# Title 57 — Taxation

## Chapter 57-51.1 — Oil Extraction Tax

### § 57-51.1-01. Definitions for oil extraction tax.

(Effective through June 30, 2031)
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. "Development incentive well" means, as determined and certified by the industrial
commission, a well spud after June 30, 2025, which:
a. Utilizes a new or innovative drilling or completion technique that constitutes a
technical advancement that has not been previously utilized with demonstrated
success by the operator within the specific formation targeted for development by
that operator;
b. Demonstrates the capability to develop reserves within the target formation that
would otherwise remain underdeveloped or undeveloped under existing drilling or
completion techniques; and
c. Is designed and anticipated to, more likely than not, increase the number of new
wells, additional production, or the ultimate recovery of oil or gas within the target
formation.
3. "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].
4. "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.
5. "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.
6. "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.
7. "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.
8. "Restimulation well" means a previously completed oil or gas well that, following
completion and production of oil, has been treated with an application of fluid under
pressure for the purpose of initiating or propagating fractures in a target geologic
formation to enhance production of oil. The term does not include a well that:
a. Has less than sixty months of production or is producing more than one hundred
and twenty-five barrels of oil per day reported to the industrial commission before
completion of the restimulation treatment;
b. Is part of a qualifying secondary recovery project, qualifying tertiary recovery
project, or stripper well or stripper well property as defined under this section; or
c. Is drilled but not completed and does not have a record of oil production reported
to the industrial commission.
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 re-entered 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 re-entered 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.
Definitions for oil extraction tax. (Effective after June 30, 2031) 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. "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].
3. "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.
4. "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.
5. "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.
6. "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.
7. "Restimulation well" means a previously completed oil or gas well that, following
completion and production of oil, has been treated with an application of fluid under
pressure for the purpose of initiating or propagating fractures in a target geologic
formation to enhance production of oil. The term does not include a well that:
a. Has less than sixty months of production or is producing more than one hundred
and twenty-five barrels of oil per day reported to the industrial commission before
completion of the restimulation treatment;
b. Is part of a qualifying secondary recovery project, qualifying tertiary recovery
project, or stripper well or stripper well property as defined under this section; or
c. Is drilled but not completed and does not have a record of oil production reported
to the industrial commission.
8. "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.
9. "Stripper well" means a well drilled and completed, or re-entered 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.
10. "Stripper well property" means wells drilled and completed, or a well re-entered 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.
### § 57-51.1-02. Imposition of oil extraction tax.

1. 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.
2. Subject to subsection 3, for a well located within the exterior boundaries of a
reservation, a well located on trust properties outside reservation boundaries as
defined in section 57-51.2-02, or a straddle well located on reservation trust land as
defined in section 57-51.1-07.10, 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. For purposes of this subsection, "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.
3. A tribe may make an irrevocable election to opt-out of the increased rate of tax
provided in subsection 2 by providing written notice to the tax commissioner. If a tribe
provides notice under this subsection, the rate of tax on oil extracted from taxable
wells is equal to the rate of tax provided in subsection 1, beginning in the month of
production after notice under this subsection is received by the tax commissioner.
### § 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.
### § 57-51.1-02.2. Temporary exemption - Oil extraction tax credit for gas flaring

mitigation.
Expired under S.L. 2021, ch. 481, § 3.

