Insights

Update (4/14/2023): And it begins. The House Committee on Natural Resources and Environment will hear Speaker Schexnayder’s House Bill 571 on CCS next Thursday, April 20 at 9:30 am.  HB 571 would make comprehensive changes to the CCS statutes, including notice provisions to local authorities, allocation of funds to local authorities, and increased financial and regulatory requirements on operators. Being the Speaker’s bill, one might expect it to pass the committee although CCS as a whole is sure to garner significant discussion. The other eight house bills on CCS will be scheduled at a later date. 

Original Update (4/11/2023): The Louisiana Legislative Session for 2023 officially began at noon yesterday (April 10), with the House of Representatives referring all nine bills involving Carbon Capture and Storage (CCS) to the House Committee on Natural Resources and Environment after one bill was re-directed. These bills have potentially far-reaching implications for CCS projects. In addition to targeting CCS projects in specific areas, the bills also have statewide implications by seeking to either eliminate or place significant hurdles on CCS development. 

HB 312, proposed by Representative Carter — which would remove the statutory cap for liability claims against CCS entities and impose strict liability for all damages – was initially provisionally referred to the House Committee on Civil Law and Procedure Committee when it was pre-flied on March 29. This week, the House re-directed that bill to the Natural Resources Committee, so all House bills are now pending before the same committee. The Senate referred its only bill relating to CCS, SB 141 by Chairman Hensgens of the Senate Natural Resources Committee, to his committee. The first committee meetings are expected next week.

Liskow will share regular updates throughout the Louisiana Legislative Session about CCS legislation.  

HB 571 is expected to be scheduled for a vote on the House floor next Wednesday, April 26, or Thursday, April 27. HB 571 moved favorably out of the House Committee on Natural Resources and Environment on April 20, as amended[1]. The adopted amendments include the following: use of more precise language identifying the proper local government officials for receipt of various notices related to CCS activities; a requirement for an environmental analysis in connection with a Class VI permit; and additional conditions specifying that liability releases are revoked in cases of actual or threatened endangerment to USDWs caused by fluid migration for which the operator is responsible, or in cases where the commissioner determines that the information provided by the operator and relied upon by the commissioner for approval of site closure or issuance of a certificate of completion of injection operations was deficient or erroneous.

The main commentary and questions by committee members related to how local officials and constituents could have input into the discussion of CCS projects as well as how local areas could benefit financially. Certain members of the House committee also discussed specific CCS projects in their areas. These themes are likely to continue as the CCS bills proceed though the legislative process.

All the other House bills are scheduled for hearing before the House Committee on Natural Resources and Environment next Wednesday morning.

[1] Amendments proposed by House Committee on Natural Resources and Environment to Original House Bill No. 571 by Representative Schexnayder: HCAHB571 3209 1229; HCAHB571 3209 944; HCAHB571 3209 1227.

Hurry Up and Wait. This week was set up to be a busy week for CCS bills, but everything was postponed. HB 571 was expected to be scheduled for a vote on the House floor this week, but it was recommitted to the House Committee on Appropriations based on the fiscal note attached to the bill. The bill contains a future (if ever realized) severance tax on carbon dioxide if it is ever removed from CCS storage facilities. The Department of Revenue estimated it would incur a one-time administrative cost of $444,000 to integrate that new tax into their system. It is unlikely that the fiscal note will affect the status of the bill. HB 571 is scheduled for hearing in Appropriations on Monday, where it is anticipated it will quickly be voted favorably, moving it back to the House floor on Monday afternoon. HB 571 could be re-set for a vote quickly on the House floor early next week.

The other eight House CCS bills were scheduled for hearing before the House Committee on Natural Resources and Environmental on Wednesday, April 26.  But all bills were removed from the agenda before the hearing. They have been re-scheduled for next Tuesday, May 2, except for one bill. The one bill which has not been rescheduled is HB 10 which sought to remove expropriation authority for CCS projects. That is a positive development for CCS projects. It is expected that the remaining seven bills will face heavy opposition. 

HB 571 was heard in the House Committee on Appropriations on Monday due to a tax feature applicable to extracted carbon dioxide. As anticipated, it received a quick and favorable vote after an uneventful hearing and will likely be set for a vote on the House floor next week.

In stark contrast, an exciting and much longer day of hearings in the House Committee on Natural Resources and Environment on Tuesday resulted in the following:

• HB 453 and HB 454 were involuntarily deferred, effectively leaving them to die in committee. Both would have impacted CCS projects statewide by limiting CCS facilities to the Gulf of Mexico or by requiring local approval at the parish level for any CCS projects.

• HB 308 received a tie vote and will remain in committee for now. That bill would require environmental impact statements for CCS projects involving Lake Maurepas and the Maurepas Swamp Wildlife Management Area, which is somewhat similar to the environmental analysis that would also be required under HB 571, as amended. 

• HB 120 and HB 267 were voted favorably. Both bills directly affect CCS projects related to Lake Maurepas. The first would probit all above-surface structures on Lake Maurepas and Lake Ponchartrain, and the second would impose a ten-year moratorium on any CCS activity involving Lake Maurepas and the Maurepas Swamp Wildlife Management Area. These two bills are expected to be set for a vote on the House floor late next week.

