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Tribe to make statement on oil tax compact Thursday

BISMARCK -- Three Affiliated Tribes chairman Mark Fox says he'll make a statement Thursday on how the reservation will proceed with an oil tax compact between North Dakota and the tribes that evenly splits tax revenue from wells on the reservation.

BISMARCK -- Three Affiliated Tribes chairman Mark Fox says he’ll make a statement Thursday on how the reservation will proceed with an oil tax compact between North Dakota and the tribes that evenly splits tax revenue from wells on the reservation.

The compact needs updating because the shared tax of 11.5 percent ends at midnight and kicks in Friday at 10 percent. The tribe has said it wants to stay at the higher rate, but State Tax Commissioner Ryan Rauschenberger said he can’t legally collect that on tribal wells because the tax rate is embedded in a new state law that applies to all oil in the state.

“I have no legal authority to collect (anything else) within the boundaries of the Fort Berthold Indian Reservation. I made that very clear,” Rauschenberger said. He said he'll collect at the legal rate, pending a revised agreement. The tribes can leave the compact with 30 days' notice.

The tribe and state officials have formally met twice on the revised compact, which the tribe has yet to sign.

Fox said Wednesday he’ll confer with his fellow council members before issuing any statement.

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The compact was signed in 2007 to kick-start drilling in the Bakken formation on the reservation, which had last seen oil drilling in the early '80s. Until then, the state and the tribes each had their own tax and the compact provided a one-tax program to make oil development more doable for companies and a way to split the revenue.

Because the tax is computed against the price of oil, the state and the tribes have seen a dramatic drop in tax revenue. Rauschenberger said the tribes’ share went from $26 million a month at peak in 2014, down to $10 million per month now.

The lowered tax rate was enacted by the 2015 Legislature to get rid of a longtime “trigger” that reduced oil taxes when the price of oil stayed below $55 for five consecutive months. It replaced the trigger with a new rate of 10 percent when oil is at $90 a barrel or less and 11 percent when it’s above $90 a barrel.

Rauschenberger said had the trigger been in place, the tribes’ monthly revenue would be closer to $5 million.

Nearly 200,000 barrels of oil are produced daily on the reservation, about 17 percent of the state’s total production.

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