### § 57-51.1-03. Exemptions from oil extraction tax.

(Effective through June 30, 2031)
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
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.
c. The incremental production from a tertiary recovery project that injects more than
fifty percent carbon dioxide produced from coal and has been certified as a
qualified project by the industrial commission is exempt from any taxes imposed
under this chapter for a period of twenty years from the date the incremental
production begins or from the date the project is certified by the industrial
commission as meeting the fifty percent or more carbon dioxide produced from
coal injection requirement, whichever is later. To qualify for the exemption under
this subsection, the project must be located outside the Bakken or Three Forks
formations and must use carbon dioxide produced from coal. The incremental
production that has been certified by the industrial commission under this section
must be used to calculate the exemption under this subdivision.
d. The incremental production from a tertiary recovery project that injects more than
fifty percent carbon dioxide produced from coal and 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 or from the date the project is certified by the industrial
commission as meeting the fifty percent or more carbon dioxide produced from
coal injection requirement, whichever is later. To qualify for the exemption under
this subsection, the project must be located within the Bakken or Three Forks
formations and must use carbon dioxide produced from coal. The incremental
production that has been certified by the industrial commission under this section
must be used to calculate the exemption under this subdivision.
e. 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.
(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.
(7) For purposes of determining the exemption provided for in subdivisions c
and d, and with respect to a unit where a tertiary recovery project was in
existence, 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 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 shall upon request or upon its own motion
hold a hearing to make this determination. For purposes of this paragraph,
in 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.
(8) For purposes of determining the exemption provided for in subdivisions c
and d, and with respect to a unit where a tertiary recovery project was in
existence, 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
tertiary recovery project and the total amount of oil that would have been
produced from the unit if the new 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 new tertiary recovery project
had not been commenced includes both primary production and production
that occurred as a result of the tertiary recovery project that was previously
in existence. The industrial commission shall determine the amount of oil
that would have been produced from the unit if the new 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 new tertiary recovery
project is certified.
f. The industrial commission shall adopt rules relating to this exemption which must
include procedures for determining incremental production as defined in
subdivision e.
4. The first three hundred thousand barrels of oil produced during the first thirty-six
months after completion, from a well drilled and completed outside the Bakken and
Three Forks formations is subject to a reduced tax rate of two percent of the gross
value at the well of the oil extracted under this chapter. The tax rate reduction under
this subsection does not apply to a well located within the exterior boundaries of a
reservation, a well located on trust properties outside reservation boundaries as

defined in section 57-51.2-02, or a straddle well as defined in section 57-51.1-07.10
located on reservation trust land, unless a tribe makes an irrevocable election to opt-in
to the tax rate reduction by providing written notice to the tax commissioner. If a tribe
provides notice of its election to opt-in to the tax rate reduction, the tax commissioner
shall apply the tax rate reduction beginning in the month of production after the notice
is received by the tax commissioner.
5. The production from a restimulation well that has been certified as a qualified well by
the industrial commission after August 1, 2023, is subject to a reduced tax rate of
two percent of the gross value at the well of the oil extracted under this chapter for the
first seventy-five thousand barrels of production or for a period of eighteen months
after the month in which oil was first produced from the restimulation well, whichever
occurs first. The tax rate reduction under this subsection does not apply to a well
located within the exterior boundaries of a reservation, a well located on trust
properties outside reservation boundaries as defined in section 57-51.2-02, or a
straddle well located on reservation trust land as defined in section 57-51.1-07.10,
unless a tribe makes an irrevocable election to opt-in to the tax rate reduction by
providing written notice to the tax commissioner. If a tribe provides notice of its election
to opt-in to the tax rate reduction, the tax commissioner shall apply the tax rate
reduction beginning in the month of production after the notice is received by the tax
commissioner. The industrial commission shall certify whether the well qualifies as a
restimulation well under section 57-51.1-01 in a manner that conforms to the practice
and procedure used by the commission at the time the restimulation well is certified.
6. a. The first two hundred fifty thousand barrels of oil produced during the first
thirty-six months after completion from a development incentive well drilled and
completed before July 1, 2028, and certified as a qualified well by the industrial
commission, are exempt from the tax under section 57-51.1-02.
b. For purposes of the exemption under this subsection:
(1) An operator seeking certification of a well as a development incentive well
shall meet the burden of demonstrating to the industrial commission that the
well meets the criteria under subsection 2 of section 57-51.1-01.
(2) An operator seeking certification of a well as a development incentive well
must be classified as one of the following:
(a) An operator with between forty and ninety-nine wells within the
Bakken or Three Forks formations which have been:
[1] Drilled by the operator during the period beginning July 1, 2023,
and ending June 30, 2025; or
[2] Drilled during the period beginning July 1, 2023, and ending June
30, 2025, and acquired by the operator.
(b) An operator with between one hundred and one hundred forty-nine
wells within the Bakken or Three Forks formations which have been:
[1] Drilled by the operator during the period beginning July 1, 2023,
and ending June 30, 2025; or
[2] Drilled during the period beginning July 1, 2023, and ending June
30, 2025, and acquired by the operator.
(c) An operator with one hundred fifty or more wells within the Bakken or
Three Forks formations which have been:
[1] Drilled by the operator during the period beginning July 1, 2023,
and ending June 30, 2025; or
[2] Drilled during the period beginning July 1, 2023, and ending June
30, 2025, and acquired by the operator.
(3) The industrial commission may not certify more than:
(a) Four development incentive wells for an operator classified under
subparagraph a of paragraph 2 of subdivision b;
(b) Eight development incentive wells for an operator classified under
subparagraph b of paragraph 2 of subdivision b; and

