American Oil and Gas Reporter - April 2018 - 155

ConventionCoverage: Louisiana Oil & Gas Association
the United States out of the Paris Climate
Accord, which amounted to the United
States contributing $3 trillion to be divided
among other nations, he said.
"It wasn't about the environment,"
Blackmon said. "It was about money."
The benefits of oil and gas to U.S. society are largely incalculable, Blackmon
insisted, but he pointed out that petroleum
fuels 70 percent of the U.S. economy
and the industry will benefit handsomely
under Trump administration policies that
call for utilizing more U.S. energy supplies
and through the Tax Cuts and Jobs Act
of 2017, he said.
While the steel tariffs seem less than
popular among many U.S. companies,
President Trump typically adopts stances
according to his negotiation strategies,
Blackmon advised, and the tariffs may
prove less onerous than expected.
Also on the federal front, Anne Idsal,
Region VI administrator for the U.S. Environmental Protection Agency, said EPA
Administrator Scott Pruitt was promoting
the rule of law and cooperative federalism
alongside state regulators.
"It's important that we don't impose
a one-size-fits-all approach," she said.
The Clean Air and Clean Water acts
incorporate the principle of cooperative
federalism, Idsal said. Pruitt favors clear
goals and objectives among regulators,
she added.
The EPA wants to see greater environmental benefit from economic growth,
Idsal described. She advised LOGA members to continue to work with the EPA
and the Louisiana Department of Environmental Quality to adapt new, more
efficient technologies.
"We want this industry to be robust,
for you to do well and to continue to
make progress," Idsal said.
Although punitive action is essential
in certain situations, she indicated, EPA
will focus on compliance instead of punitive action. As an example, she illustrated,
inspectors should notify a plant manager
about a leak immediately so it can be repaired quickly instead of notifying the
company later by assessing a penalty.
Coastal Chaos
Chris McLindon, a geologist with Upstream Exploration LLC and head of the
Coastal Atlas Project, detailed how the
project involved reviewing the impact of
fault shifts on coastal subsidence.
"The atlas will show how subsurface
geology is affecting what's happening

EPA Region VI Administrator Anne Idsal
tells LOGA that she and EPA Administrator Scott Pruitt want the agency to
promote compliance with responsible
businesses instead of projecting an adversarial stance toward industry and
state regulatory agencies.

on the surface," he said.
Contrary to public perception, land
loss rates along Louisiana's coast peaked
in the 1970s and have decreased since,
McLindon told LOGA.
Actual observed data of the extent of
South Louisiana wetlands reached a minimum value in 2008 of 14,119 square
kilometers, he reported, but from then
until the study's 2016 completion, South
Louisiana gained 600 square kilometers,
or 200 square miles, largely from natural
processes, he said.
"It is pretty clear when you look at
the data, the episode of subsidence that
caused wetlands loss in South Louisiana
was an episode of fault movement," he
concluded.
Lawsuits filed by six coastal parishes
against a litany of industry players are
approaching trial, reported Jamie Rhymes,
an attorney with Liskow & Lewis. Lawsuits are allowed under the Local Coastal
Resource Management Act of 1980 to
bring enforcement actions against operators, but after issuing 60,000 permits, the
state Office of Coastal Management had
not filed one to enforce a coastal use
permit provision nor had it filed a suit
for failure to obtain a permit, though it
had issued cease-and-desist orders and
levied as many as 3,000 fines, he said.
However, Louisiana's Jefferson,
Cameron, Vermillion, Saint Bernard, Saint
John the Baptist, and Plaquemines parishes
have filed lawsuits against operators-current and historical-claiming unspecified

damages or violations, Rhymes reviewed.
Although the Cameron Parish suit is
being reviewed in federal court, others
reviewed in federal district court were
remanded to state courts, and a state
judge has set aside 40 weeks in 2019 for
the Plaquemines lawsuit, added attorney
Edward Duhe.
Despite claims in lawsuits, the plaintiffs
are yet to cite specific permit violations,
Rhymes said. Plaintiffs have claimed they
have aerial photos, he noted, but they have
not produced any for defense attorneys.
The plaintiffs assert companies failed
to obtain coastal use permits to return
marshes to their original condition and
failure to obtain coastal use permits related
to discharge of produced water, despite
operators obtaining EPA permits allowing
the practice, Rhymes said.
A third legal issue claimed that companies failed to obtain coastal use permits
for subsidence caused by oil and gas production, he said. The state has claimed
ignorance about the violations before the
lawsuits, Rhymes said, and has shown
no inclination to work with operators.
"They are looking to maximize the
impacts of oil and gas activities on the
marsh and maximize their recoveries in
these lawsuits," he said.
The Right Price
Randy Songy, an attorney with the
Onebane law firm, reviewed tax lawsuits
in which the state Department of Revenue
had attempted to assess oil severance
taxes on values that essentially included
crude purchasers' transportation costs.
Most arms-length contract sales reflect
base prices set by market indices, with
adjustments to a base price that typically
reduce the actual sales price, Songy reviewed. For example, an index may show
$50 a barrel, he said, but the purchaser
may adjust the price to $48, which is the
amount on which an operator should pay
severance taxes.
State statute, which sets a 12.5 percent
severance tax on the value of oil at the time
and place of severance, allows taxation on
the higher of gross receipts and the posted
field price, he detailed. In a test case
involving Avanti Exploration LLC, there
was no posted field price, Songy said, but
the department insisted that price reduction
utilized by the crude purchaser amounted
to an in-kind payment to Avanti.
"Only in a government mind can a
price reduction be an in-kind payment,
but that was the argument," Songy said.
APRIL 2018 155



American Oil and Gas Reporter - April 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2018

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