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Energy

Energy.

LABI represents energy producing, transporting and consuming industries. We will continue to support healthy economic growth of the state by promoting production of adequate supplies of all forms of energy at competitive prices, opposing increased taxes and fees on energy sources, encouraging conservation of resources, and balancing environmental concerns with energy production and usage.

Major Issues.


Energy Taxation

The Issue: Louisiana should not impose additional taxes or fees on energy sources such as electricity, oil, natural gas, and other hydrocarbons.

LABI Position: Oppose suspension of exemptions from taxes which are granted to producers and consumers of energy products and sources. Oppose increased or new taxes or fees on oil, natural gas and other hydrocarbons, such as:

  • A processing, transportation, or refinery tax;
  • A sales tax on business utilities;
  • A change in the calculation of the natural gas or other energy franchise taxes which would increase the cost;
  • An increased severance tax or suspension of severance tax exemptions;
  • A sales tax on natural gas transportation;
  • A coastal wetlands environmental levy;
  • A “first use” tax;
  • A property tax on minerals in place or a reservoir tax; or
  • Any change that reduces the competitiveness of the Industrial Tax Exemption Program (ITEP).

Reasoning: Increased taxes on oil, gas or other hydrocarbons produced in or transported through Louisiana would have detrimental effects on the Louisiana economy for two major reasons:

  • Louisiana oil and gas producers, pipelines, and refineries must compete in a world market. In a competitive market, increased taxes cannot be “tacked on”; rather, taxes and fees on hydrocarbon sales would not be paid by out-of-state buyers. Those new taxes would be passed on in-state to Louisiana companies instead. New taxes and fees would benefit other producing and processing states and countries whose suppliers could displace Louisiana’s market share.
  • The mere threat of a processing tax is a disincentive for companies that operate in Louisiana. The threat looms larger for companies that are considering locating new facilities or expanding existing facilities in the state. Louisiana residents and companies are net consumers of natural gas, and they would be held captive to pay a processing tax, as there would be no alternative but to purchase taxable products.

Additionally, Louisiana’s businesses finally joined residential consumers of utilities in the exclusion from sales and use tax from their purchases of electricity and natural gas as utilities, making them more competitive with manufacturing facilities and small businesses in neighboring states. Any suggestion to suspend this exemption would again place Louisiana at a disadvantage.

 

Government-sponsored Litigation

The Issue: The onslaught of government-sponsored lawsuits against businesses creates a damaging precedent of regulation through litigation.

LABI Position: Oppose any efforts by governmental entities to use litigation against businesses as a means to bypass legislative will.

Reasoning: Government-sponsored lawsuits give state and local executives the ability to bypass the legislature to achieve regulatory objectives that the majority of the electorate may not support. This sacrifices democracy to the discretion of administration.

 

Special Funds--Legislatively Dedicated Self-Imposed Fees

The Issue: As the state has struggled in recent years to deal with revenue shortfalls, the administration and the Legislature have raided statutorily dedicated funds paid by industry fees, then used those funds for unrelated purposes throughout the state government budget.

LABI Position: Oppose raiding of legislatively dedicated funds that were created and funded by industry fees paid to accomplish specific regulatory purposes.

Reasoning: The cost of administering state regulatory programs has been shifted from the State General Fund to fees charged to regulated companies. Legislation has established statutorily dedicated funds through which these regulatory programs are funded.

Many of these programs are within the Departments of Natural Resources and Environmental Quality, as well as the Public Service Commission, and most have been created through cooperation among the Legislature, the regulating agencies, and regulated parties.

Many of the industry addessments have been voluntarily negotiated and have accumulated balances to be used for major projects. Several of the programs require that a certain amount of money be in their respective funds at all times, and fee increases on industry are triggered if the balance falls below certain levels.

Fees on industry should be equitably assessed on all classes of users and be limited to those that are necessary to adequately support relevant programs in proportion to the services rendered. Industry fees for regulatory services or other purposes should not be diverted to support the general operations of state government. If the self-generated revenues are in excess of the cost of the regulatory or other program, the Legislature should reduce the fees accordingly and/or reduce the scale of the regulatory or other program.

 

Contengency Fees for Outside Counsel Hired by the Attorney General

The Issue: Proponents of contingency fee contracts for attorneys who would represent the attorney general are continuing a multi-year effort to have the Legislature grant the attorney general authority to negotiate such contracts.