(c) Twelve development incentive wells for an operator classified under
subparagraph c of paragraph 2 of subdivision b.
c. The tax exemption under this subsection does not apply to a well located within
the exterior boundaries of a reservation, a well located on trust properties outside
reservation boundaries as defined in section 57-51.2-02, or a straddle well as
defined in section 57-51.1-07.10 located on reservation trust land, unless a tribe
makes an irrevocable election to opt-in to the tax exemption by providing written
notice to the tax commissioner. If a tribe provides notice of its election to opt-in to
the tax exemption, the tax commissioner shall apply the tax exemption beginning
in the month of production after the notice is received by the tax commissioner.
Exemptions from oil extraction tax. (Effective after June 30, 2031) 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
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.
c. The incremental production from a tertiary recovery project that injects more than
fifty percent carbon dioxide produced from coal and has been certified as a
qualified project by the industrial commission is exempt from any taxes imposed
under this chapter for a period of twenty years from the date the incremental
production begins or from the date the project is certified by the industrial
commission as meeting the fifty percent or more carbon dioxide produced from
coal injection requirement, whichever is later. To qualify for the exemption under
this subsection, the project must be located outside the Bakken or Three Forks
formations and must use carbon dioxide produced from coal. The incremental
production that has been certified by the industrial commission under this section
must be used to calculate the exemption under this subdivision.
d. The incremental production from a tertiary recovery project that injects more than
fifty percent carbon dioxide produced from coal and 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 or from the date the project is certified by the industrial
commission as meeting the fifty percent or more carbon dioxide produced from
coal injection requirement, whichever is later. To qualify for the exemption under
this subsection, the project must be located within the Bakken or Three Forks
formations and must use carbon dioxide produced from coal. The incremental
production that has been certified by the industrial commission under this section
must be used to calculate the exemption under this subdivision.
e. 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.
(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.
(7) For purposes of determining the exemption provided for in subdivisions c
and d, and with respect to a unit where a tertiary recovery project was in
existence, 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 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 shall upon request or upon its own motion
hold a hearing to make this determination. For purposes of this paragraph,
in 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.
(8) For purposes of determining the exemption provided for in subdivisions c
and d, and with respect to a unit where a tertiary recovery project was in
existence, 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
tertiary recovery project and the total amount of oil that would have been
produced from the unit if the new 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 new tertiary recovery project
had not been commenced includes both primary production and production
that occurred as a result of the tertiary recovery project that was previously
in existence. The industrial commission shall determine the amount of oil
that would have been produced from the unit if the new 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 new tertiary recovery
project is certified.

