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Regular Session, 2010
SENATE BILL NO. 624
BY SENATOR MARIONNEAUX
ECONOMIC DEVELOPMENT. Authorizes the secretary of the Department of Economic
Development to grant a Louisiana Mega Project Energy Assistance Rebate of severance
taxes that were paid on natural gas consumed or used directly in the operation of the mega-
project facility or consumed indirectly in the manufacture or creation of energy sold to the
mega-project facility for its operation. (7/1/10)
AN ACT1
To enact R.S. 51:2366, relative to economic development; to provide for the Louisiana2
Mega Project Energy Assistance Rebate; to provide for the businesses eligible for3
such rebate; to provide for the amount of such rebate; to provide certain authority to4
the secretary of the Department of Economic Development and the Department of5
Revenue; and to provide for a penalty for failure to file certain reports; and to6
provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 51:2366 is hereby enacted to read as follows: 9
ยง2366. Louisiana Mega Project Energy Assistance Rebate10
A. In addition to the funding for an economic development mega-project11
provided for in R.S. 51:2365 or as a separate incentive, the secretary of the12
Department of Economic Development with the concurrence of the governor13
may enter into a cooperative endeavor agreement to grant assistance to a mega14
project as defined in R.S. 51:2365(F) the Louisiana Mega Project Energy15
Assistance Rebate as provided for in this Section, subject to approval of the16
cooperative endeavor agreement by the Joint Legislative Committee on the17 SB NO. 624
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Budget.1
B. The assistance may be granted if the secretary determines that the2
consumption of energy will be a major cost component of the operation of a3
mega fund project and assistance in moderating the cost of such energy will be4
a major factor in inducing a mega fund project to locate, expand, or remain in5
the state. Also, the assistance may be granted only if the secretary of the6
Department of Economic Development certifies to the governor and the Joint7
Legislative Committee on the Budget that the grant of the energy assistance8
rebate shall not harm any business located in the state which may be a9
competitor of the business to be undertaken by the mega fund project.10
C. The Louisiana Mega Project Energy Assistance Rebate to the mega11
project shall be granted in the form of a rebate of Louisiana severance taxes12
that were paid on any natural gas consumed or used directly in the operation13
of the mega-project facility or consumed indirectly in the manufacture or14
creation of energy sold to the mega-project facility for its operation, determined15
as follows:16
(1) Prior to implementation of the energy assistance rebate, the17
Department of Revenue, at the request of the secretary of the Department of18
Economic Development, shall consult with the operators of the mega-project19
facility and the following businesses:20
(a) The suppliers of natural gas for operation of the mega-project21
facility.22
(b) The utilities or other suppliers of energy which themselves use or23
consume natural gas for the production of energy which they are expected to24
sell to the mega-project facility for its operation.25
(c) Any business or series of businesses back to the ultimate severance26
tax payer, which are expected to sell natural gas to the businesses described in27
Subparagraphs (a) and (b) of this Paragraph.28
(2)(a) Based upon such consultation, the Department of Revenue shall29 SB NO. 624
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require periodic reports from any such supplier or utility provided for in1
Paragraph (1) of this Subsection which will enable the department to make the2
best estimate of the amount of natural gas which is consumed or used directly3
in the operation of the mega-project facility or consumed indirectly in the4
manufacture or creation of energy sold to the mega-project facility for its5
operation which bears a Louisiana severance tax and the amount of the6
severance tax paid.7
(b) If the department finds that a supplier or utility not involved in such8
consultation is in the chain of supply of natural gas to the mega-project facility9
or the utilities or other suppliers as provided in Paragraph (1) of this10
Subsection, that supplier or utility may also be required to file the reports11
provided for in this Paragraph.12
(3) Based upon the reports, the secretary of the Department of Economic13
Development may award the Louisiana Mega Project Energy Assistance Rebate14
in the amounts of Louisiana severance tax that were paid on natural gas for15
energy consumed or used in the mega-project facility operations as determined16
by the Department of Revenue at such times as provided for in the cooperative17
endeavor agreement.18
D.(1) The secretary of the Department of Economic Development shall19
promulgate such rules and regulations for the implementation of this Section20
in the manner provided for in the Administrative Procedure Act.21
(2)(a) The Department of Revenue shall promulgate such rules and22
regulations for the implementation of the consultation and the reports required23
by the department in order to make the determination of the amount of rebate24
which may be granted, all in the manner provided for in the Administrative25
Procedure Act. Where specific identification of the amount of severance tax26
paid on natural gas consumed directly or indirectly in the operation of the mega27
project is determined by the department not to be reasonably possible, the rules28
and regulations may provide for the determination by estimate of the amount29 SB NO. 624
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to be rebated.1
(b) In addition, in preparing such report, the department shall have any2
authority provided to it for examination and investigation pursuant to Part II3
of Chapter 18 of Subtitle II of Title 47 of the Louisiana Revised Statutes of 1950,4
(R.S. 47:1541 et seq.).5
(c) Failure to file the periodic reports by any supplier or utility required6
to do so by the department as provided for in Paragraph (C)(1) of this Section7
shall make the supplier or utility subject to the same penalty provided for8
failure to file the severance tax report provided for in R.S. 47:642(A).9
Section 2. This Act shall become effective on July 1, 2010; if vetoed by the governor10
and subsequently approved by the legislature, this Act shall become effective on July1, 2010,11
or on the day following such approval by the legislature, whichever is later.12
The original instrument was prepared by Riley Boudreaux. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Dawn Romero Watson.
