2015 North Dakota Century Code Title 57 Taxation Chapter 57-51.1 Oil Extraction Tax
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CHAPTER 57-51.1
OIL EXTRACTION TAX
57-51.1-01. (Effective for taxable events occurring through December 31, 2015)
Definitions for oil extraction tax.
For the purposes of this chapter:
1. "Average daily production" of a well means the qualified maximum total production of
oil from the well during a calendar month period divided by the number of calendar
days in that period, and "qualified maximum total production" of a well means that the
well must have been maintained at the maximum efficient rate of production as defined
and determined by rule adopted by the industrial commission in furtherance of its
authority under chapter 38-08.
2. "Average price" of a barrel of crude oil means the monthly average of the daily closing
price for a barrel of west Texas intermediate cushing crude oil, as those prices appear
in the Wall Street Journal, midwest edition, minus two dollars and fifty cents. When
computing the monthly average price, the most recent previous daily closing price
must be considered the daily closing price for the days on which the market is closed.
3. "Horizontal reentry well" means a well that was not initially drilled and completed as a
horizontal well, including any well initially plugged and abandoned as a dry hole, which
is reentered and recompleted as a horizontal well.
4. "Horizontal well" means a well with a horizontal displacement of the well bore drilled at
an angle of at least eighty degrees within the productive formation of at least three
hundred feet [91.44 meters].
5. "Oil" means petroleum, crude oil, mineral oil, casinghead gasoline, and all liquid
hydrocarbons that are recovered from gas on the lease incidental to the production of
the gas.
6. "Property" means the right which arises from a lease or fee interest, as a whole or any
designated portion thereof, to produce oil. A producer shall treat as a separate
property each separate and distinct producing reservoir subject to the same right to
produce crude oil; provided, that such reservoir is recognized by the industrial
commission as a producing formation that is separate and distinct from, and not in
communication with, any other producing formation.
7. "Qualifying secondary recovery project" means a project employing water flooding. To
be eligible for the tax reduction provided under section 57-51.1-02, a secondary
recovery project must be certified as qualifying by the industrial commission and the
project operator must have achieved for six consecutive months an average
production level of at least twenty-five percent above the level that would have been
recovered under normal recovery operations. To be eligible for the tax exemption
provided under section 57-51.1-03 and subsequent thereto the rate reduction provided
under section 57-51.1-02, a secondary recovery project must be certified as qualifying
by the industrial commission and the project operator must have obtained incremental
production as defined in subsection 5 of section 57-51.1-03.
8. "Qualifying tertiary recovery project" means a project for enhancing recovery of oil
which meets the requirements of section 4993(c), Internal Revenue Code of 1954, as
amended through December 31, 1986, and includes the following methods for
recovery:
a. Miscible fluid displacement.
b. Steam drive injection.
c. Microemulsion.
d. In situ combustion.
e. Polymer augmented water flooding.
f. Cyclic steam injection.
g. Alkaline flooding.
h. Carbonated water flooding.
i. Immiscible carbon dioxide displacement.
j. New tertiary recovery methods certified by the industrial commission.
Page No. 1
It does not include water flooding, unless the water flooding is used as an element of
one of the qualifying tertiary recovery techniques described in this subsection, or
immiscible natural gas injection. To be eligible for the tax reduction provided under
section 57-51.1-02, a tertiary recovery project must be certified as qualifying by the
industrial commission, the project operator must continue to operate the unit as a
qualifying tertiary recovery project, and the project operator must have achieved for at
least one month a production level of at least fifteen percent above the level that would
have been recovered under normal recovery operations. To be eligible for the tax
exemption provided under section 57-51.1-03 and subsequent thereto the rate
reduction provided under section 57-51.1-02, a tertiary recovery project must be
certified as qualifying by the industrial commission, the project operator must continue
to operate the unit as a qualifying tertiary recovery project, and the project operator
must have obtained incremental production as defined in subsection 5 of section
57-51.1-03.
9. "Royalty owner" means an owner of what is commonly known as the royalty interest
and shall not include the owner of any overriding royalty or other payment carved out
of the working interest.
10. "Stripper well" means a well drilled and completed, or reentered and recompleted as a
horizontal well, after June 30, 2013, whose average daily production of oil during any
preceding consecutive twelve-month period, excluding condensate recovered in
nonassociated production, per well did not exceed ten barrels per day for wells of a
depth of six thousand feet [1828.80 meters] or less, fifteen barrels per day for wells of
a depth of more than six thousand feet [1828.80 meters] but not more than ten
thousand feet [3048 meters], and thirty barrels per day for wells of a depth of more
than ten thousand feet [3048 meters] outside the Bakken and Three Forks formations,
and thirty-five barrels per day for wells of a depth of more than ten thousand feet [3048
meters] in the Bakken or Three Forks formation.
11. "Stripper well property" means wells drilled and completed, or a well reentered and
recompleted as a horizontal well, before July 1, 2013, on a "property" whose average
daily production of oil, excluding condensate recovered in nonassociated production,
per well did not exceed ten barrels per day for wells of a depth of six thousand feet
[1828.80 meters] or less, fifteen barrels per day for wells of a depth of more than six
thousand feet [1828.80 meters] but not more than ten thousand feet [3048 meters],
and thirty barrels per day for wells of a depth of more than ten thousand feet [3048
meters] during any preceding consecutive twelve-month period. Wells which did not
actually yield or produce oil during the qualifying twelve-month period, including
disposal wells, dry wells, spent wells, and shut-in wells, are not production wells for the
purpose of determining whether the stripper well property exemption applies.
12. "Trigger price" means thirty-five dollars and fifty cents, as indexed for inflation. By
December thirty-first of each year, the tax commissioner shall compute an indexed
trigger price by applying to the current trigger price the rate of change of the producer
price index for industrial commodities as calculated and published by the United States
department of labor, bureau of labor statistics, for the twelve months ending June
thirtieth of that year and the indexed trigger price so determined is the trigger price for
the following calendar year.
