North Dakota Potash Tax Seeds Public Debate

Source: Associated Press, Trevor Born  (4/6/11)

"Potash mining may soon begin in North Dakota, and state lawmakers are considering how much to tax the material and where the money should go."


Potash mining may soon begin in North Dakota, and state lawmakers are considering how much to tax the material and where the money should go.

The North Dakota Senate's Appropriations Committee reviewed a proposal Monday that would charge a 1.5% tax on all extracted potash, giving the first $1 million in tax revenue to the county where the mine is located. After that, the state would get 90% of potash tax collections.

It's a major departure from a version of the bill approved by the House in February, which set the tax at 4% and gave counties a much larger cut. Both versions exempt processing facilities from paying property taxes.

Supporters of the Senate proposal said counties don't need as much potash tax revenue because, compared to oil drilling, mining potash causes less impact on roads and other county public works.

Rep. Glen Froseth, R-Kenmare, whose district includes a potential potash-mining region in northwestern North Dakota, has pushed for a higher potash tax rate. "We have a resource that's non-renewable, and that's becoming a scarce commodity," Froseth said. "I don't think we should just give it away."

In Canada the material is shallow enough to extract with standard mining, but North Dakota's potash is at greater depths, requiring a method called solution mining, which involves pumping fluid into a drilled hole, dissolving the potash, and drawing it out.

Supporters said the mines could reuse water recovered from oil exploration in the region, and pipelines could move the potash to processing plants, keeping trucks off the road.

Of the first $1 million in taxes that counties receive for each mine, the state would set aside 5% in a special fund to use for grants to counties affected by potash extraction.

The Senate Appropriations Committee took no action on the measure Monday.