Coal facilities receive tax exemptions and fund lignite research

Coal conversion facilities and electrical generating plants receive scheduled partial exemptions from certain taxes and pay a lignite research tax. The provisions cover coal conversion facilities and electrical generating plants subject to the taxes named in section 57-60-02. The coal conversion exemption applies to the state share and excludes the electricity generation tax under section 57-60-02, subsection 3. The research tax equals 5% of the specified tax amount before the exemption. For taxable production after June 30, 2026, through June 30, 2031, the listed exemption shares are 90%, 80%, 70%, 60%, and 35% in successive years.

County commissioners may grant partial or full exemptions from certain coal conversion taxes. The authority covers plants or facilities located in the county, including electrical generating plants. The county board must approve an exemption by resolution. The authority excludes the tax on electricity produced for sale under section 57-60-02, subsection 3. Tax collected from a plant or facility covered by an exemption is allocated entirely to the county. One provision allows an exemption of up to 15% through June 30, 2031. Another allows an exemption of up to five years from first taxable production.

County commissioners may exempt a coal mine from part of its severance tax. The exemption applies to an operator of a mine producing coal or commercial leonardite. The county board must approve the exemption by resolution. The exemption may cover up to 70% of the tax. Any tax revenue above the 30% not exempted is allocated to the county under the cited law. The exemption may apply to taxable production through June 30, 2031.

The state treasurer allocates coal conversion tax revenue between counties and the state, directing part of the state share to lignite research. The allocation covers money received from coal conversion facilities in each county. This rule takes effect only if the tax commissioner certifies that the specified federal electricity production tax credits have been repealed, and the certification arrives before June 30, 2031. The rule applies after the required certification before June 30, 2031. The state treasurer allocates the money at least quarterly.