North Dakota and the Mandan, Hidatsa and Arikara Nation took a major step on Thursday toward resolving a dispute over oil tax revenue, with leaders of both governments signing a new oil tax agreement.
The new compact signed by Gov. Doug Burgum and Chairman Mark Fox sends a greater share of oil tax revenue to the tribe, but the agreement still needs approval from North Dakota’s House of Representatives.
“This is one great, positive move. It’s historic and it’s going to have great benefits for both the state and the tribal nation,” Fox said after a signing ceremony at the state Capitol. “But we’re not done. We have to keep building this trust.”
The agreement changes how oil tax revenue is divided between the state and tribe for oil produced from new wells at Fort Berthold. Currently, that revenue is split 50-50. But tribal leaders objected in 2015 when state lawmakers reduced the overall tax on oil production from 11.5 percent to 10 percent.
The agreement would send 80 percent of oil tax revenue from trust lands to the tribe, while 20 percent would go to the state. For fee lands, which are private lands within the reservation, the state would receive 80 percent of the oil tax revenue and the tribe would receive 20 percent.
Because more oil development is occurring on trust lands, the tribe is estimated to gain $33.6 million in the 2019-21 budget cycle, while the state’s revenue would decrease by that amount.
However, Burgum emphasized that creating a stable tax and regulatory environment will help the tribe and the state by attracting additional investment. The addition of one drilling rig is estimated to add $16 million in increased tax revenue per biennium, according to estimates from the state tax commissioner.
Burgum said the agreement is the result of building trust between state and tribal leaders.
“It’s historic in itself, but it can also be the springboard for even greater cooperation going forward,” Burgum said.
The MHA Tribal Business Council unanimously endorsed the agreement in a resolution approved Monday. Fox said MHA plans to use the additional revenue to invest in roads, housing and other infrastructure, as well as stimulate investment to reduce natural gas flaring.
“We want to work with the state, work with our industry partners to capture that gas because right now a lot of value is being wasted,” Fox said.
Fort Berthold produced nearly 294,000 barrels of oil per day in December, about one-fifth of the state's overall oil production.
The framework for the new agreement is outlined in Senate Bill 2312, which was approved by the Senate last week but is awaiting action by the House. If legislators make any significant changes to the bill, a new compact would need to be signed.
House leaders said Thursday they’re hopeful about getting support for the bill. The House Finance and Taxation committee is scheduled to discuss the bill at 10 a.m. Tuesday in the Fort Totten Room of the state Capitol.
“This signing goes a long way to show that there’s good faith and trust between the state of North Dakota and the Three Affiliated Tribes,” said Rep. Craig Headland, R-Montpelier, chairman of the committee. “I think it will go a long way in getting the bill passed in the House.”