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Archive for the ‘Louisiana Purchase’ Category

Cameron, Vermilion, Plaquemines and Jefferson are attempting to accomplish what Southeast Louisiana Flood Protection Authority-East could not: hold oil and gas companies responsible for the destruction of Louisiana’s coastline.

On July 28, Louisiana Attorney General Jeff Landry expressed his “disappointment” that Vermilion Parish had the audacity to file a lawsuit over damages to the parish coastline Vermilion District Attorney Keith Stutes said was caused by drilling activities of several dozen oil and gas companies.

Gov. John Bel Edwards and Landry, in a rare display of political accord, intervened in the lawsuit with Edwards asking the oil and gas industry to settle the litigation and to assist the state in footing the cost of restoring the cost, which is expected to reach tens of millions of dollars over the next half-century. http://www.washingtontimes.com/news/2016/jul/28/vermilion-sues-oil-and-gas-companies-over-coastal-/

Calling lawsuits filed by Cameron and Jefferson parishes as well as Vermilion “counter-intuitive,” Landry said, “We cannot allow these differing and competing interests to push claims which collectively impact the public policy for our coast and our entire state.”

Two weeks later, on Aug. 10, Landry was practically effervescent as he all but took full credit when 24th District Judge Stephen Enright dismissed a similar lawsuit by Jefferson Parish. “I intervened in this lawsuit because I was concerned that the interest of the State of Louisiana may not have been fully represented or protected.

“I accept the court’s ruling because addressing the issues associated with permit violations through the administrative process is a cost-effective, efficient way to resolve any violations,” he said. “That was clearly the purpose of the Legislature creating this regulatory scheme.”

Funny how Landry would choose to use the word scheme.

Scheme, after all, would appear to be appropriate, considering how much money the industry has invested in campaign contributions to Louisiana politicians.

Copy of Campaign Contributions

And there’s certainly no mystery why Landry is so protective of the industry. In fact, he might be described as Jindal 2.0 because of his determination to protect the industry to the detriment of the citizens od Louisiana.

After all, of the $3.3 million Landry received in campaign CONTRIBUTIONS between July 1, 2014 through Dec. 31, 2015 (during his campaign for attorney general), more than $550,000 came from companies and individuals with strong ties to the oil and gas industry.

Moreover, more than $600,000 in campaign contributions to Landry came from out-of-state donors, with many of those, such as Koch Industries ($10,000), one of America’s biggest polluters, also affiliated with the oil and gas industry.

http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924

http://www.forbes.com/sites/christopherhelman/2013/06/10/americas-20-worst-corporate-air-polluters/#10b98e794c70

http://www.greenpeace.org/usa/global-warming/climate-deniers/koch-industries/koch-industries-pollution/

(Koch Industries, by the way, with ties dating back to the right-wing extremist group, The John Birch Society—Fred Koch, Charles and David Koch’s father, was a charter member—has run afoul of federal law on numerous occasions, including fraud charges in connection with oil purchases from Indian reservations.) http://www.corp-research.org/koch_industries

One $5,000 donor, Cox Oil & Gas, was from St. Thomas, Virgin Islands, according to Landry’s campaign finance records. That contribution date was May 20, 2014 but Cox Oil Offshore, LLC, Cox Oil, LLC, and Cox Operating, LLC, all of Dallas, contributed $5,000 each three weeks earlier, on April 28, 2014, those same records show.

Besides the Cox companies, Landry received more than $300,000 from firms and individuals from Texas, many of those from Houston and the surrounding area.

Landry, like Jindal and the bulk of legislators, has sold his soul to an industry that has ravaged our coastline, polluted our land and waterways, and failed to restore property to its original state when operations have concluded, all while reaping record profits and enriching stockholders.

LouisianaVoice has long adhered to the idea that there is far too much money in politics and that most of it comes from special interests. The reality is that citizens have long been removed from the political process.

If you don’t believe that, drop in on a House or Senate committee hearing on some controversial issue. Invariably, the issue will have already been decided by a quiet influx of special interest money and intense lobbying. As you sit and watch and listen to testimony of citizens, pay close attention because you will be the only one besides those testifying who will be doing so.