13. "Two-year inactive well" means any well certified by the industrial commission that did
not produce oil in more than one month in any consecutive twenty-four-month period
before being recompleted or otherwise returned to production after July 31, 1995. A
well that has never produced oil, a dry hole, and a plugged and abandoned well are
eligible for status as a two-year inactive well.
Definitions for oil extraction tax. (Effective for taxable events occurring after
December 31, 2015) For the purposes of this chapter:
1. "Average daily production" of a well means the qualified maximum total production of
oil from the well during a calendar month period divided by the number of calendar
days in that period, and "qualified maximum total production" of a well means that the
well must have been maintained at the maximum efficient rate of production as defined
Page No. 2
2.
3.
4.
5.
6.
7.
8.
9.
and determined by rule adopted by the industrial commission in furtherance of its
authority under chapter 38-08.
"Horizontal well" means a well with a horizontal displacement of the well bore drilled at
an angle of at least eighty degrees within the productive formation of at least three
hundred feet [91.44 meters].
"Oil" means petroleum, crude oil, mineral oil, casinghead gasoline, and all liquid
hydrocarbons that are recovered from gas on the lease incidental to the production of
the gas.
"Property" means the right which arises from a lease or fee interest, as a whole or any
designated portion thereof, to produce oil. A producer shall treat as a separate
property each separate and distinct producing reservoir subject to the same right to
produce crude oil; provided, that such reservoir is recognized by the industrial
commission as a producing formation that is separate and distinct from, and not in
communication with, any other producing formation.
"Qualifying secondary recovery project" means a project employing water flooding. To
be eligible for the tax exemption provided under section 57-51.1-03, a secondary
recovery project must be certified as qualifying by the industrial commission and the
project operator must have obtained incremental production as defined in subsection 3
of section 57-51.1-03.
"Qualifying tertiary recovery project" means a project for enhancing recovery of oil
which meets the requirements of section 4993(c), Internal Revenue Code of 1954, as
amended through December 31, 1986, and includes the following methods for
recovery:
a. Miscible fluid displacement.
b. Steam drive injection.
c. Microemulsion.
d. In situ combustion.
e. Polymer augmented water flooding.
f. Cyclic steam injection.
g. Alkaline flooding.
h. Carbonated water flooding.
i. Immiscible carbon dioxide displacement.
j. New tertiary recovery methods certified by the industrial commission.
It does not include water flooding, unless the water flooding is used as an element of
one of the qualifying tertiary recovery techniques described in this subsection, or
immiscible natural gas injection. To be eligible for the tax exemption provided under
section 57-51.1-03, a tertiary recovery project must be certified as qualifying by the
industrial commission, the project operator must continue to operate the unit as a
qualifying tertiary recovery project, and the project operator must have obtained
incremental production as defined in subsection 3 of section 57-51.1-03.
"Royalty owner" means an owner of what is commonly known as the royalty interest
and shall not include the owner of any overriding royalty or other payment carved out
of the working interest.
"Stripper well" means a well drilled and completed, or reentered and recompleted as a
horizontal well, after June 30, 2013, whose average daily production of oil during any
preceding consecutive twelve-month period, excluding condensate recovered in
nonassociated production, per well did not exceed ten barrels per day for wells of a
depth of six thousand feet [1828.80 meters] or less, fifteen barrels per day for wells of
a depth of more than six thousand feet [1828.80 meters] but not more than ten
thousand feet [3048 meters], and thirty barrels per day for wells of a depth of more
than ten thousand feet [3048 meters] outside the Bakken and Three Forks formations,
and thirty-five barrels per day for wells of a depth of more than ten thousand feet [3048
meters] in the Bakken or Three Forks formation.
"Stripper well property" means wells drilled and completed, or a well reentered and
recompleted as a horizontal well, before July 1, 2013, on a "property" whose average
daily production of oil, excluding condensate recovered in nonassociated production,
Page No. 3
per well did not exceed ten barrels per day for wells of a depth of six thousand feet
[1828.80 meters] or less, fifteen barrels per day for wells of a depth of more than six
thousand feet [1828.80 meters] but not more than ten thousand feet [3048 meters],
and thirty barrels per day for wells of a depth of more than ten thousand feet [3048
meters] during any preceding consecutive twelve-month period. Wells which did not
actually yield or produce oil during the qualifying twelve-month period, including
disposal wells, dry wells, spent wells, and shut-in wells, are not production wells for the
purpose of determining whether the stripper well property exemption applies.
57-51.1-02. (Effective for taxable events occurring through December 31, 2015)
Imposition of oil extraction tax.
There is hereby imposed an excise tax, to be known as the "oil extraction tax", upon the
activity in this state of extracting oil from the earth, and every owner, including any royalty
owner, of any part of the oil extracted is deemed for the purposes of this chapter to be engaged
in the activity of extracting that oil.
The rate of tax is six and one-half percent of the gross value at the well of the oil extracted,
except that the rate of tax is four percent of the gross value at the well of the oil extracted in the
following situations:
1. For oil produced from wells drilled and completed after April 27, 1987, commonly
referred to as new wells, and not otherwise exempt under section 57-51.1-03;
2. For oil produced from a secondary or tertiary recovery project that was certified as
qualifying by the industrial commission before July 1, 1991;
3. For oil that does not qualify as incremental oil but is produced from a secondary or
tertiary recovery project that is certified as qualifying by the industrial commission after
June 30, 1991;
4. For incremental oil produced from a secondary or tertiary recovery project that is
certified as qualifying by the industrial commission after June 30, 1991, and which
production is not otherwise exempt under section 57-51.1-03; or
5. For oil produced from a well that receives an exemption pursuant to subsection 4 of
section 57-51.1-03 after June 30, 1993, and which production is not otherwise exempt
under section 57-51.1-03.
However, if the average price of a barrel of crude oil exceeds the trigger price for each month in
any consecutive five-month period, then the rate of tax on oil extracted from all taxable wells is
six and one-half percent of the gross value at the well of the oil extracted until the average price
of a barrel of crude oil is less than the trigger price for each month in any consecutive
five-month period, in which case the rate of tax reverts to four percent of the gross value at the
well of the oil extracted for any wells subject to a reduced rate under subsections 1 through 5.
