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Delegate embarks on gubernatorial run with long record of serving natural gas industry interests | Energy and Environment

Jim Justice became governor of West Virginia after over two decades of leading the coal businesses he inherited from his father.

As governor, Justice has looked out for the coal industry, rebooting the Public Energy Authority with a directive to develop a new generation of coal plants, approving $12.5 million in annual tax breaks for a Pleasants County coal-fired plant scheduled to be closed or sold next year, and appointing West Virginia Coal Association president Bill Raney to the Public Service Commission.

If a state delegate who announced a gubernatorial run this week manages to win, West Virginia will move from one governor with a fossil fuel-rooted career to another.

Delegate Moore Capito, R-Kanawha, announced Monday that he is running for the Republican nomination for governor in 2024, launching his campaign less than three weeks after he was elected to a fourth term in the House of Delegates.

As chairman of the House Judiciary Committee, Capito, 40, has played a pivotal role in advancing or killing key energy and environmental bills.

Throughout his roughly six years in the House, Capito has been an attorney serving natural gas industry clients. Capito worked for Greylock Energy, a Charleston-headquartered gas driller and producer, and its predecessor company, Energy Corporation of America, for over eight years.

Capito left his position as corporate counsel at Greylock Energy in 2019 to join the Charleston office of energy law firm Babst Calland. Capito has represented energy clients in natural gas asset transactions.

As a delegate, Capito took to the House floor earlier this year during an intense legislative fight to defend a controversial oil and gas industry-backed bill that forced landowners to participate in an oil or gas producing unit. The measure, Senate Bill 694, established a mechanism for unitizing oil or gas wells without 100% consent from mineral interest owners in a given formation. Unitization is the combination of two or more oil and gas tracts or tract portions to form a consolidated well unit.

Under SB 694, nonconsenting oil and gas interest owners with no lease automatically have their interest leased in the mineral estate in the target formation to the horizontal well unit controller seeking to combine oil and gas tracts to drill wells.

SB 694 passed the House en route to becoming law in a 52-42 vote, an unusually close outcome in the Republican-supermajority House.

Backers hailed it as a long-awaited legislative accomplishment bringing together interest groups that have long fought over provisions to establish unitization in West Virginia, killing comparable bills in the past.

But opponents said SB 694 would result in lower compensation for royalty owners and said the bill is tantamount to stealing. Delegate D. Rolland Jennings, R-Preston, asked Capito, the bill’s presenter and chief defender on the House floor, if Capito knew the definition of stealing.

“Each and every one of you that vote for this bill, you’re stealing, and you become a thief,” Jennings said in a floor speech.

“It’s clearly theft,” Minority Whip Shawn Fluharty, D-Ohio, agreed. “And it’s also a government mandate.”

But the bill’s backers argued that it would foster economic growth from oil and sufficiently compensate nonconsenting landowners.

“It does provide, I think, for the efficient development of natural resources with the least amount of intrusion or disruption,” Capito said on the House floor.

Two Brooke County mineral interest owners filed a lawsuit in federal court earlier this year seeking to have the law declared unconstitutional.

Capito voted in March for Senate Bill 650, a measure that became law with broader support among Republicans that eliminated a state requirement that at least seven royalty owners must own an oil and gas interest for an operator to develop it.

Last year, Capito was one of the most vocal backers on the House floor of an industry-backed legislative rule on environmental protection that includes a weakening of water quality standards for some carcinogens.

Capito cited West Virginia Department of Environmental Protection support of the proposed water quality updates, which sailed to passage. DEP Deputy Secretary Scott Mandirola defended the updates before the Capito-chaired House Judiciary Committee, saying they would leave the cancer risk managed by the current standards at 1 in 1 million.

Industrial lobbyist groups that backed the water quality standards update included the Gas and Oil Association of West Virginia, the West Virginia Coal Association and the West Virginia Manufacturers Association.

Capito opposed an amendment proposed by House Democrats to expand the number of pollutants targeted by the rules and adopt only updates that would make water quality standards more stringent. The DEP’s update of standards on pollutants into rivers and streams adopted 24 of 94 updates proposed by the U.S. Environmental Protection Agency. About half of the adopted updates weakened existing standards.