Watch the committee members. They will be checking emails or texts on their phones, talking and joking among themselves or just milling around, exiting the rear door of the committee room to get coffee—anything but listening to citizens’ concerns. Only on the rarest of occasions could a committee member give you a summation of the testimony.

The only time many legislators really take their jobs seriously is when they are discussing a bill with a lobbyist and that is unfortunate.

Once you’ve heard committee testimony go upstairs to the House or Senate chamber and take a seat in the front row of the spectator gallery. Observe how few of the senators or representatives is actually paying attention to the proceedings. The scene below you will underscore the adage that there are three things one should never see being made: love, sausage, and laws.

And while you’re at it, watch the lobbyists working the room. As you observe the absence of interaction between legislators and average citizens, do the math and deduce the way lawmakers are influenced. You won’t get far before you encounter the old familiar $.

Like him or not (and in Louisiana, it’s fairly accurate to say most don’t though they can’t give you a really sound reason why), President Obama pretty much nailed it when he was running for re-election in 2012.

Jane Mayer, in her excellent book Dark Money, quoted Obama from his speech in Osawatomie, Kansas (the same town where Theodore Roosevelt demanded in 1910 that the government be “freed from the sinister influence or control of special interests”), about the U.S. Supreme Court’s Citizens United decision of 2010 and the ensuing glut of Super PAC money into the political arena:

  • “Inequality distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder.”

Meanwhile, Landry ramps up his war of words and political ideology with Gov. Edwards (perhaps in an effort to deflect attention away from his own flawed agenda). The most recent salvo was fired last week over the administration’s hiring of former Sen. Larry Bankston, a one-time convicted felon as legal counsel for the State Board of Contractors—never mind the fact that Landry also hired an employee formerly convicted of fraud for the attorney general’s fraud section. http://www.theadvocate.com/baton_rouge/news/article_fe56114c-6ad7-11e6-8e7e-6f06140ad60e.html

It would appear that in Louisiana, the state has long since been sold out to the highest bidder as witnessed by the combined efforts of Jindal, Landry, legislators, and the courts to protect big oil at all costs.

As further evidence of this, consider the words of Gifford Briggs, Vice-President of and lobbyist for the Louisiana Oil and Gas Association (LOGA) in the run-up to the 2015 statewide elections immediately after Landry had indicated he might oppose then incumbent Attorney General Buddy Caldwell.

Asked if LOGA would support Landry, Briggs, the son of LOGA President Donald Briggs, said, “We can’t officially endorse any candidate. Our PAC can, but not us. Having said that, Jeff Landry is looking like a very good candidate for Attorney General.”

 

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Regular readers of this site know our disdain for the undue influence of lobbyists and special interests over lawmakers to the exclusion of the very voters who elected those same lawmakers to represent them and their best interests.

Our opposition to political decisions made with priority given to campaign contributions over what is best for the state is well-known—and uncompromising. Money should have no place—repeat, no place—in political decisions.

Unfortunately, we know that is not the case. Politicians for the most part, are basically prostitutes for campaign funds and those who choose to remain chaste usually find themselves at a serious disadvantage come election time.

To that end, you can probably look for State Rep. Jay Morris (R-Monroe) to attract strong opposition when he comes up for re-election in 2019. And that opposition, whoever it might be, is likely to have a campaign well-lubricated by the Louisiana Association of Business and Industry (LABI), the Louisiana Chemical Association, and the oil and gas industry.

At the risk of belaboring the obvious, we have gone on record on numerous occasions as saying the voters are merely pawns to be moved about at will by big business in general and the banks, pharmaceutical companies, Wall Street and oil companies in particular. It is their money that inundates us with mind-numbing political ads that invade our living rooms every election year telling us why Candidate A is superior to Candidate B because B voted this way or that way and besides, good old Candidate A has always had the welfare of voters uppermost in mind.

The presence of that influence was never more clearly illustrated than in Tyler Bridges’ insightful story in Friday’s Baton Rouge Advocate. http://theadvocate.com/news/15225624-78/la-legislative-staffers-sort-out-changes-added-at-the-last-minute

In the very first paragraph of his story, Bridges wrote that a secret deal between Senate President John Alario (R-Westwego), House Speaker Taylor Barras (R-New Iberia) and lobbyists for LABI and the Louisiana Chemical Association.

