Did Jeff Landry Betray Louisiana’s Oil And Gas Industry Yesterday?

The answer to that question, depending on who you talk to, might be yes. Certainly there are people involved in oil and gas, and specifically on the governmental relations side of the industry, who saw yesterday’s events with Landry as a knife in the back. Are they right?

We’re not sure what we think.

To catch you up on what Landry did yesterday, here’s the press release Louisiana’s Attorney General put out following a press conference announcing that he was signing off on the Freeport-McMoRan coastal lawsuit settlement…

Freeport-McMoRan Receives Attorney General Authorization to Resolve Coastal Claims

BATON ROUGE, LA – Louisiana Attorney General Jeff Landry has authorized an agreement to release Freeport-McMoRan Inc. from all claims for past impacts to the Louisiana Coastal Zone, effectively ending longtime litigation between the company and coastal parishes in the State.

In taking today’s action, Attorney General Landry made clear that – while Freeport chose to resolve its liability by this agreement – fragmented lawsuits that attack industry and ignore federal responsibility for damages cannot fully restore Louisiana’s coast.

“The energy industry, which employs hundreds of thousands of our neighbors, is a crucial component to ensuring a vibrant economy and a safe environment in Louisiana,” said Attorney General Landry. “The State’s energy industry has not only been responsible for creating jobs and prosperity, but it also has contributed tax revenues critical to funding coastal restoration and hurricane protection projects.”

“While I believe these claims are best decided by a full and final adjudication, I will not interfere with a private company seeking relief from the immense uncertainty litigation injects into Louisiana’s energy industry,” continued Attorney General Landry. “Today’s resolution meets the criteria I have deemed necessary: good for Louisiana, productive for the coast, and consistent with the Coastal Master Plan; contain regulatory or credited relief for the industry; and must be final and create certainty for the industry moving forward.”

The resolution releases Freeport from liability for any current claims, triggering its dismissal from the coastal parish suits. In exchange, Freeport will deposit the initial payment into a trust, followed by several smaller yearly payments. Payments will not be distributed until the Legislature creates a special fund and new oversight board to hold and manage these dollars. The board will then distribute monetary awards toward projects consistent with the Coastal Master Plan, with 60% dedicated to state projects and 40% dedicated to local projects.

“If accepted by the Legislature, Freeport will contribute up to $100 million toward state and local projects enhancing coastal restoration and hurricane protection,” explained Attorney General Landry. “As the federal government bobs and weaves around its fair share of our coastal losses, Freeport has agreed to put funds in the hands of coastal experts overseeing Coastal Master Plan projects that protect our most vulnerable localities.”

“Even though today’s action enhances coastal restoration and brings needed finality to these claims, it does nothing to address the fundamental problems with job-killing lawsuits that make Louisiana unwelcome to business growth and that disregard the disastrous effects of federal policy,” concluded Attorney General Landry. “As I continue fighting to hold the Army Corps of Engineers accountable for the historical effects of their actions, I trust the Legislature will defend private operators who were compliant with federal, state, and local laws and regulations.”

Landry’s taking pains in the statement to say that he’s not for these coastal lawsuits. Which he shouldn’t be, as they’re the worst kind of destructive, abusive litigation Louisianans have come to know.

Louisiana is losing its coastline because the Army Corps of Engineers leveed the Mississippi River to its mouth. Plain and simple. Southeast Louisiana is land created by the Mississippi’s lower delta, and that land is built when the river overflows its natural banks every spring and deposits sediment in the marshes of that delta. It happens over a very long period of time, but the river ultimately wins over the ocean, which counteracts the river through its waves eroding the coast.

But when the river is trapped by those levees, the sediment is flushed out over the outer continental shelf and lost, and nothing counteracts the ocean.

It’s pretty simple. It isn’t affected by “global warming,” which is now called “climate change” because there isn’t any real evidence of significant warming or sea level rise. The Atchafalaya River, which is not leveed to its mouth, is actually pretty rapidly building its delta after all.

And it isn’t canals cut through the marsh by oil companies to service offshore and inshore drilling and production, either. But for the leveeing of the Mississippi River, those canals would be filled in by the river’s sediment every spring and the ones not being used would simply go away.

This was always an attempt by greedy trial lawyers like John Carmouche to earn big paychecks out of contingency fees for these stupid lawsuits that he and his pals convinced greaseball local politicians to file. Carmouche figured he’d get some rich oil companies to pay him go-away money if he could keep the suits going long enough, and in the case of Freeport-McMoRan he was right.

Because Freeport-McMoRan is gone. They don’t do business in Louisiana anymore. They were a major presence with a headquarters in New Orleans not all that long ago, but they gave up on this state and they don’t give a damn. As far as they’re concerned, dropping a few million dollars on some local pols here is essentially an exit fee.

