North Dakota Update

The 2021 legislative session began this week with legislative hearings and floor sessions. Due to new COVID-19 legislative rules, there are many changes to the in-person experience of being at the Capitol. When you arrive a temperature check is required at the door before entry is permitted, masks are required at all times and seating is limited in hearing rooms. Also new this session is the capability for every hearing to be live streamed on to the web so public still has access to the legislative process and can provide written or verbal testimony virtually if desired.

This session is a significant session for the lignite industry. There are many economic and regulatory pressures on the industry that will only increase with the policy changes coming with the new legislative makeup in Washington, D.C. In preparation for the increased burdens placed on our lignite mines and plants, the LEC has been working on bold ideas to help us weather the coming storm and provide additional opportunities in research and development and the commercialization of carbon capture sequestration.

Here are four proposals that we are working on that could significantly help the industry in the coming years:

1. TAX HOLIDAY – Economic and regulatory pressures are threatening the lignite industry that provides $5 billion in regional economic impact, 14,000 direct and indirect jobs and over $130 million in annual state and local tax revenues. The industry needs immediate economic relief from federal tax policy that skews energy markets and over regulation of the most environmentally conscience coal mining in the country. North Dakota should respond to this situation by providing coal conversion tax relief to the lignite plants in order to improve the economic circumstances in which they operate. This proposal does not impact county tax revenue.

2. STATE INSURANCE PROGRAM – Environmental, Social and Governance (ESG’s) are investment and banking programs that are used by many large financial institutions. Insurance companies are increasingly applying these non-financial factors as part of their analysis process to identify perceived risks in insurance markets and policies. These factors have raised policy premiums for the lignite industry by millions of dollars over the past five years when there have been little to no claims by the industry. LEC is funding a private study which will provide detailed information on the financial pressures that ESG’s are having on North Dakota coal mines and power plants. The study will be presented to the legislature to create a proposal that will provide direction to the Insurance Department to do additional study and possible creation of new ND-based insurance products at market prices for the state’s lignite industry.

3. SUPPORT BONDING PROPOSALS FOR R&D FUNDING – North Dakota has an exciting future in energy production through the use of carbon capture. LEC supports current bonding proposals that utilize low interest rates on state bonds to fund research and development that will help grow the state’s economy and create high paying jobs.

4. LONG TERM LOANS – ESG’s are limiting access to capital investment in North Dakota’s energy future. LEC supports the creation of a new Bank of ND loan program that provides access to capital for large economic growth opportunities in our state. The legislature should direct BND to allow qualifying carbon capture projects to apply for long term loans backed by Legacy Fund earnings. Investments in North Dakota projects will provide a significant economic impact to the region, provide thousands of high-paying jobs and millions in additional tax revenues.