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Oil tax compact remains unsigned with tribe

BISMARCK -- A longstanding oil tax compact between the Three Affiliated Tribes and North Dakota needs updating, but the tribes appear to be in no hurry to sign on the dotted line. The compact, which allows North Dakota to collect tax on oil wells...

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BISMARCK -- A longstanding oil tax compact between the Three Affiliated Tribes and North Dakota needs updating, but the tribes appear to be in no hurry to sign on the dotted line.

The compact, which allows North Dakota to collect tax on oil wells and evenly split the revenue, is outdated because of changes made during the past legislative session.

Tax Commissioner Ryan Rauschenberger said he, Gov. Jack Dalrymple and the tribal council met over a revised compact dated in September, but the tribes have yet to return a signature of agreement.

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It’s unclear if the council, with new leadership from Chairman Mark Fox, wants to change the compact or just wants more time to consider it. Currently, the tribes and the state each receive $10 million a month in tax revenue from tribal wells, down considerably from the $25 million monthly collected for each in a higher-priced market. Calls and text messages to tribal officials were not returned Friday.

"I believe the tribe is weighing their options, but will end up signing the agreement by the end of the year," said Rauschenberger, adding that the revised agreement is largely the same as the existing one, keeping the half-and-half share the same.

The two primary changes reflect that the 2015 Legislature removed a trigger to reduce taxes when the price of oil falls and replaced with it with a lower tax schedule that kicks in Jan. 1. The new rate will be 10 percent when oil is under $90 a barrel and 11 percent when it is higher. It’s currently rests at 11.5 percent.

Rauschenberger said the compact is important because it provides stability and certainty for oil companies, who pay a known tax rate to one entity instead of two. It was signed in 2007.

Ron Ness, director of the North Dakota Petroleum Council, said it’s important to note that, until the compact, there had not been a well drilled on the reservation for 27 years.

If oil companies were faced with the potential for two taxes - state and tribal - as they were prior to the compact, the impact would be significant, according to Ness.

“I do think oil companies would pull back. There’s enough regulatory risk out there now,” Ness said.

According to Jeff Zent, spokesman for Dalrymple, said the governor is optimistic the Three Affiliated Tribes will sign the agreement and has invited representatives to sit down and discuss the details.

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Rauschenberger said signed or not, the agreement will continue under the tax changes imposed by the Legislature. Either side can withdraw with 30 days’ notice, he said.

Related Topics: THREE AFFILIATED TRIBES
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