Who Runs Louisiana?

It’s 2019: a huge election year for Louisiana, and all the political messaging will be asking – openly or subliminally – “Who runs this state?” It’s a question the politicians have been forcing you to ask yourself for the past three years, as the Republican-controlled legislature (the state House, in particular) and the Republican Attorney General have wrestled with the Democratic Governor to assert party ideology and dominance over governmental policies and practices in Louisiana.

This year, voters are not only facing selections for governor and other statewide-elected officials, but will also be picking their next legislators. Those men and women will have, in addition to their lawmaking duties, the added responsibility for drawing new district lines following the 2020 Census – affecting Louisiana political outcomes for at least another decade into the future.

The potential rewards of that type of influence are immense, and so the political ads we’ll be seeing and hearing will expand beyond personal snapshots of those offering themselves for service to the state. Special interest groups are filling their war chests, stockpiling their ideological ammunition and prepping to launch their assaults via airwaves and cyberspace. These state elections will undoubtedly be the most expensive in Louisiana’s 207 year history.

Throughout Louisiana’s statehood, the question of “Who runs this state?” has been asked often.

“Queen Sugar” and “King Cotton” were the state’s earliest economic drivers, and while Louisiana indirectly benefited from the early to mid-19th century Industrial Revolution, the state also ultimately lost population as a consequence. Factories grew elsewhere, while Louisiana grew and exported the raw cotton and sugar that would clothe and sweeten the lives of the nation’s expanding population.

Deep beneath Louisiana’s fertile soil, another natural resource awaited. As commerce and industry expanded elsewhere, so did the demands for ways to fuel it.

In 1870, a night watchman in Shreveport lit a match, and “accidentally” discovered natural gas coming from a recently-drilled artesian well.

In 1901, nine months after and 90 miles east of the first Texas oil “gusher” Spindletop, an oil well drilled near Jennings, Louisiana also began gushing forth “black gold.” By 1906, the state legislature had passed its first oil and gas laws, and in 1909, the first oil refinery in the state – what is now the Exxon refinery in Baton Rouge – came on line.

Some quarter of a million oil and gas wells have been drilled in Louisiana since then (though 35% of them – some 80,000 – ended up as dry holes), and this state was a major contributor in fueling the nation’s phenomenal growth throughout the 20th century.

For most of previous century, oil and gas interests ruled in and over Louisiana.

The peak of the state’s oil production was exactly 50 years ago, however – in 1969, with more than 728 million barrels produced. It has been declining ever since. Within five years of that production peak, several scientific studies were released, showing that Louisiana’s coastal land mass has been declining, in direct correlation to its oil and gas production. It was Dr. Sandra M. Gagliano’s 1973 study that estimated 39% of Louisiana’s land loss was due to the industries’ dredging of canals through the coastal wetlands.

Realizing their influence was waning as their industry’s environmental impacts were being documented, discussed, and disfavored, oil and gas concerns developed a new tactic 25 years ago: the “economic impact study.”

Louisiana Mid Continent Oil and Gas Association released the first-of-its-kind study in 1993, showing the offshore oil and gas industry provided Louisiana with a positive economic impact of more than $3 billion each year.

That report had the desired effect.

In 1994, the state Legislature passed a massive incentive package, foregoing state revenue from severance taxes for certain types of wells – including wells deeper than 15,000 feet, and those that run horizontally. And, as LMOGA’s own “History of the Industry” proudly declares, “Oil and gas activity increased sharply after passage of the incentive legislation.”

Of course, prices for crude oil, which had been around $25 per barrel at the start of 1994, went up around then as well, increasing to over $45 per barrel by the start of 1997. By November 1998, the price per barrel had plunged again, to a low of $17.25. Nearly ten years later, though, in June of 2008, the price per barrel of oil reached an all-time high of $161.28. In late August 2014, oil dropped below the hundred-dollar-per-barrel mark, continuing to decline to $36 per barrel by early 2016. As of the end of 2018, the price was hanging around $45 per barrel.

In 1982, just over 42% of Louisiana’s total state general fund came from mineral revenues: oil and gas severance taxes and royalties. In the current budget year, those sources are barely more than 6% of total state general fund revenue. And in the current budget year, we the people – through individual income taxes and sales taxes we pay – provide 74% of Louisiana’s state general fund revenue.

Yet the power dynamic has not changed to completely reflect the preferences of who is really paying the state’s bills.

From severance tax exemptions to the industrial tax exemption program (ITEP), Louisiana keeps subsidizing the profitability of these industries, because “jobs.” That’s the threat they always use: If Louisiana taxpayers don’t give them tax break after tax break, they’ll take their businesses and jobs elsewhere. They won’t, of course. They can’t.

The last time a new refinery was built in the U.S. was 1977 – 42 years ago – and that was the Marathon facility in Garyville, Louisiana. Other states won’t offer them the opportunities to profit that we have.

