Lawmakers and industry split over tax exemption for interstate CO2 pipelines

Senator Jeff Magrum asked the Senate Finance and Taxation Committee to approve Senate Bill 2320, which would repeal a 10‑year property‑tax exemption that currently applies to interstate carbon dioxide pipelines and related centrally assessed property.

“Why are we exempting a property tax for a pipeline owned partially by the Chinese Communist Party?” Magrum said in committee testimony, citing public materials about investors in a proposed Summit Carbon Solutions pipeline and arguing the state should not offer a 10‑year property‑tax abatement to certain interstate CO2 projects.

Magrum reviewed the exemption’s legislative history, saying the 1991 exemption was originally intended to support a single plant and to promote enhanced oil recovery, not long‑term geological storage or broad interstate projects. He described federal incentives and permitting that have changed the economics and ownership structures since 1991 and urged the committee to consider removing the property‑tax break.

Supporters of keeping the exemption said it is a necessary incentive to attract large capital projects that provide long‑term state economic benefit. Charlie Adams of Summit Carbon Solutions said the exemption and other CO2 policies helped the state build a “business‑friendly” environment and that Summit has invested “hundreds of millions” in North Dakota, including easement payments and projected county revenue. Representatives of the North Dakota Petroleum Council and the Lignite Energy Council said enhanced oil recovery (EOR) using CO2 could unlock substantial additional oil production and significant long‑term tax revenue; they said removing the exemption would chill investment.

Opponents included the Dakota Resource Council and the North Dakota League of Cities, who said the exemption reduces local tax revenue and that project ownership and public‑safety questions warrant caution. Zachary Cassidy of Dakota Resource Council urged repeal, saying the public‑safety risks and property‑rights concerns around more pipelines in the state have not been fully addressed. Bill Wilkin, who testified earlier on another bill for the League of Cities, had raised concerns about unclear definitions in exemption language (for example, what qualifies as a “charitable organization” in SB 2312), a theme that resounded in the CO2 discussion as well.

Committee members pressed proponents and opponents on specifics. Magrum and other senators asked for numbers: a Summit Carbon Solutions representative said projected county payments along the pipeline route summed to about $6 million in the company’s county‑by‑county projection, and Summit said the law’s current construct holds counties harmless (the state reimburses lost county property tax for centrally assessed CO2 pipelines). Magrum cited a company figure that the project might generate $752 million in federal, state and local taxes during construction while North Dakota would receive little property or sales‑tax revenue under existing exemptions; Summit and industry witnesses disputed or clarified broader fiscal claims and emphasized long‑term oil‑production and royalty benefits if EOR develops.

No committee vote was taken on SB 2320 during the hearing. The record includes detailed testimony from industry, agriculture stakeholders and local government representatives. Proponents argued the exemption is a long‑standing tool to attract capital for capital‑intensive CCUS (carbon capture, utilization and storage) infrastructure. Opponents said the exemption shifts tax burden and warrants reevaluation given new ownership structures and security concerns.