We won’t bother to re-hash the details of that meeting and the agreement finally reached just before the closing minutes of the recent special session. You can read the details in the link to the Bridges story that we provided above.

But suffice it to say had it not been for Morris digging his heels in and threatening to kill his own bill when he learned of a manufacturing tax break that had been added to his bill, HB 61 that aimed at eliminating exemptions and exclusions on numerous sales tax breaks. Though a Republican, Morris feels that big business isn’t paying its fair share of taxes.

“I was not aware of the deal,” Bridges quoted Morris as saying. “I was not invited.”

Neither, apparently, were any spokespersons for consumers, organized labor, teachers, or the citizens of Louisiana.

Oh, but you can bet LABI President Steve Waguespack was invited to a meeting in Alario’s office earlier in the day, as was Louisiana Chemical Association chief lobbyist Greg Bowser.

Given that, we would like to ask Sen. Alario and Rep Barras why no one representing the people were invited to that little conclave. And don’t try to tell us that the Senate President and House Speaker were representing the people. You were not. You were representing the vested interests of the chemical industry and big business. Period.

Sen. Alario, Rep. Barras: the people of Louisiana are far more deserving of a place at the table in some furtive backroom meeting than LABI and the chemical association.

Either all factions are invited in or no one is. The playing field should be level.

By not excluding lobbyists or by not inviting those on whose shoulders are placed the greatest burden, the ones who placed you in office, you have not just failed at your job; you have failed miserably.

Our late friend C.B. Forgotston would have said of the meeting which produced that secret deal: “You can’t make this stuff up.”

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Interspersed in all the venomous political rhetoric in the gubernatorial campaign that is now moving toward its merciful final week are some real issues that affect our lives and which should warrant closer inspection by the voting public.

Unfortunately, given the public’s taste for voyeurism and salacious gossip, that probably won’t happen. Besides, time is short and the sordid half-truths, distortions and details of political black ops are just heating up. There just isn’t time for the things that matter.

But at least one group is taking U.S. Sen. David Vitter to task for a letter he wrote last April to U.S. Army Corps of Engineers Commander Lt. Gen. Thomas Bostick and Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy.

In that otherwise routine five-page letter, dated April 16, 2015, Vitter addressed a number of issues concerning levees, flood control, storm surge protection, past due payments from the Corps to the State of Louisiana for freshwater diversion projects, a request to complete the Southeast Louisiana Urban Flood Control Project (SELA) in Orleans, Jefferson and St. Tammany parishes, deauthorization of the West Pearl River Navigation Project, a request for increased negotiation efforts to approve the Lower Mississippi River Management proposal, and bank stabilization along the Ouachita River in north Louisiana.

Buried at the bottom of page three of the letter was item number 7: Helis Oil and Gas Permit MVN (Mississippi Valley New Orleans)-2013-02952-ETT.

Issue: “The aforementioned permit application is currently awaiting approval within MVN, but has stalled due to several pending lawsuits,” Vitter’s letter said. “The State of Louisiana, Department of Environmental Quality issued the water quality certification (WQC 140328-02) on March 19, 2015. Issuance of the 404 permit is the last remaining action needed to begin construction of the test well.”

Request: “Immediately approve and issue the 404 permit.”

VITTER LETTER TO CORPS

In his April 16 letter, Vitter did what he does best: intimidate with not-so-subtle threats.

“As the U.S. Army Corps of Engineers moves forward with leadership transitions and promotions in the coming months, I’d like to take this opportunity to ensure that you—as the two primary Corps leaders—continue strengthening your commitment to improve communication and issue resolution with non-Federal stakeholders who depend on the Corps to provide necessary flood protection, reliable navigation, and restored ecosystems,” he wrote.

“…However, it’s critical that Corps leadership understand there remain several significant Louisiana issues that need to be addressed and resolved in an expeditious manner. In light of those issues, I can’t support the transition or promotion of new leadership until I know that a constructive approach will be taken to address and resolve these serious problems.”

