Louisiana Carbon Capture and Storage Updates

Before closing the 2024 regular session, the Louisiana Legislature passed five Carbon Capture & Storage (CCS) house bills (HB): HB 966, HB 492, HB 937, HB 516, and HB 934, though HB 934 was subsequently vetoed by Governor Jeff Landry. Effective on August 1^st, 2024, the remaining 4 bills clarify the legal framework regarding CCS projects. This includes procedures for acquiring eminent domain of land, authority for unitization of CCS reservoirs, and establishing liability of property owners over CCS reservoirs. Additionally, the bills include procedures for revenue sharing for CCS projects and establish responsibility for the facilities to make plans in the case of an emergency. The changes are as follows:

HB 966-Energy/Conservation: Authorizes unitization for carbon dioxide sequestration

HB 966 provides the authority for unitization of CCS reservoirs, in which operators may combine or pool separately owned tracts of land to create geologic storage for CCS reservoirs. After the application of a CCS operator, the Commissioner of Conservation will ensure that the proposed reservoir meets the requirements of present law, has a defined area that is reasonable, and at least three-fourths of the landowners of interest (in proportion to land ownership) have consented in writing to unitization of their property. Additionally, HB 966 requires operators to provide equitable compensation to all landowners affected by unitization, including those who did not consent in writing to geologic storage. The basis for equal sharing of benefits, or compensation, is to be determined by the commissioner but may be based on the impact on the land, the scope of the damage to the land, and the cost of the unit operation. Unitization allows for larger tracks of geologic storage for carbon capture with little to no impact to the landowner. HB 966 marks an important step in Louisiana law towards curbing greenhouse gas emissions and mitigating climate change through CCS projects.

HB 492-Property/Expropriation: Provides relative to eminent domain

HB 492 clarifies the rights for landowners as related to eminent domain and establishes a procedure for operators to acquire private land via eminent domain to facilitate pipelines. Eminent domain, or governmental acquisition of private land for public use, may be acquired for the operator through the Louisiana Department of Energy and Natural Resources, Office of Conservation (DENR). This clarification of eminent domain significantly reduces obstacles surrounding carbon dioxide transportation, as eminent domain was unclear and difficult to obtain prior to HB 492. Additionally, HB 492 removes existing eminent domain authority for storage operators and replaces it with unitization as outlined in HB 966.

HB 937-Energy/Conservation: Provides protection from landowner liability for carbon dioxide sequestration

HB 937 establishes that landowners are not to be held liable for any duties or obligations related to CCS projects on their property even if they have agreed to allow the storage operator to use the property for sequestration. Instead, the storage operator is held liable for complying with the regulations of CCS reservoirs. For example, HB 937 changes the responsible party for installation and monitoring equipment from interested persons to the storage operators. HB 937, however, does not supersede the terms of any contractual agreements entered into by a landowner, meaning that landowners may be held liable if a contractual agreement with the operator overrides HB 937. By protecting landowners from duties or obligations surrounding CCS reservoirs, HB 937 aims to ensure that storage operators are held responsible for CCS projects and their potential impacts.

HB 516-Energy/Conservation: Enacts carbon dioxide sequestration emergency response requirements for CCS reservoirs

HB 516 requires operators to issue a semi-annual groundwater monitoring report to protect drinking water for areas surrounding the CCS reservoir. Additionally, HB 516 requires operators to have additional emergency and remedial response plans for the storage facility. This includes requiring operators to have recorded emergency response plans prior to injection and continuing training after injection. Moreover, HB 516 requires the operator to conduct discussion-based exercises on emergency plans in compliance with appropriate emergency preparedness and response agencies. HB 516 aims to protect communities from any possible impacts of CCS reservoirs and enacts response requirements in the case of an emergency, further ensuring the safety of any interested persons.

HB 934-Energy/Conservation: Provides for the dedication of revenue from carbon dioxide sequestration on state lands and water bottoms – Vetoed by Governor Jeff Landry on June 19, 2024

HB 934 would have corrected the interpretation of HB 571 which established revenue sharing on CCS projects that impact state lands. HB 571 was previously interpreted to exclude revenue sharing by local government from CCS projects if the project extended beyond a Parish boundary. HB 934 clarified that 30% of revenue from CCS projects are to be directed towards parishes included in the agreement, including property owned and operated by Louisiana Department of Wildlife and Fisheries. Although HB 934 was vetoed by Governor Landry on procedural grounds: changes in constitutionally dedicated funds cannot be altered by statute in Louisiana, the Governor stated in the veto letter that he is committed to working on similar future legislation to remit revenue to local governments.

Questions?

The various changes in the Louisiana law represent a positive step towards the implementation of CCS technologies and allows the public to be involved in the various steps of the process.

If you have questions or concerns regarding the CCS changes, please contact your ALL4 Project Manager or Andrew Hebert at ahebert@all4inc.com to learn how the changes may affect you or your facility.