Imposition of oil extraction tax. (Effective for taxable events occurring after
December 31, 2015) There is hereby imposed an excise tax, to be known as the "oil extraction
tax", upon the activity in this state of extracting oil from the earth, and every owner, including
any royalty owner, of any part of the oil extracted is deemed for the purposes of this chapter to
be engaged in the activity of extracting that oil.
The rate of tax is five percent of the gross value at the well of the oil extracted. However, if
the average price of a barrel of crude oil exceeds the trigger price of ninety dollars for each
month in any consecutive three-month period, then the rate of tax on oil extracted from all
taxable wells is six percent of the gross value at the well of the oil extracted until the average
price of a barrel of crude oil is less than the trigger price of ninety dollars for each month in any
consecutive three-month period, in which case the rate of tax reverts to five percent of the gross
value at the well of the oil extracted. By December thirty-first of each year, the tax commissioner
shall determine an indexed trigger price under this section by applying to the current trigger
price an adjustment equal to the percentage rate of change of the producer price index for
industrial commodities as calculated and published by the United States department of labor,
bureau of labor statistics, for the twelve months ending June thirtieth of that year and the
indexed trigger price so determined is the trigger price for the following calendar year.
Page No. 4
For purposes of this section, "average price" of a barrel of crude oil means the monthly
average of the daily closing price for a barrel of west Texas intermediate cushing crude oil, as
those prices appear in the Wall Street Journal, midwest edition. When computing the monthly
average price, the most recent previous daily closing price must be considered the daily closing
price for the days on which the market is closed.
57-51.1-02.1. Temporary exemption for oil and gas wells employing a system to avoid
flaring.
Liquids produced from a collection system described in subdivision d of subsection 2 of
section 38-08-06.4 utilizing absorption, adsorption, or refrigeration are exempt from the tax
under section 57-51.1-02 for a period of two years and thirty days from the time of first
production.
57-51.1-03. (Effective for taxable events occurring through November 30, 2015)
Exemptions from oil extraction tax.
The following activities are specifically exempted from the oil extraction tax:
1. The activity of extracting from the earth any oil that is exempt from the gross
production tax imposed by chapter 57-51.
2. The activity of extracting from the earth any oil from a stripper well property or
individual stripper well.
3. For a well drilled and completed as a vertical well, the initial production of oil from the
well is exempt from any taxes imposed under this chapter for a period of fifteen
months, except that oil produced from any well drilled and completed as a horizontal
well is exempt from any taxes imposed under this chapter for a period of twenty-four
months. Oil recovered during testing prior to well completion is exempt from the oil
extraction tax. The exemption under this subsection becomes ineffective if the average
price of a barrel of crude oil exceeds the trigger price for each month in any
consecutive five-month period. However, the exemption is reinstated if, after the trigger
provision becomes effective, the average price of a barrel of crude oil is less than the
trigger price for each month in any consecutive five-month period.
4. The production of oil from a qualifying well that was worked over is exempt from any
taxes imposed under this chapter for a period of twelve months, beginning with the first
day of the third calendar month after the completion of the work-over project. The
exemption provided by this subsection is only effective if the well operator establishes
to the satisfaction of the industrial commission upon completion of the project that the
cost of the project exceeded sixty-five thousand dollars or production is increased at
least fifty percent during the first two months after completion of the project. A
qualifying well under this subsection is a well with an average daily production of no
more than fifty barrels of oil during the latest six calendar months of continuous
production. A work-over project under this subsection means the continuous
employment of a work-over rig, including recompletions and reentries. The exemption
provided by this subsection becomes ineffective if the average price of a barrel of
crude oil exceeds the trigger price for each month in any consecutive five-month
period. However, the exemption is reinstated if, after the trigger provision becomes
effective, the average price of a barrel of crude oil is less than the trigger price for each
month in any consecutive five-month period.
5. a. The incremental production from a secondary recovery project which has been
certified as a qualified project by the industrial commission after July 1, 1991, is
exempt from any taxes imposed under this chapter for a period of five years from
the date the incremental production begins.
b. The incremental production from a tertiary recovery project that does not use
carbon dioxide and which has been certified as a qualified project by the
industrial commission is exempt from any taxes imposed under this chapter for a
period of ten years from the date the incremental production begins. Incremental
production from a tertiary recovery project that uses carbon dioxide and which
has been certified as a qualified project by the industrial commission is exempt
Page No. 5
c.
from any taxes imposed under this chapter from the date the incremental
production begins.
For purposes of this subsection, incremental production is defined in the following
manner:
(1) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the secondary recovery project
and the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the secondary recovery project had not been
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
(2) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
prior to July 1, 1991, and where the industrial commission cannot establish
an accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during a
new secondary recovery project and the amount of production which would
be equivalent to the average monthly production from the unit during the
most recent twelve months of normal production reduced by a production
decline rate of ten percent for each year. The industrial commission shall
determine the average monthly production from the unit during the most
recent twelve months of normal production and must upon request or upon
its own motion hold a hearing to make this determination. For purposes of
this paragraph, when determining the most recent twelve months of normal
production the industrial commission is not required to use twelve
consecutive months. In addition, the production decline rate of ten percent
must be applied from the last month in the twelve-month period of time.
(3) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
before July 1, 1991, and where the industrial commission can establish an
accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during the
new secondary recovery project and the total amount of oil that would have
been produced from the unit if the new secondary recovery project had not
been commenced. For purposes of this paragraph, the total amount of oil
that would have been produced from the unit if the new secondary recovery
project had not been commenced includes both primary production and
production that occurred as a result of the secondary recovery project that
was in existence before July 1, 1991. The industrial commission shall
determine the amount of oil that would have been produced from the unit if
the new secondary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the new secondary recovery project is certified.
(4) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the tertiary recovery project and
the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the tertiary recovery project had not been
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
Page No. 6
(5)
6.
7.
8.