As if on cue, the Corps on June 8 approved the permit application by Helis Oil & Gas Co. http://www.nola.com/environment/index.ssf/2015/06/wetlands_permit_approved_by_fr.html

Vanishing Earth, a new political blog that concentrates on environmental issues, obtained the Vitter letter to the Corps that contained Vitter’s heavy-handed approach to resolving issues, particularly the approval of the Helis permit.

That permit, since approved, will allow Helis to drill an exploratory well for the purpose of oil drilling and controversial hydraulic fracking in St. Tammany Parish. Parish residents have resisted fracking in St. Tammany and have even filed a lawsuit in district court to stop the practice there because of legitimate concerns about air and water pollution, damage to the aquifer that supplies drinking water, and the industrialization of the parish.

The irony is that St. Tammany is considered a strongly Republican parish and represents one of Vitters’ strongest areas of support.

But, as is always the case in politics, money speaks much louder than loyalty to constituents and Helis has seen to it that Vitter’s campaigns, both federal and more recently, state, are remembered fondly.

On May 8, less than a month after Vitter wrote his letter to the Corps, Helis made a $5,000 contribution to Vitter’s gubernatorial campaign. Additionally, on that same date, Helis CEO David Kerstein made an identical maximum allowable contribution of $5,000. Then, on Nov. 6 of this year, less than two weeks after the first primary, Helis chipped in an additional $5,000. The company also contributed $15,000 in three separate contributions to lieutenant governor candidate Billy Nungesser.

https://coraweb.sos.la.gov/CommercialSearch/CommercialSearchDetails.aspx?CharterID=442768_VAE52

 

Moreover, Kerstein contributed an additional $7,500 to Vitter’s U.S. House and Senate campaigns from 2000 to 2008, according to Federal Election Commission records. Corporations are prohibited from contributing to federal campaign. http://docquery.fec.gov/cgi-bin/qind/

KERSTEIN, DAVID New Orleans ATTORNEY  VITTER FOR CONGRESS 05/01/00 1000.00
KERSTEIN, DAVID New Orleans SELF VITTER FOR CONGRESS 09/22/03 1000.00
KERSTEIN, DAVID New Orleans SELF DAVID VITTER FOR US SENATE 07/07/05 2000.00
KERSTEIN, DAVID New Orleans SELF VITTER FOR US SENATE 02/21/08 300.00
KERSTEIN, DAVID New Orleans SELF DAVID VITTER FOR US SENATE 02/21/08 2200.00
KERSTEIN, DAVID New Orleans SELF/ATTORNEY VITTER FOR CONGRESS 04/18/01 1000.00

Helis apparently is not an equal opportunity donor; no contributions could be found by the company or its CEO to Democrats John Bel Edwards or Nungesser’s opponent Baton Rouge Mayor Kip Holden.

What David Vitter is essentially saying in his letter to Secretary Darcy and Lieutenant General Bostick is that if they do not perform certain acts, issue the permit, then he will punish them by taking away something of personal value to them which, in this case, are the “transitions and promotions,” wrote Vanishing Earth publisher Jonathan Henderson. “In other words, he blackmailed them.” http://vanishingearth.org/2015/11/05/senator-vitter-corruption-reaches-st-tammany-parish-fracking-fight/

Henderson is encouraging his readers to call on the U.S. Senate Select Committee on Ethics “to immediately investigate Senator David Bruce Vitter.”

Additionally, one source said some residents of St. Tammany were considering filing a complaint with the State Board of Ethics. LouisianaVoice inquired of the state board whether or not such a complaint had been filed. This was the response we received:

In response to your public records request of Nov. 12th, please be advised that all complaints and documents prepared or obtained in connection with an investigation are deemed confidential and privileged pursuant to R.S. 42:1141.4 K&L which also provides that it is a misdemeanor for any person, including the Board’s staff, to make any public statement or give out any information concerning any confidential matter.

LouisianaVoice has begun an investigation into fracking operations in Lincoln Parish as well. Residents there are concerned about the drain on the Sparta Aquifer which supplies drinking water to several north Louisiana parishes. We will bring you more details on those operations as we receive them.

