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Can business win despite losing?

December 5, 2019
Originally posted on Greater Baton Rouge Business Report

Louisiana business and industry groups went all-in supporting Eddie Rispone for governor, hoping a more conservative, business-friendly state leader would push through the legal and tax reforms they’ve long sought.

Those bets didn’t pan out, with Rispone being defeated. Still, officials with those groups are expressing optimism that they’ll be able to work with Gov. John Bel Edwards during his second term in office.

“How that relationship will play out, time will tell,” says Tyler Gray, president and general counsel of the Louisiana Mid-Continent Oil and Gas Association. “But we continue to have a relationship with him and how we work on issues, even when we don’t see eye to eye on everything.”

Working in their favor is that the state legislative makeup is more conservative and, based on campaign rhetoric, more pro-business than ever. Voters may have re-elected a moderate Democrat for governor, but they also gave him a decidedly more right-leaning state Legislature. The Republican Party will find itself holding a supermajority in the Senate, and will be two seats shy of the same veto-proof power in the House. Both chambers will also elect new leadership, another pending tide-turner in how much Edwards will be able to accomplish—or thwart.

It’s that legislative shift—18 of 39 state senators will be first-timers and 46 House members will be rookies, sparked by term limits and a concerted effort by several political action committees to elect more conservative legislators—that’s prompting optimism from the Louisiana Association of Business and Industry and organizations tied to the oil and gas industry.

New legislators will change things “a great deal, at least I’m hopeful,” says Greg Bowser, president of the Louisiana Chemical Association. “One of the key changes we’ll see is a lot of the seniority in the Senate is going to be gone. I’m hoping that’s a positive.”

More important than the turnover, says LABI President Stephen Waguespack, is that a significant number of the newcomers ran on agendas that largely mirror the positions of pro-business groups. “We’ve never had a Legislature filled with new, first-term legislators who ran on those issues,” he says, adding it will be interesting to see if the neophytes offer fresh solutions to “old problems.”

The Louisiana Oil and Gas Association saw 89% of its endorsed candidates win legislative races this fall, with LABI backing the winner in 39 contested legislative districts, plus another 22 candidates elected unopposed.

“As far as electing pro-industry (legislators), we feel very good about the direction the Legislature is going,” says LOGA President Gifford Briggs.

Remaining to be seen is if the Republican bloc remains united on key issues, or can Edwards convince enough of them to work with him to forge some level of compromise legislation?

“It’s not so much the party of the individual, it’s their willingness to work constructively and in good faith,” Edwards said during his Ask the Governor radio show in late November. “I’ve looked at the Senate and the House, and I believe there are plenty, plenty, plenty (of) members, regardless of party, who are willing to do that.”

For his part, Edwards says he’s willing to reach across the aisle in the hope of building a good working relationship with a Republican-majority Legislature and its leadership. “If they want independence that’s great,” he said during his Nov. 21 post-election news conference, “but obstructionism and independence are not the same thing.”

Key Business Issues

Determining the pecking order of the pro-business agenda remains a question, but Briggs says “the issues weighing heaviest on members are the legal climate and coastal lawsuits.”

For Bowser and the LCA, the issues are business taxation—including manufacturing inputs, inventory taxes and utility sales taxes—the ever-changing, ever-controversial ITEP guidelines, reducing the amount of dedicated dollars and increased spending on infrastructure.

Each item comes from the long-standing pro-business playbook, yet complicating matters is getting legislators—many with little experience in the way Capitol politics actually works as well as their desire to pursue hot-topic items within their respective districts—to coalesce come voting time.

“The likelihood that they would identify and pass those measures really comes down to what happens once the legislative session begins,” Gray says. “They may introduce bills and fights that they don’t even anticipate will be a fight.”

To that end, lobbying efforts began months ago, but will ramp up prior to the regular session beginning in March. “A lot of it comes down to education on the importance of oil and natural gas,” says Gray.

With a reported $2 billion in taxes generated annually, roughly 260,000 sustained jobs and a $96,000 average annual wage, the oil and gas industry will, as Gray says, look to “use that influence in support of legislators who prioritize those policies.”

The legislative shift comes at a critical time for the industry, a point reinforced in the latest drilling reports, Briggs says. According to the Nov. 15 Baker Hughes rig report, only one inland rig was running in south Louisiana on land and none was running in the area’s inland waters.

“We can argue all day long about the reasons … but we can all agree, one rig is not enough,” Briggs says. “Can we come together on solutions that can grow that number from one to 20? Can we agree on the ways to get there? Hopefully we can and attract investment back to Louisiana.”

From the broader business point of view, legal reform will continue to be an issue of emphasis for LABI, with Waguespack expressing confidence that new legislative faces—especially in the Senate—will push forward some type of tort reform over the next four years.

“It flew through the House last year but died in the Senate with a committee set up to kill it,” Waguespack says, repeating an oft-made allegation about the Senate Judiciary A Committee.

Bowser agrees structural changes to Senate committees will, if nothing else, allow controversial bills to reach the full membership, adding “simply getting a floor discussion would be a big positive.”

The conservative, pro-oil and gas bloc remains hopeful Edwards will change course on the coastal lawsuit issue, but if the announcement of a pending settlement deal with Freeport McMoRan made just weeks before the primary is any indication, that’s not likely to occur.

Waguespack points to the election results in coastal parishes as a sign that those most affected by the industry still support it. “I hope the message is that the status quo is unacceptable,” adds Bowser, saying the first 12 to 18 months of this term will send a strong signal about what can be accomplished during Edwards’ final term as governor.

“Folks are extremely excited about the election returns in the Legislature,” Waguespack said. “For the first time in a long time, we’ll have a legislative body that understands their concerns.”