SB 822 — Relating generally to real property, tax, and registration requirements associated with carbon offset agreements

WEST VIRGINIA LEGISLATURE REGULAR SESSION IntroducedCommittee Substitute for Senate Bill 822 ByBY SenatorSENATOTARR Tarr[Originating [Introducedin Februarythe 16,Committee 2024;on Finance;

referredreported toFebruary the26, Committee2024] onCS Finance]for Intr SB 2024R3918822 A BILL to amend and reenact §11-1C-2 of the Code of West Virginia, 1931, as amended;

to amend said code by adding thereto a new article, designated §11-12E-1, §11-12E-2, §11-12E-3, and §11-12E-§11-12E-4; 4;

and to amend said code by adding thereto a new section, designated §36-4-20,§36-4- 20, all relating to real property, tax, and registration requirements associated with carbon offset agreements;

IntrCS for SB 2024R3918822 CHAPTER 11.

(a) "Timberland" means any surface real property except farm woodlots of not less than ten10 contiguous acres which is primarily in forest and which, in consideration of their size, has sufficient numbers of commercially valuable species of trees to constitute at least forty40 percent normal stocking of forest trees which are well distributed over the growing site.

(b) "Managed timberland" means surface real property, except farm woodlots, of not less than ten10 contiguous acres which is devoted primarily to forest use and which, in consideration of their size, has sufficient numbers of commercially valuable species of trees to constitute at least forty40 percent normal stocking of forest trees which are well distributed over the growing site and that is managed pursuant to a plan provided for in §11-1C-1 et seq.:

or (3) Any tract or parcel of real estate, regardless of its size, which is subject to a carbon offset agreement, as that term is defined in §11-12-4b of this code, which the Tax Commissioner, in consultation with Division of Forestry, determines is incompatible with the managed timberland IntrCS for SB 2024R3918822 program due to substantial restrictions on commercial production and harvesting of timber upon it.

(c) "Tax Commissioner,"Commissioner", "commissioner""commissioner", or "tax department" means the State Tax Commissioner or a designee of the State Tax Commissioner.

(h) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagneticelectromagnetic, or similar capabilities.

— CS for SB 822 (1) "Carbon offset agreement" means any agreement, whether designated as a carbon Intr SB 2024R3918 capture agreement, carbon sequestration agreement, or otherwise, entered into between an owner of an interest in real estate in West Virginia including any type of minerals or growing timber, and any other person, entity or company, with the intent of providing payment, compensation, or remuneration for nondevelopment of a real estate interest in West Virginia to prevent the release of carbon dioxide or other greenhouse gases into the atmosphere or to absorb, suppress, or contain carbon dioxide or other greenhouse gases.

Provided, That such agreements or restrictions forforthe the injection and containment of carbon dioxide or other greenhouse gases into underground pore or container spaces are not carbon offset agreements.

(2) "Greenhouse gases" means any of various gaseous or vaporous compounds such as carbon dioxide or methane that absorb infrared radiation and may trap heat in Earth'searth's atmosphere.

(1) Legal names, addresses, and other contact information of all parties to the carbon offset agreement,agreement; (2) Location and description of the real estate in West Virginia covered by the carbon offset agreement, including:

(A)CS Postalfor address of the property, if available, Intr SB 2024R3918822 (B)(2) TaxLocation parceland ordescription other tax map identifier of the property,real andestate (C)in AnyWest otherVirginia locationcovered information required by the Taxcarbon Commissioner;offset agreement, including:

(A) Postal address of the property, if available;

(B) Tax parcel or other tax map identifier of the property;

and (C) Any other location information required by the Tax Commissioner;

— Beginning on July 1, 2024,2025, and on or before July 1 of every year thereafter, the Tax Commissioner and Division of Forestry shall jointly submit a report to the Governor and the Joint Committee on Government and Finance setting forth at a minimum the following information:

(1) The number and type of carbon offset agreements in effect burdening real estate in West Virginia during the preceding calendar year,year; (2) The number of acres of real estate burdened by carbon offset agreements during the preceding calendar year and the counties in West Virginia in which they are found, (3) The amount of money paid to West Virginia landowners under carbon offset Intr SB 2024R3918 agreements during the preceding calendar year, and (4) The amount of tax collected under §11-12E-1 et seq.

CS for SB 822 (2) The number of acres of real estate burdened by carbon offset agreements during the preceding calendar year and the counties in West Virginia in which they are found;

(3) The amount of money paid to West Virginia landowners under carbon offset agreements during the preceding calendar year;

and (4) The amount of tax collected under §11-12E-1 et seq.

(a) For tax years beginning on and after January 1, 2023,2024, and with retroactive effect to such date, there is hereby levied on every carbon offset agreement regarding, or relating to, real estate in West Virginia or other property in West Virginia, an annual excise tax in the amount of 50 percent of the gross payment under the agreement:

Provided, That,That should the payor fail to pay or remit the tax, the payor and the payee shall be jointly and severally liable for payment of the tax.

CS for SB 822 The party that enters into a carbon offset agreement with a West Virginia landowner shall, no later than February 1 of each year following every year in which the carbon offset agreement is in effect, file with the Tax Commissioner on a form acceptable to the Tax Commissioner, a return Intr SB 2024R3918 identifying the location, description, and acreage of the real estate subject to the agreement, stating the gross payment made to the landowner under the contract in the previous calendar year, and remitting the tax imposed by §11-12E-1 of this code:

(a) The Legislature finds and declares that it is the policy of the state to promote and encourage land and mineral development and forest management and timber harvesting for the CS for SB 822 economic benefit of the citizens of this state.

Intr SB 2024R3918 (b) Any covenant, restriction, condition, easement, contract, lease, deed, agreement, option, or other governing document, which is executed or recorded after the effective date of this section, which effectively prohibits or restricts the development of land and minerals or the harvesting of timber from forests with the intent and purposes of carbon capture, carbon offsets, or carbon sequestration is void and unenforceable, unless said covenant, restriction, condition, easement, contract, lease, deed, agreement, option, or other governing document is for a maximum term of 20 years or less:

NOTE:

The purpose of this bill is to balance the interests of current landowners and future landowners to ensure surface, minerals, and forest land may be developed for future economic gain by limiting use restrictions for forest carbon capture and sequestration to a maximum term of 20 years.

The bill defines certain terms.

The bill requires parties to current and new carbon offset agreements to register with the State Tax Department.

The bill requires reports by Division of Forestry and the State Tax Department.

The bill authorizes the disclosure of information between the Tax Commissioner and Division of Forestry.

The bill imposes excise tax on receipts derived from carbon offset agreements.

The bill sets forth reporting requirements.

The bill provides an effective date.

The bill defines "managed timberland" to exclude timberland that is subject to a carbon offset agreement.

The bill specifies application of West Virginia Tax Procedure and Administration Act and West Virginia Tax Crimes and Penalties Act.

The bill authorizes promulgation of rules.