LABI Position: Oppose legislation that would authorize the attorney general to enter into contingency fee contracts or to employ outside counsel to be paid by the defendants or the state from the proceeds of awards and/or settlements. Support additional legislative oversight. Support efforts to stem the tide of state and local government-sponsored and government-authorized litigation.

Reasoning: The retention of private personal injury lawyers to litigate government-sponsored lawsuits through contingency fee contracts can create an improper incentive for profit-motivated attorneys to initiate and drive civil litigation under the guise of public interest. Furthermore, the government’s retention of such lawyers on a contingency fee basis invites opportunities for abuse. Defending and further strengthening the new safeguards on the hiring, oversight and payment of private attorneys by state offices will help to eliminate any appearance of impropriety and help foster public confidence in our legal system.

 

State Water Policy

The Issue: The Legislature adopted a statewide water policy; however, recent Attorney General opinions that hold that surface water is a state-owned resource, as well as subsequent legislation authorizing cooperative endeavor agreements for sale and purchase of surface water, jeopardize commercial and industrial use of surface water. LABI opposes the Attorney General’s opinions on water rights.

LABI Position: Support a fair, flexible, and scientifically based statewide water use policy that considers the needs of all water users. Monitor the development of state and federal water conservation programs to ensure that all water users – industrial, residential and commercial – are assured adequate access to useable water sources. Oppose new or increased taxes or fees imposed by government on the use, extraction or consumption of water.

Reasoning: Business and industry in Louisiana need access to the waters within the state for both use and consumption in order to accomplish specific manufacturing and other production goals.

 

Lawsuit Climate

The Issue: The Legislature continues to amend Louisiana laws to address judicial interpretations of statutes and regulatory protocols that encourage lawsuits against the oil and gas industry. When judicial decisions stray from the original intent of the law, the business community must legislatively address these inconsistent interpretations.

LABI Position: Support any appropriate modifications to existing laws concerning oil and gas legacy lawsuits, coastal lawsuits, and environmental lawsuits along with proposed changes to mineral lease obligations. Strongly defend any legislative advances made to existing law.

Reasoning: The continual onslaught of legal action against the oil and gas industry will drive away investment in new facilities along with re-investment in existing wells. To the degree that Louisiana’s legal climate remains hostile towards exploration and production in our state, the industry’s prospects for funding of capital intensive projects here declines. 

 


Current Issues.


Subsequent Purchaser: Oppose legislation which would create a right of action to assert claims for environmental damages that were caused or sustained prior to acquisition by a purchaser of the property.

Sales Tax on Business Utilities: Support legislation which will clarify the definition of “energy sources” to assure that all are excluded from state sales and use tax.

Oil and Gas Development: Support legislation that will continue to offer incentives and a regulatory climate which would stimulate oil and gas exploration and production in Louisiana. Support streamlining of exploration, production and transportation permitting and reduction of regulatory burdens. Support primacy of state regulation over the siting, zoning, permitting, regulation of hydraulic fracturing, and other aspects of oil and natural gas operations. Oppose legislation and/or regulations that would impose additional restrictions on mineral leasing, drilling permit acquisition, or other onerous requirements that act as a disincentive to exploration, production and transportation of natural gas and oil unless and until valid, scientific studies document significant adverse impacts on the environment and risk assessments are attached.

Local Energy Taxation: Oppose legislation which would eliminate the constitutional ban on local taxation of all motor fuels.

Renewable Energy Standards: Oppose mandates which would impose renewable fuels portfolio standards that would require electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date.

Refining Capacity: Encourage expansion of Louisiana’s oil refining capacity by removing any state-imposed barriers to construction of new and expanded refining facilities.

Fuel Diversity: Encourage fuel-use diversity, whenever economically feasible, in order to reduce Louisiana’s dependence on a single fuel for electricity generation.

Solution Mining and Hydrocarbon Storage: In an effort to stabilize market prices of natural gas and other hydrocarbons for all consumers and to encourage the storage of CO2, support legislation to encourage development of salt domes and other storage facilities in the state of Louisiana. Support reasonable regulations for the safe permitting and operation of solution mining wells and hydrocarbon storage.

