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Published April 11, 2013, 08:54 AM

Tribes want change to North Dakota oil tax agreement

BISMARCK, N.D. (AP) — Tribal leaders are pressing lawmakers for a bigger cut of oil production taxes on the Fort Berthold Reservation in western North Dakota, saying the extra money is need to fund drilling impacts unforeseen when the tribes first signed the pact with the state five years ago.

By: JAMES MacPHERSON,Associated Press, Associated Press

BISMARCK, N.D. (AP) — Tribal leaders are pressing lawmakers for a bigger cut of oil production taxes on the Fort Berthold Reservation in western North Dakota, saying the extra money is need to fund drilling impacts unforeseen when the tribes first signed the pact with the state five years ago.

Fred Fox, vice chairman of the Three Affiliated Tribes, said he and several other members planned meetings with lawmakers Thursday to urge changes to the 2008 agreement that limits oil tax rates on reservation land, and spells out how the state and tribal governments share oil revenues. The amendment part of a House bill aimed at restructuring all oil taxes in the state.

The Legislature turned down a similar plea by the tribe two years ago.

"The tribe is not completely satisfied — we want it to be balanced," Fox said Thursday. "We believe in equal share of the taxes."

The Fort Berthold Reservation, in the heart of North Dakota's booming oil patch, contains portions of six counties, covering more than 1,500 square miles. About 4,500 of the approximately 12,000 tribal members live on the reservation, tribal officials say.

Since the agreement was signed, the number wells on the reservation jumped from one to about 700.

To date, the state has collected $315 million, with the tribe getting $201 million, said Ryan Rauschenberger, North Dakota's deputy tax commissioner. The state's share is divided among counties, cities, school districts and a number of state funds and programs.

North Dakota gets 80 percent of tax collections from private land on the Fort Berthold reservation, and 50 percent of the taxes from tribal trust lands that are held in trust by the federal government to benefit the tribe and individual tribal members. Under a the proposed tax structure, a 6.5 percent extraction tax and a 5 percent production tax from private or "fee land" would be split equally between the tribe and the state.

Rauschenberger said changes in a fund allocation formula that would increase the tribe's oil tax collections by about $81 million during the next two years.

Former Three Affiliated Tribes Chairman Marcus Levings and former Gov. John Hoeven signed the agreement in 2008 and agreed to a permanent extension of the accord in 2010. Its terms allow either the tribe or state to terminate the agreement with 30 days' notice.

The tribes' current chairman, Tex Hall, has told lawmakers for the past two years that the agreement should be reworked to provide more revenue to maintain the tribes' own road network, which is used by heavy trucks that have accompanied increased oil drilling on the reservation.

Fox said the additional revenue also is needed to help fund better health care, housing and law enforcement.

The reservation has more than 1,000 miles of Bureau of Indian Affairs roads but maintenance funding is insufficient, tribal and oil industry officials say.

Ron Ness, president of the North Dakota Petroleum Council, told the Senate Appropriations Committee Wednesday that the tribe deserves a greater share of the taxes collected from reservation oil production, especially to help with road building in the region.

Ness, whose group represents more than 400 companies working in North Dakota's oil patch, said drillers often have to build or maintain roads on the reservation, which can add as much as $100 million annually to an oil companies' cost.

"They are the worst roads in the oil patch," Ness told lawmakers.

Oil drillers also worry about other increased costs that could come if the agreement is terminated, which could jeopardize drilling and "drive the industry off the reservation." Ness said.

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