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: Should Louisiana 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; or
a
property tax on minerals in place or a reservoir tax.
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.
Contingency 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.
Reasoning: In 1994, then-Attorney General Richard Ieyoub proposed to hire 14 law firms to pursue environmental claims
on behalf of his office, with a guarantee of 25% of the amounts recovered. In that the contracts would have allowed
environmental witch hunts, the united business community actively opposed the contracts, and the Louisiana Independent
Oil and Gas Association filed suit to invalidate the contract. In Meredith v. Ieyoub, the Louisiana Supreme Court held that
it is within the power of the Legislature to authorize contracts, but it had not done so. The contracts were thus invalid.
The biggest problem with such legislation is that it would allow private attorneys who are interested in pursuing class
action litigation to escape the Federal Class Action Reform of 2005 passed by Congress. That federal law requires that
almost all of Louisiana’s future class action cases be filed in federal court, not state court. However, the federal law
contains a provision which allows for an exemption if the mass action suit is filed by an attorney general.
In their efforts to pass bills of this nature, Louisiana’s attorneys general speak of dire financial conditions plaguing the
Department of Justice and imply that there are claims due and owing to Louisiana that can be collected and spent on
current needs. However, this legislation is unnecessary, as the attorney general can and does hire outside attorneys to
pursue legitimate legal claims. While the 2010 legislation was sold as a method by which the state could recover damages
in the Deepwater Horizon spill, that incident is simply another high-profile excuse to allow plaintiff attorneys to get
contingency fee contracts. Louisiana’s public policy should be that we will retain the full fruits of our recovery for all
damages in order to make our state whole, rather than to siphon off 10 to 25% to outside plaintiff attorneys.
Special Funds—
Legislatively Dedicated Self-Imposed Fees
The Issue: As the state has struggled the past three fiscal years to deal with revenue shortfalls, the administration has
raided statutorily dedicated funds and used those funds for totally unrelated purposes.
LABI Position: Oppose abolition and raiding of legislatively dedicated funds that were created and funded by fees paid to
accomplish specific regulatory and other purposes.
Reasoning: The cost of administering state regulatory programs has been shifted from the state general fund to fees
charged the companies being regulated. Legislation and implementing regulations in many of the state departments
establish statutorily dedicated funds through which these regulatory and other programs are funded. Many of these
programs are within the Departments of Natural Resources and Environmental Quality, as well as at the Public Service
Commission, and most of them have been created through cooperation between the Legislature, the regulators, and the
parties being regulated. Many of the assessments 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 the fund at all times; fee
increases are triggered if the balances fall below certain levels.
In 2009 through 2011, LABI opposed legislation which was eventually passed that did in fact take millions of dollars
from these funds. If the funds are to be taken, the Legislature should also eliminate the programs that were to be funded
by the self-generated fees, as fees should be limited to those that are necessary to adequately support programs which are
relevant and in proportion to the services rendered and are equitably assessed on all classes of users.
State Water Policy
The Issue: The Legislature adopted a statewide water policy; however, recent Attorney General opinions which 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 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.
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.
CURRENT ISSUES
Legacy Lawsuits and Mineral Lease Obligations: Defend legislative advances made in oil and gas legacy lawsuits and
support appropriate adjustments to existing laws as necessary.
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 to 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 date
certain.
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.
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.
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;
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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.
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.
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.
Oilfield Wastes: See the Environmental Quality Council Program, page 19.
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.
Expropriation: Support the existing Louisiana statutes and constitutional guarantees for the orderly expropriation of
property and for the compensation for those properties expropriated.
—See also the Federal Program—
Contact: Ginger Sawyer (225/215-6644; or GingerS@LABI.org) As Energy Council Director, Ginger handles issues
impacting Louisiana’s energy producing and consuming industries.
Ginger Sawyer
Director, Energy Council
Vice President of Political Action
LABI
Brad Mittendorf
Chair, Energy Council
Southern Strategy Group
FEDERAL PROGRAM
ENERGY
Moratoria, Federal Leasing, and Regulatory Programs: Oppose regulations and legislation which would impose
moratoria or de facto moratoria on oil and gas exploration and production in the Gulf of Mexico. Continue to support
legislation that seeks to establish aggressive Outer Continental Shelf (OCS) and Arctic National Wildlife Refuge leasing
programs for oil and gas development. Revenues from such production should be shared with states that permit such
activities. Oppose any efforts to restrict leasing on federal and OCS lands. All potential reserves must be explored and added
to the nation’s production, and a balanced program between environmental and economic concerns must be achieved, rather
than withdrawing properties based on unwarranted environmental pressures.
Hydraulic Fracturing: Oppose federal regulation of hydraulic fracturing.
Energy Taxation: Support federal taxation policies that would preserve domestic energy security by stimulating
exploration and production. Such incentives would assist energy-intensive industries, which are suffering from high
energy costs and foreign competition, as well as the energy-producing industry. Also, oppose additional gasoline and
special fuels taxes as a source of revenues for non-highway purposes.
Pipeline Infrastructure: Support federal permitting of infrastructure projects that would facilitate the transportation of
resources to Louisiana consumers and other end-users.
U.S. Climate Change Policy: LABI specifically opposes any cap and trade legislation or the imposition of any carbon
tax.
Revenue Sharing: Support efforts to assure a fair and equitable distribution of revenues from offshore oil and gas
production.
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 date
certain.
Refining Capacity: Fast-track provisions of the Federal Energy Bill which will enable construction of additional oil
refining capacity in Louisiana at the earliest date.
Fuel Mix/Reduce Dependence on a Single Fuel for Generation: Fast-track provisions of the Federal Energy Bill which
would allow for expansion of nuclear electricity generating facilities in Louisiana, as well as development of additional
clean-coal technology for generation in the state when economically feasible.
Electricity Transmission: Fast-track provisions of the Federal Energy Bill which will upgrade the electric transmission
and distribution grid which provides power to Louisiana; assure that the system will accommodate electricity loads from
independent generators and other alternate sources of power.
National Energy Infrastructure Zone: To assure a reliable and affordable supply of electricity to all customers,
encourage implementation of the provisions of law which allow the Secretary of Energy to restore the energy
infrastructure system in the event that the system is compromised in an incident or event.
Royalty Valuation: Support improvements in the method by which the federal government values and collects oil and
gas royalties from leases on federal property. Those improvements should be designed to create a more efficient system
that adds fairness, certainty and simplicity to the royalty valuation process while preserving the lease terms agreed upon
by the producer and the federal government.
Oilfield Wastes: See the Environmental Quality Council federal program below.
Risk Assessment: Support legislation that will attach cost-to-risk assessments to the process by which rules are
promulgated.
Wetlands: Oppose any regulatory efforts by the Department of the Interior that would impede or curtail oil and gas
exploration and production in the wetlands.
Competition: Support a fair and fully competitive retail electricity market that allows all consumers the right to choose
their supplier of electricity. Oppose regulations and legislation which would have the effect of retroactive ratemaking.
Natural Gas Deregulation: Support legislation to remove all governmental barriers to competitive pricing and
accessibility to all onshore and offshore production, transportation and use of natural gas.
Alternative Energy and Feedstock Development: Assist in the development of a program that will promote use of
alternative energy sources but does not unduly favor one energy form over another.
Nuclear Fuel: Support legislation which would ensure the long-term viability of nuclear power for electricity generation,
assure safe storage of spent nuclear fuel, and require safe transportation of nuclear products.
Contact: Ginger Sawyer (225/215-6644; or GingerS@LABI.org)