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Published January 13 2013

North Dakota Legislature: What to watch this week

BISMARCK – Lawmakers settled in for North Dakota’s 63rd legislative session in Bismarck last week, listening to Gov. Jack Dalrymple’s vision for the oil-rich but infrastructure-challenged state.

Now it’s time to start weighing proposals.

Here’s a sampling of some issues expected to arise this week as the biennial session gets under way:

Tax breaks for drillers

The House Taxation and Finance Committee is considering a bill this week that would exempt oil drillers from paying the 6.5 percent extraction tax if the crude is processed at a North Dakota refinery.

Backers believe giving companies a tax break for selling oil locally would promote the construction of new refineries in North Dakota. The state has only one oil refinery, the Tesoro Corp. plant near Mandan. A refinery has not been built in the U.S. since the 1970s, though at least two are being mulled in North Dakota.

The Taxation and Finance Committee also is to discuss a bill this week that would give energy companies a tax exemption if they utilize or capture natural gas that otherwise is intentionally torched and wasted as an unwanted byproduct of oil production.

More than one-third of the gas produced in North Dakota is burned off as a byproduct of the state’s booming oil production. The U.S. Energy Department’s Energy Information Administration says less than 1 percent of natural gas is flared from oil fields nationwide, and less than 3 percent worldwide.

The agency says producers can flare natural gas for a year without paying taxes or royalties on it. And companies can request an extension because of the “economic hardship” of connecting the well to a natural gas pipeline. Oil wells in North Dakota typically produce the most oil and gas within their first year and decline from then on.

Breaks for companies?

Oil companies may be turning to lawmakers for a tax break.

North Dakota Petroleum Council President Ron Ness said his group, which represents more than 300 companies working in the state’s Oil Patch, may be crafting a “tax restructuring bill” that could be ready within the month. He would not elaborate.

At present, the state has a pair of primary taxes on oil: a 5 percent production tax and a 6.5 percent extraction tax. North Dakota law requires that a portion of the production tax go to oil-producing counties, which must share it with cities and school districts within the county.

Lynn Helms, director of the state Department of Mineral Resources, warned lawmakers last week to “be careful” not to raise taxes or some oil companies could move to other oil and gas fields in the U.S.


Sen. Tim Mathern, D-Fargo, an advocate of the federal health care law, is thanking Gov. Jack Dalrymple for including funding for Medicaid expansion in the state Department of Human Services budget.

Mathern said he has withdrawn a bill on the matter “to allow proper focus to be placed on the issue.”

The Legislature is revisiting whether the state should take part in running a new health insurance marketplace. Lawmakers last session rejected a state-run online health insurance marketplace, a cornerstone of the federal law. Majority Republicans at the time called the insurance exchange too complex and too expensive to put into place.

Dalrymple said in his State of the State speech last week that North Dakota must now make up $93 million over the next two years in reduced federal funding for Medicaid reimbursements.

Roll-your-own smokes

The State Tax Department is pushing a bill to define cigarettes and “roll-your-own-cigarette-making machines.” The proposal would make it illegal for a cigarette-making machine to be operated “by other persons whose consumption of the product is incidental to the owner’s personal use of the machine.”

Translation? No more bumming smokes.

Howling about fees

North Dakota Game and Fish Director Terry Steinwand said he expects standing-room only and plenty of howling at Legislative hearings next week on a proposal to increase fees for some hunting licenses and permits.

Steinwand said the last time hunting fees increased was when bottles of pop and candy bars could be bought for pocket change.

A resident big game hunting license would increase from $20 to $25. A swan hunting license, for example, would cost a resident hunter 10 bucks instead of five. A “husband and wife” fishing license will remain at $14.