Calumet announces $1.4 billion federal loan for expansion as regional officials question wastewater, taxes

Posted on October 18, 2024 by Jenn Rowell

Calumet Montana said this week that the U.S. Department of Energy has conditionally committed to a loan for the expansion of its Montana Renewables facility in Great Falls to increase production of sustainable aviation fuel.

The DOE has conditionally committed for a loan guarantee of up to $1.44 billion that if finalized by will help finance the expansion project to increase annual biofuel production from its current 140 million gallons to about 315 million gallons, according to a DOE release.

Once the facility reaches full capacity, Montana Renewables would produce about 10 percent of the Biden-Harris administration’s goal of producing 3 billion gallons of sustainable aviation fuel annually by 2030.

GFPS board approves request to access protested Calumet taxes

Montana Renewables said in a release that company expects to build a second renewable fuels reactor to allow about half the 300 million gallons capability to be online by 2026; debottlenecking of the existing renewable fuels and feedstock pretreatment units; installation of sustainable aviation fuel blending and logistics assets; increased renewable hydrogen production; addition of cogeneration for renewable electricity and steam; on-site water treatment and recycling capabilities; and other site enhancements.

The expansion is expected to create 450 construction jobs at its peak and up to 40 operations jobs, according to the company.

Sens. Jon Tester and Steve Daines praised the announcement, as did Gov. Greg Gianforte.

The Pondera County Commission said it welcomed the federal loan as it included funding for the construction of a contaminated water treatment facility at the refinery.

“It is imperative that Montana Renewables invest in the infrastructure necessary to treat or recycle the tens of millions of gallons of industrial wastewater it already produces annually as well as every drop of contaminated wastewater it will produce as production increases,” Pondera commissioners said in their statement.

Montana Renewables is also seeking U.S. Environmental Protection Agency approval to inject their wastewater underground into the Madison Aquifer in Pondera County, which the Pondera commissioners “absolutely oppose this proposed dumping scheme as it could create completely unacceptable risks to drinking and irrigation water, wildlife, public safety, and rural livelihoods in Pondera County. Pondera County is not going to be the dumpsite for Calumet/Montana Renewables waste. With the federal loan commitment in hand, Montana Renewables should abandon their irresponsible wastewater injection proposal, withdraw their permit application, and focus their energy on building the facilities necessary to treat or recycle all their wastewater on site. This would fulfill the promises made in their loan application, as well as their publicly stated commitments to sustainability and corporate responsibility.”

Montana Renewables begins delivering sustainable aviation fuel [2023]

The loan announcement also comes as Great Falls and Cascade County officials have been working to clarify Calumet’s tax abatement details with the Montana Department of Revenue.

Calumet has two pending tax appeal cases before the Montana Tax Appeal Board and Montana Renewables has a pending appeal of the Montana Department of Environmental Quality decision regarding tax exemption.

Montana Renewables, Calumet have pending tax appeals before state board

Montana Renewables is seeking to have its entire Great Falls facility certified as pollution control equipment, making it tax exempt under state law.

During an Oct. 15 meeting, Cascade County Commissioners adopted a resolution to clarify the tax abatement they granted to Calumet in 2022 after the Montana Department of Revenue contacted both the city and county for clarification about the amount each jurisdiction abated.

Both the city and county voted in 2022 to grant a new or expanding industries abatement, which is allowable under state law, allowing the expansion to be taxed at 50 percent of its taxable value for five years with increases each year thereafter until reaching 100 percent of the taxable value in the tenth year.

The city approved its abatement of city taxes in May 2022 and the county approved its abatement in August 2022 for the renewable fuel conversion project, which has now become Montana Renewables, a subsidiary but separate tax entity, under Calumet.

In August 2024, the DOR contacted the city and county officials about a possible overstatement of the 2024 certified values the department issued to the county.