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While Bobby Jindal is touting all the wonderful innovations, budget cuts, employee reductions, etc., that he has initiated in Louisiana, The Center for Public Integrity has a few items he may wish to soft peddle as he goes about trying to convince Iowans that he’s really serious about running for President and not the joke we in Louisiana know him to be.

The center has just released its 2015 integrity grades for each state and it isn’t very pretty for Louisiana.

In fact, the state received a flat-out grade of F and ranked 41st out of the 50 states overall with a composite score of 59 out of a possible 100. Only seven states had lower composite scores—Pennsylvania and Oregon (58), Nevada (57), Delaware and South Dakota (56), and Michigan and Wyoming (51).

Mississippi (61) and Alabama (67), normally found competing for Louisiana on lists of all things bad, were well ahead of Louisiana with rankings of 33rd and 7th, respectively. Alaska had the highest score at 71, good enough for a C. Michigan was the worst with its 51.

Louisiana wasn’t alone in getting a failing grade of course; there were 10 others but in the other states we can only assume the governors are at least attempting to address their problems. Jindal isn’t. He capitulated long ago as he set out on his quest for the brass ring that continues—and will continue—to elude him. Though he has only two months to go in office, he in reality abandoned us three years and 10 months ago—right after he was inaugurated for his second term. Truth be told, he has been at best a distracted administrator (I still can’t bring myself to call him a governor) for his full eight years and at worst, guilty of malfeasance in his dereliction of duty.

Harsh words, to be sure, but then his record screams out his shortcomings (loud enough to be heard in Iowa, one would think) and his lack of a basic understanding of running a lemonade stand, much less a state.

States were graded on 13 criteria by the Center for Public Integrity:

  • Public Access to Information—F
  • Political Financing—D
  • Electoral Oversight—D+
  • Executive Accountability—F
  • Legislative Accountability—F
  • Judicial Accountability—F
  • State Budget Processes—D+
  • State Civil Service Management—F
  • Procurement—D+
  • Internal Auditing—C+
  • Lobbying Disclosure—D
  • Ethics Enforcement Agencies—F
  • State Pension Fund Management—F

http://www.publicintegrity.org/2015/11/09/18407/louisiana-gets-f-grade-2015-state-integrity-investigation?utm_campaign=stateintegrity&utm_source=digest&utm_medium=link&goal=0_ffd1d0160d-08c0be5058-100352837&mc_cid=08c0be5058&mc_eid=c4ee01d834

The scores given each of these, and their national ranking were even more revealing.

Public Access to Information, for example scored a dismal 30, ranking 46th in the country.

In the scoring for Internal Auditing, on the other hand, the state’s numerical score was 79, but was good enough for only a ranking of 32nd.

Likewise, the grading for Procurement (purchase of goods and contracts) had a numeric score of 69, good enough to rank the state 25th. But numeric score of 64 for Lobbying Disclosure while rating only a D, was still good enough to nudge the state into the upper half of the rankings at 24th.

One of the biggest areas of concern would have to be the state’s numeric grade of only 40 for Judicial Accountability, plunging the state to next to last at 49th. (This is an area that has flown under the radar but one the legislature and next governor should address.)

The lowest numeric score was 30 for Public Access to Information, fifth from the bottom at 46th. LouisianaVoice can certainly attest to the difficulty in obtaining public records, having found it necessary to file lawsuit against the state on three occasions in order to obtain what were clearly public records. Even after winning two of the three lawsuits, we still experience intolerable foot-dragging as agencies attempt to stall in the hopes we will give up.

We will not. If anything, the stalling only strengthens our resolve to fight for the public’s right to know.

To compare Louisiana to other states in each of the 13 criteria, go here: http://www.publicintegrity.org/2015/11/09/18822/how-does-your-state-rank-integrity

In the final days of the 2015 legislative session the state Senate approved a bill that removed the exemptions pushed through by Jindal in his first month in office in 2008 which kept most government records from disclosure. State Sen. Dan Claitor (R-Baton Rouge) was quoted in the report as saying, “It turns out we were boondoggled on that.”