For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced during the tertiary recovery project and the amount
of production which would be equivalent to the average monthly production
from the unit during the most recent twelve months of normal production
reduced by a production decline rate of ten percent for each year. The
industrial commission shall determine the average monthly production from
the unit during the most recent twelve months of normal production and
must upon request or upon its own motion hold a hearing to make this
determination. For purposes of this paragraph, when determining the most
recent twelve months of normal production the industrial commission is not
required to use twelve consecutive months. In addition, the production
decline rate of ten percent must be applied from the last month in the
twelve-month period of time.
(6) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project and where the industrial commission can establish an accurate
production decline curve, incremental production means the difference
between the total amount of oil produced from the unit during the tertiary
recovery project and the total amount of oil that would have been produced
from the unit if the tertiary recovery project had not been commenced. For
purposes of this paragraph, the total amount of oil that would have been
produced from the unit if the tertiary recovery project had not been
commenced includes both primary production and production that occurred
as a result of any secondary recovery project. The industrial commission
shall determine the amount of oil that would have been produced from the
unit if the tertiary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the tertiary recovery project is certified.
d. The industrial commission shall adopt rules relating to this exemption that must
include procedures for determining incremental production as defined in
subdivision c.
The production of oil from a two-year inactive well, as determined by the industrial
commission and certified to the state tax commissioner, for a period of ten years after
the date of receipt of the certification. The exemption under this subsection becomes
ineffective if the average price of a barrel of crude oil exceeds the trigger price for each
month in any consecutive five-month period. However, the exemption is reinstated if,
after the trigger provision becomes effective, the average price of a barrel of crude oil
is less than the trigger price for each month in any consecutive five-month period.
The production of oil from a horizontal reentry well, as determined by the industrial
commission and certified to the state tax commissioner, for a period of nine months
after the date the well is completed as a horizontal well. The exemption under this
subsection becomes ineffective if the average price of a barrel of crude oil exceeds the
trigger price for each month in any consecutive five-month period. However, the
exemption is reinstated if, after the trigger provision becomes effective, the average
price of a barrel of crude oil is less than the trigger price for each month in any
consecutive five-month period.
The initial production of oil from a well is exempt from any taxes imposed under this
chapter for a period of sixty months if:
a. The well is drilled and completed before July 1, 2013, on nontrust lands within the
boundaries of an Indian reservation;
b. The well is drilled and completed before July 1, 2013, on lands held in trust by the
United States for an Indian tribe or individual Indian; or
c. The well is drilled and completed before July 1, 2013, on lands held by an Indian
tribe if the interest is in existence on August 1, 1997.
Page No. 7
9.
10.
The first seventy-five thousand barrels or the first four million five hundred thousand
dollars of gross value at the well, whichever is less, of oil produced during the first
eighteen months after completion, from a horizontal well drilled and completed after
April 30, 2009, and before July 1, 2015, is subject to a reduced tax rate of two percent
of the gross value at the well of the oil extracted under this chapter. A well eligible for a
reduced tax rate under this subsection is eligible for the exemption for horizontal wells
under subsection 3, if the exemption under subsection 3 is effective during all or part
of the first twenty-four months after completion. The rate reduction under this
subsection becomes effective on the first day of the month following a month for which
the average price of a barrel of crude oil is less than fifty-five dollars. The rate
reduction under this subsection becomes ineffective on the first day of the month
following a month in which the average price of a barrel of crude oil exceeds seventy
dollars. If the rate reduction under this subsection is effective on the date of completion
of a well, the rate reduction applies to production from that well for up to eighteen
months after completion, subject to the other limitations of this subsection. If the rate
reduction under this subsection is ineffective on the date of completion of a well, the
rate reduction under this subsection does not apply to production from that well at any
time.
The first seventy-five thousand barrels of oil produced during the first eighteen months
after completion, from a well drilled and completed outside the Bakken and Three
Forks formations, and ten miles [16.10 kilometers] or more outside an established field
in which the industrial commission has defined the pool to include the Bakken or Three
Forks formation, is subject to a reduced tax rate of two percent of the gross value at
the well of the oil extracted under this chapter. A well eligible for a reduced tax rate
under this subsection is eligible for the exemption under subsection 3, if the exemption
under subsection 3 is effective during all or part of the first twenty-four months after
completion.
Exemptions from oil extraction tax. (Effective for taxable events occurring
December 1, 2015, through December 31, 2015)
The following activities are specifically exempted from the oil extraction tax:
1. The activity of extracting from the earth any oil that is exempt from the gross
production tax imposed by chapter 57-51.
2. The activity of extracting from the earth any oil from a stripper well property or
individual stripper well.
3. For a well drilled and completed as a vertical well, the initial production of oil from the
well is exempt from any taxes imposed under this chapter for a period of fifteen
months. Oil recovered during testing prior to well completion is exempt from the oil
extraction tax. The exemption under this subsection becomes ineffective if the average
price of a barrel of crude oil exceeds the trigger price for each month in any
consecutive five-month period. The reduced rate of tax under subsection 1 of section
57-51.1-02 does not apply after November 30, 2015, for oil produced from wells drilled
and completed after April 27, 1987, commonly referred to as new wells, and not
otherwise exempt under this section.
4. The production of oil from a qualifying well that was worked over is exempt from any
taxes imposed under this chapter for a period of twelve months, beginning with the first
day of the third calendar month after the completion of the work-over project. The
exemption provided by this subsection is only effective if the well operator establishes
to the satisfaction of the industrial commission upon completion of the project that the
cost of the project exceeded sixty-five thousand dollars or production is increased at
least fifty percent during the first two months after completion of the project. A
qualifying well under this subsection is a well with an average daily production of no
more than fifty barrels of oil during the latest six calendar months of continuous
production. A work-over project under this subsection means the continuous
employment of a work-over rig, including recompletions and reentries. The exemption
provided by this subsection becomes ineffective if the average price of a barrel of
Page No. 8
5.
crude oil exceeds the trigger price for each month in any consecutive five-month
period. However, the exemption is reinstated if, after the trigger provision becomes
effective, the average price of a barrel of crude oil is less than the trigger price for each
month in any consecutive five-month period.