County board upholds state’s revised tax valuation for Calumet

“Surprising to Cascade County, the overstatement of certified values stems from some confusion DOR reported with regard to the tax abatement application submitted in 2021 by Calumet for its renewable fuel project. The Department of Revenue asserts that the application submitted by Calumet was confusing as Calumet used a value of $50 million in one place, a value of less than $300 million elsewhere but the actual to date value Calumet is claiming abatement on is $430 million and has requested clarification from both the City of Great Falls and Cascade County as to how much the total dollar value of the equipment included in the application was approved by the taxing jurisdictions for abatement,” according to the county staff report for the Oct. 15 meeting.

The county reviewed their paperwork and commissioners said they hadn’t capped the tax abatement, but to clarify for DOR, adopted a new resolution with a limit of $430 million so that DOR would issue updated certified taxable values so the county can finalize tax bills.

During their meeting, Commissioner Joe Briggs said DOR was treating this abatement differently than past abatements and he was unsure why.

“We have never been in the business of picking winners and losers. We have never been in the business of capping the amount,” Briggs said.

Calumet appeals county tax board denial to state [2023]

Commissioner Rae Grulkowski asked for what other abatements had the commission not established a cap, to which Briggs responded every one they’d done for the last 20 years.

Jolene Schalper of the Great Falls Development Alliance said manufacturing makes up less than three percent of the local economic market and that the project is about jobs, tax base and encouraging investment in the community.

The DOR told The Electric that the typical process for a new and expanding industry abatement under state law is:

the company applies to the local taxing jurisdictions
the jurisdiction schedules and holds a public meeting
at the public meeting the company will present their project with the detail that the board needs
the board decides to approve/deny the request and if approved, for which property
the board provides the Department of Revenue with a resolution and the approved application
DOR staff identify the assets that were approved and identify them as such in our system
DOR provides this information as part of the download to the county, which is what the city and county use to determine their budget and send tax bills

“Typically, between the approved application and the resolution, the jurisdictions will provide the assets that they are approving the incentive on. That was not done in this scenario and the department asked for clarification,” according to DOR.

DOR officials told The Electric that there’s nothing in state statute prohibiting pollution control, as certified by DEQ, from also getting the NEI abatement or transferring ownership of the assets to another entity, but since certified pollution control became tax exempt, DOR officials said they haven’t seen it included in NEI applications.

Calumet settles with EPA over 2019 violations

DOR is not part of the DEQ appeal and “cannot confirm that the assets in question are also the assets that they are requesting the abatement on, however, it is our understanding they have requested all of the Montana Renewables facility to be certified as pollution control equipment, therefore we believe these are likely the same assets,” according to a written response to The Electric.

The Electric asked how much tax revenue had been abated for Calumet and Montana Renewables over the last two years under the abatement approved by the city and county in 2022, to which DOR provided:

Calumet Montana Refining LLC:

2022 – $0
2023 – $3,333,610

Montana Renewables LLC:

2022 – $13,124,923
2023 – $283,202,936

City Attorney David Dennis said he provided a response to the DOR’s August request for a dollar amount approved by the commission for Calumet’s tax abatement that it was clear that Calumet had requested and the commission had approved an abatement on $50 million.

County tax appeal board denies $189.5 million Calumet protest [2023]

In his response to DOR, Dennis wrote that Calumet submitted a tax abatement to the city in November 2021 stating that it expected to received a 100 percent pollution control tax exemption from the state on equipment totalling $250 million so it was seeking the abatement on the remaining $50 million of equipment that would not qualify for the exemption.

In December 2021, the deputy city planning director asked DOR to calculate the impact of the requested $50 million tax abatement on the city’s tax revenue, which was provided in February 2022 to the city and is below.

City staff presented the request to commissioners in May 2022 and they approved the abatement, which was estimated as a $2,777,982 loss of city tax revenue over a decade, according to Dennis’ letter to DOR.

