An Update on Carbon Capture Legislation Following Louisiana’s 2024 Regular Legislative Session

Since the US Environmental Protection Agency (EPA) granted Louisiana primary enforcement authority over Class VI underground injection wells, there have been a number of legislative developments aimed at regulating carbon capture and sequestration (CCS). With regulatory oversight shifting from the EPA to the Louisiana Department of Energy and Natural Resources (LDNR), legislators have been working to take advantage of greater legislative freedom to promote efficiency in the permitting process and encourage economic viability for the CCS industry in Louisiana.

The 2024 Louisiana Regular Legislative Session has seen the proposal of several bills related to CCS. What follows is a summary of this legislative session, highlighting the status of each proposed bill.

FAILED

The common themes among Louisiana bills that failed to pass were: (a) increasing protections associated with property rights and eliminating eminent domain for CCS projects (see HB 729, 774, and 783); (b) allowing local tax levies for CO2 injection (see HB 73); (c) increasing protections on the land surrounding lakes (see HB 280, 289, and 389); and (d) requiring CO2 projects to comply with local land use planning and zoning ordinances (see HB 276).

• HB 73 (Rep. Mack): Authorized a parish to levy and collect a tax on carbon dioxide injected for sequestration by a Class IV injection well that is located within the parish. The owner and operator of the well would be liable for payment of the tax.
• HB 276 (Rep. Carter): Required the owner and operator of a carbon dioxide sequestration project to comply with local land-use planning and zoning ordinances.
• HB 280 (Rep. Coates): Prohibited the issuance of any orders or permits to allow construction, installation, or use of any permanent structure above the surface of Lake Maurepas or Lake Pontchartrain.
• HB 289 (Rep. Mack): Prohibited permits for Class VI wells in Caney Lake, Lake Maurepas, Lake Pontchartrain, and Toledo Bend Reservoir.
• HB 389 (Rep. Mack): Prohibited sequestration of carbon dioxide, and the use of pipelines for such purpose, on or beneath Lake Maurepas and the Maurepas Swamp Wildlife Management Area for 10 years.
• HB 729 (Rep. Carter): Eliminated eminent domain authority for carbon dioxide storage facility owners and operators.
• HB 774 (Rep. McCormick): Required operators who exercise their eminent domain power to compensate mineral owners for any stranded reserves, or pay the additional cost to drill the carbon dioxide plumes.
• HB 783 (Rep. McCormick): Provided that a landowner shall be compensated in the event their pore space is appropriated under eminent domain or a unitization action by the Commissioner of Conservation.

PASSED¹

• HB 169 (Rep. Carter): Alters the current law by limiting compensatory damages in any civil liability action against the owner or operator of a storage facility, carbon dioxide pipeline, or the generator of the carbon for noneconomic losses to $250,000 per person, rather than per occurrence. Additionally, in cases of wrongful death or substantial injuries, the recovery for these losses cannot exceed $500,000 per person. This bill has been signed into law by Governor Jeff Landry, and becomes effective August 1, 2024.
• HB 492 (Rep. Geymann): Expands the current law to give expropriation authority to entities engaged in transportation of carbon dioxide by pipeline for underground storage. The bill also extinguishes eminent domain rights relative to geologic storage. This bill has been signed by the Governor and becomes effective August 1, 2024.
• HB 516 (Rep. Mack): Establishes requirements for carbon dioxide sequestration regarding emergency preparedness, siting restrictions, ground water monitoring, and the recordation of notices and maps with the parish. This bill has been sent to the Governor for executive approval.
• HB 934 (Rep. LaCombe): Alters the distribution of revenue received by the state for the storage of carbon dioxide on state-owned lands or water bottoms. As a result, the state is required to distribute 30% of the funds to the parishes involved, with the remaining balance being distributed to the Wildlife and Fisheries Conservation Fund. This bill has been sent to the Governor for executive approval.
• HB 937 (Rep. Geymann): Provides landowners with limited liability protection from CCS operations occurring on their property. This bill has been signed by the Governor and becomes effective August 1, 2024.
• HB 966, formerly 696 (Rep. Geymann): Authorizes unitization for carbon dioxide storage projects and details the process for forming a unit. This bill has been signed by the Governor and becomes effective August 1, 2024.

Of particular note this session is HB 492, which extends expropriation authority to pipeline companies transporting carbon dioxide for CCS projects, thus expanding the range of operators who can utilize eminent domain to aid their operations. Additionally, the bill clarifies the approval requirements, stating that the expropriating entity must first obtain a certificate of public convenience and necessity, subject to Title 30 of the Louisiana Revised Statutes. However, the bill fails to detail the threshold requirements for obtaining the certificate, leaving the door open for future statutory amendments or regulations. The expansions provided under HB 492 are limited, however, as storage operators cannot exercise expropriation authority over reservoir or pore space for geologic storage. Instead, a separate bill, HB 966, was passed during this session that allows for unitization of geologic storage space for carbon dioxide.

HB 966 gives the Commissioner of Conservation the authority to unitize, pool, and consolidate all separately owned tracts within a unit for geologic storage in order to facilitate an orderly development of the state’s geologic storage resources and prevent waste. The procedures adopted here follow a similar system that is in place for Louisiana oil and gas projects. To apply for an order for unit operation, three-fourths of the owners in interest within the proposed unit must have consented in writing. Additionally, the order can only be issued after notice, public hearing, and a finding by the Commissioner that the unit is for a public and necessary purpose. The order must also provide for just and equitable compensation to all owners in interest, including the storage operators and landowners, whether they have consented or not to such operations.

Conclusion

The recent passage of this legislation has helped Louisiana create a more robust regulatory framework and clears the path for more investment in Louisiana CCS projects. These developments underscore Louisiana’s commitment to fostering carbon capture development and innovation, and position the state to potentially become a leader in the industry. As Louisiana continues to position itself at the forefront of CCS regulation, it sets a powerful precedent for other states as they develop their own directives.

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¹ As of the date of publication, these bills have passed the legislature, but HB 516 and HB 934 are still in the process of being approved by the governor.