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Will Carbon Offset Agreements – Or Conservation Easements — Survive in West Virginia?

If you are looking for another example of how the Legislature in West Virginia favors big industry over the little guy, look no further than SB 822, introduced in the Senate on February 16, 2024. This bill attacks carbon offset agreements and conservation easements — two different kinds of contracts currently used by small landowners to generate income from private land. Sometimes these contracts prohibit future timbering of the land. The timber industry hates this.

Carbon offset agreements are private contracts between emitters of greenhouse gas – say a manufacturer or a package delivery company — and owners of forested lands. Forested lands act as a natural carbon sink, removing carbon dioxide from the atmosphere and converting the carbon to wood fiber while releasing oxygen back into the atmosphere. That wood fiber keeps the carbon from the atmosphere over many years. Carbon dioxide emitters pay landowners not to cut the carbon absorbing timber on their lands. In exchange the producers get carbon credits against pledges to de-carbonize operations or in carbon markets.

Conservation easements are a different sort of private contract. They are made between a private landowner and a charitable group like the Eastern Panhandle Land Trust to preserve the natural character of valuable land by prohibiting development, including commercial timbering. By their terms, easements are perpetual. If an easement is donated to a charity the landowner gets a tax deduction, so both conservation easements and carbon offset agreements create a revenue stream for the landowner.

SB 822 seeks to interfere with a private landowner’s freedom to restrict her property from future timbering, all in service to the West Virginia timber industry. In 2023 a similar bill was opposed by environmental groups, the West Virginia Farm Bureau and property owners’ groups as a threat to a legitimate income stream for farmers and forest property owners, and an obvious incursion into the freedom to direct the use of one’s own land. Perhaps most importantly, carbon offset agreements are a market-based device to reach carbon neutrality and should be encouraged. Fortunately, last years’ bill died in the Finance committee.

SB 822 would create a strong disincentive for carbon offset agreements. First many of them would be removed from the Managed Timberland Program and lose the tax break that accompanies it. Carbon capture agreements that impose substantial restrictions on “commercial production and harvesting of timber” would be removed.

Second, purchasers of carbon offset agreements would have to register with the state and be liable for an excise tax payment of up to 50% of the underlying value of the carbon offset. That kind of heavy-handed tax would deter many of the agreements.

SB 822 would also create huge uncertainty regarding the common use of conservation easements. It would amend the article on “covenants” in the Code chapter on Estates and Property to declare a state policy in favor of land development and timber harvesting. It would void any future easement or contract that effectively restricts land development or timbering longer than 20 years for the purpose of carbon offset or sequestration.

If the Legislature passes this bill, it will favor the economic interests of large industry over small landowners, deprive farmers and small landowners of a revenue stream from their own property, interfere with the freedom of contract, and eliminate a means of reducing greenhouse gasses and climate change. This is bad legislation, and it deserves to be firmly rejected.

Update 2/29/24. SB 822 was taken off the Senate calendar on the last day a bill could be passed out of its chamber of origin, effectively killing the bill. This resulted from strong opposition on the Senate floor by Minority Leader Mike Woelfel (Cabell) when the bill was read for the third time . Woelfel asked “Why are we taking away the property owner’s right to manage his property and his timber as he sees fit?” This “property freedom” rationale overcame the industry argument advanced by Sen. Eric Tarr (Putnam). Tarr argued that the bill was necessary to keep private carbon offset agreements from encumbering thousands of acres of forestland and “putting them out of reach of the timber industry.”