Summary — HB 1295 (North Dakota) — Carbon dioxide tax exemptions & incentive evaluations
Status: Introduced Nov 13, 2024. Second reading — failed to pass (yeas 24, nays 60). (Bill would have provided an effective date if enacted.)
Purpose and intent
- HB 1295 would (1) strengthen periodic evaluation of state economic development tax incentives and (2) narrow or eliminate several tax exemptions and special tax treatment tied to carbon dioxide (CO2) pipelines, CO2 capture/injection equipment, and related contractor exemptions. The stated intent is to require regular review of incentives and to remove or revise preferential tax treatment connected to CO2 capture/transport used in enhanced oil recovery (EOR) and geological storage.
Key substantive provisions
1. Regular evaluation of economic development tax incentives
- Amends NDCC § 54‑35‑26(3) to direct the legislative management interim committee to examine listed economic development tax incentives, complete analyses during the interim, and ensure each listed incentive is subject to a complete analysis at least once every six years.
- The bill explicitly lists many incentives subject to periodic review, including renaissance zone credits, research expense credit, various workforce and manufacturing incentives, and tax exemptions tied to CO2 handling and qualified data‑center equipment.
Changes to contractor use tax and sales/use exemptions
- Amends NDCC § 57‑40.2‑03.3 (use tax on contractors) to (re)state the list of tangible personal property and materials that are exempt from contractor use tax. The statute, as amended, continues to reference materials used in compressing/gathering/storing/transporting/injecting CO2 for use in enhanced recovery (see § 57‑39.2‑04.14 in current law).
Repeals of CO2‑related exemptions and PILOTs
- Repeals the following code sections (as listed in the bill title):
- § 57‑06‑17.1 — carbon dioxide pipeline exemption (tax status for pipelines)
- § 57‑06‑17.2 — payments in lieu of taxes (PILOT) for certain CO2 pipeline property
- § 57‑39.2‑04.14 — carbon dioxide capture and injection sales/use tax exemption
- Repeal of these sections would remove statutory sales/use tax exemptions and special PILOT provisions that applied to CO2 pipelines and CO2 capture/injection equipment, unless replaced elsewhere in law.
Ad valorem property tax exemption changes
- Amends § 57‑60‑06 to revise the property tax exemption treatment for carbon dioxide capture equipment used for enhanced oil recovery and secure geologic storage. (Exact amendment language in the bill modifies how such equipment is treated for property tax purposes; repeal/change of related statutes may limit prior exemptions.)
Who would be affected
- CO2 pipeline owners/operators, companies investing in CO2 capture and injection equipment, oil producers using CO2‑EOR, contractors and suppliers involved in constructing CO2 handling facilities.
- Local governments and state tax revenues — removing exemptions/PILOT arrangements could increase taxable bases and revenues; conversely transition rules or administrative impacts could arise.
- The legislative interim committee (charged with conducting reviews) and agencies administering tax exemptions.
Procedural and timing notes
- The bill directs analyses on a six‑year review cycle for the listed economic development incentives.
- HB 1295 would repeal existing statutory exemptions — the timing and any transition/ grandfathering provisions would depend on the effective date language (not included here).
- As of the reported status, HB 1295 failed during second reading (24–60) and therefore did not become law.
Fiscal impact
- The bill text does not include a fiscal estimate; repealing tax exemptions and PILOTs would generally increase state and local tax collections (magnitude depends on exemptions removed and any grandfathering). Removing preferential tax treatment could also affect project economics and future investment decisions in CO2 transport/capture infrastructure.
Notes
- Multiple different states sometimes use the same bill number. This summary is limited to the North Dakota version described in the bill title and the North Dakota Century Code sections cited in the provided materials.
