Fight over Louisiana groundwater extends to Legislature, courts

[ad_1]

Baton Rouge Water Co. is in an all-out, multi-layered fight with a state groundwater panel that agency officials now say is freezing hundreds of thousand of dollars in fee revenues and risks breaking the panel charged with protecting Baton Rouge’s drinking water.

The political and legal battle represents a marked shift for both Baton Rouge Water and the Capital Area Ground Water Conservation Commission, which water company officials helped shepherd into creation in the mid-1970s and have periodically led for decades. 

At the heart of the dispute is a commission initiative to establish a $1.5 million-per-year metering program to collect hourly pumping data from big water users of the Southern Hills aquifer in a bid to combat chronic salt water intrusion.

The water company and other users are saying the commission is going too far; the commission counters it’s responding to a threat to the drinking water supply.

In the courts, Baton Rouge Water has attacked the groundwater panel’s basic authority to regulate companies that pump from the aquifer.  The company has also challenged the commission’s ability to charge the fees that fund its operations.

In the Legislature, Senate Bill 432, which has gotten vocal support from Baton Rouge Water and ExxonMobil, would block the commission meters from being installed if users can provide their own meters with required accuracy levels, as Baton Rouge Water and ExxonMobil say they have.

Commission officials say they want the pumping data for two reasons — to improve the accuracy of the previously self-reported information, which has been used to charge big users pumping fees, and to build a computer model through the Water Institute and LSU.

The model will be used for long-term planning to find a way to balance future pumping demands against the gradual but continued reach of saltwater intrusion.

The groundwater is the primary drinking water source for the capital region and a key source of water for some industries, but it is threatened by long-term saltwater intrusion exacerbated by continued pumping, LSU and U.S. Geological Survey experts have noted for years.

Some of those long-term solutions could involve costly or difficult steps for ratepayers, taxpayers and groundwater users, from moving companies off the aquifer and shutting or moving wells north to financing new river purification systems or other alternative water sources.

Patrick Kerr, president and CEO of Baton Rouge Water, said his company’s efforts in the courts and Legislature are intended not to undo the commission but to find a regulatory balance while protecting the aquifer.

“Our hope and our desire is … both to balance the needs of today’s residents and future residents of the Capital area, economic needs, social needs, health needs against the needs of preserving the aquifer, and I think we will find balance,” Kerr said. “I really think we’re going to come out this with a really positive, good regulatory environment.”

Kerr argues, though, that it may be time for the state to take a bigger hand in regulating groundwater in Baton Rouge and elsewhere in Louisiana as new Department of Energy and Natural Resources Secretary Tyler Gray and legislators press for a revamp of that agency.

“Because water knows no boundaries, water issues are not local issues,” Kerr said. “Water issues are State issues. We absolutely support the Ground Water District working with the State to solve groundwater issues for the entire State of Louisiana.”

The Legislature is currently considering House Bill 810 to refashion the department, potentially bringing the standalone groundwater commission more closely under the department and opening up access to the department’s expertise.

While the department is also broadly looking at how state resources are regulated, a department spokesman said the bill wouldn’t change the panel’s authority.

Whose meters to use?

During hours of hearings on SB 432, the bill aimed at the meters, legislators heard competing arguments from Baton Rouge Water, ExxonMobil, the chemical industry, the commission and residents over the wisdom of self-reporting and the need for a more certain regulatory regime versus giving a state regulator direct access to private company property and data.

Baton Rouge Water officials have argued the commission meters are too expensive and rely on a dubious financing deal and, with ExxonMobil officials, say they are inaccurate and redundant since the companies have their own meters.

And the water company, which has about 100 wells in the aquifer and is its largest user, contends the commission program amounts to a property taking and a potential security risk due to the third-party contractors who will need to keep regular tabs on the devices.

Baton Rouge Water and ExxonMobil officials say they want to support the planning effort but want to keep self-reporting with their own meters.

Commission officials countered that the new meters, about 150 of which have already been installed, will improve the accuracy of pumping data and have already shown the old self-reporting system significantly undercounted pumping rates.

During hearings, commission officials provided legislators with self-reported data that show the exact same monthly pumping totals in the exact same months for some wells over a one- to two-decade-long period.

Gary Beard, executive director of the commission, noted the panel’s expert hired for legal disputes with Baton Rouge Water says this is virtually impossible and shows users were probably estimating.

A House amendment that Beard supported to allow companies to use their own meters but give the commission a direct feed to their data failed.

Sen. Rick Edmonds, R-Baton Rouge, the sponsor of the bill, said his legislation was already amended to tighten meter accuracy and would give the commission authority to audit users. He said the bill represents a good compromise among the competing interests.

The bill has moved easily through the Senate and a House committee and is waiting on a final vote.

Beard said the bill, as written, would undermine the metering program and set up conflicts with state law that would end up being litigated.

“It’s pretty shameful that people have no more respect for the people’s water than this, and I’m disappointed the people’s elected representatives for this area are allowing it to happen,” he said.

A fee or a tax?

In state district court, Baton Rouge Water’s arguments challenging the commission’s authority to require the meters and its ability to charge pumping fees haven’t gotten much traction so far.

But the fees are up for debate before Louisiana Board of Tax Appeals, where Baton Rouge Water has alleged the fees are an unconstitutional severance tax.

In April, Local Tax Judge Cade Cole ruled that if the fees are found to be taxes, they would be illegal severance taxes. Whether the charges are taxes, however, remains unresolved.

A trial is set for mid-June.

In a sworn affidavit, Baton Rouge Water’s Kerr testified that he had believed for some time the “pumpage charge is actually a severance tax” but the company never challenged the charges until the commission more than tripled its fees in 2022. The increase supported the metering and monitoring program.

Since November 2022, the company had been paying fees to the commission under protest, about $1.73 million worth. But it began holding the latest pumping fees — more than $400,000 — unspent in escrow earlier this year after the commission wouldn’t hold the earlier payments in reserve.

The money is being held under the rationale that if Baton Rouge Water prevails, it must have a way of getting its money back, according to court papers.

Accusing the company of trying to break the district, Beard, the commission director, said the loss has the commission operating at 47% of revenue so far.

“We’ve had to stop all programs, all monitoring and metering programs all have stopped,” he said.

In a hearing last month, a commission attorney told Cole, the state tax judge, that the panel “will be broke” by the end of July if the trend continues.

“Essentially, they are attempting to starve us out of this litigation,” the attorney, Murphy Foster, argued in the April 12 hearing, according to a transcript.

Another quarterly payment, probably closer to $500,000, is due in the coming days, Beard said.

In an interview, Kerr raised the prospect that a portion of the pumping charges could ultimately be ruled fees and allowed while the rest could be ruled a tax and disallowed.

But he also suggested the localized Baton Rouge fees could be replaced with a state severance tax for all groundwater users that the state could use for studies, alternative water supplies and a new regulatory regime.

“The severance tax could be very small, but would be incredibly powerful,” Kerr said.

[ad_2]

Source link