Gov. Jeff Landry turned heads this week when he accused the oil-and-gas industry of “hypocrisy” in a dispute over a bill making its way through the state Legislature. That bill drawing the oil industry’s ire is now headed for a key vote this weekend.
The comments from the Republican governor came in defense of a sprawling bill that includes changes to how the state and its courts deal with a class of oil field cleanup litigation known as “legacy” lawsuits.
The bill, SB 244 by Sen. Bob Hensgens, R-Abbeville, was originally intended to make changes to the state Department of Energy and Natural Resources with the aim of making the oil and gas regulator more efficient.
But as it advanced, it picked up amendments attempting to revive stalled bills on carbon capture and legacy suits. The legacy amendment has added heat to what might otherwise have been a relatively staid measure in governmental tinkering.
Critics on various sides of the legacy issue charge the amendment language has inserted unconstitutional provisions that would work to the detriment of either landowners looking to clean up old messes or oil companies seeking to avoid the cost of the cleanup from long-gone drillers.
Those changes came in a 53-item amendment adopted Tuesday that led various legislators to characterize it as under-cooked or inept. State Rep. Joe Orgeron, R-Golden Meadow, compared it to an unqualified mechanic.
“He just takes all his tools, and he throws (them) at your engine and says, … ‘I’m gonna fix it. There you go,'” said Orgeron.
The bill is headed to a final House vote Sunday and legislators like Orgeron are expected to add more amendments to the more than 200-page legislation.
Sen. Eddie Lambert, who’s been in the Legislature for 22 years and played a role in writing that legacy language opposed by oil and gas interests, said there’s “no telling” where things will end up Sunday night, though he expected the bill would get out of the House.
“Now what language it has on it, will it be acceptable to the governor, does it wind up in conference, that’s all to be determined,” said Lambert, a Republican from Gonzales.
He added that moving the bill to conference, where a select group of the House and Senate hash out final language, could mean more late amendments with little time to review them.
“You’ll have a lot of people very nervous, and that could cause problems with passing it,” Lambert said.
The ‘crux’ of the issue
What has stirred opposition from oil and gas interests is a proposal that could leave companies on the hook to pay for cleanups after they sell an oil and gas field to another driller. Current indemnification rules are meant to ensure that the new drilling companies agree to assume the cost of any cleanup from past drilling.
Though industry advocates say these rules that are regularly built into lease contracts are critical to enticing the state’s lagging oil rig activity on land, Sen. Lambert views it as passing the buck. As Gov. Landry said Tuesday, it sits at the core of the legacy suit issue.
Mike Moncla, president of the Louisiana Oil and Gas Association, said he’s known Gov. Landry for 20 years and knows he wants “to pass legacy reform.” Moncla said he spoke with the governor after the legislative hearing on Tuesday morning where governor made the “hypocritical” comment.
“From conversations with him Tuesday afternoon, I think he recognizes the unconstitutionality of the anti-indemnity language. We are working together on language to move industry forward,” Moncla said.
The Governor’s Office didn’t immediately respond to an email for comment Friday.
‘A foundation’ for the future
Some aspects of the bill haven’t been controversial, including changing the department’s name to the “Louisiana Department of Conservation and Energy.”
SB 244 would also create a special commission made up of the state’s various agencies to consider how new laws and economic development projects affect the state’s natural resources. The commission would serve as an information hub and provide a unified front to counter unwanted congressional changes and pursue federal grant dollars, agency officials have said.
DENR Secretary Tyler Gray told legislators earlier this month this new panel, the Natural Resources Commission, would formalize lines of communication among the agencies.
The bill would also strengthen the state’s role in overseeing groundwater. Gray explained that, as the state considers steel, data center and other economic projects, it will need to plan for critical resources like water.
That involves greater data gathering on water use, though not by greater regulation of its use, Gray said.
“We’re looking to build a foundation to make sure that we can inventory and be prepared for the future. Water and power are the two most important components of economic development. Louisiana visibly has a lot of (water), so we want to make sure we’re in a place where we can negotiate, not necessarily regulate, but negotiate with other states,” Gray told legislators.
The bill would also more fully consolidate power in the hands of the secretary by eliminating the state Office of Conservation, a semi-independent agency that dates to the early 1900s.
The office, which has oversight that includes oil and gas, oil field cleanup, and groundwater pumping and injection, has its own commissioner who reports directly to the governor.
Natural resources officials have told legislators the reason that SB 244 is more than 200 pages is that legal provisions that give authority to the commissioner of conservation are being shifted to the department secretary.
Keith Hall, an LSU professor who specializes in energy law, said the office was put inside the department when state government was reorganized in the mid-1970s. But Hall said he suspected that even with the consolidation, day-to-day operations wouldn’t change much because so much is handled by staff.
Groundwater raises concerns
These bureaucratic changes, however, haven’t been without some lower-level controversies, in particular, for areas of the state, like Baton Rouge, where groundwater use is already a closely followed issue.
An earlier version of the bill had proposed bringing the Capital Area Groundwater Commission in Baton Rouge and another groundwater district in north Louisiana that oversees the Sparta aquifer fully under the department and making them advisory panels only.
Later changes brought them back out from under the department, but the bill kept some of the Baton Rouge commission’s regulatory language that included requiring meters on groundwater wells and also left out longstanding exemptions for agricultural wells.
Gray and Hensgens had to assure rural legislators that meters aren’t being required and that the exemption omission was an error, with Hensgens reminding a House panel that he’s from a family of sixth-generation rice farmers who rely on groundwater.
“So, there’s no increased restrictions as it relates to water in this bill,” Gray added.
At the same time, environmental advocates who have pressed the Baton Rouge groundwater panel to take a stronger hand in regulating the capital region’s aquifer to stem saltwater intrusion say the bill still grants the state exclusive authority over groundwater.
Kathy Wascom, a board member for the Louisiana Environmental Action Network, said the current bill puts the commission, which has been an independent regulator for 50 years, in an unsettled position.
“It still leaves a real gray area,” she said.
In an interview, Gray said that the portion of the bill remains an area in need of work.