Carmouche is counting on there being a few more Freeport-McMoRans out there and he’s probably right. It’s quite foreseeable that BP will settle a coastal suit soon. After that, who knows?

Nobody with an interest in continuing to do business in Louisiana will want to settle these suits, because the precedent of doing so means it’s only a matter of time before Carmouche, or the next generation of Louisiana plaintiff lawyers who follow him, will make another trip to the well. For the folks who want to stick around, these suits have to be won, not settled.

Which is why they’re so disgusted with the Freeport-McMoRan settlement and Landry signing off on it.

For example, this wasn’t very salutary…

Tyler Gray, President of the Louisiana Mid-Continent Oil and Gas Association (LMOGA), and Mike Moncla, President of the Louisiana Oil and Gas Association (LOGA), issued the following joint statement today in response to new developments regarding the Louisiana coastal lawsuits:

It is disappointing that some elected officials have sided with plaintiffs’ attorneys in support of job-killing lawsuits and a flawed settlement scheme that could put our coast further at risk.

Through these lawsuits, the government seeks to impose sweeping, retroactive liability on the entire oil and gas industry for activities carried out according to federal laws and regulations decades ago. This misguided attempt to rewrite history and penalize energy producers for legally conducted operations that have been endorsed and incentivized by state and local leaders for nearly a century is a distortion of the law dreamed up and marketed by plaintiffs’ attorneys, presumably to serve their own financial gain.

The secretive manner in which the proposed settlement with one defendant is being plotted behind closed doors also raises serious concerns. It’s been over a year since this purported ‘deal’ was announced, and the public has yet to see the details, including the actual terms. This complete lack of transparency and oversight has allowed private plaintiffs’ attorneys to act with unbridled discretion over government-sponsored lawsuits, which have the potential to impact coastal, economic, and environmental policy in the state for generations.

Contrary to recent claims by some elected officials, this proposed settlement is not dedicated to coastal restoration—the supposed reason why these lawsuits were filed. Under this problematic proposal, funds could be used for projects unrelated to coastal restoration and hurricane protection. This convoluted approach is inconsistent with current state law, and it exposes these lawsuits for what they really are—a money grab unconcerned with coastal restoration.

LMOGA, LOGA, and our member companies will continue to fight these meritless coastal lawsuits and oppose the implementation of this untenable settlement scheme. However, we remain committed to developing real solutions that will preserve and protect our coast, and we welcome the opportunity to work with Governor Edwards, Attorney General Landry, and other leaders in undertaking collaborative efforts to achieve this shared goal.”

Nor was this…

The following is a statement from Grow Louisiana Coalition Executive Director Marc Ehrhardt in response to Attorney General Jeff Landry’s announcement on coastal lawsuits in South Louisiana: 

“Only politicians and lawyers have seen this supposed settlement. It has been done in secret. Whenever a politician or lawyer says ‘Trust me. It’s good for you,’ it doesn’t seem to work out too well for the people. How is this secret settlement scheme any different?

With a worldwide pandemic and a moratorium on lease sales in the Gulf of Mexico, our state and parish leaders should do everything they can to support Louisiana’s workforce and local businesses. Instead, some are falling for the empty promises of trial lawyers looking for a payday for themselves.

Not one square inch of the coast has been created as a result of these lawsuits in the entire time that these trial lawyers have been wheeling and dealing behind the scenes and out of the public eye.

The fact is that thirty-five cents of every dollar spent by the state on coastal master plan projects is funded directly by the energy industry’s activities on and off of Louisiana’s shores.

According to the CPRA, the State’s Coastal Master Plan forecasts hundreds of millions of dollars in revenue coming directly from the oil and natural gas industry in the next three years. This alone shows that the best hope for protecting and building Louisiana’s Working Coast is partnering with an active, safely operating oil and natural gas industry. Louisiana’s energy industry is the largest private funder of the world’s largest environmental restoration and climate resilience plan, our coast. Lawsuits haven’t produced a penny to pay for coastal work.

Drawn out legal moves and empty promises undermine honest, productive efforts to build and protect our coast. Louisiana’s energy industry has a working and thriving partnership with parishes, the state and the scientific community. All without lawyers promising big paydays to come.”

Or this…

Despite serious and unaddressed concerns and the lack of support expressed by state lawmakers, local elected officials, and industry leaders across the coast, Attorney General Jeff Landry and Department of Natural Resources Secretary Tom Harris, on behalf of the John Bel Edwards Administration, have reportedly signed onto a proposed agreement, which seeks to settle coastal land loss claims with one defendant company no longer operating in Louisiana.