f. The industrial commission shall adopt rules relating to this exemption which must
include procedures for determining incremental production as defined in
subdivision e.
4. The first three hundred thousand barrels of oil produced during the first thirty-six
months after completion, from a well drilled and completed outside the Bakken and
Three Forks formations is subject to a reduced tax rate of two percent of the gross
value at the well of the oil extracted under this chapter. The tax rate reduction under
this subsection does not apply to a well located within the exterior boundaries of a
reservation, a well located on trust properties outside reservation boundaries as
defined in section 57-51.2-02, or a straddle well as defined in section 57-51.1-07.10
located on reservation trust land, unless a tribe makes an irrevocable election to opt-in
to the tax rate reduction by providing written notice to the tax commissioner. If a tribe
provides notice of its election to opt-in to the tax rate reduction, the tax commissioner
shall apply the tax rate reduction beginning in the month of production after the notice
is received by the tax commissioner.
5. The production from a restimulation well that has been certified as a qualified well by
the industrial commission after August 1, 2023, is subject to a reduced tax rate of
two percent of the gross value at the well of the oil extracted under this chapter for the
first seventy-five thousand barrels of production or for a period of eighteen months
after the month in which oil was first produced from the restimulation well, whichever
occurs first. The tax rate reduction under this subsection does not apply to a well
located within the exterior boundaries of a reservation, a well located on trust
properties outside reservation boundaries as defined in section 57-51.2-02, or a
straddle well located on reservation trust land as defined in section 57-51.1-07.10,
unless a tribe makes an irrevocable election to opt-in to the tax rate reduction by
providing written notice to the tax commissioner. If a tribe provides notice of its election
to opt-in to the tax rate reduction, the tax commissioner shall apply the tax rate
reduction beginning in the month of production after the notice is received by the tax
commissioner. The industrial commission shall certify whether the well qualifies as a
restimulation well under section 57-51.1-01 in a manner that conforms to the practice
and procedure used by the commission at the time the restimulation well is certified.
### § 57-51.1-03.1. Stripper well, new well, secondary or tertiary project, and restimulation

well certification for tax exemption or rate reduction - Filing requirement.
1. 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:
a. 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.
b. To receive, from the first day of eligibility, a tax exemption under subsection 3 of
section 57-51.1-03 on production from a secondary or tertiary project, the
industrial commission's certification must be submitted to the tax commissioner
within eighteen months after the month in which the first incremental oil was
produced.
c. 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.
d. To receive, from the first day of eligibility, a tax rate reduction under subsection 5
of section 57-51.1-03 on production from a restimulation well, the industrial
commission's certification must be submitted to the tax commissioner within six
months after the month in which the first oil was produced.

2. 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.
### § 57-51.1-07. Allocation of moneys in oil extraction tax development fund.

Moneys deposited in the oil extraction tax development fund from revenue collected under
section 57-51.1-02 and oil extraction tax revenue allocated to the state under the terms of an
agreement entered pursuant to chapter 57-51.2 must be transferred monthly by the state
treasurer as follows:
1. Twenty percent must be allocated 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. Three 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. One-half of one percent must be allocated to the resources trust fund beginning with
allocations made by the state treasurer in August 2019 and continuing until the
combined allocations under this subsection total one hundred twenty-eight million
seven hundred forty thousand dollars, after which the state treasurer shall discontinue
making allocations under this subsection.
3. 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.
4. Thirty percent must be allocated to the legacy fund as provided in section 26 of
article X of the Constitution of North Dakota.
5. The remainder must be allocated 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.
d. 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.
3. 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 under section 57-51.1-07.5, 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. 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 in the
following order:
1. The first two hundred fifty million dollars into the state general fund;
2. The next two hundred fifty million dollars into the social service fund;
3. The next seventy-five million dollars into the budget stabilization fund, but not in an
amount that would bring the balance in the fund to more than the limit in section
54-27.2-01;
4. The next two hundred fifty million dollars into the state general fund;
5. The next ten million dollars into the lignite research fund;
6. The next twenty 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 million
dollars;
7. The next fifty-nine million seven hundred fifty thousand dollars, or the amount
necessary to provide for twice the amount of the distributions under subsection 3 of
section 57-51.1-07.7, into the funds designated for infrastructure development in
non-oil-producing counties under sections 57-51.1-07.7 and 57-51.1-07.8 with fifty
percent deposited into the municipal infrastructure fund and fifty percent deposited into
the county and township infrastructure fund;
8. The next one hundred million two hundred fifty thousand dollars or the amount
necessary to provide a total of one hundred sixty million dollars into the funds
designated for infrastructure development in non-oil-producing counties under sections
infrastructure fund and fifty percent deposited into the county and township
infrastructure fund;
9. The next sixty-five million dollars to the public employees retirement fund for the main
system plan;
10. The next twenty million dollars into the airport infrastructure fund; and
11. Any additional revenues into the strategic investment and improvements fund.
### § 57-51.1-07.6. Political subdivision allocation fund.

