Keeping it Cool for the Summer: a Mid-Session Legislative Update, Louisiana’s Primacy Application, and Carbon Capture Demonstration Awards

This summer is shaping up to be a defining season for the future of Louisiana’s carbon capture storage industry. This article provides a breakdown of the status of Louisiana’s primacy application—back on track after a lengthy delay, the 2023 Legislative Session bills that seems most and least likely to pass this term, and a recent announcement from Senator Bill Cassidy regarding federal dollars being awarded to certain Louisiana projects employing advanced storage techniques.

I. Primacy Application Status

On September 17, 2021, Louisiana submitted its primacy application to the EPA for regulation of Class VI injection wells. After much back-and-forth between the State and the EPA, and a bipartisan effort by Louisiana’s Democratic Governor John Bel Edwards and Republican Senator Bill Cassidy, on April 27, 2023, the EPA signed a proposed rule to approve Louisiana’s request for primacy over Class VI Wells under the Underground Injection Control Program and opened the proposal to public comment.

The EPA has attributed part of the reason for its delay in granting primacy to heightened EPA requirements on environmental justice. EPA Region 6 Administrator Earthea Nance stated that “[a]s an agency that is advancing environmental justice, EPA listened to the community voices in the region and worked extensively with the state of Louisiana to ensure its primacy application reflected essential environmental justice and equity considerations. As we work to finalize this proposal, EPA will seek and consider public feedback and continue to prioritize protections for our most vulnerable communities while ensuring they have a meaningful seat at the table.”

The public comment period is now open for sixty days. All public comments should be submitted on or before July 3, 2023. Depending on the volume of comments received, the process of addressing the comments may take several months. So, we anticipate final approval for Louisiana primacy will likely be in the first quarter of 2024.

II. Louisiana’s 2023 Legislative Session

In the wake of public discomfort over CCUS projects and the Louisiana Middle District Court’s decision in Air Prods. Blue Energy, LLC v. Livingston Par. Gov’t, 2022 U.S. Dist. LEXIS 231839, 2022 WL 17904535, which enjoined the local government from enforcing its moratorium on drilling Class V wells, several CCUS-related bills have been introduced this term. There is still time for changes in wording and passage potential, but certain bills have begun to float to the top while others sink in committees. Of course, all of these bills, if passed by both chambers, are subject to a gubernatorial veto by a governor who has shown great interest in developing CCUS in the State.

House Bill 571, presented by Speaker of the House Clay Schexnayder, is the furthest along the legislative wringer. On May 11, 2023, HB 571 passed the House by a vote of 98 to 1 and has been ordered to the Senate. HB 571 is packed with lots of CCUS-related rules including notice requirements to parish governing authorities, equitable sharing of profits from state CCUS projects between the State and local governments, required environmental analyses, an increase from ten to fifty years post-injection for issuance of certificates of completion, a tax on carbon dioxide extraction from storage facilities, and required record keeping. The bill also increases operator contributions to the Storage Trust Fund from a cap of $5 million total to $5 million per facility or $10 million for two or more facilities. Akin to Louisiana’s rule allowing recordation of a memorandum of mineral lease, rather than the lease itself, HB 571 provides for recordation of a notice of geologic storage agreement.

While HB 571 is likely to pass in some form this session, almost all other CCUS-related bills appear to have stalled or have already died in committee or on the House floor. The following paragraphs summarize their status.

The following bills remain in committee: HB 35 (considered by but not referred out of committee on May 10, 2023), which would ban all carbon capture projects in St. Helena Parish; HB 308 (currently before the Committee on Natural Resources and Environment), which would require environmental impact statements for wells or pipelines beneath Lake Maurepas and the Maurepas swamp; and HB 312 (currently before the Committee on Civil Law and Procedure), which places strict liability for damages attributable to owners of carbon capture storage facilities.

Three CCUS-related bills have been involuntarily deferred. Involuntary deferral occurs when a majority of a committee’s members vote to defer without the consent of the author or member reporting the bill. Although two-thirds of a committee’s members may vote to reschedule an involuntarily deferred bill for hearing, the committee will do so only after hearing all other House instruments requested to be heard by the committee. For this reason, the following bills are unlikely to reappear this session: HB 453, which would require that carbon dioxide injected for geologic sequestration using a Class VI injection well be transported to and sequestered in a storage facility in the Gulf of Mexico; HB 454, which would require a local election for the approval of carbon dioxide sequestration; and HB 10, which would have taken eminent domain authority from carbon capture facility operators.

Finally, on May 15, 2023, two bills that had advanced out of the House Natural Resources Committee died on the House floor. The bills specifically targeted Lake Maurepas, the subject of the Air Products decision. HB 120 sought to prohibit the permitting of above-surface structures on Lake Maurepas (failed by a vote of 28-71), and HB 267 sought a 10-year moratorium on carbon capture projects on Lake Maurepas (failed by a vote of 26-73).

III. CCUS Demonstration Awards

On May 5, 2023, Senator Bill Cassidy’s office announced that the Department of Energy has selected two Louisiana projects to receive carbon capture demonstration awards from the Infrastructure and Investment Jobs Act (IIJA). The purpose of these awards is to fund projects that demonstrate improvements in CCUS technology. The two projects employ solvent-based absorption of post-combustion CO2. The first project, a partnership with Entergy Services, LLC and Talos Energy, Inc., plans to capture a minimum of 95% of emissions from Entergy’s Lake Charles Power Station, or nearly 2.5 million tons of CO2 per year. The other, the Cypress Carbon Capture Project by Taft Carbon Capture, LLC, plans to capture a minimum of 90% of emissions from a power plant in Hahnville, or nearly 3 million tons of CO2 per year.

IV. Important Upcoming Dates

June 8, 2023 – final adjournment of 2023 regular legislative session

June 15, 2023 – EPA in-person public hearing in Baton Rouge regarding primacy

July 3, 2023 – Last day for public comment on Louisiana’s primacy application

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