As for the overall oil and gas-related jobs in Louisiana, Dr. Loren Scott, the economist who has been doing the industry’s “economic impact” studies for the past 25 years, reported the 2018 jobs total at 44,580. In 2008, it was 53,000. And in 1998, it was nearly 82,000. That’s a 46% decline over the past 20 years. What the industry seldom says is that advances in computerized controls and automation have eliminated the need for people to actually do many of these jobs.

In truth, these industries have consistently applied for ITEPs, avoiding the payment of local property taxes for up to a decade, for improvement projects that actually eliminate jobs, rather than creating them. Up until recently, they got those tax breaks nearly automatically.

Louisiana remains a petro-colonial state, with our “good masters” consistently seeking rules and laws that favor their status and keep them flush with money to propagandize the people and contribute to the campaigns of candidates who will see the issues in a way that is advantageous for the oil and gas industry.

Consider what we now know of Exxon’s subterfuges, for example.

In the 1970s, even as they were funding LSU’s initial research and studies into remedies for Louisiana coastal land loss, the petrochemical giant was also conducting pioneering research into global climate change. Yet after one of Exxon’s senior scientists informed company executives that, in 1977, there was general scientific agreement that burning fossil fuels was accelerating the global warming phenomenon, Exxon continued their climate modeling research, but they quit speaking of it openly. Ultimately, in 1982, Exxon’s scientists determined that “significant reduction in fossil fuel consumption would be necessary to curtail future climate change.” The internal report to Exxon executives also noted, “There is concern among some scientific groups that once the effects (of climate change) are measurable, they might not be reversible.”

Bless Exxon’s heart: they didn’t tell any of us. Instead, they poured profits into an intentional public campaign of disinformation –questioning the science and fact of global warming, utilizing the same strategies previously employed by Big Tobacco regarding smoking and lung cancer, and – along with Koch Industries – provided climate change-denying organizations with tens of millions of dollars in support.

Here in Louisiana, the oil and gas industry paid lobbyists to argue against alternative energy proposals. They ultimately killed off the state’s solar energy tax credit program, which benefited homeowners and the environment, while arguing to keep their own industry’s corporate concessions intact. They sought and received designations of refineries – and now pipelines– as “critical infrastructure,” protectable at gunpoint and making protesting those developments a felony.

They have battled and defeated every piece of proposed legislation to limit – or even study – industrial groundwater usage. And they’ve defeated every attempt to require facilities install fenceline air quality monitors, even as the oil and chemical companies “settled” EPA lawsuits citing them for decades of excess emissions in violation of the Clean Air Act.

The industry fought tooth and nail in 2014 to kill the Southeast Louisiana Levee Board lawsuit which accused 97 oil, gas, and pipeline companies of damaging the wetlands. They continue to try and buy elections of parish officials in an effort to kill off the 42 coastal land-loss lawsuits now pending trial in federal court. All this, despite the companies having signed agreements before dredging all those coastal canals – agreements which promised they would follow state law requiring proper maintenance of the rights of way and eventual restoration of the land to its original condition.

Photo courtesy: Coalition to Restore Coastal Louisiana

This coming year, the oil and gas companies – and their allied chemical industries, all of which would continue their power and control over Louisiana – will once again be pushing “tort reform” measures in the legislature. 

These industries are now utilizing portions of their profits to promote the narrative that “Louisiana is a judicial hellhole” because “trial lawyers are running the state” (with the unspoken, but implied addendum of “into the ground”).

Gov. John Bel Edwards is – by trade – an attorney, and he is running for re-election this year. An opinion piece published in the Wall Street Journal in March of 2018 previewed the tactics oil and gas interests will be using to try and defeat him – branding him as a trial lawyer who wants to retain power, along with all his trial lawyer friends. The author of that commentary, Allysia Finley, is rated “right” for her media bias, according to allsides.com. Certainly, right-wing bloggers and columnists with other publications picked upon her commentary, and over the following week amplified it, with statements such as “The trouble with trial lawyers is that for the most part, they suck the life out of the economy.” And they all re-iterated the oil and gas industry’s mantra: “The oil industry is booming in Texas while it is stagnant or declining in Louisiana. Blame it on the state and several parishes filling lawsuits against the industry.” 

Unsurprisingly, ExxonMobil, Shell, PPG, and especially Koch Industries have been longtime heavy funders of the American Tort Reform Association – the group that publishes an annual “Judicial Hellholes” report. Louisiana is usually ranked near the top of this report, with accompanying statements such as, “The Pelican State’s legal climate has suffered at the hands of powerful trial attorneys and the politicians they have controlled for decades. Gov. John Bel Edwards, a trial lawyer, has helped further stack the deck against defendants down on the bayou, and Louisiana is unlikely to escape this litigiously fevered swamp anytime soon.”