a. The incremental production from a secondary recovery project which has been
certified as a qualified project by the industrial commission after July 1, 1991, is
exempt from any taxes imposed under this chapter for a period of five years from
the date the incremental production begins.
b. The incremental production from a tertiary recovery project that does not use
carbon dioxide and which has been certified as a qualified project by the
industrial commission is exempt from any taxes imposed under this chapter for a
period of ten years from the date the incremental production begins. Incremental
production from a tertiary recovery project that uses carbon dioxide and which
has been certified as a qualified project by the industrial commission is exempt
from any taxes imposed under this chapter from the date the incremental
production begins.
c. For purposes of this subsection, incremental production is defined in the following
manner:
(1) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the secondary recovery project
and the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the secondary recovery project had not been
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
(2) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
prior to July 1, 1991, and where the industrial commission cannot establish
an accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during a
new secondary recovery project and the amount of production which would
be equivalent to the average monthly production from the unit during the
most recent twelve months of normal production reduced by a production
decline rate of ten percent for each year. The industrial commission shall
determine the average monthly production from the unit during the most
recent twelve months of normal production and must upon request or upon
its own motion hold a hearing to make this determination. For purposes of
this paragraph, when determining the most recent twelve months of normal
production the industrial commission is not required to use twelve
consecutive months. In addition, the production decline rate of ten percent
must be applied from the last month in the twelve-month period of time.
(3) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
before July 1, 1991, and where the industrial commission can establish an
accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during the
new secondary recovery project and the total amount of oil that would have
been produced from the unit if the new secondary recovery project had not
been commenced. For purposes of this paragraph, the total amount of oil
that would have been produced from the unit if the new secondary recovery
project had not been commenced includes both primary production and
production that occurred as a result of the secondary recovery project that
was in existence before July 1, 1991. The industrial commission shall
Page No. 9
6.
7.
determine the amount of oil that would have been produced from the unit if
the new secondary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the new secondary recovery project is certified.
(4) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the tertiary recovery project and
the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the tertiary recovery project had not been
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
(5) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced during the tertiary recovery project and the amount
of production which would be equivalent to the average monthly production
from the unit during the most recent twelve months of normal production
reduced by a production decline rate of ten percent for each year. The
industrial commission shall determine the average monthly production from
the unit during the most recent twelve months of normal production and
must upon request or upon its own motion hold a hearing to make this
determination. For purposes of this paragraph, when determining the most
recent twelve months of normal production the industrial commission is not
required to use twelve consecutive months. In addition, the production
decline rate of ten percent must be applied from the last month in the
twelve-month period of time.
(6) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project and where the industrial commission can establish an accurate
production decline curve, incremental production means the difference
between the total amount of oil produced from the unit during the tertiary
recovery project and the total amount of oil that would have been produced
from the unit if the tertiary recovery project had not been commenced. For
purposes of this paragraph, the total amount of oil that would have been
produced from the unit if the tertiary recovery project had not been
commenced includes both primary production and production that occurred
as a result of any secondary recovery project. The industrial commission
shall determine the amount of oil that would have been produced from the
unit if the tertiary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the tertiary recovery project is certified.
d. The industrial commission shall adopt rules relating to this exemption that must
include procedures for determining incremental production as defined in
subdivision c.
The production of oil from a two-year inactive well, as determined by the industrial
commission and certified to the state tax commissioner, for a period of ten years after
the date of receipt of the certification. The exemption under this subsection becomes
ineffective if the average price of a barrel of crude oil exceeds the trigger price for each
month in any consecutive five-month period. However, the exemption is reinstated if,
after the trigger provision becomes effective, the average price of a barrel of crude oil
is less than the trigger price for each month in any consecutive five-month period.
The production of oil from a horizontal reentry well, as determined by the industrial
commission and certified to the state tax commissioner, for a period of nine months
Page No. 10
after the date the well is completed as a horizontal well. The exemption under this
subsection becomes ineffective if the average price of a barrel of crude oil exceeds the
trigger price for each month in any consecutive five-month period. However, the
exemption is reinstated if, after the trigger provision becomes effective, the average
price of a barrel of crude oil is less than the trigger price for each month in any
consecutive five-month period.
8. The initial production of oil from a well is exempt from any taxes imposed under this
chapter for a period of sixty months if:
a. The well is drilled and completed before July 1, 2013, on nontrust lands within the
boundaries of an Indian reservation;
b. The well is drilled and completed before July 1, 2013, on lands held in trust by the
United States for an Indian tribe or individual Indian; or
c. The well is drilled and completed before July 1, 2013, on lands held by an Indian
tribe if the interest is in existence on August 1, 1997.
9. The first seventy-five thousand barrels or the first four million five hundred thousand
dollars of gross value at the well, whichever is less, of oil produced during the first
eighteen months after completion, from a horizontal well drilled and completed after
April 30, 2009, and before July 1, 2015, is subject to a reduced tax rate of two percent
of the gross value at the well of the oil extracted under this chapter. A well eligible for a
reduced tax rate under this subsection is eligible for the exemption for horizontal wells
under subsection 3, if the exemption under subsection 3 is effective during all or part
of the first twenty-four months after completion. The rate reduction under this
subsection becomes effective on the first day of the month following a month for which
the average price of a barrel of crude oil is less than fifty-five dollars. The rate
reduction under this subsection becomes ineffective on the first day of the month
following a month in which the average price of a barrel of crude oil exceeds seventy
dollars. If the rate reduction under this subsection is effective on the date of completion
of a well, the rate reduction applies to production from that well for up to eighteen
months after completion, subject to the other limitations of this subsection. If the rate
reduction under this subsection is ineffective on the date of completion of a well, the
rate reduction under this subsection does not apply to production from that well at any
time.
