Energy and Environment Policy Updates in Wyoming
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Energy and Environment Policy Updates in Wyoming

Brownstein Client Alert, May 24, 2024

Earlier this month, the Wyoming state legislature’s Joint Minerals, Business and Economic Development Committee met at the University of Wyoming (UW) in Laramie. The meeting’s theme and focus centered around finding a balance between meeting the demand for minerals while minimizing environmental impact and promoting sustainable practices as well as highlighting the capabilities and future growth of the University of Wyoming’s School of Energy Resources.

Below are some key highlights from the meeting, which ran from May 8-10, including the main takeaways from its presentations and panels.
 

Economic Outlook

The UW Center for Business and Economic Analysis provided an overview of Wyoming’s economic outlook with the following key points:

  • Wyoming’s unemployment rate is expected to be around 3.1%.
  • Natural resources and mining employment is expected to rebound in 2024.
  • Housing affordability turned negative in 2022—housing is unaffordable for median-income households in Wyoming.
  • The lack in airline service contributes to a lack of mobility for business travel.
  • 5% of Wyoming is unserved by any broadband.
  • Major projects are underway in Wyoming, creating economic growth, if there is sufficient infrastructure: CarbonSAFE, Project West, Pacific Soda, Minutemen III, Rare Element Resources Pilot and the Terrapower Natrium Reactor Modular Nuclear Power Plant
  • Current economic challenges include: lack of affordable housing, lack of agglomeration economies due to low population and challenges in accessing child care.
  • Strong economic factors include: agriculture; leisure, hospitality and tourism; construction; manufacturing; and wholesale and retail trade, transportation and utilities

Presentations and Panels

The meeting featured a series of presentations and panel discussions covering a wide range of topics. Below is a summary of each. 

Energy-Related Water Issues: The committee is studying issues relating to produced water. The Wyoming Oil and Gas Conservation Commission (WOGCC) requested statutory revisions by striking a portion of W.S. Section 30-5-104(d)(vi)(A), which would change where reservoirs could be located. This would afford operators more flexibility to strategically site such reservoirs to serve their operations more efficiently. The Committee will consider draft legislation at its next meeting.

Hydrogen Production: The UW School of Energy Resources (SER) is dedicated to energy-driven economic development for the state of Wyoming by integrating cutting-edge energy research with academic programs. SER has a Hydrogen Energy Research Center, which is working to support the growth of the hydrogen industry while serving the state’s existing energy customers. SER provided an update on its research, which includes developing new market for natural gas and coal. The school is working on a pilot project that aims to integrate produced water thermal desalination technology with auto thermal or steam methane reforming. This would allow for efficient hydrogen production, leveraging water produced during oil and gas extraction.

Mineral Production: The Wyoming Mining Association (WMA) asked the committee to consider tax relief on the purchase of equipment in the form of a sales tax credit and to reduce the severance tax rate from 6.5% to 6% to align with the severance tax rate for oil and gas production. The committee did not take action on the request, indicating a preference for such legislation to be considered by the Joint Revenue Interim Committee. WMA expressed concern that the Joint Minerals Committee will not be willing to consider the issue. Thus, members of the Joint Minerals Committee may consider possible legislation to provide tax relief at a future meeting.

Pipelines: At the request of Gov. Mark Gordon’s policy office, the committee received an update about pipeline regulation, including carbon dioxide (CO2) pipelines. Federal agencies, such as the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), regulate interstate pipelines. The committee received testimony about intrastate regulation of pipelines. There was no request for a bill draft.

Coal, Coal-Fired Electric Generation and Carbon Capture: Wyoming produces more coal than any other state and is home to some of the largest coal mines in the United States. The coal industry employs 5,100 people directly and 10,000 indirectly. There are 12 coal-fired plants (17 coal-fired units) in Wyoming, all owned or managed by generation/transmission utility companies. Due to changes in the national energy market with transitions made to gas or other renewables, coal production has declined by approximately one-third from 2015-2022. From 2003 to 2022, coal-produced electricity has declined significantly, from 97% to 71%.

With other states like Washington, Oregon and California enacting legislation to reduce or phase out coal-based electrons, Wyoming has responded by enacting legislation to support the continuation of its coal industry. Specifically, Wyoming law requires the owner of a coal-fired power plant to make a good-faith effort to sell before making plans to close the facility. Further, Wyoming requires utility companies to evaluate carbon capture to meet lower CO2 standards. The committee discussed a recent announcement by the EPA mandating aggressive CO2 emissions reductions from existing coal-fired power plants and new natural gas-fired turbines. The governor’s office indicated that it will join legal efforts to challenge the EPA’s action. In recent years, the Wyoming State Legislature appropriated $1.2 million to fund litigation to challenge federal actions that threaten Wyoming’s coal industry. The committee requested a litigation update for its next meeting.

Pipeline Corridor Initiative and Enhanced Oil Recovery: The Enhanced Oil Recovery Institute (EORI) provided an update on the Wyoming Pipeline Corridor Initiative (WPCI). WPCI was created to identify a system of corridors that are integrated in the Bureau of Land Management’s (BLM’s) existing corridor network for the construction of pipelines for the transport of CO2 and other enhanced oil recovery (EOR) products, as well as other compatible uses on federal lands. EORI discussed ideas on how to incentivize enhanced oil recovery and how the WPCI can be used to create a CO2 Pipeline Project to reduce planning and permitting costs. The committee will consider draft legislation to incentivize enhanced oil recovery at its next meeting.

Oil and Gas Bonding: The committee is studying oil and gas and pipeline issues, including regulation of intrastate CO2 pipelines. Currently, the WOGCC has authority to request bonds under Wyoming statute. The committee is sympathetic to the small oil and gas producers in the state. The committee will form a subgroup with legislators and members of industry to see what potential legislative framework could be crafted to help support small producers comply with bonding requirements.

Integrated Test Center: Wyoming established the Integrated Test Center (ITC) to provide a space for researchers to test carbon capture, utilization and sequestration (CCUS) technologies using actual coal-based flue gas to create marketable products. The ITC opened in 2018 outside of Gillette, Wyoming, and is one of a handful of such facilities around the world. Since opening its doors, several entities have provided governance over the ITC, which has created confusion. The committee requested legislation to clarify the UW School of Energy Resources’ authority, such as its ability enter into lease agreements. The Committee will consider draft legislation at its next meeting.

Department of Environmental Quality Industrial Siting Act: The committee heard an update of the Industrial Siting Program, housed in the Wyoming Department of Environmental Quality. Members provided the committee with a chance to meet the new administrator and receive an overview of new and proposed projects. The committee may consider legislation to clarify the Industrial Siting Commission’s responsibility to consult with the Northern Arapaho Tribe and the Eastern Shoshone Tribe of Wyoming’s Wind River Reservation when proposed projects might affect in tribal communities.

Tax Free Storage Zone Exemption: In the 2024 Budget Session, the legislature repealed two requirements for the sales-tax manufacturing exemption—first, that the sale or lease of machinery is to a specified NAICS manufacturer, and second, that the sale or lease does not include noncapitalized machinery (2024 Wyoming Session Laws, Ch. 67). The committee will continue to explore the topic and see what solutions may be available.
 

Future Outlook

The committee directed the Legislative Service Office to draft nine stand-alone bills and create four working groups. The committee will meet again July 30-31, 2024. Initially, the committee was set to meet in Casper, Wyoming, but may change to location to Gillette, Wyoming.

 

This document is intended to provide you with general information regarding recent updates from the Wyoming State Legislature's Joint Minerals, Business and Economic Development Committee. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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