Tribal Business Council would consider leaving the tax agreement and implementing its own tax on oil production, Fox said.

That would create a system of dual taxation at Fort Berthold, a situation the state and the tribe have wanted to avoid because it could deter oil development on the reservation.

Some members of the Senate voiced concerns this week about changes legislators proposed to the oil tax agreement, with Sen. Richard Marcellais, D-Belcourt, comparing it to broken treaties with the U.S. government.

But Sen. Kelly Armstrong, R-Dickinson, said the tribe likely would have left the tax sharing agreement if the Legislature hadn’t acted in 2015 to remove tax breaks known as triggers that would have kicked in while oil prices were low.

“It was abundantly clear that if the trigger hit, the tribe was going to violate the agreement as well,” Armstrong said.

The North Dakota Petroleum Council estimates the oil industry has paid about $40 million more each month in taxes with those oil price-based tax breaks removed.

The tribe also believes it’s entitled to half of the 1½ percent tax that wasn’t collected on oil produced in 2016 due to the Legislature’s action, Fox said. The Tribal Business Council adopted a resolution earlier this year to collect that tax from oil companies, but the tribe is still working to implement that policy, Fox said.

“We’re trying our best to stay in the agreement,” Fox said. “But if the state just refuses to change things to allow us to benefit more, then we’ve got to make hard choices to realize more revenue one way or another.”