10. The first seventy-five thousand barrels of oil produced during the first eighteen months
after completion, from a well drilled and completed outside the Bakken and Three
Forks formations, and ten miles [16.10 kilometers] or more outside an established field
in which the industrial commission has defined the pool to include the Bakken or Three
Forks formation, is subject to a reduced tax rate of two percent of the gross value at
the well of the oil extracted under this chapter. A well eligible for a reduced tax rate
under this subsection is eligible for the exemption under subsection 3, if the exemption
under subsection 3 is effective during all or part of the first twenty-four months after
completion.
(Effective for taxable events occurring after December 31, 2015) Exemptions from oil
extraction tax. The following activities are specifically exempted from the oil extraction tax:
1. The activity of extracting from the earth any oil that is exempt from the gross
production tax imposed by chapter 57-51.
2. The activity of extracting from the earth any oil from a stripper well property or
individual stripper well.
3. a. The incremental production from a secondary recovery project which has been
certified as a qualified project by the industrial commission after July 1, 1991, is
exempt from any taxes imposed under this chapter for a period of five years from
the date the incremental production begins.
b. The incremental production from a tertiary recovery project which has been
certified as a qualified project by the industrial commission is exempt from any
taxes imposed under this chapter for a period of ten years from the date the
incremental production begins. Incremental production from a tertiary recovery
project from a horizontal well drilled and completed within the Bakken and Three
Page No. 11
c.
Forks formations which has been certified as a qualified project by the industrial
commission is not exempt from July 1, 2015, through June 30, 2017, and is
thereafter exempt from any taxes imposed under this chapter for a period of five
years from July 1, 2017, or the date the incremental production begins, whichever
is later.
For purposes of this subsection, incremental production is defined in the following
manner:
(1) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the secondary recovery project
and the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the secondary recovery project had not been
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
(2) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
prior to July 1, 1991, and where the industrial commission cannot establish
an accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during a
new secondary recovery project and the amount of production which would
be equivalent to the average monthly production from the unit during the
most recent twelve months of normal production reduced by a production
decline rate of ten percent for each year. The industrial commission shall
determine the average monthly production from the unit during the most
recent twelve months of normal production and must upon request or upon
its own motion hold a hearing to make this determination. For purposes of
this paragraph, when determining the most recent twelve months of normal
production the industrial commission is not required to use twelve
consecutive months. In addition, the production decline rate of ten percent
must be applied from the last month in the twelve-month period of time.
(3) For purposes of determining the exemption provided for in subdivision a and
with respect to a unit where a secondary recovery project was in existence
before July 1, 1991, and where the industrial commission can establish an
accurate production decline curve, incremental production means the
difference between the total amount of oil produced from the unit during the
new secondary recovery project and the total amount of oil that would have
been produced from the unit if the new secondary recovery project had not
been commenced. For purposes of this paragraph, the total amount of oil
that would have been produced from the unit if the new secondary recovery
project had not been commenced includes both primary production and
production that occurred as a result of the secondary recovery project that
was in existence before July 1, 1991. The industrial commission shall
determine the amount of oil that would have been produced from the unit if
the new secondary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the new secondary recovery project is certified.
(4) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there has not been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced from the unit during the tertiary recovery project and
the amount of primary production from the unit. For purposes of this
paragraph, primary production means the amount of oil which would have
been produced from the unit if the tertiary recovery project had not been
Page No. 12
4.
commenced. The industrial commission shall determine the amount of
primary production in a manner which conforms to the practice and
procedure used by the commission at the time the project is certified.
(5) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project, incremental production means the difference between the total
amount of oil produced during the tertiary recovery project and the amount
of production which would be equivalent to the average monthly production
from the unit during the most recent twelve months of normal production
reduced by a production decline rate of ten percent for each year. The
industrial commission shall determine the average monthly production from
the unit during the most recent twelve months of normal production and
must upon request or upon its own motion hold a hearing to make this
determination. For purposes of this paragraph, when determining the most
recent twelve months of normal production the industrial commission is not
required to use twelve consecutive months. In addition, the production
decline rate of ten percent must be applied from the last month in the
twelve-month period of time.
(6) For purposes of determining the exemption provided for in subdivision b and
with respect to a unit where there is or has been a secondary recovery
project and where the industrial commission can establish an accurate
production decline curve, incremental production means the difference
between the total amount of oil produced from the unit during the tertiary
recovery project and the total amount of oil that would have been produced
from the unit if the tertiary recovery project had not been commenced. For
purposes of this paragraph, the total amount of oil that would have been
produced from the unit if the tertiary recovery project had not been
commenced includes both primary production and production that occurred
as a result of any secondary recovery project. The industrial commission
shall determine the amount of oil that would have been produced from the
unit if the tertiary recovery project had not been commenced in a manner
that conforms to the practice and procedure used by the commission at the
time the tertiary recovery project is certified.
d. The industrial commission shall adopt rules relating to this exemption that must
include procedures for determining incremental production as defined in
subdivision c.
The first seventy-five thousand barrels of oil produced during the first eighteen months
after completion, from a well drilled and completed outside the Bakken and Three
Forks formations, and ten miles [16.10 kilometers] or more outside an established field
in which the industrial commission has defined the pool to include the Bakken or Three
Forks formation, is subject to a reduced tax rate of two percent of the gross value at
the well of the oil extracted under this chapter.
57-51.1-03.1. Stripper well, new well, work-over, and secondary or tertiary project
certification for tax exemption or rate reduction - Filing requirement.
To receive the benefits of a tax exemption or tax rate reduction, a certification of qualifying
well status prepared by the industrial commission must be submitted to the tax commissioner as
follows:
1. To receive, from the first day of eligibility, a tax exemption on production from a stripper
well property or individual stripper well under subsection 2 of section 57-51.1-03, the
industrial commission's certification must be submitted to the tax commissioner within
eighteen months after the end of the stripper well property's or stripper well's
qualification period.
2. To receive, from the first day of eligibility, a tax exemption under subsection 3 of
section 57-51.1-03 and a rate reduction on production from a new well under section
Page No. 13
57-51.1-02, the industrial commission's certification must be submitted to the tax
commissioner within eighteen months after a new well is completed.
