"Clean and Green" Property Tax Incentives

In 2007, the Legislature passed House Bill 3 (May special session) that established property tax incentives to encourage energy projects with less environmental impact than conventional facilities. The “Clean and Green” incentives come in three forms.

First, certain facilities and equipment (included in the list below) can be classified as either Class 14 or Class 15 Property (15-6-157 and 15-6-158, MCA). These classes are taxed at 3 percent of market value; previously, these facilities may have been taxed at a higher percent of their market value. To qualify for the 3 percent tax rate, the standard prevailing wages for heavy construction must be paid during construction and some other qualifications may also apply.

Second, high-voltage direct-current converter stations that are constructed in a location and manner so that the station can direct power to two different regional power grids can be classified as Class 16 property. Class 16 property is taxed at 2.25 percent of market value.

Third, a subset of Class 14, 15, and 16 properties are eligible for a property tax abatement of 50 percent for up to 19 years (15-24-3101 et seq. MCA).  This abatement applies to all mills levied against the qualifying facility or equipment. For qualifying clean advanced coal research and development equipment or for renewable energy research and development equipment, only the first $1 million of the value receives the abatement.

The Department of Environmental Quality must certify that certain transmission lines, carbon dioxide pipelines and liquid fuel pipelines qualify as Class 14 or 15 property. The Department also certifies any facility or equipment seeking the property tax abatement. A taxpayer starts the process by filling out the appropriate application. Projects eligible for these property tax classifications and abatements are likely to have unique characteristics, so a follow-up interview or inspection may be necessary.

Rules setting the framework for “Clean and Green” certification are at ARM 17.80.201 and 17.80.202. Rules for alternating current transmission lines are at ARM 17.80.203 and ARM 17.80.225. Rules for carbon dioxide pipelines are at ARM 17.80.204.  Rules for enhanced oil recovery equipment are at ARM 17.80.205-206. Once the property is certified, the Department of Revenue applies and administers the property tax just as with any other facility. DOR rules are ARM 42.4.4114 and 42.4.4115.

For additional information, contact:
Garrett Martin

For CO2 pipelines and enhanced oil recovery equipment, contact:
Dave Aguirre
(406)782-2689, Ext. 205

AC Transmission Line Certification Form

CO2 Pipeline Tax Certification Form

Closed-Loop Enhanced Oil Recovery Tax Certification Form

Clean and Green Certification Form

Types of Facilities that May Qualify for “Clean and Green” Incentives

  • Biodiesel production facility
  • Biogas production facility
  • Biomass gasification facility
  • Coal gasification facility that sequesters carbon dioxide
  • Ethanol production facility
  • Geothermal generating facility
  • Integrated gasification combined cycle facility that sequesters carbon dioxide
  • A natural gas combined cycle facility
  • Transmission lines and associated equipment and structures, including interconnections and converter stations
  • Equipment 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
  • Carbon dioxide pipelines for the transportation of carbon dioxide for the purposes of sequestration or for use in closed-loop enhanced oil recovery operations
  • Carbon sequestration equipment
  • Equipment used in closed-loop enhanced oil recovery operations
  • Qualified pipelines, including pumping and compression equipment, carrying “green” fuels
  • All property or a portion of the property of a renewable energy manufacturing facility
  • Research and development equipment for clean advanced coal or renewable energy technologies