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Rules halt booze deliveries on North Dakota reservation

November 17, 2017

BISMARCK, N.D. (AP) — Alcohol sales are drying up on an American Indian reservation in the heart of North Dakota’s oil patch after tribal officials imposed new rules for retailers and wholesalers, including doubling the taxes on non-American Indian retail businesses that sell booze.

Bar and liquor store owners on the Fort Berthold Reservation report they received their last shipment of alcohol this week from distributors. The distributors are also subjected to the Three Affiliated Tribes’ new rules that require permits and require records and businesses to be open for inspection by the tribe.

“We’re cut off,” Terry Clayton, owner of Ranchman’s 23 Saloon and Steakhouse, said Friday. “All deliveries have stopped.”

The reservation spans a million acres in west-central North Dakota and is home to the Mandan, Hidatsa and Arikara tribes. The move comes amid a higher tax rate that the tribes are attempting to charge oil companies that drill on the reservation, which accounts for about 20 percent of the state’s 1 million barrel-per-day oil production.

North Dakota Tax Commissioner Ryan Rauschenberger said the tribes’ action to impose their own taxes likely is a “test case for tribal authority over all commerce within boundaries of the reservation.”

Tribal officials did not return telephone or email messages from The Associated Press. The tribe has said it needs higher tax rates to pay for road repairs, law enforcement and other consequences of oil development on the reservation.

The Three Affiliated Tribes’ new 7 percent tribal sales tax is in addition to the state’s 7 percent sales tax on alcohol that was imposed on the 22 non-American Indian owned businesses that sell booze on the reservation.

Rauschenberger said the state collected $325,000 in taxes from alcohol sales on the reservation last year. Tribal-owned establishments such as the Four Bears Casino and other businesses owned by tribal members don’t collect or remit the state tax, which is not shared with the tribe.

Rauschenberger said state and tribal officials have met in the past year on sharing the state tax, “but no agreement was reached.” He said the bulk of booze sales on the reservation are at the casino, which also must purchase alcohol from a North Dakota distributor under state law.

“I don’t think the tribes thought this through until they realized the casino is getting cut off, too,” said Clayton, the steakhouse and bar owner.

Patrick Packineau, general manager of the casino, would not comment on alcohol deliveries to the facility.

Clayton, along with officials from groups representing retail and wholesale distributors, said the lack of booze on the reservation will lead to sales outside its boundaries or the potential for illegal sales within it.

Clayton and Lisa Christianson, owner of the Alley Cat Lounge in Parshall, said several retail alcohol businesses have pooled money to hire an attorney to fight the tribes’ rules. They said business owners are more worried about subjecting their premises to tribal rules than with the increased taxes.

No business owners have remitted the new tax or signed documents that give the tribe authority to examine their records or facilities, they said.

“Our big problem is with the rules and regulations,” Clayton said. “They basically want us to sign our rights away. We are not (tribal) members and we have no rights under tribal law.”

Bob Nelson, president of Fargo-based liquor distributor Johnson Brothers, said his company has halted sales until the tribal rules are changed.

“Our greatest concern is that these rules would subject us to legal liabilities that we don’t face anywhere else,” he said in a statement. “Unfortunately, until those rules are actually changed, the risk to our business is too great.”

The two biggest cities on the reservation, Parshall and New Town, have large populations of people who aren’t American Indian. The cities were absorbed by the reservation in the early 1970s.

Non-American Indian owned businesses are largely located on “fee land,” which is privately owned.

Christianson’s bar has been in her family for about 30 years, and her relatives homesteaded the land decades ago, she said. Christianson advertised the bar for sale when the new rules were imposed by the tribe. So far, there have been no takers, she said.

“I might have to board up the windows and walk away,” she said.

The Three Affiliated Tribes announced earlier this year it would impose a higher tax rate for oil drillers. Gov. Doug Burgum also called the move “inconsistent” with a tax accord between the state and the tribes.

Tax Department data show that since the oil agreement was adopted a decade ago, the state has collected more than $1.09 billion in oil revenue, with the tribe getting $962 million.

Data show the tribe is averaging about $13 million a month from the oil tax revenue at present.

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