Repealed by S.L. 2017, ch. 38, §19.
### § 57-51.1-07.7. Municipal infrastructure fund - Continuing appropriation - State

treasurer - Department of transportation - Reports.
1. There is created in the state treasury the municipal infrastructure fund. The fund
consists of all moneys deposited in the fund under section 57-51.1-07.5.

a. The first forty million dollars deposited in the fund each biennium is appropriated
to the state treasurer on a continuing basis for the purpose of providing grants to
cities located in non-oil-producing counties pursuant to subsections 2 through 5.
The grant funding may be distributed only to cities located in non-oil-producing
counties, excluding hub cities, and may be used only for essential infrastructure
projects.
b. The remaining moneys deposited in the fund are available to the department of
transportation, within the limits of legislative appropriation, for the purpose of
providing grants to cities located in non-oil-producing counties pursuant to
subsection 6.
2. By November thirtieth of each even-numbered year, a city that receives a grant from
the fund under subsection 3 or 4 and has the population of at least one thousand shall
provide a report to the state treasurer on the use of the funding. The state treasurer
shall notify cities of the reporting requirement by November first of each even-
numbered year. Upon request, the state treasurer may provide an extension of up to
fifteen days for a city to submit the report. The state treasurer shall determine the
format of the report. The report must include the amount of grant funding received and
spent by the city and a description of the infrastructure projects completed in part or in
whole with the grant funding. The state treasurer shall make the reports available to
the public on the state treasurer's website. A city that does not provide the report in a
timely manner or in the correct format is not eligible to receive a grant from the fund
under subsection 3 or 4 for a period of two years starting from the date the report was
due. If a city uses the funding in a manner inconsistent with the requirements of this
section as identified in any financial audits conducted by the state auditor or an
independent accounting firm, the state treasurer shall reduce any future grants to that
city under subsection 3 or 4 by the amount spent that was inconsistent with the
requirements.
3. Within forty days after the fund receives total deposits under subdivision a of
subsection 1 that are greater than or equal to the amount needed for the grants under
this subsection or by September thirtieth of each odd-numbered year, whichever is
earlier, the state treasurer shall distribute moneys in the fund as grants to cities for
essential infrastructure projects. The state treasurer shall distribute the grants only if
the fund receives total deposits that are at least ten percent of the amount needed for
distributions under this subsection based on the following:
a. Two million five hundred thousand dollars to each city with a population of at least
five thousand;
b. Five hundred thousand dollars to each city with a population of at least two
thousand but less than five thousand; and
c. One hundred twenty-five thousand dollars to each city with a population of at
least one thousand but less than two thousand.
d. If, at the time of the distributions, the moneys in the fund are less than the amount
needed for the grants under this subsection, the state treasurer shall distribute
the grants under this subsection on a pro rata basis.
e. For the purposes of determining the city's population under this subsection, the
state treasurer shall use the most recent actual or estimated census data
published by the United States census bureau.
4. Within sixty days after the fund receives total deposits equal to the amount identified
under subdivision a of subsection 1 or by September thirtieth of each odd-numbered
year, whichever is earlier, the state treasurer shall distribute the moneys in the fund as
grants to cities for essential infrastructure projects. The state treasurer shall distribute
the grants only if the fund receives total deposits equal to the amount needed under
subsection 2 plus at least ten percent of the amount identified under subdivision a of
subsection 1, based on the following:
a. One hundred fifty dollars per person of the city's population.