DIGEST
Marionneaux (SB 624)
Present law allows for funding of all or a portion of economic development mega-projects
upon recommendation by the secretary of the Department of Economic Development [DED]
and concurrence by the governor. "Mega-project" is defined as a project which will provide
the following:
1. Either 500 new direct jobs to the state or a minimum initial investment of $500
million by the private sector or the U.S. government through the creation of a new
facility or the expansion of an existing facility.
2. A substantial return on the investment by the state as measured by projected tax
revenues.
3. A project for a military or federal installation which is important to the Louisiana
economy and that may be subject to base realignment and closure, or for the
purchase of land for a mega project.
4. A project resulting in re-creating or saving at least 500 direct jobs in the state,
through the transfer of ownership of a facility that has been closed or a facility that
is at risk of closure due to conditions arising out of or relating to a proceeding under
Title 11 of the United States Code.
Proposed law authorizes the secretary of DED, with the concurrence of the governor, to enter
into a cooperative endeavor agreement to grant assistance to a mega project as defined above
the Louisiana Mega Project Energy Assistance Rebate, subject to approval of the cooperative
endeavor agreement by the Joint Legislative Committee on the Budget. The assistance may
be granted only if the secretary determines that the consumption of energy will be a major SB NO. 624
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cost component of the operation of a mega-fund project and assistance in moderating the
cost of such energy will be a major factor in inducing a mega-fund project to locate, expand,
or remain in the state. Also, the assistance may only be granted if the secretary of DED
certifies to the governor and the Joint Legislative Committee on the Budget that the grant
of the energy assistance rebate will not harm any business located in the state which may be
a competitor of the business to be undertaken by the mega-fund project.
The rebate is in the form of a rebate of Louisiana severance taxes that were paid on any
natural gas consumed or used directly in the operation of the mega-project facility or
consumed indirectly in the manufacture or creation of energy sold to the mega-project
facility for its operation, determined as follows:
1. Prior to implementation of the energy assistance rebate, the Department of Revenue
(DOR), at the request of the secretary of DED, must consult with the operators of the
mega-project facility and the following businesses:
(a) The suppliers of natural gas for operation of the mega-project facility.
(b) The utilities or other suppliers of energy which themselves use or consume
natural gas for the production of energy which they are expected to sell to the
mega-project facility for its operation.
(c) Any business or series of businesses back to the ultimate severance tax payer,
which are expected to sell natural gas to the businesses described above.
Based upon such consultation, the DOR must require periodic reports from any such supplier
or utility which will enable it to make the best estimate of the amount of natural gas which
is consumed or used directly in the operation of the mega-project facility or consumed
indirectly in the manufacture or creation of energy sold to the mega-project facility for its
operation which bears a Louisiana severance tax and the amount of the severance tax paid.
Based upon the reports, the secretary of DED may award the rebate in the amounts of
severance tax that were paid on natural gas for energy consumed or used in the mega-project
facility operations as determined by DOR at such times as provided for in the cooperative
endeavor agreement.
Proposed law directs the secretary of DED to promulgate rules and regulations for the
implementation of the proposed law in the manner provided for in the Administrative
Procedure Act (APA).
The Department of Revenue is directed to promulgate rules and regulations for the
implementation of the consultation and the reports required by the department in order to
make the determination of the amount of rebate all in the manner provided for in the APA.
In addition, in preparing such report, the department is authorized to use the same authority
provided to it for tax examinations and investigations. Provides that where the specific
identification of the amount of severance tax paid on natural gas consumed directly or
indirectly in the operation of the mega project is determined by the department not to be
reasonably possible, the rules and regulations may provide for the determination by estimate
of the amount to be rebated.
Failure to file the periodic reports by any supplier or utility required to do so by the
department makes the supplier or utility subject to the same penalty provided for failure to
file the severance tax report provided for in R.S. 47:642(A) that is a specific penalty of $250
dollars for each reporting period.
Effective July 1, 2010.
(Adds R.S. 51:2366) SB NO. 624
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Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Finance to the original
bill.
1. Directs the secretary of the Department of Economic Development to
promulgate rules for implementation.
2. Directs the secretary of the Department of Revenue to promulgate rules for
implementation relative to the amount of the rebate to be granted.
Senate Floor Amendments to engrossed bill.
1. Add authorization for department's rule to allow for the amount of rebate to
be estimated.