What do you do when a participant on “the honor system” proves to be dishonorable, over and over again? When it’s ExxonMobil, and you’re the citizen coalition known as Together Baton Rouge, you make a public example of the “world’s largest publicly-traded international oil and gas company”.
The issue this time is property tax valuation, which Together Baton Rouge says is $408-million below what it should be for Exxon’s four facilities in East Baton Rouge Parish. They’ve sent a letter to Assessor Brian Wilson requesting that he adjust the corporation’s 2018 tax bill accordingly.
And the group, which draws its membership from a broad array of faith-based congregations, community groups, and the two largest teachers’ unions, is pointing to a section of state law that lets them hold the assessor’s feet to the fire to get this done.
Specifically, LA R.S. 47:1957.F states: “If any tax assessor intentionally or knowingly or through negligence omits any taxable property from the assessment…he shall be liable on his official bond for the full amount of the taxes due on the property.”
Those taxes would total – by their calculation – $5.9-million.
Where does Exxon’s liability come into play, you may ask? An earlier section of the law, LA R.S. 1953, require the corporation to furnish “a sworn statement of the value of their property,” and “false swearing” is a criminal offense. Additionally, later sections of the law, LA R.S. 47:2329 and 3308, say a property owner that “intentionally” commits such an act foregoes any legal right to “question or contest” a revised valuation.
The case made by Together Baton Rouge is quite compelling, especially since they use ExxonMobil’s own publicity to show the current assessment of $1.39-billion for the four Baton Rouge facilities undervalues Exxon’s worth.
For 2017, Exxon’s refinery, chemical plant, plastics plant and polyolefins plant were listed as having a combined value of $1.45 billion. But last year the corporation also made combined capital improvements worth more than $335-million, and they submitted advance notice of intent to seek industrial tax exemptions for those projects, which included $209-million in refinery improvements, $98-million for the chemical plant, $22-million at the plastics facility, and $6.9-million at the polyolefins plant.
Since Together Louisiana and its local chapter Together Baton Rouge had been waging a multi-year campaign to limit the formerly automatic giveaways of property tax revenue through the state Industrial Tax Exemption Program (ITEP), with Exxon at the top of their list as a habitual recipient of state subsidies for industry, also known as “corporate welfare”, Exxon embarked on a publicity campaign to try and counteract the criticism.
(In its report, “Giving Away the Farm”, Together Baton Rouge documented that from 1998 to 2017 Exxon had received 203 ITEPs totaling more than $589-million, while shedding 2037 jobs from its payroll over the same period.)
Among Exxon’s efforts to sway the larger ITEP conversation in their favor was a May 21, 2017, half-page ad in The Advocate, touting completion of the $200-million refinery project. That same month they also released a piece called “Baton Rouge Economic Impact Report 2017”, lauding themselves for the same “economic investment”.
And the company issued a press release just after Thanksgiving last November, extolling completion of the capital improvement projects at all of its Baton Rouge facilities, saying these “competitive upgrades totaled approximately $340 million” – a number which closely coincides with their ITEP application, give-or-take five million dollars.
It should be noted that this batch of property tax exemptions has yet to be approved, so under state law, the value of the improvements should have been included in Exxon’s current-year assessment.
Exxon claims the assessor’s office told them not to include those capital improvements in its sworn valuation statement, an assertion Assessor Brian Wilson has confirmed. In an interview with The Advocate’s reporter Sam Karlin, Wilson said “If Exxon ultimately receives the ITEP award, the company would run the risk of not being able to receive the property tax dollars back.” And, he added, the directive on how to handle this came from the state Department of Economic Development.
And while Exxon’s application for this particular batch of exemptions is currently being considered by local governing bodies, including the school board, Together Baton Rouge executive director Broderick Bagert says, “You don’t give your kid his allowance the day after you discovered him stealing money from your wallet.”
