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Conservation & Energy corrections bill draws testimony warning it could allow lower mineral royalties
Summary
During consideration of SB 379, a technical Department of Conservation and Energy follow-up bill, the Alliance for Affordable Energy warned language in an earlier draft could permit the State Mineral and Energy Board to set minimum royalties below current levels; sponsors adopted technical amendments and the bill was reported favorable.
The House Natural Resources Committee adopted technical amendment sets and reported Senate Bill 379 favorable on May 11, but the bill’s consideration featured pointed public testimony about potential fiscal effects.
Chairman Henskins described SB 379 as a cleanup to last year’s department reorganization, replacing obsolete statutory references and clarifying the secretary’s authorities. The committee adopted two amendment packages that, among other things, adjusted investment language and added requirements for posting department determinations and clarifying intervention rights in judicial review of administrative actions.
Peter Kelly, representing the Alliance for Affordable Energy, told the committee he was "seriously concerned about SB 379's fiscal impact." Kelly cited draft language on page 14 (lines 11–15 in the pre-amendment version) that would, in his view, allow the State Mineral and Energy Board to charge royalties "less than 1/8 but greater than 1/16," a change he said could effectively halve the statutory minimum royalty and materially reduce state revenue. "This effectively cuts minimum oil and gas royalties in half... There are no guardrails in the bill to ensure that this doesn't happen," Kelly said, urging the committee to remove the lines or require a fiscal note.
Secretary Dustin Davidson and department counsel acknowledged the bill's technical purpose and the committee's need for clarity; Davidson urged members to read the full document and noted that certain activities mentioned in separate plans have enjoyed broad legislative support. The sponsor and staff adopted technical amendments and the committee moved SB 379 forward.
What happened next: The committee reported SB 379 favorable with the adopted amendments. Members asked staff and agencies to provide clearer documentation, and sponsors indicated they would consider fiscal follow-up — including the possibility of a fiscal note or additional language — when the bill moves to later consideration.
Why it matters: Mineral royalties are a substantial revenue source for Louisiana. Witnesses said state royalties have generated hundreds of millions annually and that any change in minimum rates — even if intended to incentivize new production — should include safeguards and a fiscal analysis before adoption.
Quote: "This effectively cuts minimum oil and gas royalties in half," said Peter Kelly of the Alliance for Affordable Energy. "SB 379 needs guardrails and a fiscal note so the legislature can understand the potential impact on state revenues." Secretary Dustin Davidson urged review of the entire bill and clarified that the administration does not use the 2022 Climate Action Plan as binding guidance on policy decisions.
