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Light Sweet Deal For Big Oil In LA

In addition to jumping in front of the cannon-ball sized lawsuit filed by the Levee Board of SELA, Bobby Jindal’s kindness toward our big oil masters extends to forgetting to collect royalties or penalties from land-based extraction. 

According to a Legislative Audit, Louisiana’s Office of Mineral Resources waived nearly $6 million in penalties against mineral extraction companies and failed to collect a further $1.4 million in royalty payments between 2008 and 2012. That’s millions in taxpayer dollars. Another giveaway:

Companies are required to hand over royalty payments when they extract minerals, such as oil and gas, from state-owned lands and water bottoms. The Monday audit looked at whether OMR, the state agency charged with collecting these payments, ensured they were received completely, accurately and in a timely manner between 2008 and 2012.

The audit showed in the last five years, companies were assessed $12.8 million for making mineral royalty payments late, incomplete or not at all. The OMR’s Board, however, has the authority to waive these payments, and chose to do so in 45 percent of the cases.

OMR also failed to record why penalties were waived, but said the current policy aims to avoid unnecessary and costly litigation. While the board added waiving such penalties also “encourages companies to self-report underpaid royalties,” it agreed to begin collecting all such fees at the auditor’s urging.

The state agency also failed to collect $1.7 million in royalty payments from companies that illegally deducted severance taxes from their royalty payments. According to state law, companies can deduct severance taxes paid to the state, but only if they then increase their royalty payments in line with their tax refund.

Between 2008 and 2012, ten companies underpaid their royalty payments to the tune of $1.4 million. Companies also deducted at least $323,450 more in severance taxes than allowed.

Oh well, good thing those hospital privatizations are going well! Only missing $40m this FY? Oops.

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