Jindal called his changes his “gold standard,” but the report said it is “riddled with loopholes and cynical interpretations by the governor and other state officials.”

That looked like a promising reversal to the secrecy of the Jindal administration but then the legislature agreed to postpone implementation of the new law that abolished the abused “deliberative process” exception until after Jindal leaves office next January.

Jindal also managed to gut the state’s ethics laws early in his first year. Enforcement of ethics violations was removed from the State Ethics Board and transferred to judges selected by a Jindal appointee. That prompted long-time political consultant Elliott Stonecipher of Shreveport to say that while the state’s ethics laws looked good on the surface, there was “no effective enforcement and that breeds more than just a system of corruption, but an acceptance of those practices,” the center’s report said.

The center reported that it is not Louisiana’s ethics laws that produced such a poor grade, but the day-to-day interpretations of the laws by various departmental legal advisors.

Since the center’s first survey of public integrity on a state-by-state basis, no fewer than 12 states have had legislators or cabinet-level officials charged, convicted or resign over ethics-related issues, the report said.

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By MIKE STAGG (Independent filmmaker, citizen activist, political strategist – Special to LouisianaVoice)

For the past seven years, as Louisiana has lurched from one fiscal crisis to another, the State of Louisiana has paid the oil and gas industry $2.4 Billion in severance tax exemptions. Despite that massive transfer of public wealth into private hands, the oil and gas industry used its influence inside the Department of Natural Resources and the Jindal administration, to limit—and for three years shut down—audits that would have revealed whether the industry’s severance taxes and royalty payments to the state were accurate.

These facts have been hiding in plain sight, contained in five performance audits of the Department of Natural Resources and the Louisiana Department of Revenue conducted by the Legislative Auditor since 2010. Two of those audits focused on royalty collections from oil and gas produced on state-owned lands and water bottoms. Another focused on severance tax collections; yet another dealt with mineral leases handled by the State Mineral and Energy board, while the fifth audit examined how the Office of Conservation has handled the orphaned and abandoned well cleanup program.

The cozy relationship between DNR and the oil and gas industry is explicit in the department’s regulation of the industry. That coziness, when extended to state finances, has proven disastrous for the Louisiana treasury and its residents. DNR is responsible for collecting oil and gas royalties, which account for roughly seven percent of state General Fund dollars, or approximately $800 million per year.

For a three-year period, between July 2010 and July 2013, DNR had jurisdiction to determine the accuracy of severance taxes and royalty payments.

And DNR let industry have its way.

Audits on royalty revenue dropped. Audits on severance tax revenue all but stopped, even as the state’s financial condition continued to worsen. In short, when it came to providing rigorous oversight to ensure that the royalty and severance tax payments were accurate, DNR’s Office of Mineral Resources deferred to the oil and gas industry while programs that serve the citizens of Louisiana were cut, primarily in healthcare and higher education, the unprotected portions of the state General Fund.

DNR’s relationship with the oil and gas industry is a blatant example of regulatory capture. Regulatory Capture is a form of political corruption that occurs when an agency, created to act in the public interest, advances instead the special concerns of the industry it is charged to regulate.

Severance taxes are the constitutional expression of our, as Louisiana citizens, shared claim on our state’s vast mineral wealth. Exempting severance taxes negates the public claim on that mineral wealth and undermines our ability to invest in ourselves as a state.

Severance tax exemptions are direct payments from the state to the oil and gas producers after the companies have submitted their exemption certificates. Royalties are the property owners’ share of the proceeds from the sale of oil and gas produced from wells on their land. For purposes of this story, royalties are the state’s share of the revenue from oil and gas produced on state-owned lands and water bottoms after severance taxes have been paid.

Since the mid-1980s, Louisiana Department of Revenue has published an annual report on tax exemptions called “The Tax Exemption Budget.” In that document, the department identifies each tax exemption and quantifies the cost of each exemption to the state.

It makes clear that tax exemptions are in fact a spending of state funds — here’s how the LDR explains it in every report: “Tax exemptions are tax dollars that are not collected and result in a loss of state tax revenues available for appropriation. In this sense, the fiscal effect of tax exemptions is the same as a direct fund expenditure.”

