Gov. Bobby Jindal might want to take advice from Louisiana Oil and Gas Association President Don Briggs to keep repeating his mantra about removing Louisiana from all the “bad lists”, specifically the watch list in the American Tort Reform Foundations’s annual “Judicial Hellholes” report.
Our state finds itself on the watch list primarily because of its membership in what the Louisiana Lawsuit Abuse Watch (LLAW) calls a “legacy lawsuit lottery”, stemming from the massive number of lawsuits that are stifling oil and gas production —more than 1,500 companies have been the subject of more than 250 legacy lawsuits over the last five years.
Legacy lawsuits are lawsuits in which litigation takes place because of alleged environmental harm that might have taken place decades earlier.
I spoke to Briggs today about his work with the Jindal Administration to get support for shoring up problems with Act 312, signed by Gov. Blanco in 2006. The law was crafted to stop the bevy of lawsuits in the wake of the Louisiana Supreme Court’s opinion in Corbello v. Iowa Production in 2003.
In the suit, property owners were awarded $73 million for damage done to property valued at $100,000. Thirty three million dollars was awarded for remediation, with no stipulation that that money has to be used to clean up from environmental damage. There is no cap on remediation awards in Louisiana that ties awards to land value, as there is in Texas. Briggs would have liked to seen something like the Texas law worked into Act 312, but as he told me, “That dog won’t hunt.”
Briggs would now like to see a bill drafted in the next Legislative Sessions that makes procedural changes to the way the the court reads Act 321. Now companies that assume responsibility for environmental clean-up often find themselves sued for liability.
About half of all oil and gas producers in the state are mired in such lawsuits, Melissa Landry, executive director of LLAW told me.
This is from a press release LLAW put out about the Louisiana being on the American Tort Reform Founstation’s Judicial Hellhole watch list:
According to the state’s legal watchdog group, Louisiana Lawsuit Abuse Watch (LLAW), the main area of concern highlighted in the Hellholes report is Louisiana’s reputation as a “legacy lawsuit lottery.”
“Unfortunately, Louisiana’s pattern of doling out millions of dollars for hugely exaggerated claims of environmental damage as a result of decades-old oil and gas production has spawned a cottage industry of cookie cutter lawsuits that are giving Louisiana a bad name and threatening the survival of a critical aspect of our energy sector,” said Melissa Landry, LLAW’s executive director. “This jarring reputation as a potential Judicial Hellhole should concern every policymaker and citizen in Louisiana hoping to see more jobs and a stronger economy for our state.”
“This is not the first time Louisiana has been called out on the national stage for its poor legal climate, and whether we like it or not, reputations matter,” Landry continued. “The perception of a state’s legal climate affects how companies do business, and where they decide to invest and create new, well-paying jobs.
Legacy lawsuits are civil claims aimed at well sites in Louisiana where there may be damage to the land that in many cases may have occurred decades ago. The impact they’re having is slowing down oil production, jobs and tax revenues at a time when we need it most. As noted in the Hellholes report, more than 1,500 companies- large and small- have been targeted in more than 250 legacy suits over the past five years. The result is a stagnating Louisiana on-shore oil business in recent years, as compared to a growing and robust industry in neighboring Texas where these types of lawsuits are not a problem.
Another impact of legacy lawsuits is that they can delay cleanup of the land where it is needed for years or even a decade while these legacy suits languish in our courts.
“With the 2012 legislative session on the horizon, our lawmakers and state leaders should be thinking about what they can do to make Louisiana more competitive. Addressing the legacy lawsuit issue and passing other meaningful legal reforms to help move Louisiana off the judicial hellholes ‘Watch List’ would be a great place to start.”
Of course, we know that damage that lawsuits are doing to oil and gas production in our state. The most recent example being environmentalists filing a lawsuit to challenge the first offshore petroleum lease off Louisiana’s shore since the BP oil spill. While this suit, of course, isn’t a legacy suit, it is a reminder of the legal hurdles that energy producers must go through these days.
With the importance of the oil and gas industry in our state even being more vital in hard economic times, let’s hope that something can come out of the coming Legislative Session to help ease the litigation surrounding producers.