Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                             SB 510.1
                                               SENATE BILL NO. 510
                                        INTRODUCED BY S. FITZPATRICK
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  A BILL FOR AN ACT ENTITLED: “AN ACT PROVIDING PROPERTY TAX INCENTIVES FOR ALTERNATIVE
  FUEL PRODUCTION; PROVIDING A PROPERTY TAX ABATEMENT FOR RENEWABLE DIESEL AND
  SUSTAINABLE AVIATION FUEL PRODUCTION FACILITIES; REVISING CLASS FOURTEEN PROPERTY
  TO INCLUDE TAXATION OF RENEWABLE DIESEL AND SUSTAINABLE AVIATION FUEL PRODUCTION
  FACILITIES; PROVIDING DEFINITIONS; AMENDING SECTIONS 15-6-157, 15-6-158, 15-24-3102, AND 15-
  24-3111, MCA; AND PROVIDING AN APPLICABILITY DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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           Section 1. Section 15-6-157, MCA, is amended to read:
           "15-6-157.   Class fourteen property -- description -- taxable percentage. (1) Class fourteen
  property includes:
           (a)     wind generation facilities of a centrally assessed electric power company;
           (b)     wind generation facilities owned or operated by an exempt wholesale generator or an entity
  certified as an exempt wholesale generator pursuant to 42 U.S.C. 16451;
           (c)     noncentrally assessed wind generation facilities owned or operated by any electrical energy
  producer;
           (d)     wind generation facilities owned or operated by cooperative rural electric associations
  described under 15-6-137;
           (e)     biomass generation facilities up to 25 megawatts in nameplate capacity of a centrally assessed
  electric power company;
           (f)     biomass generation facilities up to 25 megawatts in nameplate capacity owned or operated by
  an exempt wholesale generator or an entity certified as an exempt wholesale generator pursuant to 42 U.S.C.
  16451;
           (g)     noncentrally assessed biomass generation facilities up to 25 megawatts in nameplate capacity
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68th Legislature 2023                                                                                               SB 510.1
  owned or operated by any electrical energy producer;
          (h)      biomass generation facilities up to 25 megawatts in nameplate capacity owned or operated by
  cooperative rural electric associations described under 15-6-137;
          (i)      energy storage facilities of a centrally assessed electric power company;
          (j)      energy storage facilities owned or operated by an exempt wholesale generator or an entity
  certified as an exempt wholesale generator pursuant to 42 U.S.C. 16451;
          (k)      noncentrally assessed energy storage facilities owned or operated by any electrical energy
  producer;
          (l)      energy storage facilities owned or operated by cooperative rural electrical associations
  described under 15-6-137;
          (m)      battery energy storage systems that comply with federal standards on the manufacture and
  installation of the systems that are owned and operated by an electrical energy storage producer, electrical
  energy producer, or energy trading entity or by the owner or operator of an electrical vehicle charging site;
          (n)      all property of a biodiesel production facility, as defined in 15-24-3102, that has commenced
  construction after June 1, 2007;
          (o)      all property of a biogas production facility, as defined in 15-24-3102, that has commenced
  construction after June 1, 2007;
          (p)      all property of a biomass gasification facility, as defined in 15-24-3102;
          (q)      all property of a coal gasification facility, as defined in 15-24-3102, except for property in
  subsection (1)(t) of this section, that sequesters carbon dioxide;
          (r)      all property of an ethanol production facility, as defined in 15-24-3102, that has commenced
  construction after June 1, 2007;
          (s)      all property of a geothermal facility, as defined in 15-24-3102;
          (t)      all property of an integrated gasification combined cycle facility, as defined in 15-24-3102, that
  sequesters carbon dioxide, as required by 15-24-3111(4)(c);
          (u)      all property or a portion of the property of a renewable energy manufacturing facility, as defined
  in 15-24-3102, that has commenced construction after June 1, 2007;
          (v)      all property of a natural gas combined cycle facility;
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68th Legislature 2023                                                                                                  SB 510.1
          (w)      equipment that is used to capture and to prepare for transport carbon dioxide that will be
  sequestered or injected for the purpose of enhancing the recovery of oil and gas, other than that equipment at
  coal combustion plants of the types that are generally in commercial use as of December 31, 2007, that
  commence construction after December 31, 2007;
          (x)      high-voltage direct-current transmission lines and associated equipment and structures,
  including converter stations and interconnections, other than property classified under 15-6-159, that:
          (i)      originate in Montana with a converter station located in Montana east of the continental divide
  and that are constructed after July 1, 2007;
          (ii)     are certified under the Montana Major Facility Siting Act; and
          (iii)    provide access to energy markets for Montana electrical generation facilities listed in this
  section that commenced construction after June 1, 2007;
          (y)      all property of electric transmission lines, including substations, that originate at facilities
  specified in this subsection (1), with at least 90% of electricity carried by the line originating at facilities specified
  in this subsection (1) and terminating at an existing transmission line or substation that has commenced
  construction after June 1, 2007;
          (z)      the qualified portion of an alternating current transmission line and its associated equipment
  and structures, including interconnections, that has commenced construction after June 1, 2007;
          (aa)     all property of a renewable diesel production facility, as defined in 15-24-3102, that has
  commenced construction after December 31, 2020; and
          (bb)     all property of a sustainable aviation fuel production facility, as defined in 15-24-3102, that has
  commenced construction after December 31, 2020.
