BILL ANALYSIS

H.B. 2790

By: Darby

Judiciary & Civil Jurisprudence

Committee Report (Unamended)

BACKGROUND AND PURPOSE

The bill author has informed the committee that, in order for Texas to compete and ultimately lead in the carbon capture, utilization, and storage (CCUS) industry, our state needs to provide a predictable legal, economic, and regulatory framework. H.B. 2790 seeks to provide that framework for current and prospective CCUS operators, facilities, and producers while also providing for damages for interference with water or mineral access.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 2790 amends the Civil Practice and Remedies Code to set out provisions relating to liability for capturing and storing carbon dioxide. The bill defines the following:

· "captured carbon dioxide" as carbon dioxide from any source that, through human effort or means, is seized for the purpose of sequestering the carbon dioxide with the intent of permanently preventing the carbon dioxide from being released into the atmosphere, including carbon dioxide that is captured from the atmosphere, stripped, segregated, or divided from a fluid stream, or captured from certain emissions sources;

· "carbon dioxide" as the chemical compound composed of one carbon and two oxygen atoms, including:

o anthropogenic carbon dioxide;

o naturally occurring carbon dioxide;

o carbon dioxide captured from the atmosphere; and

o phases, mixtures, and combinations of carbon dioxide that include:

§ a substance incidentally derived from the source materials for or process of capturing the carbon dioxide;

§ a substance added to the carbon dioxide stream to enable or improve storage of the carbon dioxide; and

§ a substance incidentally captured with carbon dioxide captured from the atmosphere;

· "claimant" as a party seeking relief, including a plaintiff, counterclaimant, or cross‑claimant, in an action under the bill's provisions and who is a land or mineral owner and party to a written agreement with the defendant related to the party's land or minerals and the defendant's activities regarding captured or stored carbon dioxide;

· "defendant" as a person against whom an action is brought under the bill's provisions and who is a producer of captured carbon dioxide or an owner or operator of a facility used to store carbon dioxide or a mechanism or instrumentality being used to transport captured carbon dioxide, including a pipeline or a tank or vessel carried by motor vehicle, watercraft, or rail;

· "geologic storage" as the underground storage of carbon dioxide in a reservoir;

· "geologic storage facility" as the underground reservoir, underground equipment, injection wells, and surface buildings and equipment used or to be used for the geologic storage of carbon dioxide and all surface and subsurface rights and appurtenances necessary to the operation of a facility for the geologic storage of carbon dioxide. The term includes any reasonable and necessary areal buffer and subsurface monitoring zones, pressure fronts, and other areas as may be necessary for Texas to receive delegation of any federal underground injection control program relating to the storage of carbon dioxide;

· "legal requirement" as a statute, regulation, rule, order, judgment, or permit controlling or directing conduct or the design, construction, or use of a facility or equipment that was enacted, adopted, promulgated, or issued by the federal government, an agency of the federal government, a federal court, the state, an agency or court of the state, or a local government in the state;

· "reservoir" by reference as a natural or artificially created subsurface sedimentary stratum, formation, aquifer, cavity, void, or coal seam; and

· "stored carbon dioxide" as captured carbon dioxide that is being transported or temporarily or permanently stored.

H.B. 2790 prohibits a claimant from bringing an action against an applicable defendant on the basis that captured carbon dioxide, stored carbon dioxide, or a process associated with capturing or storing carbon dioxide is a pollutant, constitutes a nuisance, including a public nuisance, under common law or state law, or has caused a nuisance-related injury.

H.B. 2790 prohibits a claimant from recovering noneconomic damages in a civil action against an applicable defendant for damages for injury to a person or property, including for interference with a possessory interest or an ownership right or an injury to crops or an animal, arising from an event governed by a legal requirement enacted, adopted, promulgated, or issued for the purpose of controlling or directing the transportation, capture, or storage of carbon dioxide to permanently prevent it from being released into the atmosphere, and resulting from any of the following:

· the transmission or injection of captured carbon dioxide into a geologic storage facility, including an action for damages caused by seismic activity;

· subsurface migration of stored carbon dioxide, including a claim for trespass or conversion arising from the subsurface migration of stored carbon dioxide into a pore space, geologic formation, cavity, void, reservoir, aquifer, mineral deposit, or other geologic formation; or

· captured or stored carbon dioxide being inadvertently released, including an action alleging environmental damage caused by the inadvertent release of captured or stored carbon dioxide into the air or surface water.

