Oil Industry Backs ND Tribe’s Request For More Tax Revenue

BISMARCK – Representatives of seven oil companies that operate on the Fort Berthold Indian Reservation support sending a greater share of oil tax revenue to the Three Affiliated Tribes, a move that would cost the state $145 million in 2017-19.

In a letter to Gov. Doug Burgum and legislative leaders, the oil industry representatives said they support the tribe’s position to receive 100 percent of tax revenue from oil produced on trust lands within the reservation.

Currently the state and tribe split oil tax revenue from trust and fee lands equally.

The oil industry representatives wrote that the downturn in the economy has eroded the tribe’s budget, leaving the reservation unable to efficiently manage energy development.

“We strongly urge the state of North Dakota to work with the MHA Nation in addressing the MHA’s budget shortfall issue,” states the letter, signed by representatives of Targa Resources, WPX Energy, QEP Resources, EOG Resources, Enerplus Resources, Arrow Midstream Holdings and HRC Operating.

Sending that additional tax revenue to the tribe would mean a gain of $145 million for the reservation, but a loss of $145 million to the state in 2017-19, said state Tax Commissioner Ryan Rauschenberger, using current projections.

Included in the $145 million loss to the state is about $20 million in oil tax revenue that benefits counties, cities and schools within the boundaries of the reservation, Rauschenberger said.

It’s unlikely North Dakota legislators will introduce a bill in the final days of the session to send additional oil tax revenue to the tribe, said Sen. Dwight Cook, chairman of the Senate Finance and Taxation Committee.

“It’s undoable,” said Cook, R-Mandan. “It’s a tremendous amount of revenue.”

Tribal Chairman Mark Fox has said tribal leaders would consider leaving the oil tax sharing agreement with the state and implementing a tribal oil tax if a solution isn’t reached.

“That is why the companies that are working on the reservation would certainly rather see us give all the money to the tribes rather than have the tribes introduce a second tax on those companies,” Cook said.

The Three Affiliated Tribes opposed a change legislators made in 2015 to reduce the overall tax on oil production from 11½ percent to 10 percent. But legislators also removed tax breaks known as triggers that would have led to a loss of revenue for the tribe and the state while oil prices were low.

Rauschenberger estimates the tribe has received $32 million in the past 12 months that would not have been collected if the tax breaks had remained in law.

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