Energy, Environment, West Virginia Legislature

House Judiciary OKs Senate bill to allow DNR to lease underground pore spaces for carbon sequestration

MORGANTOWN – A Senate bill that would enable the state to make money from carbon sequestration projects under state lands cleared its first House hurdle on Monday, winning approval of the Judiciary Committee.

The committee approved a tweaked version of SB 162, which passed the Senate in just a few minutes last Thursday without any committee consideration.

The bill allows the Division of Natural Resources, with approval of the Commerce secretary, to lease state-owned pore spaces underlying state forests, natural and scenic areas, wildlife management areas and other lands under its jurisdiction for underground carbon sequestration.

It prohibits such leases under state parks.

The leases would be offered via sealed bids to the highest responsible bidder, with the proviso that DNR may reject all bids and re-advertise should the round of bidding prove unsatisfactory. It allows the secretaries of Commerce and Economic Development to jointly agree to bypass the bidding process and directly award a lease if it is a necessary component of an economic development project and would net a market value or greater royalty.

All proceeds would go to the DNR.

Commerce Secretary James Bailey told the committee that among the bill’s benefits will be revenue and economic development opportunities should the state be chosen to house one of four regional hydrogen hubs to be established by the U.S. Department of Energy. West Virginia has made the short list in this competition and is preparing a more detailed proposal.

But even if the state should not get a hub, he said, it paves the way for other future economic development projects.

Bailey said they believed that DNR lacked clear statutory authority to undertake the leases and this bill clarifies that. It follows last year’s passage of the Carbon Sequestration Act, which says that the rights to underground pore space lie with the surface owner – as opposed to mineral rights where ownership can be severed.

One of the Judiciary tweaks was to remove a mistaken reference in the original to DNR selling pore rather than just leasing spaces. Bailey said the Carbon Sequestration Act forbids severing surface rights from the pore space rights.

Asked how much money the state could make from these leases, Bailey said, “The market is still developing. It’s so early into that I couldn’t get to any kind of near-accurate projection.”

The committee also passed a companion bill, SB 161, which enables the DNR to sell, lease or otherwise dispose of property under its jurisdiction. It removes and updates some outdated code.

Both bills now head to the full House.

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