3. To receive, from the first day of eligibility, a tax exemption under subsection 4 of
section 57-51.1-03 and a rate reduction for a work-over well under section 57-51.1-02,
the industrial commission's certification must be submitted to the tax commissioner
within eighteen months after the work-over project is completed.
4. To receive, from the first day of eligibility, a tax exemption under subsection 5 of
section 57-51.1-03 and a tax rate reduction under section 57-51.1-02 on production
from a secondary or tertiary project, the industrial commission's certification must be
submitted to the tax commissioner within the following time periods:
a. For a tax exemption, within eighteen months after the month in which the first
incremental oil was produced.
b. For a tax rate reduction, within eighteen months after the end of the period
qualifying the project for the rate reduction.
5. To receive, from the first day of eligibility, a tax exemption or the reduction on
production for which any other tax exemption or rate reduction may apply, the
industrial commission's certification must be submitted to the tax commissioner within
eighteen months of the completion, recompletion, or other qualifying date.
6. To receive, from the first day of eligibility, a tax exemption under subsection 6 of
section 57-51.1-03 on production from a two-year inactive well, the industrial
commission's certification must be submitted to the tax commissioner within eighteen
months after the end of the two-year inactive well's qualification period.
If the industrial commission's certification is not submitted to the tax commissioner within the
eighteen-month period provided in this section, then the exemption or rate reduction does not
apply for the production periods in which the certification is not on file with the tax commissioner.
When the industrial commission's certification is submitted to the tax commissioner after the
eighteen-month period, the tax exemption or rate reduction applies to prospective production
periods only and the exemption or rate reduction is effective the first day of the month in which
the certification is received by the tax commissioner.
57-51.1-04. Authority of tax commissioner to accept production reports computed on
a property basis.
Repealed by S.L. 1989, ch. 732, § 5.
57-51.1-05. Administration of oil extraction tax.
For the purposes of administering the tax imposed by section 57-51.1-02, the provisions of
chapter 57-51 pertaining to the administration of the oil and gas gross production tax law not in
conflict with the provisions of this chapter, including but not limited to the provisions of that
chapter relating to the filing of returns, deduction of the tax by the purchaser or producer in
making settlement with any owner of the oil, payment of the tax and interest and penalties
thereon, refunds, attachment of liens for failure to pay the tax, and civil and criminal penalties for
failure to comply with the provisions of that chapter, govern the administration of the tax
imposed by section 57-51.1-02.
57-51.1-06. Oil extraction tax development fund established.
The tax imposed by section 57-51.1-02 must be paid to the state treasurer when collected
by the state tax commissioner and must be credited to a special fund in the state treasury, to be
known as the oil extraction tax development fund. The moneys accumulated in such fund must
be allocated as provided in this chapter and the legislative assembly shall make any
appropriation of money that may be necessary to accomplish the purposes of this chapter. For
purposes of distributions and allocations made by the state treasurer under this chapter and
chapters 57-51 and 57-51.2, all revenue collected by the commissioner under this chapter must
be considered revenue collections for the period in which the revenue was received by the
commissioner.
Page No. 14
57-51.1-07. Allocation of moneys in oil extraction tax development fund.
Moneys deposited in the oil extraction tax development fund must be transferred monthly by
the state treasurer as follows:
1. Twenty percent must be allocated and credited to the sinking fund established for
payment of the state of North Dakota water development bonds, southwest pipeline
series, and any moneys in excess of the sum necessary to maintain the accounts
within the sinking fund and for the payment of principal and interest on the bonds must
be credited to a special trust fund, to be known as the resources trust fund. The
resources trust fund must be established in the state treasury and the funds therein
must be deposited and invested as are other state funds to earn the maximum amount
permitted by law which income must be deposited in the resources trust fund. Five
percent of the amount credited to the resources trust fund must be transferred no less
than quarterly into the renewable energy development fund, not to exceed three million
dollars per biennium. One-half of one percent of the amount credited to the resources
trust fund must be transferred no less than quarterly into the energy conservation grant
fund not to exceed one million two hundred thousand dollars per biennium. The
principal and income of the resources trust fund may be expended only pursuant to
legislative appropriation and are available to:
a. The state water commission for planning for and construction of water-related
projects, including rural water systems. These water-related projects must be
those which the state water commission has the authority to undertake and
construct pursuant to chapter 61-02; and
b. The industrial commission for the funding of programs for development of
renewable energy sources; for studies for development of cogeneration systems
that increase the capacity of a system to produce more than one kind of energy
from the same fuel; for studies for development of waste products utilization; and
for the making of grants and loans in connection therewith.
c. The department of commerce for the funding of programs for development of
energy conservation and for the making of grants and loans relating to energy
conservation.
2. Twenty percent must be allocated to the common schools trust fund and foundation
aid stabilization fund as provided in section 24 of article X of the Constitution of North
Dakota.
3. Thirty percent must be allocated to the legacy fund as provided in section 26 of
article X of the Constitution of North Dakota.
4. Thirty percent must be allocated and credited to the state's general fund.
57-51.1-07.1. Resources trust fund - Procedure for review of applications for financial
assistance for water-related projects.
1. A political subdivision or rural water system seeking loans, grants, or other financial
assistance by legislative appropriation from the resources trust fund for a water-related
project or study must submit the proposed water-related project or study to the state
water commission for review. The commission may require the political subdivision or
rural water system to supply information as it considers necessary to review the
request. After consideration and review of the proposed water-related project or study,
the state water commission may conduct or it may require the project sponsor to
conduct a preliminary study for the proposed project or study. The preliminary study
must be conducted in accordance with criteria established pursuant to subsection 3.
2. Every legislative bill appropriating moneys from the resources trust fund pursuant to
subsection 1 must be accompanied by a state water commission report, which must
include:
a. A summary of the engineering feasibility study of the proposed water project.
b. Statements concerning the proposed water project as it relates to the
comprehensive state water plan of the state water commission.
c. The need for the proposed water project, including any alternative projects which
would satisfy such need.
Page No. 15
d.
3.
The availability of other sources of funding or financial assistance for such water
project.
e. A recommendation as to whether or not the proposed water project should
receive financial assistance through legislative appropriation from the resources
trust fund.
f. Other items as deemed necessary or appropriate by the state water commission.
