Louisiana has a new statute on
the legislative books, apparently aimed at making the state
more user-friendly for 3-D seismic data acquisition.
Yet the new law brings to mind an old cliché:
With friends like this, who needs enemies?
Act 8 of the Second Extraordinary Session
of 2000 - which went into effect in August 2000 - created
a comprehensive fee structure for obtaining exclusive and
non-exclusive seismic permits over state lands and water
bottoms, including wildlife management areas and refuges.
In some instances, however, the base fees are a staggering
750 percent more than previously, according to Don Briggs,
president of the Louisiana Independent Oil & Gas Association
The oil and gas folks are understandably
smarting, given that the legislation was prompted by LIOGA's
still-pending February 2000 lawsuit against the self-funding
Louisiana Department of Wildlife and Fisheries (DWLF). That
suit contests the validity of what LIOGA considers an excessive
$60 per acre "access fee" levied by DWLF to conduct seismic
exploration in wildlife management areas and refuges.
In Louisiana, exclusive right-of-use seismic
permits for large tracts on wildlife refuges are competitively
bid. In other refuge and wildlife management areas, non-exclusive
permits are issued in order of request by seismic companies.
These are the permits that carry the $60 price tag.
Briggs said the fee, which escalated from
$20 to $60 in 1996, made Louisiana non-competitive with
other states and had essentially brought seismic activity
to a screeching halt in the Bayou State. He noted that Texas
charges an average of $5 per acre on state lands.
LIOGA's legal suit contains a three-pronged
challenge to the fee levied by the state agency:
The DWLF lacks the authority to charge any fee at
all in certain areas covered by wildlife management
areas and refuges.
The fee was not enacted by the legislature prior to
its initiation, as required by the Louisiana Constitution.
The DWLF didn't follow the proper rule-making procedure.
However, James Jenkins, DWLF secretary, claimed
to be on solid legal ground, citing an opinion issued by
the Attorney General Richard Ieyoub's office stating that
the agency has regulatory jurisdiction over all seismic
activity in the state, both private and public property,
including land and water bottoms.
In addition to assessed fees associated with
its regulatory authority, DWLF has charged an access fee,
or right-of-use fee, for these areas since the 1930s.
Ieyoub's office noted also that the Mineral
Board has exclusive authority to grant permits to conduct
geophysical and geological surveys on state-owned lands
and water bottoms. It issues permits for seismic activities
that occur in state waters or on state water bottoms in
wildlife management areas and wildlife refuges - but not
on the land portion.
Because LIOGA's lawsuit claims the DWLF fee
violates the state constitution, Ieyoub is included as a
defendant as well.
And the Winner Is ...
LIOGA came out the winner in round one of
the legal skirmish when it persuaded the trial court to
grant a preliminary injunction against the state agency,
prohibiting it from charging access fees to oil and gas
companies on wildlife and fisheries lands.
After hearing arguments by both of the opponents
in the trial court, Judge Michael Caldwell ruled that LIOGA
made a prima facie case that the $60 per acre access fee
is illegal and signed the judgement in June, subject to
the posting of bond by the association.
The court deferred ruling on LIOGA's challenge
to the authority of DWLF to set the fee on state-owned lands
and water bottoms until a trial on the merits. Instead,
Caldwell's decision was based on the other counts of the
He determined that the fee had to be enacted
by a vote of two-thirds of the legislature, according to
the Louisiana Constitution. In addition, even if the relevant
constitutional provision did not apply, the DWLF had to
comply with the Louisiana Administrative Procedure Act's
Within the framework of the newly enacted
Act 8, the state Mineral Board has the exclusive authority
to grant permits to conduct geophysical and geological surveys
on all state-owned lands, including wildlife management
areas and refuges.
The fee set by the Mineral Board for non-exclusive
permits will be based on the market value but cannot exceed
$30 per acre or fall below $5 per acre. A fee for exclusive
permits will be determined by public bid.
The DWLF can continue to charge its regulatory
fee of $135 per seismic agent but can no longer charge an
added fee for any designated oyster seed ground or reservation
that belongs to the state.
... Not So Fast
To the dismay of the oil and gas community,
the Mineral Board opted to launch Act 8 by raising the base
seismic permit fee on state lands from $2 to $15 and setting
a $30 base fee on DWLF land, according to Briggs.
"Passing Act 8 didn't help the industry at
all," Briggs said, "because it still makes the whole cost
of shooting 3-D seismic non-competitive in the state. We
There is a ray of hope, however.
"The way Act 8 works is the Mineral Board
can review the fee charged for non-exclusive permits at
least every six months," Briggs said, "and they'll find
out $15 is too high because we're not going to get any seismic
"If they keep the fee that way, I'm not sure
just how we'll do it, but we'll work to make some changes."
Some industry observers continue to blame
the continuing low level of seismic activity in Louisiana
on the backlog of existing non-exclusive seismic data that
came available just as the last downturn in the industry
occurred, but Briggs doesn't buy this.
"There are several seismic projects out there
that would be shot now if it weren't for the fees," he claimed.
Meanwhile, Briggs noted LIOGA is still in
court on the issue of authority cited in its case against
DWLF. If the motion for summary judgement filed by the association
prior to the passage of Act 8 proves unsuccessful, a trial
on the merits is set for January 2001.