The remaining CCS house bills are set for hearing on May 10 in the House Committee on Natural Resources and Environment. Those bills include: HB 10, which removes CCS expropriation authority; HB 35, which prohibits CCS in St. Helena Parish; and HB 312, which removes CCS damage caps and imposes strict liability. 

We’re now past the halfway point of the session. Six of the nine House CCS bills have now been effectively killed in the House Natural Resources Committee. HB 10 and HB 35 were involuntarily deferred in this week’s committee meeting on Wednesday, which essentially means the bills were voted down. HB 10 sought to remove eminent domain authority for CCS projects. If the eminent domain bill had passed, it could have effectively stopped most CCS projects around the state as eminent domain is a tool of last resort to obtain permission to acquire rights from a landowner who generally cannot be located, is deceased without a succession, or may be a single holdout. HB 35 was a local bill that proposed to prohibit CCS projects in St. Helena Parish. The prohibition in St. Helena would have eliminated any CCS projects in that parish and could have set a precedent for other areas of the state to seek the same local control over what is otherwise a statewide regulated industry. The Speaker’s comprehensive HB 571 passed the House floor on Thursday. The Speaker’s bill passing moves this bill closer to becoming law, which would provide additional notice to local government of future CCS projects and also provide local governments with revenue sharing with the state on CCS projects on state owned land. The remaining 2 bills involving Lake Maurepas are scheduled for a vote on the House floor next week on May 15.

For some additional flavor on the debate on HB 571 on the House floor, here is a list of amendments which were proposed by other members but failed to be adopted by the House:

1. An Amendment to remove eminent domain authority for subsurface rights for CCS projects;
2. An Amendment to prohibit carbon dioxide underground storage until Louisiana receives primacy from the federal government;
3. An Amendment to require the CCS entity to send a copy of any CCS expropriation suit to local government officials and the corresponding state legislators at the time of filing;
4. An Amendment to require a CCS operator in an expropriation suit to provide the landowner with copies of all pore space leases with other owners in the reservoir;
5. An Amendment to require notice be given to the legislators in a parish at the same time when notice is required to be given to local parish government regarding a CCS project;
6. An Amendment to increase the revenue that local parish receives from CCS projects on state land from 30% to 40%.

Only one CCS bill remains active and it moves closer to becoming law.  Six of the nine House CCS bills were effectively killed in the House Natural Resources Committee. The two other CCS bills were voted down on the House floor. Those eight House bills could have effectively stopped most CCS projects around the state, particularly the CCS bill which sought to remove eminent domain authority from CCS projects. By voting down these anti-CCS bills, the legislature has protected the opportunity for Louisiana to become a leader in CCS projects in the United States.

The remaining bill, HB 571 by Speaker Schexnayder, passed the Senate Natural Resources Committee without any new amendments and moved to the Senate Floor. The Speaker’s bill would provide additional notice to local government of future CCS projects and also provide local governments with revenue sharing with the state on CCS projects on state owned land.  HB 571 should be heard on the Senate Floor next week.

The 2023 Louisiana Regular Session has ended. HB 571 by Speaker Schexnayder was the only one of the nine CCS bills filed in the House to pass. HB 571 provided a balanced approach between providing additional protections for local governments and communities while permitting the CCS industry in Louisiana to move forward. 

HB 571 by Speaker Schexnayder added new provisions to Louisiana law on CCS as follows:

1. Requires additional notice be provided to local governments in advance of future CCS projects;
2. Provides local governments with revenue sharing with the state on CCS projects on state owned land;
3. Requires the storage operator to include a detailed environmental analysis as part of a Class VI injection well permit application;
4. Requires the storage operator to provide quarterly reports to the commissioner on CCS operations;
5. Requires the storage operator to provide notice within 24 hours to the commissioner of any noncompliance, malfunction, or failure relating to CCS operations;
6. Enlarges the timeframe from 10 years to 50 years for which the storage operator must continue to monitor the facility after the last injection of carbon dioxide before the operator may be eligible to receive a certificate of completion of injection operations;
7. Provides additional environmental requirements that the storage operator must satisfy in order to qualify for a certificate of completion of injection operations after 50 years;
8. Increases the money that a storage operator must contribute to the Carbon Dioxide Geologic Storage Trust Fund from $5M per operator to $5M per facility with a $10M per operator cap;
9. Makes explicit that the funds in the Carbon Dioxide Geologic Storage Trust Fund are also eligible to be used for any environmental remediation associated with a CCS facility, among many other items;
10. Prohibits the legislature from sweeping the money in the Carbon Dioxide Geologic Storage Trust Fund for any other purpose without a two-thirds vote of the legislature;
11. Provides for the filing of a short form notice of a geologic storage agreement into the public records to protect the personal financial information of a landowner from disclosure while providing sufficient public notice of the geologic storage agreement.

The other eight House bills on CCS died in either House committee or on the House floor. Those eight House bills could have effectively stopped CCS projects around the state, particularly the CCS bill which sought to remove eminent domain authority from CCS projects. By voting down these anti-CCS bills, the legislature has protected the opportunity for Louisiana to become a leader in CCS projects in the United States