          (2)      (a) The qualified portion of an alternating current transmission line in subsection (1)(z) is that
  percentage, as determined by the department of environmental quality, of rated transmission capacity of the
  line contracted for on a firm basis by buyers or sellers of electricity generated by facilities specified in
  subsection (1) that are located in Montana.
          (b)      The department of revenue shall classify the total value of an alternating current transmission
  line in accordance with the determination made by the department of environmental quality pursuant to
  subsection (2)(a).
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68th Legislature 2023                                                                                             SB 510.1
           (c)      The owner of property described under this subsection (2) shall disclose the location of the
  generation facilities specified in subsection (1) and information sufficient to demonstrate that there is a firm
  contract for transmission capacity available throughout the year. For purposes of the initial qualification, the
  owner is not required to disclose financial terms and conditions of contracts beyond that needed for
  classification.
           (3)      Class fourteen property does not include facilities:
           (a)      at which the standard prevailing rate of wages for heavy construction, as provided in 18-2-414,
  was not paid during the construction phase; or
           (b)      that are exempt under 15-6-225.
           (4)      For the purposes of this section, the following definitions apply:
           (a)      "Biomass generation facilities" means any combination of boilers, generators, associated prime
  movers, and other associated property, including appurtenant land and improvements and personal property,
  that are normally operated together to produce electric power from the burning of organic material other than
  coal, petroleum, natural gas, or any products derived from coal, petroleum, or natural gas, with the use of
  natural gas or other fuels allowed for ignition and to stabilize boiler operations.
           (b)      (i) "Compressed air energy storage" means the conversion of electrical energy to compressed
  air by using an electrically powered turbocompressor for storage in vessels designed for that purpose and in the
  earth, including but not limited to deep saline formations, basalt formations, aquifers, depleted oil or gas
  reservoirs, abandoned mines, and mined rock cavities.
           (ii)     The term includes the conversion of compressed air into electrical energy by using
  turboexpander equipment and electrical generation equipment.
           (c)      (i) "Energy storage facilities" means hydroelectric pumped storage property, compressed air
  energy storage property, regenerative fuel cells, batteries, flywheel storage property, or any combination of
  energy storage facilities directly connected to the electrical power grid and associated property, appurtenant
  land and improvements, and personal property that are designed to:
           (A)      receive and store electrical energy as potential energy; and
           (B)      convert the stored energy into electrical energy for sale as an energy commodity or as
  electricity services to balance energy flow on the electrical power grid in order to maintain a stable transmission
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68th Legislature 2023                                                                                             SB 510.1
  grid, including but not limited to frequency regulation ancillary services and frequency control.
          (ii)     The term includes only property that in the aggregate can store at least 0.25 megawatt hour
  and has a power rating of at least 1 megawatt for a period of at least 0.25 hour.
          (iii)    The term does not include property, including associated property and appurtenant land and
  improvements, that is used to hold water in ponds, reservoirs, or impoundments related to hydroelectric
  pumped storage as defined in subsection (4)(e).
          (d)      "Flywheel storage" means a process that stores energy kinetically in the form of a rotating
  flywheel. Energy stored by the rotating flywheel can be converted to electrical energy through the flywheel's
  integrated electric generator.
          (e)      "Hydroelectric pumped storage" means a process that converts electrical energy to potential
  energy by pumping water to a higher elevation, where it can be stored indefinitely and then released to pass
  through hydraulic turbines and generate electrical energy.
          (f)      (i) "Regenerative fuel cell" means a device that produces hydrogen and oxygen from electricity
  and water and alternately produces electrical energy and water from stored hydrogen and oxygen.