Leaving aside the issue of the yet-to-be granted exemptions for the 2017 improvements, Together Baton Rouge states in its complaint to the assessor that other contributing factors to the current $1.39-billion valuation of Exxon properties don’t add up. For example, there are old ITEPs that expired at the start of 2018, which should add another $60.7-million (allowing for standard depreciation of those 10-year-old improvements) to the value of Exxon’s property. And overall depreciation, based on a 20-year useful life, as Exxon has told the federal Securities and Exchange Commission is its practice, comes up to approximately $48-million for the corporation’s four Baton Rouge facilities.
So, starting with a 2017 value of $1.45 billion, and adding just the roll-on of expiring ITEPs at $61-million, then subtracting the $48-million in depreciation from the whole, means the property should be valued at $1.463 -billion, rather than $1.39 billion. If you add the 2017 improvements that have yet to be exempted from property tax, Together Baton Rouge says Exxon should be paying property taxes on a total assessed value of $1.8-billion.
“We want real numbers,” says Together Baton Rouge organizer Edgar Cage. “They have to report their value. They know their value – no matter what the assessor says.”
It’s curious, in a way, that the presumption of “everybody cheats on their taxes” made it into the state’s laws on property assessment, with criminal penalties for making a false declaration being included. But one also has to ask, despite the legal fiction of “corporate personhood”, how the penalty of “up to one year imprisonment” would be exacted against an entity like Exxon? And that also leads to the question whether such a penalty is, indeed, any kind of deterrent for business and industry?
Certainly, the strictures placed on assessors, holding them personally and financially responsible for errors and omissions, are far more punitive. And while it may be necessary for ensuring public trust in elected officials, why don’t we hold the corporations that operate within the state to similar standards of behavior?
Instead, Louisiana continues with “the honor system.”
When it comes to hazardous chemical releases into the air, water, or soil, Louisiana’s Department of Environmental Quality allows “self-reporting” by the industries, and unquestioningly accepts reports that say, essentially, “Something bad got away from us, but it stopped at our chainlink fence.”
A sampling of recent reports from Exxon’s chemical plant in Baton Rouge illustrate this.
On August 24, 2018, there was a hydrogen chloride release from the same plant. (A colorless gas, hydrogen chloride forms white fumes of hydrochloric acid upon contact with atmospheric water vapor. The humidity was 52% that day.) Exxon’s statement was that the release “didn’t leave the fenceline.”
The previous day, August 23, there was a “small” fire at the chemical plant. Exxon states it was “contained to the unit where it occurred.”
And on June 11, 2018, a sulfuric acid release burned three workers, sending two to the hospital. Exxon’s official statement said, “None of the liquid sulfuric acid released escaped off the plant site.”
This “honor system” remains in place, despite Exxon’s 2014 settlement with the EPA over chemical releases and spills at the four Baton Rouge facilities. More recently, on Oct. 31, 2017, Exxon settled another EPA suit over more than 16-thousand illegal emissions since 2005.
There’s also the “honor system” within the ITEP program, and, as previously reported here, Exxon is not loath to take advantage of it. For while the ITEP rules say “environmentally required capital upgrades shall not qualify” for the long-term property tax exemption, the improvements to ten gas flares at Exxon’s Baton Rouge facilities – as required under the 2017 EPA settlement – were included in the company’s December 2016 ITEP request.
The Industrial Tax Exemption Program has no rules analogous to “trust, but verify”; no requirements for the Department of Economic Development to check with other state and/or federal agencies regarding the status of litigation or judgments involving businesses applying for the property tax breaks. And beyond the statement that “upgrades required by any state or federal governmental agency in order to avoid fines, closures or other penalty shall not qualify”, the only repercussion for getting caught cheating this system is losing that particular tax exemption. No civil litigation, no criminal charges, no fines – not even a requirement for the company to document that all its other ITEPs are legitimate and valid. And, obviously, there’s no penalty like losing all the other property tax exemptions or being prohibited from asking for any new ones for a time.
