Louisiana lawmakers open study on how carbon-capture projects should share revenue with parishes

The House Natural Resources Committee met Jan. 14 for a study (HSR5) focused on local revenue from carbon capture, sequestration and related permits.

Department of Energy and Natural Resources (DENR) officials told the committee that the State Mineral and Energy Board, for which DENR provides staff, has authority under Title 30 to negotiate and collect payments for carbon capture and storage (CCS) on state property and water bottoms. Blake Canfield, executive counsel for the department, said the board has negotiated six agreements since October 2021 and has collected more than $58 million total so far, including more than $7 million distributed to parishes under Act 378 of 2023. Canfield described a typical payment structure in the most recent state agreements as an upfront bonus (example: $300 per acre), an annual acreage rent (example: $60 per acre annually) and an injection fee tied to tons of CO2 injected (example cited: $7.50 per ton) with guaranteed minimum annual payments once injection starts.

Tyler Gray, secretary of the Department of Energy and Natural Resources, and Canfield told lawmakers the board has asked staff to study a change to how projects are marketed (moving toward a public bidding model similar to oil and gas leasing), which could affect future valuations. Gray and Canfield also said DENR does not make recommendations about taxing privately owned projects; the department’s remit on state property is to negotiate leases and collect payments under existing law.

Committee members pressed DENR on permitting timelines and capacity. Canfield said Louisiana received primacy from EPA to run the Class VI underground injection control program in February 2024 and that no Class VI permits had been issued yet; DENR expects to issue the first permits in the first quarter of 2025. He described the review as time intensive, explained the difference between administrative completeness and technical review, and said the permitting office has seven staff assigned specifically to Class VI work and roughly 60 people in the broader Office of Conservation. Canfield said applications typically take 18–24 months to prepare; DENR estimates comparable timeframes for review depending on site complexity (landowner agreements and “artificial penetrations” in the review area were named as common complicating factors).

Officials and outside experts gave three possible channels for local revenue: - Existing state-lease payments for state-owned lands and water bottoms (some state agreements already allocate funds to parishes). Canfield and DENR staff provided a parish-by-parish breakdown of amounts collected and distributed under current agreements: Cameron Parish ($4,100,000), St. Charles Parish ($968,000), Livingston Parish ($921,000), St. John the Baptist Parish ($712,000), Jefferson Parish (just over $500,000), Tangipahoa Parish ($709,000) and Plaquemines Parish (just under $39,000). Canfield said the board has collected more than $58 million to date and more than $7 million has been distributed to parishes per Act 378 of 2023. - Property taxes assessed on capture equipment, pipelines and injection wells under draft Louisiana Tax Commission (LTC) rules. Greg Upton, director of the LSU Center for Energy Studies, said the main channel through which local governments will receive revenue is property taxes on capture equipment, pipelines and injection facilities and that LTC has draft emergency rules with tables for assessing well-footage and related equipment. - A statutory injection fee (analogous to a severance tax) imposed per ton of CO2 injected and dedicated back to parishes. Committee members and parish officials discussed an injection-fee model that could be assessed at the place and time of sequestration (similar to the severance-tax statutory model). Upton and multiple local officials noted that if an injection fee were assessed only at the place of injection, parishes that host injection wells would receive the benefit while capture or industrial host parishes would not; the legislature could instead design a statute that shares proceeds across a defined storage area if it chose to do so.

Local elected officials and associations urged stronger revenue sharing for parishes that host injection infrastructure. Guy Cormier of the Police Jury Association said parishes want a predictable share of revenues rather than a patchwork of individually negotiated payments. Allen Parish leaders asked the legislature to consider a per-ton tariff; Roland Hollis (Louisiana CO2 Alliance) urged that "that parish, wherever it's injected at, should receive $8 a ton" as a simple, local-focused starting point for revenue. The Police Jury Association and several parish officials said they prefer a consistent statutory approach rather than ad hoc, parcel-by-parcel deals.

Industry representatives and assessors’ groups described the property-tax approach the Tax Commission has drafted. Tommy Faucher (LAMOGA) and Bob Adair (Advantis) said industry, assessors and LAMOGA worked on LTC guidance to value sequestration wells and pipelines; the commission published proposed tables for well-footage assessment and pipeline valuation and placed those rules in the December register as an emergency proposal. Adair and Faucher emphasized that early valuation work focuses on assessed value (not tax rates) and that valuations are likely to evolve as the economy of projects becomes clearer.

Experts and witnesses also flagged trade-offs and risks. Michael Brissett and Danny Ford (Louisiana Mineral Servitude Owners) warned that long-lived CO2 plumes could complicate later subsurface resource development and urged care in siting and unitization to avoid foreclosing future mineral production and attendant severance revenues. Elizabeth Soyczyk (Climate Reality Project and 10,000) raised groundwater and safety concerns and cited a reported leak at an Archer Daniels Midland (ADM) facility in Illinois; committee members noted the state’s role in enforcing Class VI rules and the interaction with federal regulation. LSU’s Upton emphasized that companies move forward only where projects pass private cost-benefit tests, often supported by the federal 45Q tax credit, and that the legislature can affect local outcomes either by changing property-tax assessment rules or by creating a statutory injection fee.

The committee did not take votes on legislation. Members said the session was informational and that the Natural Resources Committee will continue follow-up briefings on permitting, LT C rules, the draft revenue frameworks and the constitutional questions raised by Wildlife and Fisheries properties purchased with conservation funds. Representative Shane Mack, sponsor of the study resolution, asked staff and interested parties to continue working with parishes and DENR on data and legislative options.

The hearing closed without floor votes; Representative Landry moved to adjourn and the committee adjourned.