Between 2008 and 2014, according to the Tax Exemption Budget, the State of Louisiana paid oil and gas companies more than $2.4 Billion in severance tax exemptions. Those checks went out at the exact same time that our legislature cut funding for programs like aid to families of children with disabilities, behavioral health programs, home health care, and programs that assisted victims of domestic violence. During that same period, state funding for higher education was also cut by more than $700 million as the tuition and fees paid by those attending technical colleges, community colleges, and state universities were jacked up to cover the difference.

The first performance audit on royalty collections was released in July 2010. Royaltieshttps://app.lla.state.la.us/PublicReports.nsf/B6B5DE331E9D48818625776E005CFDA5/$FILE/00018070.pdf The Legislative Auditor found that DNR’s Office of Mineral Resources took a lackadaisical approach to verifying the accuracy of royalty payments from the 1,888 active mineral leases on state-owned lands and water bottoms.

The Legislative Auditor noted that severance taxes and royalties are connected, that both are dependent on the amount of oil and gas produced, as well as the price of the resource.

Desk audits compared the volume of oil and gas sold to the volume of oil and gas produced, which ensures that royalty payments are properly calculated. These audits also help ensure that production wells on state lands are submitting properly calculated royalty payments.

The Legislative Auditor found that the Office of Mineral Resources (OMR) had not conducted a single such audit in a decade. Despite the Auditor’s recommendation that it resume these audits, OMR waited another three years before getting around to doing so.

The Legislative Auditor also found that OMR did not compare royalty reports against severance tax reports filed with the state Department of Revenue, nor did it compare royalty reports to production reports submitted elsewhere in DNR.

In its response to the Legislative Auditor’s Royalty performance audit findings, on June 24, 2010, DNR announced that “As part of the Streamlining Commission’s recommendations, OMR will take over LDRs severance tax field audit program and the two audits will be integrated beginning July 1, 2010.”

In September of 2013, the Legislative Auditor released a follow-up performance audit on royalty collections. https://app.lla.state.la.us/PublicReports.nsf/DB918AD8E33411F286257B490074B82A/$FILE/00031C97.pdf

The auditors were dismayed to find that the revenue produced by OMR’s audits had fallen below the levels reported in 2010.

The Auditor also found that that the State Mineral and Energy Board had waived 45% of the $12.8 million in penalties that were assessed against companies by OMR for late payment of royalties.

Neither the Office of Mineral Resources nor the State Mineral and Energy Board seemed at all concerned about the fiscal impact their indifference to generating revenue had on the programs that Louisiana residents depend on. Their primary concern was with not inconveniencing their friends in the oil and gas industry.

The Legislative Auditor conducted an audit on severance tax collection procedures in the

Louisiana Department of Revenue in 2013 but, because severance tax audit functions had been transferred to the DNR in 2010, auditors had to return to the Office of Mineral Resources close on the heels of the second royalty collections audit. https://app.lla.state.la.us/PublicReports.nsf/AC044A6D3709B90C86257BE30065348B/$FILE/000351F7.pdf

In this audit, the Legislative Auditor found that oil and gas industry complaints about the LDR’s use of GenTax software (which identified possible nonpayers of severance taxes) led first, to LDR shutting off the software, and second, audit power being transferred to DNR.

The scale of the oil and gas production not audited as a result of that shift was staggering. DNR’s field audits ignored oil and gas production on private lands — which comprises 98.1% of all oil and gas leases in Louisiana — for a three-year period.

Revenue from severance tax audits fell 99.8% from the levels produced by the Department of Revenue once responsibility was transferred to the Office of Mineral Resources. The actual dollar amount fell from $26 Million in 2010 to $40,729 in Fiscal Year 2012.

For the three-year period that DNR’s Office of Mineral Resources had responsibility for severance tax audits, the industry essentially operated under an honor system.

Prior history shows why this was a problem. In the late 1990s, the Mike Foster administration filed lawsuits against more than 20 oil and gas companies claiming they had shortchanged the state by as much as $100 million on severance tax payments. Now, for three years as recurring revenue shortfalls continued, the Office of Mineral Resources ignored that history.

