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HB 1537

AN ACT to amend and reenact section 6-09.4-22 of the North Dakota Century Code, relating to service agreement protection of service during the term of the loan; and to declare an emergency.

69th Legislative Assembly (2025-26) Introduced by Landon Bahl and 8 co-sponsors

Protects a financed service from disruption by annexation or private franchise during the loan term, requiring financing agency participation and safeguards for bond payments.

Filed with Secretary Of State 04/22
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WeVote Research Nonpartisan
Bill Summary · HB 1537

HB 1537 — Summary (North Dakota, 2025)

Status: Enacted (Act 850). Filed with Secretary of State 04/22/2025; signed by Governor 04/21/2025. Emergency clause included (effective upon approval).

Main purpose

To protect a political subdivision’s right to continue providing a service (and the revenues from that service) when the capital improvement delivering that service was financed, in whole or in part, by a loan from the Public Finance Authority (PFA) or another state agency/enterprise. The law limits disruption of service during the term of the loan and establishes who may enter enforceable agreements about service rights.

Key provisions

  • Prohibition on curtailment: Service provided or made available by a political subdivision through construction or acquisition of an improvement (or the revenues therefrom) financed by a loan from the PFA or another state agency/enterprise may not be curtailed or limited during the term of the loan by:
    • Inclusion (e.g., annexation) of all or part of the area served into another political subdivision; or
    • Granting a private franchise for a similar service within the area served.
  • No franchise/licensing requirement: The providing political subdivision may not be required to obtain a franchise, license, or permit as a condition of continuing to serve the area if that area is included within another political subdivision during the loan term.
  • Negotiated agreements allowed but limited: Two political subdivisions may negotiate an agreement allocating the right or obligation to provide the service only if the PFA (or other financing state agency/enterprise) is a party to the agreement and the agreement contains adequate safeguards to protect the security and timely payment of any outstanding bonds issued to fund the loan. Otherwise the agreement is invalid and unenforceable.
  • Remedy for preexisting agreements: An agreement made before January 1, 2025, that violates the above requirement (i.e., excludes the PFA/financing agency or lacks required safeguards) is voidable only at the option of the PFA or other financing state agency/enterprise. Voidability requires 30 days’ written notice to the agreement parties. This provision does not apply to litigation already commenced before January 1, 2025.
  • Enforcement: The statute’s enforcement mechanisms and the PFA’s role are emphasized by the limitation on valid intergovernmental/service agreements (see above).
  • Effective immediately: The act was passed with an emergency clause.

Who is affected

  • Political subdivisions that constructed, acquired, or financed improvements (e.g., utilities, infrastructure) with loans from the PFA or other state agencies — preserves their ability to continue providing the financed service during the loan term.
  • Other political subdivisions that might annex served areas or compete to provide similar services.
  • Private entities seeking franchises to provide similar services inside served areas.
  • The Public Finance Authority and other state financing agencies (granted enforcement/voiding authority).
  • Bondholders and lenders (indirectly protected by the requirement for safeguards ensuring timely bond payment).

Timing & procedural notes

  • Effective upon the Governor’s approval (emergency clause).
  • Special rule for pre-2025 agreements: violates-subsection agreements entered before 1/1/2025 are voidable only at the financing authority’s option with 30 days’ notice; existing litigation before that date is unaffected.
  • Earlier committee drafts explored a retroactive application (to 1997) and narrower “water service” language; the enacted version uses broader “service” language and contains the emergency clause and limited voidability for pre-2025 agreements.

Practical impact

The law strengthens protections for local providers that used state-backed financing to build or acquire infrastructure, by reducing the risk that annexation or private franchising during a loan term will disrupt service or revenues needed to repay bonds. It also centralizes oversight/protection for bond security with the PFA or other financing state agencies and restricts enforceable intergovernmental agreements unless the financing agency participates and bond security is preserved.

Compiled from official sources — confirm details with the bill’s official record.

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