A group of Native American landowners is seeking changes to a historic oil and gas tax sharing agreement between their tribal government and the state of North Dakota.
![012925-nws-SB2304-03.JPG](https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=150%2C100 150w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=200%2C133 200w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=225%2C150 225w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=300%2C200 300w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=400%2C267 400w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=540%2C360 540w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=640%2C427 640w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=750%2C500 750w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=990%2C660 990w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=1035%2C690 1035w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=1200%2C800 1200w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=1333%2C889 1333w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg?resize=1476%2C985 1476w, https://bloximages.chicago2.vip.townnews.com/bismarcktribune.com/content/tncms/assets/v3/editorial/9/71/971d3a16-dd9a-11ef-8750-ff5176123f00/67990f362d4f5.image.jpg 2008w)
Sen. Chuck Walen, R-New Town, listens to testimony during a hearing on Senate Bill 2304 at the North Dakota State Capitol on Tuesday.
The agreement was reached between the state and the Mandan, Hidatsa, and Arikara Nation in 2019 to split taxes for oil and gas produced on the Fort Berthold Indian Reservation where oil production has surged since a boom began almost two decades ago.
Senate Bill 2304, introduced Tuesday during a hearing at the Senate Finance and Taxation Committee, would pause the disbursement of oil and gas taxes collected from individual landowners on the reservation until the agreement is modified and the tribe submits federal audit reports that it allegedly has missed for years.
Tribal chairman Mark Fox, through a spokesperson, said audits have been delayed due to the COVID-19 pandemic and a ransomware attack.
People are also reading…
- Bill would hold state cash from localities that block energy, ag projects in North Dakota
- North Dakota resolution seeks to recognize 'the Kingship of Jesus Christ'
- New Salem man crashes into patrol vehicle during Mercer County chase, police say
- Ian Cramer, US senator's son, pleads guilty to incidents before fatal North Dakota pursuit
"We will essentially be caught up by the end of the year," he said.
The bill was brought by state Sen. Chuck Walen, R-New Town, and state Sen. Richard Marcellais, D-Belcourt, but Walen said it came on behalf of land and mineral owners who argue that the agreement does not account for the rights of private landowners on the reservation and violates the law.
They also allege that tribal leadership is mismanaging oil money and not being transparent.
MHA Nation, as well as Spirit Lake Nation -- which does not produce any oil -- both oppose the measure. Representatives for both of the tribes argued Tuesday that moving forward with the bill would interfere with tribal sovereignty.
MHA said that supporters of SB 2304 have the law wrong on the tribe's authority.
The oil and gas industry voiced opposition as well, arguing the bill would impede years of efforts to establish tax agreements between the state and tribe, potentially discouraging investment.
Tribal oil tax deal faces landowner pushback
Land on Native American reservations is broken up into three categories: trust land owned by the tribe; land owned owned by allottees; and land owned by fee holders, said Wallen.
Allotted land is trust land that was distributed to private owners in the late 19th and early 20th centuries. Fee lands are privately held.
The agreement between the state and the tribe aimed to prevent "dual taxation" because of differences in tribal and state tax laws. Under the agreement, 80% of oil tax revenue from trust lands goes to the tribe, while 20% goes to the state. For private lands, the state receives 80% of the oil tax revenue and the tribe receives 20%.
Multiple Native landowners testified on Tuesday that the tribe did not have the legal authority to enter into the agreement that changed the nature of the taxes on their land without their consent. Among the complaints are that allottees are not mentioned in the agreement.
"We're not asking really for the agreement to be changed, but just modified to include allottees and fee holders," Walen said. "So the amount of the tax is not under question, it's just how it's distributed."
The landowners also voiced complaints about money management of the tribe. Documents submitted as part of testimony included a letter from the federal Bureau of Indian Affairs that in January 2024 threatened sanctions against MHA Nation for not having submitted audits since 2020.
Part of the bill would have required these audits to be completed before the tax money was disbursed from the state.
"A temporary moratorium is needed to safeguard the funds in question from being disbursed, squandered and hidden from the public's eye," Todd Hall, a landowner and supporter of the bill said.
Fox, MHA's tribal chairman, said his government is transparent. In addition to him saying the tribe will soon be caught up with audits, he said the tribe regularly relays financial information to the public through the internet and radio.
"The MHA Nation provides updated financial reports every month," he told the Tribune.
Scott Davis, a former state commissioner of Indian Affairs, gave testimony on behalf of MHA and read Fox's testimony for him.
Fox said none of the laws or treaties cited by proponents of the bill precluded the tribal government's taxing authority, and courts have upheld the rights of tribes to tax oil and gas operators on allotted land.
"Simply put, these individuals are asking the North Dakota (state Legislature) to violate an agreement that was lawfully executed," the testimony said.
According to Fox, many of the bill's supporters were trying to circumvent failures in politics at the tribal-level by taking the issue up with the state.
Ronald Brugh, owner of the oil company War Pony Energy, and Tex Hall, a former tribal chairman who both testified in support of the bill have also both run for tribal office in recent years.
The bill's proponents maintained that the state was the right place to address it since the state disburses the taxes.
Testimony from Spirit Lake tribal chairwoman Lonna J. Street, included pushback, as well. State Rep. Collette Brown, D-Warwick, read Street's testimony that said it could violate tribal sovereignty.
"The development and introduction of SB 2304 have proceeded without meaningful consultation with our tribal government," the testimony said.
Brown added that if the law went forward, the bill should make clear it specifically pertains to MHA and not all tribes.
Ron Ness, president of the North Dakota Petroleum Council, told the committee that the bill would endanger the 2019 agreement.
"Getting these agreements has been a huge challenge, but what a benefit it's been," he said.
He also questioned if some of the issues around money management were areas that the state should weigh into.
"Certainly there are challenges to be worked out, but I think they need to be worked out within that (tribal) sovereignty that we've been educated about," Ness said. "This body has tried before to dictate to the tribe how it thinks it ought to spend its money and it did not go very well as I recall."
Brugh, one of the landowners testifying in support of the bill, said it would not impact activity from the oil and gas industry.
"I'm an old landman, I've leased up to 134,000 acres on Fort Berthold ... why would we want to cut our own throat?" he said.
The committee did not discuss the issue beyond testimony. It will take action later.
Donald Trump has called the UK's fossil fuel strategy a "very big mistake" and urged the country to "get rid of windmills" while advocating for increased North Sea oil production.