Sponsor proposes $5/ton pore-space tax and $500 million disaster fund for CO2 sequestration

Representative Sue Ann Olson told the committee that House Bill 1573 would impose a $5-per-ton tax on any substance transported more than 25 miles for permanent underground storage ("pore space utilization") and would deposit the first $500 million of proceeds into a new North Dakota Disaster Fund to pay cleanup, specialized response equipment and other emergency needs.

"In North Dakota, we have a severance tax on oil and gas and coal because they are wasting resources," Olson said. "Utilization of pore space is the same — it is finite and used up over time. ... The disaster fund will help supply equipment and training if they are needed beyond what is otherwise required to be supplied."

Olson cited international and domestic incidents — including reported CO2 leaks in Illinois and a cited report that averaged 4.1 CO2 accidents per year since 1988 — and argued volunteer rural emergency responders lack the resources and equipment to handle serious CO2 incidents. She said the 25-mile threshold was intended to exempt short, on‑site injection lines and to target trunk lines that bring CO2 into the state for sequestration.

Supporters including Dakota Resource Council urged passage, stressing the need for funds for emergency response, monitoring and nuisance mitigation. "Giving our emergency responders and our communities the ability to have relief and to have the ability to manage these pipelines correctly and to respond to any new technological needs is crucial," Zachary Cassidy of Dakota Resource Council said.

Opponents — Summit Carbon Solutions, North Dakota Petroleum Council, Lignite Energy Council, ethanol producers and the Greater North Dakota Chamber — warned the tax would discourage investment and said existing regulatory and financial-assurance tools already obligate operators to carry insurance, post financial assurances and comply with Industrial Commission and Public Service Commission permit conditions. Summit representatives argued the bill risks constitutional commerce-clause problems by targeting interstate imports of CO2 and cited existing required insurance levels (the PSC required $100 million general liability and an additional $25 million property insurance for the North Dakota portion of a proposed pipeline) and state trust-fund mechanisms for emergency programs.

Other witnesses pointed to unintended consequences in the bill's drafting. The Department of Water Resources raised concerns that the measure as written could tax managed aquifer recharge projects (produced water recharge) and gave an example implying millions in added costs if the tax were applied to recharge volumes; industry witnesses warned the tax could also apply to saltwater disposal pipelines that currently operate in the Bakken and would produce large unanticipated costs.

Several committee members asked for clarification and for drafting fixes; sponsors said they were open to technical changes, including excluding produced water or short disposal systems from the tax. No committee vote was taken; the hearing record included extensive opposition and support and requests for drafting cleanup.