Electricity Transmission: Encourage the Louisiana Public Service Commission to require that all repairs to the electricity transmission and distribution system, to the greatest extent possible, incorporate upgrades sufficient to meet federal goals of re-tooling the nation’s transmission system. Support legislation that would grant tax incentives for upgrading the state’s electric transmission and distribution grid. Promote improved transmission, evaluate cost-effective storm hardening, and seek access to lower cost generation for all consumers.

Competition: Support a fair and fully competitive retail electricity market that allows all consumers the right to choose their supplier of electricity.

The move to competition should:

  • Provide for the transition to competition for all consumers;
  • Require the continued regulation of the transmission and distribution of electricity;
  • Provide incentives that will encourage the expansion and upgrade of electricity transmission facilities;
  • Promote reliability of electric service for all consumers;
  • Require the equitable sharing of net verifiable stranded costs that cannot be mitigated;
  • Protect consumers from unwarranted shifts in tax burdens; and
  • Provide for the prompt amendment or repeal of statutory constraints to open access.

Lease Use/Plant-Use Gas: Support legislation affirming the historical treatment of natural gas used at the lease and at gas processing plants as not being subject to sales or use taxes.

Competition: Support a fair and fully competitive retail natural gas, liquefied natural gas, and liquefied petroleum gas market that allows all consumers the right to choose their supplier of natural gas.

Liquefied Natural Gas: Support legislation and/or regulations that will promote the development of LNG terminals both onshore and offshore Louisiana.

Cost of Service: Oppose legislation that would shift the cost of electricity service from one class of consumer to another. Oppose legislation or regulations that would force consumers to absorb the costs of providing service to customers of another utility company in another service territory. Oppose imposition of taxes or fees to subsidize energy assistance programs within the Public Service Commission.

Consumer Advocacy: Oppose legislation that would establish new programs within new or existing agencies or departments that require public funding for representation or intervention in regulatory proceedings.

Alternative Energy and Feedstock Development: Support legislation that will promote use of alternative energy sources but does not unduly favor one energy form over another.

Fuel Mandates: Oppose legislation that will mandate the use or supply of any specific fuel for gasoline, diesel or electricity generation.

Injection Wells: Support the retention of the responsibility for Class I and Class II injection wells related to oil and gas exploration and production within the Department of Natural Resources.


Ongoing Policy.


Utility Exemption from Louisiana Monopoly Law: Support legislation to exempt from the provisions regulating monopolies the electric and gas utility companies which are subject to the jurisdiction of the LPSC, the City Council of the City of New Orleans, the Federal Energy Regulatory Commission, or any other public utility regulatory body with ratemaking or other general regulatory authority over an electric or gas utility company.

Abrogation of Contracts:  Oppose legislation which would abrogate existing contracts between parties. 

Public Education and Research: 1) Support research and compilation of data that reflects the impact of agency fees on business. 2) Support energy-related research by the LSU Center for Energy Studies. 3) Support educational programs to inform the Louisiana public of the serious nature of the changes in energy costs and availability, encourage active energy conservation programs and plan a program for community activities to facilitate such educational efforts.

Intrastate and Interstate Pipelines: Participate actively with governmental entities and leaders to ensure the viability and integrity of the state’s intrastate pipeline systems and those interstate pipeline systems that operate and serve customers in Louisiana.

By-Products: Maintain the non-taxable status of by-products and intermediate materials.

Mineral Taxes: Support legislation and/or regulations that will establish the fair market value for oil, natural gas, and oil and natural gas equipment for taxation purposes.

Assessment Practices/Electric Utilities: Oppose redistribution of tax proceeds to parishes other than the parish where the electric utility plant is located.

Assessment Practices/Pipelines: Support equitable assessment practices for pipelines classified as public service properties.

Oilfield Wastes: Support the current jurisdiction of the Department of Natural Resources and the Department of Environmental Quality and oppose changing the jurisdiction thereof to the Attorney General or to any other department or agency. (See the Environmental Quality Council program)

Expropriation: Support the existing Louisiana statutes and constitutional guarantees for the orderly expropriation of property and for the compensation for those properties expropriated for energy related transmission or product transportation.

 


Contacts.


Lauren Chauvin serves as Director of the Energy Council. In this capacity her responsibilities include all issues impacting Louisiana's energy producing and consuming industries.

 

Lauren Chauvin

Director, Energy Council, LABI

laurenc@labi.org
(225) 928-5388

Emory Belton

Chair, Energy Council
Belton Consulting, LLC

(225) 615-0212

emory.belton@gmail.com