The state water commission shall adopt rules for governing the review and
recommendation of proposed water projects for which financial assistance by
legislative appropriation from the resources trust fund is being sought under this
section. The rules must consider project revenues, local cost sharing, and ability to
pay. The rules may provide for repayment of a portion of funds allocated from the
resources trust fund.
57-51.1-07.2. Permanent oil tax trust fund - Deposits - Interest - Adjustment of
distribution formula.
Repealed by S.L. 2011, ch. 483, § 11.
57-51.1-07.3. Oil and gas research fund - Deposits - Continuing appropriation.
There is established a special fund in the state treasury to be known as the oil and gas
research fund. Before depositing oil and gas gross production tax and oil extraction tax
revenues in the general fund, tax relief fund, strategic investment and improvements fund, or the
state disaster relief fund, two percent of the revenues must be deposited monthly into the oil and
gas research fund, up to ten million dollars per biennium. All moneys deposited in the oil and
gas research fund and interest on all such moneys are appropriated as a continuing
appropriation to the council to be used for purposes stated in chapter 54-17.6.
57-51.1-07.4. Separate allocation of state share of collections from reservation
development.
Repealed by S.L. 2011, ch. 483, § 11.
57-51.1-07.5. (Effective through June 30, 2017) State share of oil and gas taxes Deposits.
From the revenues designated for deposit in the state general fund under chapters 57-51
and 57-51.1, the state treasurer shall deposit the revenues received each biennium as follows:
1. The first two hundred million dollars into the state general fund;
2. The next three hundred million dollars into the tax relief fund;
3. The next one hundred million dollars into the state general fund;
4. The next one hundred million dollars into the strategic investment and improvements
fund;
5. The next twenty-two million dollars into the state disaster relief fund, but not in an
amount that would bring the unobligated balance in the fund to more than twenty-five
million dollars; and
6. Any additional revenues:
a. Seventy percent into the strategic investment and improvements fund; and
b. Thirty percent into the political subdivision allocation fund.
(Effective after June 30, 2017) State share of oil and gas taxes - Deposits. From the
revenues designated for deposit in the state general fund under chapters 57-51 and 57-51.1,
the state treasurer shall deposit the revenues received each biennium as follows:
1. The first two hundred million dollars into the state general fund;
2. The next three hundred million dollars into the tax relief fund;
3. The next one hundred million dollars into the state general fund;
4. The next one hundred million dollars into the strategic investment and improvements
fund;
Page No. 16
5.
6.
The next twenty-two million dollars into the state disaster relief fund, but not in an
amount that would bring the unobligated balance in the fund to more than twenty-five
million dollars; and
Any additional revenues into the strategic investment and improvements fund.
57-51.1-07.6. Political subdivision allocation fund - Oil and gas tax revenue
allocations to political subdivisions - State treasurer - Continuing appropriation.
There is created in the state treasury the political subdivision allocation fund. The fund
consists of oil and gas tax revenue deposited in the fund pursuant to this chapter. All moneys in
the fund are appropriated to the state treasurer on a continuing basis for the purpose of
allocations to political subdivisions in oil-producing counties.
1. If the balance of the fund exceeds ten million dollars on March first of each
odd-numbered year, within thirty-one days, the state treasurer shall allocate all
moneys in the fund to eligible political subdivisions in oil-producing counties based on
each political subdivision's oil and gas gross production tax allocations under
subsection 4 or subsection 5 of section 57-51-15 in the most recently completed
formula allocation year. The allocation to each eligible political subdivision must be
proportional to each political subdivision's total oil and gas gross production tax
allocation under subsection 4 or subsection 5 of section 57-51-15 in the most recently
completed formula allocation year relative to the combined total of all oil and gas gross
production tax allocations under subsection 4 and subsection 5 of section 57-51-15 in
the most recently completed formula allocation year. For purposes of this subsection,
"formula allocation year" means the period beginning September first of an
odd-numbered year and ending August thirty-first of the following even-numbered year.
2. If the balance of the fund exceeds ten million dollars on August first of each
odd-numbered year, within thirty-one days, the state treasurer shall allocate all
moneys in the fund to eligible political subdivisions in oil-producing counties based on
each political subdivision's oil and gas gross production tax allocations under
subsection 4 or subsection 5 of section 57-51-15 in the most recently completed
formula allocation year. The allocation to each eligible political subdivision must be
proportional to each political subdivision's total oil and gas gross production tax
allocation under subsection 4 or subsection 5 of section 57-51-15 in the most recently
completed formula allocation year relative to the combined total of all oil and gas gross
production tax allocations under subsection 4 and subsection 5 of section 57-51-15 in
the most recently completed formula allocation year. For purposes of this subsection,
"formula allocation year" means the period beginning September first of an
odd-numbered year and ending August thirty-first of the following even-numbered year.
57-51.1-08. Intent.
It is the intent of the electors of the state of North Dakota and the legislative assembly to
fund public elementary and secondary education in North Dakota at the level of seventy percent
of the educational cost per student, as determined under the provisions of chapter 15.1-27, to
provide funds for the life skills and transition center, and to provide for water development and
utilization and energy conservation and development programs by enactment of an excise tax to
be known as the "oil extraction tax" and enactment of an income tax credit.
The legislative assembly has determined that many areas within the state of North Dakota
do not have adequate water supplies for municipal, domestic, livestock, light industrial, and
other uses. However, adequate water supplies are essential for the social and economic stability
of municipalities and rural areas. It is, therefore, declared to be in the best interest of the people
of the state of North Dakota to establish a resources trust fund to be used to construct, or assist
in the construction of, multiple-use water supply facilities. The legislative assembly also
recognizes that appropriate planning to meet current and long-range water needs for the benefit
of all of the citizens of the state of North Dakota is a matter of concern and high priority. The
legislative assembly further intends that revenues generated by use of any facilities constructed,
in whole or in part, with financing from the resources trust fund shall be deposited in the
resources trust fund.
Page No. 17
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