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2022 Op. N.D. Att'y Gen. 1 (2022)

handle is hein.sag/sagnd0103 and id is 1 raw text is: LETTER OPINION
The Honorable Thomas Beadle
State Treasurer
600 E. Boulevard Ave Dept 120
Bismarck, ND 58505
Dear Mr. Beadle:
Thank you for your letter inquiring as to the method of distribution of gross production
and oil extraction taxes to the constitutional funds set forth in N.D. Const. art. X, §§ 22,
24, and 26. For the reasons indicated below, it is my opinion that the distributions of
gross production and oil extraction tax revenues should be allocated from the state's
share of the aforementioned revenues. Further, that portion of the gross production and
oil extraction tax revenue derived from oil and gas exploration and production within
the exterior boundaries of the reservations and on trust properties outside reservation
boundaries (reservation wells), which is distributed directly to the tribes pursuant to
N.D.C.C. ch. 57-51.2, should not be included in the definition of revenue when making
constitutional allocations of oil and gas revenues under N.D. Const. art. X.
In 2007, the 60th Legislative Assembly enacted chapter 57-51.2 of the North Dakota
Century Code, allowing the state to enter into agreements with the tribes1 relating to
the taxation and regulation of oil and gas extraction and production on reservation
wells. This law was passed in response to a U.S. Supreme Court Case, Cotton Petroleum
Corp. v. New Mexico,2 where the Court held that states, in addition to the tribe, may
tax a non-indian oil and gas operator whose operations are located on a reservation.
At the time, this created the prospect for dual taxation on oil and gas produced on
reservations. The oil produced on reservation wells was taxed at a 5% rate for the tribe
1 Three Affiliated Tribes, Standing Rock Sioux Tribe, and Turtle Mountain Band of
Chippewa Indians.
2 Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163 (1989).

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