House Finance and Taxation Committee recommends not advancing conservation-easement tax exemption bill; forwards hydroelectric credit bill

The House Finance and Taxation Committee on an organizational hearing day debated three tax-related bills and issued mixed recommendations: it recommended "do not pass" on the amended version of House Bill 1383, issued a due-pass recommendation on House Bill 1211, and recommended "do not pass" on House Bill 1289.

House Bill 1383: conservation-easement tax treatment

House Bill 1383 drew the longest debate. Commissioner Gearing, appearing for the executive branch, proposed an amendment that would prevent land placed in a perpetual conservation easement from qualifying for a property-tax exemption tied to that easement, while preserving existing exemptions tied to inundated or wetland lands under current law. "It would not allow any land in the state of North Dakota that is under a perpetual easement or easement, to receive a tax abatement or exempt from tax," Gearing told the committee. He said the intent was to stop counties from using local modifiers to grant tax exemptions based on conservation easements.

State Supervisor of Assessments Shelley Myers told the committee the proposed language would be inserted into the valuation and assessment statute for agricultural land, and agreed the draft accomplishes the commissioner’s stated goal. Charles Dendy, general counsel for the Tax Department, summarized the effect: the amendment "prevents lands in a conservation easement from obtaining a property tax exemption based on being in the easement. But it excludes lands that are exempt now under wetlands or inundated lands."

Members voiced disagreement about retroactivity. Several representatives, including Representative Porter and Representative Greenheck, said they would support language that applies only to easements placed after the act’s effective date rather than undoing past local decisions. Porter urged a forward-looking approach, saying, "If the land is placed into an easement after the effective date of this act going forward, I don't have a bit of problem with it. But doing something that retroactive, I think, is not in line with how this body acts." The committee adopted an amendment to make the prohibition prospective, not retroactive.

After additional debate the committee held two formal actions on HB 1383. A motion to give the bill a due-pass recommendation as amended was moved by Representative Haggart and seconded by Representative Nehring; that motion failed on a recorded roll call. Representative Porter then moved a "do not pass" recommendation on the amended version; that motion was seconded by Representative Olson and passed on the committee vote, making the committee recommendation "do not pass." Committee members and staff discussed next steps and possible further review before the bill would reach the floor.

Why it matters

Supporters of the amendment argued it removes a statutory path that some counties have used to remove farmland from the local tax base when the land is placed in long-term conservation easements. Opponents said retroactive changes would unfairly alter long-standing arrangements and could penalize property owners who inherited encumbered land. Committee discussion also cited a localized example in Pembina County where a tax modifier was used to lower assessments for land subject to wetland/conservation easements, and committee members asked the Tax Department to help identify whether similar practices exist elsewhere.

House Bill 1211: hydroelectric renewable credits

The committee also considered House Bill 1211, which would allow certain hydroelectric or municipal power producers to participate in renewable-energy credit markets. Representative Porter noted outside counsel for the attorney general had advised there was not a litigation risk affecting the bill. After discussion that included potential benefits to municipal power providers and to local consumers, Representative Dockter moved a due-pass recommendation; the motion carried on a committee roll call and the committee recorded a due-pass recommendation.

House Bill 1289: property-tax relief proposal

House Bill 1289, a proposal intended to reduce property-tax burdens for certain households (discussion centered on keeping people in their homes), drew concern about cost-shifting at the local level. Representative Porter moved a "do not pass" recommendation, arguing the proposal would shift taxes to other local property owners because the bill does not include state reimbursement. The motion for "do not pass" carried on a roll call vote.

Committee process notes and next steps

Committee members asked staff and the Tax Department to investigate how widely counties are using local modifiers to treat easement-held land, and whether any further statutory clarification is needed. Several members said they wanted additional information before the bill would, if at all, be carried to the House floor. The committee took recorded recommendations on the three bills: HB 1211 received a due-pass recommendation to move forward; HB 1383 (as amended) and HB 1289 received "do not pass" recommendations from the committee.