January 27, 2017 / 6:24 AM / 3 years ago

Native American tribes decry state taxation of reservation energy projects

WASHINGTON (Reuters) - As some Native American tribes renew their push for more control over the natural resources on their lands, they will also urge Congress and President Donald Trump to prohibit state taxation of energy and resource development on reservations.

File Photo: A drill rig abuts farmland on the Fort Berthold Reservation in North Dakota, November 1, 2014. REUTERS/Andrew Cullen/File Photo

States are generally prohibited from taxing Indians on reservations, but they are allowed to tax non-Indian companies extracting resources from tribal lands.

The tribes, which have their own governments, argue they should have sole authority to levy taxes on such projects. Additional state taxes drives away company investment and economic development, tribal leaders told Reuters.

Tribes including the Mandan, Hidatsa and Arikara (MHA) Nation in North Dakota’s Bakken oil fields and the Navajo Nation in the U.S. Southwest said hundreds of millions of dollars in tax revenues on their energy production goes to the states in which their reservations are located - with the tribes getting few state services in return.

“Dual taxation is an impediment to development,” MHA Nation Chairman Mark Fox said in an interview with Reuters.

More than half of the tax revenues on energy projects “are taken out of the reservation and not put back in any shape or manner, aside from paving some state highways.”

Oil drilling on the Indian reservation of Fort Berthold accounts for about a third of North Dakota’s production.

The North Dakota Treasurer’s office declined to comment.

Native American lands are managed by the federal government, which provides financial support and services to tribes through a slew of initiatives - from housing aid, to jobs assistance, to historic preservation programs. States are not required to provide services on Indian reservations.

Trump promised during the presidential campaign to strip away regulations on energy development, and his advisors are studying ways to ease especially burdensome regulations governing drilling and mining on tribal lands.

A Trump administration official did not immediately respond to a request for comment on the question of state taxation.

The Navajo Nation, which has also complained about the state taxation of tribal energy production in New Mexico, Utah and Arizona, said it will partner with the MHA Nation to lobby for changes to policy in Washington this year.

“If we are developing on our own lands, we shouldn’t be required to pay royalties to the state,” said Jackson Brossy, a representative of the Navajo Nation in Washington D.C.

Officials in the states of New Mexico, Utah, and Arizona did not respond to requests for comment.

Fox said that North Dakota has collected close to $1 billion from shared taxes from oil development on Fort Berthold. The money could have been better invested by the tribe in infrastructure and services, as well as programs to tackle the problems that an oil boom can bring, such as pollution and drug abuse.

“We have crime like we’ve never seen before,” Fox said.

Editing by Richard Valdmanis and Brian Thevenot

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