Capito called the proposed adoption of only 24 of the EPA’s suggested human health criteria updates a “toe-in-the-water approach.”

Conservationist groups like the West Virginia Rivers Coalition and the West Virginia Environmental Council opposed weakening the water quality standards, saying they shouldn’t be weakened since manufacturers were already following them. Opponents of the update pointed to West Virginia having the third-highest cancer death rate in the nation, per federal data, arguing that the state is especially vulnerable to any weakening of those standards.

Capito has supported efforts to expand solar development in West Virginia, couching that support in free-market, rather than pro-renewable, terms.

His support was critical in securing last year’s passage of a law enabling solar power purchase agreements. Capito was lead sponsor of the solar-friendly law, House Bill 3310, which exempted solar power purchase agreements from West Virginia Public Service Commission jurisdiction.

Capito defended the measure by noting that it contained no state subsidies or tax credit provisions. Under a solar power purchase agreement, a developer arranges designing, permitting, financing and installing a solar energy system on a customer’s property at little or no cost.

The customer buys the system’s electric output from the solar services provider for a predetermined period at a fixed rate, usually lower than the local utility’s fixed rate, while the solar services provider gains tax credits and income from electricity sales.

“The bill before you is truly the epitome of [a] free market,” Capito said in a floor speech last year. “This bill does not allow for more solar in the state of West Virginia. This bill does not provide any state subsidies for solar or renewable energy, and it does not give any preference or priority to solar or renewable energy.”

In a Judiciary Committee meeting that resulted in the bill’s advancement to the full House, Chris Hamilton, president of the West Virginia Coal Association, blasted the bill in an extended back-and-forth discussion with Capito. Hamilton predicted that the bill would result in a loss of coal jobs as consumers get to “cherry-pick” their electrical load.

In response, Capito called HB 3310 a “very, very watered-down version” of Senate Bill 30, a similar measure that stalled in the Economic Development Committee.

Capito also was one of few Republicans to vote against an industry-backed bill earlier this year that would have exempted oil and gas tanks closest to public water intakes from mandated evaluations and certifications.

House Bill 2598 was designed to benefit the oil and gas industry by lessening inspection costs for tank operators. But it provoked concern about potential drinking water contamination from tank leaks of pollutants harmful to human health near public water intakes. The bill died in the Senate.

Capito voted for the 2019 Pleasants Power Station bailout. He also voted for a measure that became law this year, Senate Bill 262, which allowed the state treasurer, currently his cousin and new Republican U.S. House of Representatives candidate Riley Moore, to restrict banking contracts with financial institutions that divest from fossil fuel companies.

Capito’s House reelection bid in the 2022 cycle drew heavy support from fossil fuel interests.

Capito’s campaign committee, Moore Capito for WV 2022, received over $40,000 from fossil fuel political action committees and executives, including $1,500 in contributions from Greylock Energy CEO Kyle Mork.

Moore Capito for WV 2022 reported receiving contributions of $2,800 from Rusty Hutson Jr., co-founder and CEO of Diversified Energy Co., and his wife Kimberly Hutson, another $2,800 from Diversified’s political action committee, and another $5,571 in in-kind contributions from Hutson, Diversified’s PAC and Diversified executive vice president Benjamin Sullivan via a fundraiser.

Diversified has become the largest owner of oil and gas wells in the country in recent years, expanding through a business model that many industry experts say is unsustainable and could leave states on the hook for billions in well cleanup costs.

Other contributors to Capito’s campaign throughout the 2022 election cycle were Mountain Valley Pipeline lead developer Equitrans Midstream Corp. ($5,600), EQT’s PAC ($3,300), Mountain Valley Pipeline investor Next Era Energy’s PAC ($2,000), ExxonMobil PAC ($2,000), the Marathon Petroleum Corp. Employees PAC ($1,500) and the Gas and Oil Association of West Virginia’s PAC, GOpac ($750).

Read More: Delegate embarks on gubernatorial run with long record of serving natural gas industry interests | Energy and Environment

2022-12-05 03:26:04

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