North Dakota Senate advances state, tribal oil tax compromise

North Dakota Senate advances state, tribal oil tax compromise


Three Affiliated Tribes Chairman Mark Fox, right, testifies in support of Senate Bill 2257 during a hearing in front of the Senate Finance and Taxation Committee at the state Capitol earlier this month in Bismarck. Senate Bill 2312 is projected to send an additional $33 million in oil tax revenue to the tribe for the 2019-21 budget cycle.

A bill that sets the groundwork for a new oil tax agreement with the Mandan, Hidatsa and Arikara Nation cleared a hurdle on Wednesday as the Senate approved a compromise.

The proposal, Senate Bill 2312, is projected to send an additional $33 million in oil tax revenue to the tribe for the 2019-21 budget cycle by changing how tax revenue from the reservation is split.

Supporters say the entire state will benefit from increased oil industry investment at Fort Berthold if the tribe and governor sign a new oil tax sharing agreement, preventing the possibility of dual taxation.

“This is a bill for certainty and to bring peace among all parties, the state, tribes, the industry,” said Sen. Jordan Kannianen, R-Stanley, the bill’s primary sponsor.

The bill passed with a 40-5 vote. It will now be considered by the House, where leaders have already voiced support for the bill.

“We greatly appreciate the Senate’s support on it,” said Mark Fox, chairman of the MHA Nation, in an interview on Wednesday. “Now it’s on to the House, and we’re hoping for the same kind of success.”

Gov. Doug Burgum and leaders of the MHA Nation discussed the oil tax agreement Tuesday at the Capitol. Burgum spokesman Mike Nowatzki said the parties remain supportive of a compact consistent with the legislation.

Fox said the details being discussed with the governor are minor clarifications with the wording of the agreement.

“I think we’re pretty much almost there,” Fox said.

Oil tax revenue is currently split equally between the state and the tribe for oil produced at Fort Berthold. Tribal leaders objected in 2015 when state lawmakers reduced the overall tax on oil production from 11.5 percent to 10 percent.

Under the bill approved by the Senate, 80 percent of oil tax revenue from trust lands would go to the tribe, while 20 percent would go to the state. Trust lands are held by the federal government in trust for the benefit of the tribes.

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 would see a revenue increase.

Fox has long advocated for a greater share of oil tax revenue to offset impacts of energy development on the reservation. Fort Berthold, in the heart of the Bakken, accounts for about one-fifth of the state’s oil production.

“With each year that we get this additional tax revenue, we can do our planning for a lot of the long-term things, from fixing the roads and highway safety to water infrastructure to housing development, all of these things necessary to enhance continued energy and resource development here on Fort Berthold,” Fox said.

The bill also extends the work of a tribal taxation issues committee, led by Burgum, during the next interim. The legislation does not change a provision in the state’s oil tax policy that requires oil companies to pay a higher tax rate if oil prices reach $90 for three consecutive months.

Several oil industry representatives sat in the Senate chambers for the vote on Wednesday. Ron Ness, president of the North Dakota Petroleum Council, said the industry group strongly supports the bill.

“Industry is watching very closely,” Ness said. “This is a super big deal for stability and the ability to make long-term investments.”

(Reach Amy Dalrymple at 701-250-8267 or


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