b. In addition to the amounts in subdivision a, for a city with a positive average of
the annual percentage increase in population from three years prior, a dollar
amount equal to the product of the following:
(1) The amount calculated in subdivision a; and
(2) The average of the annual percentage increase in population from three
years prior, multiplied by ten.
c. In addition to the amounts in subdivisions a and b, for a city with a positive
average of the annual percentage increase in taxable property values from three
years prior, a dollar amount equal to the average of the annual property valuation
percentage increase for the three most recent years, multiplied by twenty-five
thousandths.
d. Grants may be distributed under this subdivision only if the grant distributions
under subsection 3 are completed. If total deposits equal to the amount identified
under subdivision a of subsection 1 are insufficient to provide for the grants, the
state treasurer shall distribute the grants under this subsection on a pro rata
basis. If any moneys remain from the total deposits equal to the amount identified
under subdivision a of subsection 1 after the distribution of grants under this
subsection, the state treasurer shall distribute any remaining moneys in
proportion to the combined total distributed to each city under subsections 3 and
4 relative to the combined total distributed to all the cities under subsections 3
and 4.
e. For the purposes of determining the city's population under this subsection, the
state treasurer shall use the most recent actual or estimated census data
published by the United States census bureau.
f. For the purposes of determining taxable property values, the state treasurer shall
use the most recent data published by the tax commissioner in the tax levy
report.
5. For purposes of subsections 2 through 4:
a. "Essential infrastructure projects" means capital construction projects to construct
new infrastructure or to replace existing infrastructure, which provide the fixed
installations necessary for the function of a city. Capital construction projects
exclude debt repayments and routine maintenance and repair projects, but
include the following:
(1) Water treatment plants;
(2) Wastewater treatment plants;
(3) Sewer lines and water lines, including lift stations and pumping systems;
(4) Water storage systems, including dams, water tanks, and water towers;
(5) Storm water infrastructure, including curb and gutter construction;
(6) Road and bridge infrastructure, including paved and unpaved roads and
bridges;
(7) Airport infrastructure;
(8) Electricity transmission infrastructure;
(9) Natural gas transmission infrastructure; and
(10) Communications infrastructure, excluding fiber optic infrastructure.
b. "Fiscal year" means the period beginning September first and ending August
thirty-first of the following calendar year.
c. "Non-oil-producing county" means a county that received no allocation of funding
or a total allocation of less than five million dollars under subsection 2 of section
start of each biennium.
6. From the funding identified under subdivision b of subsection 1, the director of the
department of transportation shall distribute grants to cities located in non-oil-
producing counties from the fund in accordance with the provisions of the flexible
transportation fund under section 24-02-37.3.