During this time, the Haynesville Trend emerged as the most productive shale gas field in the country.

Even though the severance tax exemption on horizontal drilling meant that the state was denied severance tax revenue for much of that play, companies still managed to game the exemption system at taxpayer expense.

Under the rules for severance tax exemptions, the state pays back the taxes already paid once it receives the exemption certificate from the company — plus “Judicial Interest” which in the period covered by the audit averaged about 4.5%.

That is, the state had to dip into non-exempt severance tax payments in order to cover the interest costs on those certificates that the companies chose to sit on for several months.

The Audit found that over the course of four fiscal years running from 2009 through 2012, the Department of Revenue issued 13,818 severance tax refund checks totaling $360,190,583. An extra $23,859,012 in interest was tacked on to that. https://app.lla.state.la.us/PublicReports.nsf/CF6244B77E3A958686257C30005E80B1/$FILE/000368DA.pdf

In addition, the Auditor found that the Department of Revenue overpaid severance tax exemption refunds by $12.9 million between July 2010 and May 2012.

The decline in audit revenue, the interest paid to companies on the gaming of the severance tax exemption process, the overpayment of severance tax exemption refunds, the decision by the State Mineral and Energy Board to waive 45% of fines for late payment of royalties combined to benefit the industry at taxpayer expense to the tune of $68 million.

These gifts to the oil and gas industry were made at a time when the industry was already receiving $2.4 Billion in tax exemptions and at a time when every dollar the state did not collect translated into a cut to programs that Louisiana residents depended on.

The Auditor also pointed out that hiring additional auditors within DNR and LDR would produce a great return on the state’s investment. Each auditor costs a department between $50,000 and $60,000 per year, but they bring in an average of $1.3 million per year. LDR said it had requested additional auditors in its budgets but they were never approved by the Jindal administration.

Oil and gas companies control all of the information used in the severance tax and royalty payment process. The industry has used this power to its advantage and to the state’s detriment.

Vigilant auditing can close that information gap.

The Office of Mineral Resources has shown little interest in that kind of work. DNR’s abdication of its oversight role on royalty revenue has had an outsized impact on Louisiana because of the role that revenue plays in state finances. When added to the three-year period when DNR failed to perform severance tax audits, the agency has likely cost the state hundreds of millions of dollars over the past seven years.

That is corruption.

Not all of this went unnoticed. In the 2014 legislative session, Sen. Rick Gallot (D-Ruston) and Rep. Joe Harrison (R-Gray) introduced concurrent resolutions to order LDR, DNR and the Legislative Auditor to agree upon a means to conduct a thorough audit of oil and gas production, severance taxes and royalty payments. Gallot’s resolution passed the Senate by a vote of 35-0. https://app.lla.state.la.us/PublicReports.nsf/D6A0EBE279B83B9F86257CE700506EAD/$FILE/000010BC.pdf

But by the time the resolution reached the House floor in early June, the oil and gas industry and the Jindal administration recognized the threat the audit posed, so they joined forces to kill it. SCR 142

The resolution had to be killed to keep the secret.

In the midst of a prolonged and deepening fiscal crisis, the Jindal administration and the industry did not want legislators and the public to question whether the severance taxes and royalties paid to the state were accurately calculated.

The Department of Natural Resources betrayed the trust of the people of this state. It failed its fiduciary responsibility twice; first, as collector of royalty payments, and again during the time it served as chief auditor of severance tax collections. It has repeatedly put the needs of the industry above the needs of the people of this state.

For the oil and gas industry, $2.4 Billion in severance tax exemption payments were not enough. Its greed is so great that, in a time of fiscal constraints on state government, it went out of its way to cheat the state out of still more money. It used its power and influence in the Department of Natural Resources and its ties to the Jindal administration to do so.

By these acts, the oil and gas industry has shown itself to be unworthy of the trust we have placed in it.

For Looting Louisiana in our time of fiscal need, the oil and gas industry must be stripped of its severance tax exemptions. Under the Louisiana Constitution, we are entitled to the full benefits of this state’s mineral wealth.

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