The Republican-controlled North Dakota Legislative Assembly has passed legislation giving more oil and natural gas tax revenue to the three Native American tribes on the Fort Berthold Reservation, which accounts for about one-fifth of the state's oil production from the Bakken Shale.
Senate Bill (SB) 2312 calls for 80% of revenue from gross oil and gas production and oil extraction taxes for new wells on the reservation to be allocated to the Three Affiliated Tribes, aka the Mandan, Hidatsa and Arikara (MHA) Nation. The remaining 20% would go to the state. Under previous agreements, revenue on all tribal lands was divided evenly between the tribes and Bismarck.
House lawmakers passed the bill on an 84-8 vote Wednesday. The bill passed the Senate in a 40-5 vote held Feb. 20. Republican Gov. Doug Burgum is expected to sign the bill.
According to a fiscal note by the state's tax commissioner, the tribes will receive an additional $33.6 million in oil and gas tax revenue for the 2019-2021 biennial budget cycle. Conversely, several parts of state government, including the legacy and common schools trust funds, are expected to be impacted.
SB 2312 covers oil and gas wells which begin drilling after June 30. The bill also calls for creating a 10-member tribal taxation issues committee, which would include the governor, to study tribal taxation issues.
Low commodity prices had compelled state lawmakers to consider cutting the state's oil tax since about 2015. When a proposed oil production tax cut was floated two years later, the tribes threatened to abandon an oil production revenue-sharing agreement they had signed with Bismarck in 2008, when the shale boom started to take off.
SB 2312 contains identical language to an oil tax compact signed by Burgum and MHA Nation Chairman Mark Fox in late February. The bill was introduced by state Senate Majority Leader Rich Wardner (R-Dickinson), Sen. Jordan Kannianen (R-Stanley) and state House Majority Leader Chet Pollert (R-Carrington).
Earlier this month, the state Department of Natural Resources reported that oil production in the state averaged 1.4 million b/d in January, the most recent month with available statistics. Of the total, nearly 300,000 b/d was produced on the reservation.