### § 57-51.1-07.8. County and township infrastructure fund - Continuing appropriation -

State treasurer - Department of transportation - Reports.
1. There is created in the state treasury the county and township infrastructure fund. The
fund consists of all moneys deposited in the fund under section 57-51.1-07.5.
a. The first forty million dollars deposited in the fund each biennium is appropriated
to the state treasurer on a continuing basis for the purpose of providing grants to
non-oil-producing counties and townships located in non-oil-producing counties
pursuant to subsections 2 through 7. The grant funding may be distributed only to
non-oil-producing counties and townships located in non-oil-producing counties
and may be used only for road and bridge infrastructure projects.
b. The remaining moneys deposited in the fund are available to the department of
transportation, within the limits of legislative appropriation, for the purpose of
providing grants to non-oil-producing counties and townships located in non-oil-
producing counties pursuant to subsection 8.
2. By November thirtieth of each even-numbered year, a county that receives a grant
from the fund under subsection 5 shall provide a report to the state treasurer on the
use of the funding. The state treasurer shall notify counties of the reporting
requirement by November first of each even-numbered year. Upon request, the state
treasurer may provide an extension of up to fifteen days for a county to submit the
report. The state treasurer shall determine the format of the report. The report must
include the amount of grant funding received and spent by the county and a
description of the road and bridge infrastructure projects completed in part or in whole
with the grant funding. The state treasurer shall make the reports available to the
public on the state treasurer's website. A county that does not provide the report in a
timely manner or in the correct format is not eligible to receive a grant from the fund
under subsection 5 for a period of two years starting from the date the report was due.
If a county uses the funding in a manner inconsistent with the requirements of this
section as identified in any financial audits conducted by the state auditor or an
independent accounting firm, the state treasurer shall reduce any future grants to that
county under subsection 5 by the amount spent that was inconsistent with the
requirements.
3. Within sixty days after the fund receives total deposits equal to the amount identified
under subdivision a of subsection 1 or by September thirtieth of each odd-numbered
year, whichever is earlier, the state treasurer shall distribute moneys in the fund as
grants to counties for road and bridge infrastructure projects. The state treasurer shall
distribute the grants only if the fund receives total deposits that are at least ten percent
of the amount identified under subdivision a of subsection 1.
4. The state treasurer shall distribute thirteen percent of the total deposits under
subdivision a of subsection 1 to non-oil-producing counties for the benefit of the
organized and unorganized townships within each non-oil-producing county. The
distribution must provide for an allocation to each organized and unorganized township
which is proportional to the number of township road miles in each organized and
unorganized township relative to the combined total township road miles in all
organized and unorganized townships in all non-oil-producing counties. For purposes
of this subsection, township road miles must be based on certifications provided to the
state treasurer under section 54-27-19.1. The amount allocated to organized
townships under this section must be paid by the county treasurer to each organized
township. The amount allocated to unorganized townships under this section must be
credited by the county treasurer to a special fund for unorganized township roads.
a. To be eligible for an allocation of funds under this subsection, an organized
township must levy at least eighteen mills for general purposes and have a
general fund balance of less than one hundred thousand dollars as of December
thirty-first of the prior year.
b. To be eligible for an allocation of funds under this subsection for unorganized
townships, a county must levy at least eighteen mills for unorganized township
road and bridge purposes.

c. For purposes of determining the mills levied by a township or county, the state
treasurer shall use the most recent mill rate data published by the tax
commissioner.
5. After the distributions in subsection 4, the state treasurer shall distribute the remaining
eighty-seven percent of the total deposits under subdivision a of subsection 1 to
non-oil-producing counties based on the most recent data compiled by the upper great
plains transportation institute regarding North Dakota's county, township, and tribal
road and bridge infrastructure needs. The distribution to each non-oil-producing county
must be proportional to each non-oil-producing county's total estimated road and
bridge investment needs relative to the combined total estimated road and bridge
investment needs of all the non-oil-producing counties. The total estimated road and
bridge investment needs for each county is the twenty-year estimate for unpaved and
paved road and bridge needs as identified by the upper great plains transportation
institute. If the data compiled by the upper great plains transportation institute includes
more than one twenty-year estimate for the total needs of each county, the state
treasurer shall use an average of the twenty-year estimates for each county.
6. If the total deposits under subdivision a of subsection 1 are insufficient to provide for
the grants under subsections 4 and 5, the state treasurer shall distribute the grants on
a pro rata basis.
7. For purposes of subsections 2 through 6:
a. "Fiscal year" means the period beginning September first and ending August
thirty-first of the following calendar year.
b. "Non-oil-producing county" means a county that received no allocation of funding
or a total allocation of less than five million dollars under subsection 2 of section
start of each biennium.
c. "Road and bridge infrastructure projects" means the projects associated with the
construction of new unpaved and paved road and bridge infrastructure or
associated with the maintenance, repair, or replacement of existing unpaved and
paved road and bridge infrastructure.
8. From the funding identified under subdivision b of subsection 1, the director of the
department of transportation shall distribute grants to non-oil-producing counties and
townships located in non-oil-producing counties from the fund in accordance with the
provisions of the flexible transportation fund under section 24-02-37.3.
### § 57-51.1-07.9. State energy research center fund - Continuing appropriation.

