Marathon Petroleum, accused of fraudulently seeking tax exemption, asks commerce board to defer vote on its request

Critics say company is trying to avoid local government oversight

Marathon Petroleum in St. John the Baptist Parish, shown here in a May 2018 photo, requested tax exemptions from the Louisiana Board of Commerce and Industry Friday. The board deferred a vote on the request. (Photo by Peter G. Forest)

A state board deferred consideration of $43 million in tax breaks for Marathon Petroleum Friday after claims that the company falsified public records to avoid going to St. John the Baptist Parish officials for approval.

Marathon went before the Board of Commerce and Industry Friday for a tax break for an expansion project at its Garyville refinery. In 2016, via executive order, Governor John Bel Edwards gave parish governing bodies authority to approve or disapprove property tax exemptions that affect their bottom line under the Industrial Tax Exemption Program.

Marathon is attempting to get the exemption grandfathered in under the old rules — which only required the commerce board’s approval — because of an advance notice submitted back in 2014. “Marathon Petroleum Corporation (MPC) filed advanced notifications for the projects as required under the program guidelines,” Jamal Kheiry, a Marathon spokesperson, wrote in an email. “We are submitting the applications in full compliance with the rules of the program.”

But Together Louisiana, a statewide network of congregations and civic organizations that has pushed for stricter requirements for the tax exemption program, said that the advance notice submitted by Marathon was for a completely different project. In 2014, Marathon submitted advance notice to the state for a project for a natural gas hydrotreater, with an expected work start date of Jan. 1, 2015. But the project is now being described as the installation of coker drums, which began on Jan. 1, 2018, after the governor’s executive order took effect.

The company asked to have the tax exemption deferred Friday after concerns about the application came to light. The Board of Commerce and Industry approved the deferral.

Together Louisiana caught the discrepancy by reviewing advance notifications that the organization previously downloaded from the Louisiana Economic Development website, said Broderick Bagert, with Together Louisiana.”If we had not discovered this, this would have been approved without local input,” Bagert said. “Deferring does not eliminate the questions we have.”

Last November, the parish council and school board voted down $25 million in tax breaks for Marathon. Bagert said the discrepancies in Marathon’s tax exemption before the board Friday equated to fraud and an attempt to avoid the parish approval process. If approved, the exemption would result in a $43 million loss in tax revenue for St. John schools, roads and other public services.

Larry Sorapuru, a former councilman in St. John Parish, said the parish could use that money for youth programs, the elderly and streets. “We’re trying to build a community center. We have some youth that are trying to form a fishing club,” he told the state board Friday. “Don’t leave us out in the cold.”

Bagert accused Louisiana Economic Development with helping in the fraud by changing the records in its online system. Tam Bourgeois, Louisiana Economic Development’s Executive Council, said the department is reviewing the discrepancies, including when the records were last changed. An initial review of the documents appeared to show that they were edited in December 2018, she said.

Bourgeois said that LED often works with Together Louisiana over concerns the organization has with tax exemption applications, but that the department did not hear about the discrepancies with Marathon’s application until Thursday. “This one came to us via a media request yesterday afternoon,” she said. 

The Louisiana Illuminator requested comment from LED on the discrepancies Thursday morning.

Board members asked Bourgeois to forensically examine when the changes were made, who made them and why they were made before the exemption goes before the board again for approval.