Soon after Biden had suspended new oil drilling on federal lands, the Mandan, Hidatsa and Arikara Nation earned a speedy exemption, drawing permission from the new administration for future energy development on their oil-rich Fort Berthold reservation.
It was a testament to the tribe's sway within the climate-focused Democratic administration, and for top North Dakota officials, it also revealed an opportunity for a silver lining.
Facing a Legislature that two years ago expanded its agreement with the MHA Nation, known as the Three Affiliated Tribes, Gov. Doug Burgum and state regulators saw a chance to mend an old disagreement in the tribal-state tax accord: Officials would push a bill to trade millions of dollars in tax revenues on oil wells that extend laterally beneath Fort Berthold, if tribal leaders could use their newly-proven favor in Washington to negotiate an additional drilling exemption on two tracts of untapped federal land bordering their reservation.
“We cannot access it from anyplace else other than the tribal lands. And it’s got good rock in it,” said Senate Majority Leader Rich Wardner, R-Dickinson, of the targeted federal lands, which sit on an especially sweet spot of the Oil Patch representing hundreds of millions in potential revenues for the state. “Good rock means good oil.”
But MHA leadership has long argued that revenues off of the straddle wells that reach beneath the reservation are rightfully theirs, and though tribal Chairman Mark Fox initially said he was willing to bargain with the new administration to complete the trade, his view of the deal has soured after lawmakers tacked an 11th hour amendment onto the bill before it advanced out of the Senate, cutting off a chunk of the tax revenues and requiring the tribe to negotiate an exemption from the new administration before seeing any of the payout.
“I assure you, we're not doing cartwheels to do it now,” Fox told The Forum after the bill squeaked through the Senate.
He pointed to sentiments that surfaced during last year's presidential election — "My gosh, you know the fervor, the animosity, the racism" — which he suggested underpinned the Legislature's resistance to sealing their deal: "You have people down there that don't understand the logistics of how energy is done. All they know is, I'll be damned if Indians are going to benefit (from) anything we do."
When the oil tax agreement, known as a compact, was first forged between North Dakota and the MHA Nation in 2008, it opened new doors for development on Fort Berthold. Prior to the agreement, oil companies had steered clear of the reservation, where they faced complex and uncertain tax rules between the two governments. But in the years since the compact, the state and tribe have brought in nearly $3.5 billion in combined tax revenue off of reservation drilling, with close to half of that sum going to the tribe.
Still, as the agreement has been periodically amended in the years since, the straddle wells reaching underneath Fort Berthold have remained a point of contention. Fox has pushed for their inclusion in the compact for years, and said that he was told when the compact was amended last session that the straddle wells would be looped into the agreement the next time around.
Convincing lawmakers to cede the revenue from these oil wells has proven a tall task, and state officials have often pointed out that in every other scenario — as in state and county borders — the tax is levied at the head of each well, regardless of where horizontal drilling goes after that point. But for state leadership, the long-standing straddle well issue offered a chip on the table amid the Biden administration's curtailments of oil industry activity.
But even with backing from the governor's office and legislative leadership, the exchange looked like too big a gamble for much of the Senate, who passed it only after it was substantially amended to require the tribe to negotiate an exemption on the federal lands from the White House before receiving any of the benefit themselves.
"They’re holding us hostage, so to speak," said Fox, a former Marine who used to serve as a tax official for the tribe. The chairman added that if the bill isn’t reverted back to its original form, the tribe could move forward with its own independent tax on the border wells — a tax that he said would be within the bounds of the compact.
A regulatory vehicle from the Oil & Gas Division of the Mandan, Hidatsa and Arikara Nation visits an oil well site near the Fort Berthold reservation. Adam Willis / The Forum
State Tax Commissioner Ryan Rauschenberger, however, disagreed. He warned that such a tax would likely violate — and possibly void — the tribal-state agreement. A similar situation strained the tax agreement several years ago, when the tribe sent a higher tax bill to producers on the reservation, a move that both Burgum and Rauschenberger called "inconsistent" with state law at the time.
And even though the bill that emerged from the Senate is substantially more favorable to the state, the deal may face an even tougher crowd in the fiscally conservative House.
Though Wardner said he saw the original deal as mutually beneficial for both the state and the tribe, he noted that the tax compact between the two governments has been amended to the benefit of the tribe several times since it was created, and for some legislators, "enough is enough."
Rep. Craig Headland, R-Montpelier, who oversees the House committee taking up the bill, said the tribe should be independently motivated by its own oil industry stake to negotiate looser regulations out of the Biden administration without the need for concessions from the state.
“They’re also citizens of the state of North Dakota, and rather than trying to club us over the head with it,” they should be trying to help out, he said.
Headland also rejected Fox’s suggestion that prejudice or spite had anything to do with lawmakers' concerns over the deal. “If we were racist, why would we have negotiated to let them share in the tax agreement at all?” he asked.
But some members of the MHA Nation expressed concerns about the terms of the deal in the first place. Members of Fort Berthold Protectors of Water & Earth Rights (POWER), an environmental group on the reservation, said the state and tribe should not sacrifice protected lands for financial gain. Of the two tracts of federal land eyed by the state, one is prime habitat for bighorn sheep, and the other, known as the Blue Buttes area, holds spiritual importance to the tribe.
"I'm not in favor of our tribe being used to weaken protections for the land and the air," said Theodora Bird Bear, a POWER member.
“The state is the one that’s calling the shots," added Joletta Bird Bear, Theodora’s sister who's also a POWER member. Joletta said the state is “capable of doing its own work” and should not leverage its relationship with the tribe to draw favors out of the Biden administration. “I think it’s underhanded myself,” she said.
For Joletta, the regulations that exist on the federal lands bordering Fort Berthold aren’t “hypothetical.” Rather, they are protections hard-won by the work of her ancestors to preserve not only the surface, but also the land underneath. Curtailments to federal protections in North Dakota, she noted, would leave a precedent for similar rollbacks near Native American reservations in other parts of the country.
“It’s important to always remember that our political and cultural identity as tribal people is intertwined with our land,” Joletta said. “No other group can say that.”
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.
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Under Biden, North Dakota and tribal officials looked to strike an oil deal. Here's how it went sour | INFORUM - INFORUM
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