(Effective
through June 30, 2033)
The state energy research center fund is a special fund in the state treasury. Before
depositing oil and gas gross production tax and oil extraction tax revenues under section
57-51.1-07.5, one percent of the revenues must be deposited monthly into the state energy
research center fund, up to seven million five hundred thousand dollars per biennium. All
moneys deposited in the state energy research center fund and interest on all such moneys are
appropriated on a continuing basis to the industrial commission for distribution to the state
energy research center. The state energy research center shall use the funds in accordance
with section 15-11-40.
### § 57-51.1-07.10. Straddle well distribution.

1. By August 1, 2021, and on or before April thirtieth of each subsequent fiscal year, the
industrial commission shall certify to the tax commissioner the on-reservation trust
lands acreage ratio and the on-reservation nontrust lands acreage ratio for each
reservation with on-reservation spacing unit acreage. For each reservation, the
on-reservation trust lands acreage ratio is calculated by dividing the on-reservation
spacing unit acreage consisting of trust lands by the total spacing unit acreage. For
each reservation, the on-reservation nontrust lands acreage ratio is calculated by
dividing the on-reservation spacing unit acreage consisting of nontrust lands by the
total spacing unit acreage. The on-reservation acreage ratios for each reservation are

effective for taxable production each fiscal year beginning July first. By August 1, 2021,
and on or before June first of each subsequent fiscal year, the tax commissioner shall
publish the on-reservation acreage ratios for each reservation.
2. The tax commissioner shall certify to the state treasurer the total oil and gas gross
production and oil extraction taxes attributable to production from straddle wells drilled
before July 1, 2019, by reservation, and the total oil and gas gross production and oil
extraction taxes attributable to production from straddle wells drilled on or after July 1,
2019, by reservation. Before allocation of the state's share of oil and gas tax revenues
under section 57-51.1-07.5, the state treasurer shall allocate monthly to the governing
body of a tribe associated with a reservation that has on-reservation spacing unit
acreage, an amount equal to:
a. Fifty percent of the taxes certified under this section for wells drilled before July 1,
2019, multiplied by the on-reservation trust lands acreage ratio calculated under
subsection 1 for that reservation;
b. Fifty percent of the taxes certified under this section for wells drilled before July 1,
2019, multiplied by the on-reservation nontrust lands acreage ratio calculated
under subsection 1 for that reservation;
c. Eighty percent of the taxes certified under this section for wells drilled on or after
July 1, 2019, multiplied by the on-reservation trust lands acreage ratio calculated
under subsection 1 for that reservation; and
d. Twenty percent of the taxes certified under this section for wells drilled on or after
July 1, 2019, multiplied by the on-reservation nontrust lands acreage ratio
calculated under subsection 1 for that reservation.
3. For purposes of this section:
a. "On-reservation spacing unit acreage" means the mineral acreage located within
the exterior boundaries of a reservation in this state from all spacing units with
one or more straddle wells.
b. "Straddle well" means an oil and gas well located outside the exterior boundaries
of a reservation which has one or more laterals penetrating a reservation
boundary.
c. "Total spacing unit acreage" means the total mineral acreage from all spacing
units with one or more straddle wells.
4. Upon accepting a payment under this section, if a tribe assesses any tax or fee or
imposes any regulation on any current or future straddle well, or assesses an
additional tax on any well subject to an agreement under chapter 57-51.2, the
agreement under chapter 57-51.2 is void and the state treasurer may not distribute
any funds to the tribe under this section or chapter 57-51.2.
### § 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.
