BISMARCK — Negotiations over how to split an oil tax between North Dakota and an American Indian tribe whose reservation accounts for close to a fifth of the state's oil production found resolution Thursday, April 22, following heated talks between the two sides this legislative session.
The approval of Senate Bill 2319 by House lawmakers provided some closure in a yearslong disagreement between the state of North Dakota and the Mandan, Hidatsa and Arikara Nation over tax revenues off of oil wells drilled laterally beneath the tribe's oil-rich Fort Berthold Indian Reservation.
"Hard deliberations and hard discussion — we were able to get through those to make the agreement more equitable," said MHA Chairman Mark Fox.
The MHA Nation, known as the Three Affiliated Tribes, has long argued revenues off of these straddle wells are rightfully theirs.
Lawmakers expressed concern this session about a proposal to amend the state-tribal tax agreement, known as a compact, and debates over the issue were swept into broader negotiations between the state and the tribe over how to navigate oil production under President Joe Biden's climate-focused administration. Lawmakers and the tribe ultimately reached a compromise that avoided altering the 13-year-old tax compact while still sending a cut of the straddle well tax revenues to the tribe.
“I’m surprised it ended up the way it did. I thought we'd get to something, but I didn’t know what it would be,” said Senate Majority Leader Rich Wardner, R-Dickinson.
At points during the negotiation process, Fox floated the possibility of putting an independent tribal tax on oil production from the straddle wells, a move state officials warned could void the tax compact between the state and tribe and leave an unstable tax climate for oil producers.
After deliberations over the last few months, “everybody’s happy,” Wardner said.
The final version of the bill resulted in a complicated tribal-state split on tax revenues off wells that start off of the reservation and extract oil from underneath it. The agreement, which now heads to Gov. Doug Burgum's desk, would send just over $7 million from the state to the tribe every two years, close to half of the amount at play at earlier points in negotiations.
In recent weeks, Fox has emerged as a vocal advocate for the continued operation of the Dakota Access Pipeline, which transports the bulk of oil produced on the Fort Berthold Reservation to market. Operations of the pipeline have been vigorously opposed by another tribe, the Standing Rock Sioux Nation, for years, and North Dakota officials have been on edge for months about a possible shutdown of the pipeline by the Biden administration or a federal court.
Both Wardner and state Tax Commissioner Ryan Rauschenberger said Fox’s recent advocacy for the embattled pipeline was an important factor in bringing negotiations over the straddle wells to a resolution.
An earlier version of the bill would have required the tribe to leverage its influence with the White House for looser drilling regulations on two patches of untapped federal lands adjacent to their reservation. That piece of the deal was left out of the final agreement, though state officials and lawmakers expressed hopes conversations would continue on that front.
Although Fox said he hoped to get the agreement written into a tax compact, which can be more complicated to amend than statute, he said the tribal government feels confident in the compromise that the two sides eventually reached.
"We're satisfied. That satisfaction outweighs some of these other minor concerns," he said.