The oil industry’s empty threat
For 20 years, I have promoted a tax on oil and gas imported into Louisiana for processing. I have fought the major oil companies over this issue like David battling Goliath, but I take comfort in knowing it’s the right thing for our state.
A processing tax would replace the outdated 1921 severance tax, which only taxes oil and gas produced in Louisiana. Replacing the severance tax with the processing tax would reduce taxes for in-state producers like our neighbors in the Haynesville Shale, and for the first time it would address the billions of barrels of oil imported into Louisiana for processing each year.
We could raise enough money to eliminate the state income tax. We could begin a serious effort to restore our coastline, protecting New Orleans and coastal communities from storms and floods. We could provide stable funding for our schools, roads, healthcare and other services.
Most importantly, Louisiana could begin raising itself off the bottom and finally realize its potential as one of the most progressive states in the South.
Standing in the way are the major oil companies producing billions of barrels of oil off our coast in the Gulf of Mexico. Its representatives have said the industry will leave Louisiana if we tax oil and gas processed in Louisiana. It’s an empty threat, considering that we have the oil refineries no other state wants, 50,000 miles of pipelines, the Mississippi River, a trained workforce and, most importantly, the abundant oil and gas deposits in Louisiana and off our coast.
Just how empty is this threat was made clear in a now-infamous deposition taken last month in a lawsuit filed by the Louisiana Oil and Gas Association. LOGA is suing Attorney General Buddy Caldwell in an attempt to quash a landmark lawsuit brought by the Southeast Louisiana Flood Protection Authority East, based in New Orleans, alleging that 97 oil, gas and pipeline companies damaged the coastal wetlands and worsened flood protection in southeast Louisiana.
The flood authority lawsuit is a decisive event in the history of Louisiana’s 100-year relationship with oil. A public entity has drawn a line in the dirt, saying the oil industry bears partial responsibility for Louisiana’s catastrophic coastal land loss and should help pay the billions of dollars needed to stop and reverse it.
Gov. Bobby Jindal opposes this argument and will join with LOGA in the Legislature to kill the lawsuit. Legislators allied with the oil industry have vowed to undo the suit in the session that started March 10.
With the governor and potentially the Legislature hostile to their arguments, the Southeast Flood Authority now faces the prospect of having the third branch of state government, the courts, closed to it as well. That is why the statements made under oath by LOGA President Don Briggs last month are making the rounds of political and industry circles.
A longtime oil lobbyist, Briggs has consistently defended the industry against lawsuits, environmental critics, the processing tax and repeal of lucrative state and federal tax breaks. Recognizing the threat from the Flood Authority lawsuit, Briggs and LOGA sued the attorney general to overturn his decision allowing the authority to hire outside lawyers to handle its case.
One of those outside lawyers, Rock Palermo of Lake Charles, deposed Briggs on Feb. 20. He focused on Briggs’ standard response to threats against the industry: that oil companies will leave Louisiana if they are found liable for coastal damage.
Palermo asked if Briggs had “any facts or information” to support his view the oil industry was not to blame for coastal erosion. Briggs answered, “No … nothing.”
Palermo: “Is it your opinion that oil and gas companies are leaving Louisiana because of the threat of lawsuits?”
Briggs: “Yes.”
Palermo: “Which oil companies have left Louisiana because of lawsuits?”
Briggs: “I don’t know.”
Palermo: “Do you have any facts or data to support your opinion?”
Briggs: “No.”
Palermo: “Is it your belief that oil and gas companies are not coming to Louisiana because of the threat of lawsuits?”
Briggs: “Yes.”
Palermo: “Which oil companies have decided not to drill in Louisiana because of the threat of lawsuits?”
Briggs: “I don’t know.”
Palermo: “Do you have any facts or data to support your opinion?”
Briggs: “No.” The chief lobbyist for the oil industry in Louisiana went under oath and revealed the statements he’s made for years to protect his clients’ privileged position in Louisiana are empty rhetoric with no factual support.
Now that Briggs has been exposed as Chicken Little, the question becomes whether the Legislature will continue to buy the oil industry’s “sky is falling” rhetoric and close the courthouse door to those trying to hold it accountable for its actions in Louisiana.
Foster Campbell is the North Louisiana representative on the Louisiana Public Service Commission. You can reach him at 676-7464 or foster. campbell@la.gov.
