Tribes ask for bigger share of oil tax

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BISMARCK (AP) — North Dakota’s Three Affiliated Tribes should get a larger share of tax collections from the reservation’s oil production, which is needed to pay for road repairs and other consequences of oil development, the tribes’ chairman said Friday.

“For lack of better words, it’s almost like this could potentially overtake us,” Tex Hall said during a hearing of the North Dakota Senate’s Natural Resources Committee. “If we don’t get on top of this, this can overtake us.”

Hall asked committee members to support changes in a money allocation formula that would boost the tribe’s oil tax collections by about $22.5 million during the next two years. The panel’s chairman, Sen. Stanley Lyson, R-Williston, said the panel would review the legislation again Monday.

The Fort Berthold Indian Reservation is at the center of an oil drilling boom in western North Dakota, as companies compete to extract oil from shale rock known as the Bakken formation.

Former Gov. John Hoeven and Hall’s predecessor, Marcus Levings, signed an agreement in June 2008 that specifies how reservation production is regulated, and how oil tax collections were to be divided between the state and tribe.

Hoeven and Levings signed a permanent extension of the accord in January 2010. Its terms allow either the tribe or state to terminate the agreement with 30 days’ notice.

It says the state of North Dakota gets 80 percent of tax collections from “fee land” on the Fort Berthold reservation, and 50 percent of the taxes from tribal trust lands.

Fee land is privately owned. Trust lands are held in trust by the federal government to benefit the tribe and individual tribal members.

Hall said Friday that an 80-20 split in the tribe’s favor of oil tax revenues from trust lands would be fairer, instead of the present 50-50 division. Sen. John Warner, D-Ryder, whose district includes the Fort Berthold reservation, has introduced legislation to make the change.

“This is not a windfall, this is not a profit thing,” Hall said during Friday’s hearing. “This is for our government, to build its roads, its health care and its infrastructure. If we don’t have the necessary monies, this will slow (oil production) down. We cannot be overrun. Our people’s safety and health come first.”

North Dakota Tax Department data show the state has collected $47.8 million in oil taxes from reservation production from September 2008 through December 2010, while the tribe has received $21.3 million.

The state collected just over $4 million in taxes in both November and December, while the tribe received more than $2 million, Tax Department data shows.

Should the allocation formula be changed, the agency estimates North Dakota will collect $19.6 million less in taxes during the 2011-13 budget period, which begins July 1.

The state would also transfer almost $2.9 million of its collections to oil-producing counties, to make up for what they would have had if the distribution method had remained the same.

Hall appealed directly to lawmakers for changes in the tax allocation formula in a speech last month, and he has pressed Gov. Jack Dalrymple on the issue.

Dalrymple has said his budget recommendations include spending on state highways that would benefit the reservation. Ryan Bernstein, the governor’s deputy chief of staff, said Friday that Dalrymple was neutral on the legislation.

The Fort Berthold reservation has about 1,500 miles of roads, including about 150 miles of state highway and 660 miles of county roads.

Hall said about 56 miles of reservation road that is heavily used by oil industry trucks needs urgent reconstruction this year, and more roads need similar attention in the future.

The agreement was authorized by the 2007 Legislature after oil companies said an accord would help promote reservation investment by setting up stable tax rates and rules. The proposed legislation only rearranges how oil tax income is shared; it does not change tax rates.

From February 1988 until July 1, 2008, only one well was drilled on the reservation, state and tribal data show. Since the regulatory and revenue-sharing agreement was signed, 267 wells have been drilled, and another 130 locations have been approved for drilling.

The bill is SB2348.

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