We’ve finally got firm numbers on the real cost Louisiana working families are paying for the lawsuit abuse that has run rampant in our state for far too long. Over the last six years, many have argued that coastal lawsuits against Louisiana’s oil and gas industry would irreparably damage our economy and drive jobs out of the state.
We wanted to know if that was really true – is there a direct relationship between our state’s failing economy and lawsuit abuse? To find out, we commissioned an in-depth economic analysis of the situation, and it appears many of those assertions were right on the money. According to the new study conducted by Dr. Gavin Roberts for the Pelican Institute, frivolous coastal litigation has cost our state upwards of $113 million in economic activity and at least 2,000 jobs.
The study, titled “The Cost of Lawsuit Abuse: An Economic Analysis of Louisiana’s Coastal Litigation,” examines the impacts the sweeping state-sanctioned litigation is having on state and parish economies, as well as employees in the energy sector. Even considering the extremely conservative estimates utilized in the study, the picture it paints is grim. Every year, Louisiana’s economy loses between $44 million to $113 million due to the risk of lawsuits posed to the offshore energy industry.
The study also shows that as Louisiana faces among the worst economies in the country, the lawsuits effectively killed off 2,000 jobs, equating to approximately $70 million in lost wages for Louisiana’s working families. This is a significant revelation and is the first time a study has definitively pointed to the damages wrought by the Louisiana state government’s job-killing lawsuits.
The study also examines the local level impacts of the coastal lawsuits. During a time when the state is pulling local parishes onto its lawsuit bandwagon against the will of many residents of said parishes, we discovered coastal lawsuits are causing Louisiana state and local governments to lose as much as $22.6 million per year in industry royalties. In fact, drilling off Louisiana’s coast has declined by more than 50 percent since the lawsuits were filed in 2013.
This study is crucial, as it’s the first to demonstrate the breadth of the impact lawsuit abuse, particularly coastal lawsuits, are having on local communities and the state as a whole. Lawsuit abuse is a deep and entrenched threat to Louisiana families, and these coastal suits are one of the most pernicious examples. It’s also worth noting that the statistics developed for this study are very conservative, which means the damage being done to our state is likely much worse than we’ve presented.
Nobody should be truly surprised by the results of this study. When you sue your state’s No. 1 job creators, you must know you’re placing your state’s economy and working families at risk. At least now we have a conservative estimate of the number of lost jobs and opportunities countless Louisianans have experienced as a result of these ill-advised suits.
So, what’s been accomplished since the filing of the lawsuits? The answer is, sadly, nothing. Louisiana continues to fall further behind our neighboring states in nearly every category, and former state residents are fleeing for the border at record rates. We’ve lost so much thanks to the poor decisions of our state’s leaders combined with the ambitions of a small group of motivated attorneys, but we still have an opportunity to stop the bleeding.
The answers are on the table. The coastal lawsuits are one of many examples of the damaging effects brought on by the proliferation of lawsuit abuse, a serious problem that has persisted in Louisiana for decades. In April, the Pelican Institute unveiled solutions to help Louisiana shed its reputation as a legal swampland with the release of its legal and regulatory reform plan for the state as part of its series of deep-dive policy solutions under the nonpartisan policy platform, “A Jobs and Opportunity Agenda for Louisiana.”
As for the coastal lawsuits, the answer is obvious. If we want to bring Louisiana back to a place rich with jobs and opportunity rather than continued stagnation, we must abandon this ill-fated lawsuit strategy. We can’t expect to catch up with the rest of the nation if we continue using this overtly hostile approach with job creators. It’s time to abandon the mistakes of the past and forge a new direction for a more competitive Louisiana. Our future hangs in the balance.
Daniel J. Erspamer is the CEO of the Pelican Institute for Public Policy. – New Orleans