          (ii)     The term does not include a green hydrogen facility, green hydrogen pipeline, or green
  hydrogen storage system as defined in 15-6-163.
          (g)      "Wind generation facilities" means any combination of a physically connected wind turbine or
  turbines, associated prime movers, and other associated property, including appurtenant land and
  improvements and personal property, that are normally operated together to produce electric power from wind.
          (5)      (a) The department of environmental quality shall determine whether to certify that a
  transmission line meets the criteria of subsection (1)(x), (1)(y), or (1)(z), as applicable, based on an application
  provided for in 15-24-3112. The department of environmental quality shall review the certification 10 years after
  the line is operational, and if the property no longer meets the requirements of subsection (1)(x), (1)(y), or
  (1)(z), the certification must be revoked.
          (b)      If the department of revenue finds that a certification previously granted was based on an
  application that the applicant knew was false or fraudulent, the property must be placed in class nine under 15-
  6-141. If the application was fraudulent, the applicant may be liable for additional taxes, penalty, and interest
  from the time that the certification was in effect.
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68th Legislature 2023                                                                                              SB 510.1
              (6)    Class fourteen property is taxed at 3% of its market value."
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              Section 2. Section 15-6-158, MCA, is amended to read:
              "15-6-158.   Class fifteen property -- description -- taxable percentage. (1) Class fifteen property
  includes:
              (a)    carbon dioxide pipelines certified by the department of environmental quality under 15-24-3112
  for the transportation of carbon dioxide for the purposes of sequestration or for use in closed-loop enhanced oil
  recovery operations;
              (b)    qualified liquid pipelines certified by the department of environmental quality under 15-24-3112;
              (c)    carbon sequestration equipment;
              (d)    equipment used in closed-loop enhanced oil recovery operations; and
              (e)    all property of pipelines, including pumping and compression equipment, carrying products
  other than carbon dioxide, that originate at facilities specified in 15-6-157(1), with at least 90% of the product
  carried by the pipeline originating at facilities specified in 15-6-157(1) and terminating at an existing pipeline or
  facility.
              (2)    For the purposes of this section, the following definitions apply:
              (a)    "Carbon dioxide pipeline" means a pipeline that transports carbon dioxide from a plant or
  facility that produces or captures carbon dioxide to a carbon sequestration point, including a closed-loop
  enhanced oil recovery operation.
              (b)    "Carbon sequestration" means the long-term storage of carbon dioxide from a carbon dioxide
  pipeline in geologic formations, including but not limited to deep saline formations, basalt or oil shale
  formations, depleted oil and gas reservoirs, unminable coal beds, and closed-loop enhanced oil recovery
  operations.
              (c)    "Carbon sequestration equipment" means the equipment used for carbon sequestration,
  including equipment used to inject carbon dioxide at the carbon sequestration point and equipment used to
  retain carbon dioxide in the sequestration location.
              (d)    "Carbon sequestration point" means the location where the carbon dioxide is to be confined for
  sequestration.
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68th Legislature 2023                                                                                               SB 510.1
              (e)   "Closed-loop enhanced oil recovery operation" means all oil production equipment, as
  described in 15-6-138(1)(c), owned by an entity that owns or operates an operation that, after construction,
  installation, and testing has been completed and the full enhanced oil recovery process has been commenced,
  injects carbon dioxide to increase the amount of crude oil that can be recovered from a well and retains as
  much of the injected carbon dioxide as practicable, but not less than 85% of the carbon dioxide injected each
  year absent catastrophic or unforeseen occurrences.
              (f)   "Liquid pipeline" means a pipeline that is dedicated to using 90% of its pipeline capacity for
  transporting fuel or methane gas from a coal gasification facility, biodiesel production facility, biogas production
  facility, or ethanol production facility, renewable diesel production facility, or sustainable aviation fuel production
  facility.
              (g)   "Plant or facility that produces or captures carbon dioxide" means a facility that produces a flow
  of carbon dioxide that can be sequestered or used in a closed-loop enhanced oil recovery operation. This does
  not include wells from which the primary product is carbon dioxide.
              (3)   Class fifteen property does not include a carbon dioxide pipeline, liquid pipeline, or closed-loop
  enhanced oil recovery operation for which, during construction, the standard prevailing wages for heavy
  construction, as provided in 18-2-414, were not paid during the construction phase.
              (4)   (a) Except as provided in subsection (4)(b), class fifteen property is taxed at 3% of its market
  value.
              (b)   Carbon sequestration equipment placed in service after January 1, 2014, that is certified as
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