Local governments press for direct revenues as Louisiana weighs carbon-sequestration taxes and pipeline levies

Debate over how Louisiana should tax carbon dioxide pipelines and sequestration wells intensified May 5 in the House Ways and Means Committee, where parish officials pressed for direct, dedicated revenue streams to pay for emergency response, road damage and other costs they expect when large industrial carbon projects arrive.

Two different proposals were discussed in the hearing and related testimony. Representative Blake Mack introduced a bill to impose a tonnage-based “injection” fee on CO2 permanently stored underground and to dedicate the revenue to parishes near storage wells. Representative Richard Shammelhorn proposed a different approach: a pipeline-operating tax — a per-ton-per-mile fee — directed to local governments inside a three-mile buffer of pipeline routes.

Local governments: emergency, equipment and schools Allen Parish jurors and officials told the committee they face potential multi-million-dollar local obligations if large projects land in their districts. Allen Parish Police Juror Adam Husson, and parish administrator Jacob Dillehay, said volunteer fire departments, school systems and parish infrastructure will need durable funding. Husson urged lawmakers to require project owners to contribute directly: “Our parish assumes industrial-size risk without industrial-size benefit. House Bill 4 44 provides — begins to provide — that benefit,” he told the committee.

Sister Norma Núñez, director of Metanoia Manor (a faith-based residential program that cares for trafficking victims), and Metanoia board members also testified about local social services that would benefit from stable, dedicated funding streams.

Industry and tax analysts: wait for final federal rules and project models Industry groups and pipeline owners urged caution and delay. Company and industry trade witnesses warned that a high, fixed per-ton tax would make projects uneconomic. Tommy Fauci, president of the Louisiana Mid-Continent Oil and Gas Association, and other industry witnesses emphasized that project models are still being developed and that federal tax credits (including Section 45Q) and other international credits affect project economics. “I think the time it is taking to get there … doesn’t diminish the want of the industry to continue to work with the legislature and local governments to figure out, if there is a number moving forward,” Fauci told the committee.

Analysts said Texas and other states are actively competing to host projects and that Louisiana’s decisions on tax treatment could shift project locations. Dr. Greg Upton (LSU Center for Energy Studies) presented analytic background: using comparators, he said an injection fee in the vicinity of $1 per metric ton was in the same order of magnitude as a severance-tax-style share, but cautioned that assumptions and project designs change results.

Bills and committee action - Representative Mack (HB 444): proposed an injection fee (per-ton storage tax) with state collection and parish distribution; sponsor and parish officials asked the committee to advance the idea after a year of study sessions. Committee members took testimony and voluntarily deferred HB 444 for further work. - Representative Shammelhorn (HB 552): proposes a pipeline operator levy (5¢ per ton per mile in the draft) where proceeds would be dedicated to parishes within a three‑mile corridor. The committee also voluntarily deferred this bill for further work and local-industry conversations.

Points of contention and next steps The hearing exposed two central tensions: (1) local governments want predictable, dedicated revenue tied to the scale of projects so they can plan emergency services, infrastructure and social services — and (2) industry says project economics remain uncertain because federal credits, contract structures (who owns and operates pipelines and storage wells), and final technical permitting remain in flux.

Industry witnesses urged that lawmakers avoid a single statewide fixed tax that would apply to all projects; instead, they suggested formulas tied to project economics or a formula similar to a percentage of an administered credit. Local officials said they cannot rely on voluntary community benefit agreements and need statutory commitments.

Ending Committee sponsors and witnesses said they will continue the conversation in committee and among industry, parish governments and state agencies. Several lawmakers said they favored a negotiated formula that gives local governments a stable share while keeping projects competitive.