My first guest from the new home is Dan Collins, the whistleblower who won his lawsuit in 2015 against the Department of Natural Resources and now faces a date for oral arguments on the department’s appeal of his win.
The podcast of Dan’s program while we did the show at KPEL was the most-listened to podcast of the year with nearly 1,000 downloads and streams. So, with the appeal looming, I figured let’s get things rolling with an hour of discussing the things that have made our state the fiscal and environmental mess that it is today.
Dan and I only met two years ago as we each chased our corruption stories that involved DNR. Dan’s whistleblower law suit involves the hijacking of a water quality project for the Atchafalaya Basin Program into an oil and gas drilling access canal. He identified manipulation of the state mineral leasing process, as well as unusual activity involving rights of way and property agreements connected to the project.
State mineral leases are run through DNR’s Office of Mineral Resources. They also collect and audit royalty payments that come to the state through oil and gas leases involving state-owned lands and water bottoms.
The corruption story that I was (and still am) chasing led me to OMR, as well. In 2013, the Louisiana Legislative Auditor found that the state of Louisiana had gone three years without auditing oil and gas severance tax payments in the state. The power to perform those audits had been taken away from the state’s chief tax collector (the Department of Revenue) and given to OMR. DoR was supposed to alert OMR about severance tax payers who might be audit candidates, but within three months of the audit authority being taken away from DoR, the Jindal administration also managed to kill the department’s software program that it had used to identify non-payers. For three years, the state flew blind on severance tax payments.
Evidence suggests that the industry was tipped off that this change was coming and they made off like bandits accordingly once the two step (authority transfer, then blinding of DoR) was completed.
As Dan explains in our conversation, his status as a contract employee of the state gave him standing to blow the whistle on what he believed (and a jury agreed) was illegal activity in connection with the project on which he had once worked.
It’s been ten years since he discovered the wrongdoing. Seven years since he filed suit. Just over one year since a jury of his peers in East Baton Rouge Parish unanimously agreed with him. If the state loses its appeal, the case will likely go to the Louisiana Supreme Court. If Dan loses, he says he’ll appeal as well.
This case and the severance tax give away should matter to every Louisiana citizen. Severance taxes and royalty payments represent our modest claim on the mineral wealth of this state. Taken together, severance taxes and royalty payments make up about 15% of the state’s general fund revenue. When they don’t collect what is owed us on that revenue, our leaders are giving away our wealth, often times in ways that directly benefit them at our expense.
It’s estimated that hundreds of millions of dollars in severance tax revenue was lost between 2010 and 2013 when the audits were not done. One attorney whose looked at the numbers (500,000 severance tax transactions each year when the audits were not done) says the revenue losses could be more than $1 Billion.
The industry and the Jindal administration beat back an attempt by the Legislature force an audit of oil and gas production in 2014. They might well have known how much money was lost, but they did not want legislators and the public to know how much had been given away.
We still continue to fight revenue shortfalls in this state today. I think those can be traced in some significant measure to the failure to audit severance taxes during those key years.
The connecting tissue between Dan’s case and my ongoing work is that in each instance the public’s interest and the well-being of the state was put somewhere down the hierarchy of priorities by our elected leaders. Healthcare could be cut, but oil and gas companies could not be made to pay the taxes they owed. Tuition at colleges and universities could rise at the fastest rate in the country but oil and gas companies could not be inconvenienced by making them give us a true accounting of what they had done with our mineral wealth.
Dan Collins stood up for us at considerable sacrifice to himself and his career. Listen to his story in the podcast. We owe him a debt of gratitude.
Thanks to Matt Roberts, AOC’s Community Programming Director for help locating the music used in this segment.
A Foolish Game by Hans Atom (c) copyright 2017 Licensed under a Creative Commons Attribution Noncommercial (3.0) license. http://dig.ccmixter.org/files/hansatom/55394 Ft: Snowflake