In Calumet’s supporting documentation submitted in its abatement request to the city, Calumet wrote that it would be “applying for the Montana Department of Revenue permanent tax exemption for new pollution control equipment and therefore we anticipate a remaining $50 million of property valuation for the NEIC abatement. If the city grants the NEIC tax abatement…this equates to an unbudgeted increase of $1.4 million over a 10-year period. Rejecting the application puts execution of the project at risk and only increases Calumet property taxes an additional $0.8 million over the same 10 year period. This is a solid investment in growing a long term industrial partner that was established in 1922. The growth from this project will also increase dependence upon city utilities by the refinery as well as additional employment resulting from the project.”

County approves Calumet tax abatement [2022]

The Electric covered the Calumet request in May 2022 and reported that “Calumet is requesting a city tax abatement on the $50 million not covered by the state’s tax abatement.”

Montana Renewables has a pending appeal before the Montana Tax Appeal Board, with a hearing currently set for May 2025, in which the biodiesel production company with a Great Falls facility asked the Montana Department of Environmental Quality to certify the plant as a pollution control facility.

Under state law, air and water pollution and carbon capture equipment certified as such by DEQ is tax exempt.

In November 2021, Calumet Montana Refining spun off some assets to create Montana Renewables, which is a separate company and taxpaying entity.

City approves Calumet tax abatement [2022]

Montana Renewables asked DEQ to certify the entire facility as an air and water pollution control facility, which would render the entire facility tax exempt, but DEQ certified only certain equipment, representing eight percent of the facility, according to the appeal filed in April with the Montana Tax Appeal Board.

The Electric asked Calumet’s spokeswoman if the company intended to pursue the tax exemption for the facility expansion funded by the DOE loan. The company has not yet responded.

City considering Calumet tax abatement request [2022]

Calumet also has two pending tax protests pending before the state tax board, one is to protest the company’s valuation for the 2023 tax year, the other to appeal a revised valuation for their 2022 tax year.

Last fall, the Cascade County Tax Appeal Board voted to deny a request from Calumet asking their taxable value for 2023 to be lowered by about $189 million. Calumet appealed that decision to the state tax board.

City officials said the Calumet protest meant about $1.1 million being held annually from city revenues until the protest was resolved.

City Commission approves tax increase, budget

This spring, Calumet asked the county tax board to reject the DOR’s adjustment to their taxable valuation to account for about $79 million in assets that had been missed in the initial appraisal.

County considering legal services for issuance of municipal bonds for Calumet project [2022]

Calumet protested their 2017 taxable value from the state that was set at $538 million.

The county tax appeal board lowered the taxable value to $312.5 million. The DOR appealed that decision to the state.

The protest was settled in 2020 and the city lost about $4 million in tax revenue over that three year period, according to the city staff report.

In 2016, Calumet requested a tax abatement that was estimated to be a $6 million loss of property taxes to the city over 10 years. Commissioners denied that request.

During the 2022 commission meeting on the abatement request, Commissioner Rick Tryon said that Calumet’s previous tax protest “kind of put us in a bit of a bind. I just hope that we don’t have to go through that again.”

Former Mayor Bob Kelly said during the meeting that abatement approval had to strike a balance of benefit to the company and also the community.

When any entity protests their taxes, as Calumet did, Kelly said, “that causes a great consternation for us.”

He said that businesses disagree with their tax assessments, they should protest them, but “it doesn’t go unnoticed,” in the community.

Kelly said that “Calumet’s been a good citizen, they’re good taxpayers.”

For more background, read our previous coverage below:

Montana Renewables looking to use injection wells in Pondera County for washwater

Montana Renewables reaches milestones [2023]

County approves bonds for Montana Renewables conversion project [2022]

County resets levies after adjusting for Calumet change affecting GFPS [2021]

County requests tax recertification for GFPS budget, Calumet tax reduction [2021]

County to consider tax recertification for Calumet valuation drop to keep GFPS budget whole [2021]

Calumet planning transition to renewable diesel operations [2021]