Oil tax agreement between ND governor, tribe 4-24-07

BISMARCK, N.D. (AP) - Legislators have given Gov. John Hoeven power to negotiate a tax-sharing and regulatory agreement for oil production on the Fort Berthold Indian Reservation.

They hope the measure will cause oil production to flourish on the reservation, which sits atop the promising Bakken rock formation. A new oil well has not been drilled on reservation trust lands in almost 30 years, said Rep. David “Skip” Drovdal, R-Arnegard.

Oil companies “are starting to crack the technology so that they'll be able to recover the oil out of the Bakken formation,” Drovdal said.

Rep. Dawn Charging, R-Garrison, said the formation “holds much potential ... for the oil industry, and for all of us in North Dakota.” Charging's district includes the Fort Berthold reservation.

“Now it's up to the leadership of both respective governments,” Charging said. “We have set the stage.”

North Dakota's Senate approved the bill, 45-0, on Monday. The House followed suit on Tuesday, endorsing it 94-0.

Supporters of the legislation believe it offers oil companies a more attractive tax and regulatory climate on the reservation. Overlapping state and tribal taxes, laws and regulations have caused companies to shy away, while exploration booms outside the reservation's boundaries, officials say.

The bill affects reservation trust lands, which are owned by the federal government and held in trust for the Three Affiliated Tribes or a tribal member, and privately owned “fee” land.

At present, both the state and tribe may tax oil production on trust land. The tribe does not tax oil production on private land, and it does not get a share of the state's oil tax income from private land.

The legislation says the state and tribe must split oil tax collections from trust lands evenly, while the state will get an 80 percent share from fee lands. State regulations will prevail on newly drilled oil wells, and any revenue disputes will be settled in federal court.

The state and tribe have until June 30, 2009, to negotiate a
specific tax and regulatory agreement.

The bill is SB2419.