- Cheree Franco
- WRITING SEC: Sheffield Nelson at today’s press conference
Sheffield Nelson thinks XTO Energy (a subsidiary of Exxon) and Southwestern Energy, two publicly traded companies that are drilling for natural gas in Arkansas, have violated Securities and Exchange Commission rules by talking about the negative impact of a severance tax increase on their work in Arkansas.
Nelson, who is leading an initiative campaign for a gas severance tax increase, today sent a letter to Mary Shapiro, chair of the SEC, outlining his argument: Through their donations to an anti-severance tax group (Southwestern, XTO and the private Stephens Production have contributed together more than $1.5 million), these companies have knowingly disseminated false information – that they will pull out of Arkansas and jobs will be lost, should the severance tax pass. Nelson contends it violates securities rules to disseminate such relevant business information only in Arkansas, rather than to the public generally.
XTO and Southwestern have donated $950,000 of the $1.6 million total contributions received by the anti-severance group, Arkansans for Jobs and Affordable Energy. This group, spearheaded by Randy Zook, president of the Arkansas State Chamber of Commerce, is behind the Stop the Gas Tax campaign.
In Feb. 2012, in a public letter seeking contributions, Zook writes, “This industry plays a vital role in our state’s future economic development, and a tax increase would no doubt jeopardize jobs we’ve come to count on, as well as the potential for continued growth.” Other materials say, “this gas increase is a job killer, let’s keep those high paying jobs here, keep Arkansas competitive.” A study commissioned by the Conway Chamber of Commerce found that Arkansas would lose 8,300 jobs if the severance tax passes.
According to Nelson, these statements, made indirectly in behalf of XTO and Southwestern by a campaign they are financing, are scare-mongering, the equivalent of telling the public that these companies will leave the state if they have to pay more taxes. And, he maintains, that is simply not the case. In February, Southwestern released its 2011 financials, which indicated that the company invested over three times as much capital in Arkansas than in any other state – a commitment it is unlikely to walk away from, Nelson contends.
Neither Southwestern or XTO have ever mentioned Arkansas’s potential severance tax in public SEC filings, said Nelson. If this tax was a material financial issue, Nelson said, they would have to file notice with financial regulators.
Arkansas Times asked XTO for it’s reaction to Nelson’s S.E.C. complaint, and we received this statement via email: “We don’t believe this current debate over a proposal to increase the severance tax merits an SEC filing. If enacted, a significant severance tax increase would impact our costs to drill in Arkansas, and such costs will be taken into account when making future investment decisions.”
We’ve sought a comment from the group opposing the tax increase. In an earlier exchange with a related group opposing the tax, a spokesman told Max Brantley that predictions of a negative impact on drilling activity were not the same thing as a decision to withdraw from the state.
UPDATE FOLLOWS FROM LUCAS HARGRAVES OF THE ANTI-TAX GROUP: