The 2021 North Dakota Legislative Session was the most productive pro-coal session in the history of the Lignite Energy Council.  Overall,
18 pieces of legislation were passed. They include significant financial appropriations and purposeful policy-related provisions that will provide meaningful opportunities for the lignite industry.

The work that went into developing the core principles of the LEC’s legislative priorities began months before the session started. Near the end of the summer in 2020, the CEOs of the Lignite Energy Council’s major members met with Lt. Governor Brent Sanford to discuss the future of the coal industry in North Dakota. During those conversations, a list of proposals was generated to provide legislation that would help address the current economic and regulatory issues and strategically position lignite for future changes due to environmental, social and corporate governance, extreme market pressures and likely heavy-handed federal regulations.

Next, LEC Government Affairs staff held multiple meetings with key stakeholders to further analyze the list of proposals to identify how each concept would assist member utility and mine operations. The priorities that reached consensus were later approved by the LEC Management Committee at its December strategy meeting and served as the backbone of the coordinated legislative efforts through the LEC’s Government Affairs Committee throughout the 2021 session.

LEC President Jason Bohrer and Vice President of Government Relations and External Affairs Jonathan Fortner met with leaders in the House and Senate along with key legislators to build political support for the proposals and to identify bill sponsors who are familiar with energy production and understand electricity markets and grid reliability. From there, both strategic planning and legal analysis were performed to put the proposals into draft legislative language that would fit into the North Dakota Century Code and were introduced during the early days of the legislative session.

Given the visibility of the Council’s legislative priorities, members of the North Dakota media were briefed on the proposals and the state’s major newspapers followed the LEC’s legislative priorities closely throughout the session.

LEC representatives were a daily presence in the Capitol during the 76-day session to build political support with individual legislators. The LEC staff wrote and published a four-page briefing document that was placed on all 141 legislators’ desks providing background material on the lignite industry and we testified in support of the legislation numerous times in committee hearings in both legislative chambers.

Below is a short description of each of 18 lignite-related bills. The summaries that are in bold are the LEC priority bills that were approved by the LEC Management Committee:

 

  1. Senate Bill 2287, sponsored by Senator Rich Wardner, R-Dickinson, directs the Insurance Commissioner to study and determine whether a program or mechanism could be implemented that could provide an alternative for North Dakota’s lignite industry to seek market-based rates that are not skewed against the fossil fuel industry.  The bill passed the Senate 46-1, the House 87-3 and was signed into law by Governor Doug Burgum on March 15, 2021.
  2. House Bill 1015, provides funding to the Office of Management and Budget. An important provision in the bill directs the Bank of North Dakota to extend a $250 million line of credit to the Industrial Commission to support loans or loan guarantees issued from the clean sustainable energy fund. Within the bill language of HB1452, there is language for a guaranteed loan program geared toward high-tech energy projects such as those aimed at capturing carbon dioxide emissions from lignite-fired power plants. The bill passed the House 73-15, the Senate 42-4 and was sent to the Governor at the end of the legislative session. By law, the Governor has 15 days post-session to sign or veto legislation.
  3. Senate Bill 2152, sponsored by Senator Jessica Bell, R-Beulah, conforms the North Dakota Century Code to comply with federal law regarding 45Q tax policy. Previous sessions have addressed the utilization of CO2 for enhanced oil recovery, but the language would provide that same incentive for carbon dioxide storage. The bill passed the Senate 47-0, the House 90-1 and was signed into law by Governor Burgum on March 22, 2021.
  4. House Bill 1412, sponsored by Representative Jeff Delzer, R-Underwood, provides temporary and critical tax relief to the lignite industry by reducing the full amount of the general fund portion from coal conversion taxes paid by the lignite power plant and conversion facility operators for a five-year period. The fiscal note valued the tax relief to total $42.6 million in the next two-year legislative biennium and could provide $106.5 million in total relief over five years. The bill passed the Senate 43-4, the House 84-5 and was signed by Governor Burgum on April 22, 2021. 

    Key industry and legislative supporters of HB1412 are pictured at the ceremonial bill signing with Governor Doug Burgum in the Memorial Hall at the North Dakota State Capitol.

  5. House Bill 1452 Representative Glenn Bosch, R-Bismarck, creates the Clean Sustainable Energy Authority to help position North Dakota as a leader in reducing environmental impacts through a comprehensive research and development authority. The legislation provides $25 million from state’s general fund to the authority to fund qualified projects. The authority can choose to award submissions with funding in the form of grants and loans for projects that “reduce environmental impacts and use energy sources derived from within the state.” The lignite research council is authorized to appoint two voting members to the eight-member authority board. The bill passed the Senate 41-6, the House 76-12 and was signed into law by Governor Burgum on April 26, 2021.

    Key industry and legislative supporters of HB1452 are pictured at the official bill signing with Governor Doug Burgum in the Memorial Hall at the North Dakota State Capitol.

     

  6. Senate Bill 2206, sponsored by Senator Jessica Bell, R-Beulah, provides the opportunity for public utilities to recover research and development costs incurred to develop lignite more efficiently from carbon capture and sequestration utilization. The legislation also includes the ability to recover costs in rates from a dispatchable on-demand generating unit, plant or facility for power purchase agreements to help protect grid reliability. The bill passed the Senate 45-1, the House 90-4 and was signed into law by Governor Burgum on April 12, 2021.
  7. House Concurrent Resolution 3025, sponsored by Representative David Nehring, R-Bismarck, is a resolution that urges “the federal government to refrain from enacting regulations that threaten the reliability and affordability of electric power in North Dakota and to increase support for research, development, and deployment for next generation carbon-based energy generation.” The bill was adopted by both the House and Senate via voice vote and was filed with the Secretary of State on March 12, 2021.
  8. Senate Bill 2317, sponsored by Senator Bell, R-Beulah, directs The Board of University and Trust Lands to set up a coal mine reclamation trust which can receive and accept assets as directed by the Public Service Commission (PSC). The trust would be primarily managed by the PSC and would act as collateral bond in the possible worst-case scenario that would call for the forfeiture of any coal mining bonds in North Dakota. The bill passed the Senate 42-5, House 90-2 and was signed into law by Governor Burgum on April 12, 2021.
  9. Senate Bill 2238, sponsored by Senator Jessica Bell, R-Beulah, requires the state to do an analysis of the causes of visibility impairment and spell out how the state should respond if the EPA rejects its regional haze state implementation plan. The bill directs DEQ to perform an analysis on natural and international causes of visibility and to periodically review the state implementation plan to consider whether additional measures are necessary to make reasonable progress toward meeting the national goal of visibility improvement as defined by the Clean Air Act. Under the bill language, the DEQ may not require controls that only increase total costs with little corresponding visibility benefit. The bill passed the Senate 46-0, the House 88-6 and was signed into law by Governor Burgum on March 23, 2021.
  10. Senate Bill 2237, sponsored by Senator Jessica Bell, R-Beulah, modifies current state law to add  “coal-fueled electric generating units” to existing statute which limits the stringency of state regulations to no more than what federal rules require. This change was needed because EPA defines coal conversion units and coal-fueled electric generating units differently in published regulations so this would provide clarity in the North Dakota Century Code. The bill passed the Senate 47-0, the House 94-0 and was signed into law by Governor Burgum on March 23, 2021.
  11. Senate Bill 2291, sponsored by Senator Jessica Bell, R- Beulah, codifies the current practice of the State Investment Board as it relates to investment policies on environmental, social and corporate governance (ESG). The policy disallows the consideration of ESG when making investments in North Dakota’s state pension and legacy fund investments. The study will review various impacts ESG has on government and private industry in ND and must include an evaluation of investment policy as it relates to ESG and the level of involvement the state has with companies that use ESG when making business decisions or investments. The study will also include the implications to the state as it relates to the boycott of energy or production agriculture commodities, with a report to legislative management by June of 2022. The bill passed the Senate 42-4, the House 82-12 and was signed into law by Governor Burgum on March 23, 2021.
  12. Senate Bill 2014, introduced by the Senate Appropriations Committee, provides ongoing funding and policy language for the North Dakota Industrial Commission. The bill appropriates $4.5 million from the lignite research fund for near-term, market-driven projects, activities, or processes will generate matching private industry investment and have the most potential of preserving existing lignite production and industry jobs or that will lead to increased development of lignite and its products and create new lignite industry jobs and economic growth for the general welfare of this state. A portion of the funding can also be used for any litigation that may be necessary to protect and promote the continued development of lignite resources. The bill was passed by the House 71-17, the Senate 47-0 and was sent to Governor Burgum after session ended. The bill awaits further action.
  13. House Bill 1380, sponsored by Representative Mike Lefor, R-Dickinson, creates the Legacy Fund Earnings “Streaming” bill to invest research, innovation, and technology into the state’s economy. In the conference committee process, the bill went through a significant change that deviated from the original versions passed in the House and Senate. The agreed upon language transfers legacy fund earnings each biennium in a ranked order that sends the first $150M to the legacy sinking and interest fund to service the debt on the bonding bill found in HB1431. The next $60M goes towards the highway tax distribution fund and any remaining funds for other purposes designated by the legislature is up to $50M for tax relief; up to $30M to the clean sustainable energy fund and up to $30M for the university research programs. The bill was passed by the House 81-9, the Senate 46-1 and was sent to Governor Burgum after session ended. The bill awaits further action.
  14. Senate Bill 2137, sponsored by Senator Myrdal, R-Edinburgh, provides a sales tax exemption for operators, owners and tenants of a qualified data center for information technology equipment, computer software and other expenses related to constructing and running a data center. Attracting data centers provides an opportunity to add value to the state’s electric generation. This is power that could be generated and used in the state, bypassing transmission constraints that limit the amount of power that can be exported out of state. This bill will help North Dakota compete with other states that are targeting data centers. The bill was passed by the House 72-20, the Senate 47-0 and was signed into law by Governor Burgum on April 21, 2021.
  15. Senate Bill 2313, sponsored by Senator Rich Wardner, R-Dickinson, allows the ND Public Service Commission to examine the “qualitative benefits” of generation assets owned by investor-owned utilities and gives the PSC the ability to assign a higher value to baseload plants that provide dispatchable baseload power. The bill passed the House 90-0, the Senate 43-4 and was signed into law by Governor Burgum on April 19, 2021.
  16. House Bill 1455, sponsored by Representative Dave Nehring, R-Bismarck, requires an electric utility to notify the PSC and county auditor if a facility is being considered for retirement. Upon notice of removal from service, the PSC may request that the utility provide any applicable reliability study developed with a regional transmission organization in a process that may accept public comment. An interim study is also included to research “the need, cost, effect, and appropriate process for bonding and ensuring reclamation of coal conversion facilities” and the amount of financial assurance and schedules; interaction of economics and the statutes, rules, and policies relating to the remaining useful life and early retirement of coal conversion facilities; the role of the PSC in all electrical generation retirement; and the appropriate level of community involvement in the retirement process. The study would also examine the state’s role in assuring grid reliability. It would evaluate the effectiveness of government programs and incentives relating to energy production, reliability, and the role of state agencies in that process. The bill passed the Senate 47-0, the House 93-0 and was signed into law on April 19, 2021.
  17. House Bill 1003, introduced by the House Appropriations Committee, provides the funding for the Office of the Attorney General. The bill was amended to add $1 million to the amount of funding for the state litigation pool in case of court challenges to the upcoming Regional Haze State Implementation Plan. The bill passed the House 86-5, the Senate 43-3 and the bill was signed by Governor Burgum on April 28, 2021.
  18. Senate Concurrent Resolution 4012, sponsored by Senator Rich Wardner, R-Dickinson, is a resolution that calls for the establishment of a state policy to support the reliability and resilience of the electric grid, ensure price transparency to consumers in electric markets, and incentivize carbon capture utilization and storage as an alternative to preserve dispatchable thermal electric generation and its associated benefits. The bill was adopted via voice vote by the Senate and the House and was filed with the Secretary of State on April 19, 2021.