The most recent “hellhole” report, issued Dec. 26, 2018, ranks Louisiana number five – up from number eight the previous year. California is number one, followed by Florida, New York City, and St. Louis, Missouri; then Louisiana. TopVerdicts.com’s most recent list of the 100 highest court awards in civil lawsuits does show California with 33 of the top 100 verdicts: Florida has 11 on that list. But the highest awards, and the greatest number in the top 100 – 42 – were in Texas, including the top two verdicts. One was for half a billion dollars, with the biggest verdict being for more than $8-billion. Both of those cases were for business-to-business breach of contract.

Texas did not make the “Judicial Hellholes” list at all. Louisiana, ranked number 5, did not have a single case among the top 100 verdicts. 

Yet the oil and gas industry keeps telling us Texas is doing things right, while Louisiana suffers because trial lawyers are the problem.

Texas, ironically, is also the example these same industry apologists use as an example of successful tort reform initiatives. 

Oil and gas isn’t the only business sector trying to attribute Louisiana’s problems to trial lawyers. The Louisiana Association of Business and Industry has long been engaged in demonizing trial lawyers as the bane of Louisiana business, while they’ve waged a campaign for “civil justice reform” (as they’re now calling it). LABI has long been the primary financial funder of Louisiana Lawsuit Abuse Watch, which claims to be “a citizen watchdog group dedicated to stopping lawsuit abuse that threatens local businesses and jobs.”  All they seem to do though, is recycle “reports” from other questionable sources, in furtherance of the campaign for tort reform.

LABI will be making tort reform their top issue during the upcoming 2019 legislative session. LABI president Stephen Waguespack – who was former Gov. Bobby Jindal’s executive counsel, and is himself a lawyer by trade – wrote a column October 3, 2018, titled “It’s Time for Some 1-800-LEGALREFORM.”

In it, he said: “It’s all about the incentives created by the State Capitol over the years to promote a lawsuit culture in Louisiana. What has never been honestly discussed with the public are the laws the Louisiana Legislature has put in place and protected over the years to intentionally incentivize and promote one of the most active lawsuit industries in the entire nation – laws that have become strong incentives created by the Louisiana Legislature to create a robust and competitive business environment for trial lawyers.”

LABI will be branding this year’s effort to “reform” civil justice as a pro-consumer idea. They’re already using the high cost of auto insurance in Louisiana as their “focus,” blaming it on the law that says lawsuits in auto accidents (and any other civil issues) must involved claims of $50,000 or more in order to be heard before a jury, instead of just a judge.  This conveniently ignores the 2006 abolition of the Louisiana Insurance Rating Commission, a body that publicly heard and debated insurance rate hike requests. Instead, those rate increases are decided by the Insurance Commissioner alone. The holder of that office throughout the past dozen years  — Jim Donelon — has argued all along that the best way to combat Louisiana’s high insurance rates is to make the state a better place to do business. 

Baton Rouge Business Report executive editor J.R. Ball has indicated he’s throwing in with the “blame the lawyers” scenario. He wrote, on October 10, 2018, “The folks at Truth in Accounting, a state debt transparency organization, say Louisiana’s fiscal afflictions are merely symptoms of an even more sinister underlying problem: too many lawyers.”

What Ball didn’t do – or at least didn’t write about – is look into “Truth In Accounting,” which gave Louisiana a grade of “D.” SourceWatch.org says: “TIA is a right-wing 501(c)3 nonprofit and uses the American Legislative Exchange Council’s (ALEC’s) Rich States, Poor States state economic outlook rankings analysis as its database.

ALEC, which claims to be a “membership organization of state legislators,” instead actually receives 98% of its funding from corporations and corporate foundations. ALEC provides state lawmakers with sample legislation, most of which is designed to (according to the Center for Media and Democracy) “undermine environmental regulations and deny climate change; support school privatization; undercut health care reform; defund unions and limit their political influence; restrain legislature’s abilities to raise revenue through taxes; mandate strict election laws that disenfranchise voters, among many other issues.”

LABI was founded in the mid-1970s with one primary goal: to bust the unions through passing the “right-to-work” law. In the intervening years, LABI and its affiliated group members have been consistent advocates before Louisiana legislative committees, in alignment with the ALEC objectives iterated above.

And it’s a segment of LABI’s membership that has been working behind the scenes for more than a decade, preparing to make their big move toward becoming the next answer to the question of “Who Runs Louisiana?”

Let’s call them the “Erector Set.”

In our next several stories we’ll be exploring who, what, and how they’re working to shift the power of state government into their full control.

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Sue Lincoln
Sue Lincoln is a veteran and widely-respected reporter who has been covering Louisiana politics for nearly three decades. Originally from Long Beach, California, Sue’s career in journalism began on the radio in Los Angeles. After moving to Louisiana, Sue earned her bachelor’s degree. For ten years, from 2000-2010, she was the Assistant News Director at Louisiana Network. Sue also worked as the education reporter for Louisiana Public Broadcasting and has contributed to various state publications as a freelance journalist. But she is perhaps best known as the voice of the popular politics Capitol Access.