Remember, Exxon waged a $30-million campaign to promote public skepticism about climate change, even as the company spent additional millions researching it, starting in the late 1970s. The revelations of their double-dealing led to a federal SEC probe and a shareholder rebellion that ousted ExxonMobil management in May 2017.
Now the company’s official stance is that “The risk of climate change is clear, and there is a broad scientific and policy consensus that action must be taken.”
Isn’t it time Louisiana discharges its reliance on honor systems, since there is so much proof that corporations – like Exxon – persist in acting dishonorably?
“We’re a team. And we here at DNR are open to suggestions from the oil and gas well operators as to how we can collectively work to find the best path forward. We’re open to discussion, as we are having with you.”
If the buddy-buddy enforcement culture (or lack thereof) at OC wasn’t enough to assure Indigo Minerals that they’re immune to repercussions for this looming environmental disaster, then all you really have to do is – as they say – “follow the money.”
DNR’s account shows the first incident of a pressurized water well in Section 26, where, in July 2014, drilling operator XTO “plugged and abandoned” (P&A) well #31-9595Z “due to the presence of gas”. Then, in December 2015, Indigo had to do a P&A on rig supply well #31-9660Z in Section 22, also due to the presence of gas.
One year later, in December 2016, Indigo had to dig a “relief” well in Section 22, to vent gas pressure in the Carizzo-Wilcox aquifer. This relief well was adjacent to a pair of Haynesville Shale wells (#249866 and 249867) Indigo had just begun drilling the previous month (Nov. 2016).
Yet according to reports filed by DNR’s field agent, there was a lot more to it than that.
They found gas was pressurizing the aquifer, and on 12-20-2016, DNR officially notified the Keatchie Water System to monitor its public water supply well located 500 feet from the new gas well site.
The relief well dug to vent the gas flowed as expected, at first, but a day later, the pressure dropped. Left wide open, it died the next day. Two days later it began flowing again, then sputtered out within 4 hours. Then it started flowing again, but with drilling mud, not water. Meanwhile, water and gas bubbles were appearing around the gas well drilling pad.
Going back to the “official” presentation to GOHSEP, DNR’s document says the next incident occurred in April 2017.
An Indigo crew installing a pipeline in Section 28 reported a previously plugged and abandoned water well blowing water and gas in the woods visible from the pipeline right-of-way. A mile to the west, in Section 29, Indigo was completing fracking on a pair of wells, #249878 and #249879.
Three months later – in July 2017 – a DNR inspector notes the same water well (#31-5054Z) had blown its cap, and was geysering water, gas and sand (a notable fracking component) into the air, leaving a crust on the surrounding trees. Meanwhile, Indigo was actively blowing open the shale less than a mile northeast, and four miles underground, fracking well #249867 with its explosively pressurized mix of water, chemicals and sand, according to the official records for that particular well.
In September 2017, DNR issued the first emergency declaration, which they expanded the following month as bubbling was reported at another plugged and abandoned water well in section 28.
Meanwhile, Indigo was completing its other fracked well to the northeast, #249866, less than a mile away.
Emails from that time frame show there was some real confusion at DNR headquarters in Baton Rouge. What was the serial number of the latest water well? Was it #31-5005Z, #31-5051Z, or #31-5055Z?
DNR’s Matt Simon was also emailing back and forth with Indigo’s senior drilling engineer Shara Myers, with his initial missive to her on 10-19-2017 stating, “I am the current Engineer Manager for Louisiana’s Oilfield Site Restoration. I have an emergency on my hands. – a rig supply well which is blowing out of control in the area. I believe you are aware of it. Do you have time to discuss how you went about controlling the well Indigo spudded in recently? I understand you had to drill a directional well to kill it.”
In November, the DNR emergency contractor drills four relief wells around the initial rig supply well blowout site, and a 5th relief well adjacent to the second. But a pond between the two locations is now bubbling up gas, and each time it rains, bubbles appear along a pipeline right-of-way between the two sites. And the second rig supply well is actually described as “boiling.”
