Marathon Petroleum, accused of fraudulently seeking tax exemption, granted contingent tax break

Three months after it was accused of falsifying records in an attempt to get a property tax exemption from the Louisiana Board of Commerce and Industry, Marathon Petroleum was awarded that tax break Monday after a state official testified that it is commonplace for industries to “amend” their requests after originally submitted.

The commerce board granted the $43 million tax break to Marathon with the caveat that taxing authorities in St. John the Baptist Parish, who recently denied an exemption request from the company, will have the right to deny the requests on their end. Together Louisiana, a statewide network of congregations and civic organizations that has pushed for stricter requirements for the tax exemption program, had accused Marathon of putting an earlier date on the exemption request to avoid a new law that gives local taxing authorities the right to deny tax exemptions approved by the commerce board.

In November 2020, Marathon asked the commerce board for a tax break through the state’s Industrial Tax Exemption Program for an expansion project at its Garyville refinery. They argued that they had provided advance notice in 2014.

The date matters because in 2014, under the rules of ITEP, the commerce board had the unilateral right to exempt industries from property taxes. In 2016, Gov. John Bel Edwards issued an executive order giving local bodies authority to approve or disapprove the decisions made by that board.

Together Louisiana officials say the advance notice Marathon submitted in 2014 was for a completely different project: a natural gas hydrotreater, with an expected work start date of Jan. 1, 2015. The project is now being described as the installation of coker drums, which began on Jan. 1, 2018.

The group’s accusation — made in a November meeting before the commerce board — caused the board to delay its decision on Marathon’s request.  Together Louisiana, which had argued that the application couldn’t have been altered without assistance from inside Louisiana Economic Development, had asked for an investigation into how the application was changed and by whom.

Mandi Mitchell, assistant secretary for Louisiana Economic Development, said at Wednesday’s meeting that “changes to advances in applications (for tax breaks) were commonplace” as “project details shifted” and that staff has often allowed companies to adjust the details listed on their advanced notifications.

“An accusation has been made that LED staff colluded with the company to circumvent local approval or to defraud the process,” Mitchell said. She said she doesn’t believe “anyone at LED would advise, direct or encourage the company to amend a pre-executive order advance” notice.

She said LED made no attempt to mislead the board or public or give Marathon an advantage over others. She said of the 197 pre-executive order project advanced notifications, 17 were changed with permission from LED.

Dan Wortmann, a spokesperson for Marathon Petroleum, said he appreciated LED’s “confirmation of our transparent approach to adhere to the rules of the ITEP program.”

Yet everyone was not convinced. “Anyone who’s looking at this in a reasonable way knows this is a post-executive order project,” Brod Bagert, an organizer with Together Louisiana, told the board. “We find it kind of astounding that these are being contemplated for approval.”

Speaking of Marathon, he said, “We have a company that has tried to abuse the system. There are serious problems with the way this program is being administered by staff, which continually makes the interpretation most favorable to the company regardless of the circumstances.”

Although the ITEP rules from 2014 would mean St. John officials wouldn’t be able to block the commerce board’s decision, Marathon officials said at Wednesday’s meeting that they’d agree to let St. John officials have the final say if the commerce board approved their ITEP request.

At Marathon Petroleum, we value open dialogue with our stakeholders, including communities we’re a part of and government bodies that do the work of the people,” Wortmann said to the board. “Through ongoing engagement with stakeholders, we seek first to listen and incorporate feedback.”

The board approved the tax exemption request with that understanding. Last November, the St. John the Baptist Parish Council and school board voted down $25 million in tax breaks for Marathon.

Rick Moreland, a member of Together Louisiana, said after Wednesday’s meeting that Mitchell’s explanation was unsatisfactory and the board shouldn’t have accepted it. “Their main justification for allowing this seems to have been that they’ve done this many times before,” Moreland told the Illuminator. “That’s just inertia. That’s saying ‘this is the way we’ve always done it.’”