However, the bill authorizes the claimant to recover noneconomic damages only if the claimant establishes, in addition to other requirements of law, actual damages and one of the following:

· that, with respect to information relevant to a permitting authority's decision to grant the defendant a permit to transport, capture, or store carbon dioxide or conduct the process or operate the equipment or facility being used to transport, capture, or store carbon dioxide:

o the defendant concealed, withheld, or misrepresented the information;

o the information relates to the safety or propriety of injecting carbon dioxide into the geologic storage facility or is relevant to determining whether the stored carbon dioxide could migrate or escape in the manner in which it migrated or escaped;

o the permitting authority, in granting the defendant's permit reasonably relied on the information and did not receive the relevant accurate information from another source before granting the defendant's permit;

o the information is of sufficient importance that a reasonable person with the permitting authority's knowledge and experience would consider the information material to the permitting authority's decision to grant the permit; and

o the permit was granted not more than five years before the date the carbon dioxide was injected, migrated, or escaped;

· that:

o at the time of the event that caused the damage that is the basis of the action, the defendant was not in compliance with a legal requirement that governs an aspect of the defendant's conduct, including conduct regarding the defendant's equipment or facility, relevant to the event;

o the legal requirement is intended to protect a person or property from the kind of damage that occurred in the event; and

o if the defendant had been in compliance with the legal requirement, the event would not have occurred; or

· that, if the aspect of the defendant's conduct, including conduct regarding the defendant's equipment or facility, was not subject to an applicable permitting process or applicable legal requirement:

o the defendant's actions or omissions were contrary to a standard industry practice for the conduct relevant to the damage-causing event;

o the defendant chose not to comply with such industry practice solely for an economic reason; and

o if the defendant had acted in accordance with such industry practice, the damage‑causing event would not have occurred.

H.B. 2790 prohibits an applicable claimant from recovering noneconomic damages in a civil action for a claim that an applicable defendant prevented or impeded access to, or interfered with the production of, underground minerals or water due to the storage of captured carbon dioxide in a geologic storage facility. The bill authorizes the claimant to recover noneconomic damages only if the claimant establishes, in addition to other requirements under the law, actual damages and establishes the following regarding information relevant to the authority determining if storage of captured carbon dioxide in the geologic storage facility would prevent or impede the claimant's access to underground minerals or water or interfere with the claimant's production of the minerals or water:

· the defendant withheld from or misrepresented the information to the permitting authority;

· the permitting authority, in granting the defendant's permit, reasonably relied on the information provided by the defendant and did not receive the relevant accurate information from another source before granting the defendant's permit;

· the claimant did not know or receive notification of the proceeding in which the defendant obtained a permit to establish the geologic storage facility; and

· the information is of sufficient importance that a reasonable person with the permitting authority's knowledge and experience would consider the information material to the permitting authority's decision to grant the permit.

H.B. 2790 establishes that a claimant who receives compensation, including through a lease payment, a royalty payment, or the purchase of an easement, in consideration of the possibility that a geologic storage facility may prevent or impede access to or interfere with the production of the claimant's underground minerals or water is not entitled to recover damages from the owner or operator of the facility if the facility prevents or impedes access to or interferes with the production of the claimant's minerals or water.

H.B. 2790 limits the economic damages available for interference with access to underground minerals and water due to the storage of captured carbon dioxide to a claimant not otherwise barred from recovering damages by the bill to the following:

· if the defendant's geologic storage facility prevents or impedes access to the claimant's underground minerals or water, the increased cost to access the minerals or water that results from penetrating or circumventing the geologic storage facility;

· if the defendant's geologic storage facility interferes with the production of the claimant's underground minerals or water, the increased cost to produce the minerals or water and the present value of the minerals or water that the claimant cannot with reasonable probability produce because of the interference; or

· if the defendant's geologic storage facility prevents access to and the production of the claimant's underground minerals or water, the present value of the minerals or water that the claimant cannot with reasonable probability produce because of the facility.

H.B. 2790 prohibits a claimant in an applicable civil action from recovering exemplary damages unless the claimant meets the statutory requirements for recovery of exemplary damages and proves the elements described by the bill's provisions relating to the following, as applicable:

· limited liability for injection, migration, and release of captured carbon dioxide; and

· limited liability for interference with access to underground minerals and water due to storage of captured carbon dioxide.

H.B. 2790 establishes that its provisions may not be construed to impair, amend, alter, negate, or otherwise affect any right, obligation, or other term of an agreement but authorizes the voluntary waiver of the bill's provisions by agreement. The bill's provisions relating to liability for capturing and storing carbon dioxide are an exercise of authority under the Texas Constitution and take effect only if the bill receives a vote of three-fifths of all the members elected to each house, as provided by the constitution. The bill's provisions apply only to a cause of action that accrues on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.