Meanwhile, in the section one mile north of these problems, Comstock Oil and Gas was completing a pair of fracked Haynesville Shale wells, #250110 and #250254. It’s also important to note here that all of the horizontal drilling out from the base of the vertical portion of Haynesville Shale wells is required to run north to south, or vice-versa.
Problems continue in Section 28 in February of this year, with bubbling reported at a non-Haynesville Shale well operated by Indigo. There’s bubbling all over the surface of the well pad for #229067. The well, which pulls gas from the Hosston formation “only” 1.6 miles underground, had been operating without incident since 2004.
Less than a mile due east, in Section 27, two other wells – #215968 in the Hosston, and #158546, one mile down in the Rodessa formation – are bubbling around their respective well pads, too.
This happens as, in Section 33, due south of Section 28, and southeast of Section 27, Indigo is completing the horizontal drilling portion of four Haynesville Shale wells: #250494, #250495, #250496, and #250497. The actual fracking of these four wells will take place in June.
That’s when a crack — what Gary Snellgrove described as “a crevice six inches wide” — opened up in Section 28, and “gurgling” could be heard coming from underground. They have subsequently “placed a vent pipe in the biggest part.”
And in Section 21, due north of this, Indigo is currently drilling #251045 and #251046 into the Haynesville Shale.
Coincidental? Possibly. Yet consider how many vertical holes of varying depths have been drilled deep into the earth of DeSoto Parish to tap its underlying water, oil and gas fields. Take Section 28, for example: in this one square mile, there are 10 water wells, and 12 gas wells, ranging from 5500 to more than 16-thousand feet deep. Add the pressures of fracking fluids cracking open the layers of shale, and the chances of fissures forming – essentially man-made faults – are not outside the realm of possibility.
And, in fact, as part of DNR’s presentation to the area drilling operators last spring, the state agency specifically asked them: “Do you have any subsurface geologic maps? Additionally, do you know of any faults or shear zones in this area?”
That raises another question. Why hasn’t DNR put even a temporary moratorium on drilling and fracking new Haynesville Shale wells in all the sections directly adjacent to those where there’s bubbling and blowouts of water wells?
The likely answer to that is the topic of our next report. 
The weakest element of Bridgewater’s game is his deep ball; he doesn’t have the pure arm strength to effortlessly uncork a long pass, probably a major reason he fell all the way to 32nd in the 2014 draft. (Despite the degree to which quarterback is a technical and mental position, scouts continue to be enamored with players with overwhelming size and arm strength, even when they can’t read defenses or deliver passes accurately. We saw it that year with Blake Bortles going 3rd overall; we saw it again this year with Josh Allen going 7th overall. We saw it in 2011 when folks seriously talked up Blaine Gabbert as a better QB prospect than Cam Newton, and we saw it when both Gabbert and Jake Locker were picked in the top 10.)
That said, this is an area where Bridgewater can improve with time, has likely improved and he can still hit all the other routes on the tree very well. (Look at that first GIF– even if Bridgewater can’t deliver a perfect bomb 50-60 yards downfield, throwing a perfect corner route 30 yards away is nothing to sneeze at.) What’s more important in the Saints offense, with all the talent on hand, is that Bridgewater be able to deliver accurately. Between the talent of the skill players and Sean Payton’s designs at getting them open, Bridgewater’s job should be relatively easy, and he’s got the accuracy and the acumen for it.
Bridgewater’s career path even mirrors Brees’ to some extent. (I’ve got to give Arif Hasan, now of The Athletic, credit for 
BONUS COLUMN! I was planning to use this week to write a 53-man roster projection, but the Teddy Bridgewater trade required its own column. Don’t worry; that other one is coming soon on Friday as well. (And then on Saturday, we can find out just how accurate my predictions were.)