A BILL for an Act to amend and reenact section 57-06-17.1 of the North Dakota Century Code, relating to the carbon dioxide pipeline tax exemption; and to provide an effective date.
Summary
SB 2320 would amend North Dakota’s property tax exemption for carbon dioxide pipelines. Under current law, qualifying CO2 pipeline property and associated equipment are exempt from taxation during construction and for the first ten full taxable years after initial operation, so long as the pipeline was constructed after 1996 and is used to transport carbon dioxide for secure geologic storage or for enhanced oil or natural gas recovery. The bill would narrow that exemption by excluding interstate pipelines and associated equipment used to bring carbon dioxide into North Dakota for secure geologic storage.
The bill’s effective date would apply to taxable years beginning after December 31, 2024. In practical terms, it would change the tax treatment of certain carbon capture and storage infrastructure, potentially increasing property tax liability for interstate CO2 pipeline projects that serve storage purposes in the state.
Impact
SB 2320 would amend section 57-06-17.1 of the North Dakota Century Code, limiting the existing carbon dioxide pipeline property tax exemption. The change would affect owners and operators of interstate CO2 pipelines and related equipment that transport carbon dioxide into North Dakota for secure geologic storage, while leaving the exemption in place for other qualifying in-state pipeline property and equipment. Because the bill applies to taxable years beginning after December 31, 2024, it would alter future tax obligations rather than retroactively changing prior tax years.
Sentiment
The bill did not advance, failing on Senate second reading by a vote of 10 yeas to 36 nays. That vote suggests the chamber was largely opposed to the proposal, or at least unwilling to narrow the exemption in the manner proposed. No committee transcript was provided, so the available record shows sentiment primarily through the decisive floor defeat rather than through detailed debate.
Contention
The central point of contention is whether interstate carbon dioxide pipelines that bring CO2 into North Dakota for geologic storage should continue to receive the state’s property tax exemption. Supporters of the bill likely viewed the change as a way to limit tax preferences for out-of-state pipeline infrastructure and to narrow the exemption to projects more directly tied to in-state activity. Opponents likely favored preserving the existing incentive structure for carbon capture and storage development, including interstate transport networks that may be important to project feasibility and investment.