Melissa Landry, a spokesperson on behalf of the legal teams representing BP America Production Company, Chevron, ConocoPhillips, Exxon Mobil Corporation, and Shell, issued the following statement today regarding this development:

“The proposed settlement is not dedicated to Louisiana’s coast, and it will not help advance a meaningful resolution to the litigation. These misguided lawsuits challenge decades of operations that were conducted lawfully with the full knowledge and encouragement of state and federal officials. This distortion of state policy was created by private plaintiffs’ lawyers who are not accountable to the public and serve their own interests. We hope this circumvention of the law will not be allowed to continue and that all interested parties can work together to support our coast and our communities. The investments and progress we are already making toward a safer, stronger coast have been achieved through collaboration, not litigation.”

The proposed settlement agreement with one defendant, announced by plaintiffs’ attorneys in September 2019 sparked widespread criticism and failed to garner legislative approval last year. The proposed settlement has not been publicly disclosed to date, such that its terms cannot be verified.

Those aren’t just pro forma statements. These guys aren’t happy.

But Landry signing off on the settlement means…what, exactly? The answer, from a public policy standpoint, is “not much.”

Nothing in the Freeport-McMoRan settlement is actionable until the Louisiana Legislature acts. And here’s the thing – it’s highly unlikely there will be a majority for passing the legislation to move that settlement forward, because the oil and gas industry still has some pull with the leges and because there is a sense that Louisiana is in great danger of losing the industry as a whole.

Shell just closed an oil refinery in Convent a few months ago, after all. Offshore drilling is all but dead and doesn’t look like it’s going to come back until Joe Biden is gone. Louisiana’s total rig count as of Feb. 26 stands at 37, just five more than the modern low of 32. Tens of thousands of jobs have been lost in the industry since 2015, and it’s a big concern that they’ll never come back. The legislators are going to be extremely careful about doing anything that would make the problem worse, and the Freeport-McMoRan settlement has always been seen as doing just that.

So for Landry, signing off on this settlement – at least in his judgement – is more or less a free shot. He doesn’t think he’s making public policy here, so it’s not like he’s hurting anybody.

And he’s helping himself.

Why is he helping himself? Well, let’s remember that John Carmouche is a major, major player in Louisiana politics. It’s Carmouche’s money, and that of his friends, which played a massive role in staking the infamous Gumbo PAC in the 2015 and 2019 elections, and Gumbo PAC was the single largest factor in trashing David Vitter and Eddie Rispone as they ran against John Bel Edwards for governor.

Of course, the coastal lawsuit issue wasn’t talked about in either race. Gumbo PAC ran ads about hookers to beat Vitter in 2015, and they ran ads claiming Rispone was a racist who would rob people of their homestead exemption and school lunches and Lord-knows-what-else in 2019.

Vitter and Rispone should have done a better job of framing those Gumbo PAC ads for what they really were, but some PAC that spends $10 million attacking you personally in a statewide race isn’t always the easiest target to hit.

Landry is about as savvy a Louisiana political operator as you’ll find, and he knows his history. Before Vitter and Rispone there was Bobby Jindal, who as it turns out is nobody’s political genius. But Jindal did something that made his election and re-election very easy – he cut a deal with the big plaintiff lawyers like Carmouche, John Houghtaling and others, he took their campaign cash, and he promised to leave them alone.

And without their money, the Democrats couldn’t lay a glove on Jindal. In 2007 the opposition was the hapless Foster Campbell, Republican turncoat state legislator Walter Boasso and vanity independent candidate John Georges, who later bought the Baton Rouge Advocate and New Orleans Times-Picayune. And in 2011, the Democrats didn’t put up a candidate at all; they ended up running a fifth-grade teacher from Haynesville with five thousand dollars in her campaign account.

If you’re Landry, you figure you can always make your peace with the oil companies. What’s obvious to you is that you don’t want to make war with the trial lawyers. Without their money Gumbo PAC becomes more a lamb than a lion, and you become Bobby Jindal of 2007 more than David Vitter of 2015.

Because here’s the thing – while Republican politicians in Louisiana know they’re far more closely oriented toward oil and gas than the plaintiff bar, they also know that oil and gas can’t or won’t help them politically as much as a John Carmouche can hurt them. Bogging down legislation to support the Freeport-McMoRan settlement is a whole lot easier than coming out publicly and going to war with Carmouche. So Landry is now in a position where Carmouche can’t really oppose him.

But has he pushed the oil companies into backing one of his opponents in the 2023 governor’s race?

It’s possible. But who?

Right now it’s pretty clear Lt. Governor Billy Nungesser is going to run for governor. Nungesser would love to have the oil and gas industry supporting him. Except, as Landry will surely point out, Nungesser was the parish president in Plaquemines when the first coastal lawsuits were filed. He helped create this mess in the first place. Exactly how is Nungesser an improvement over Landry?

There’s a Democrat likely in the race, and the rumor is it’ll be Gary Smith, a rather ethically-challenged “moderate” state senator from LaPlace. Smith has a ton of family money and can self-fund a statewide campaign, but he’s a lot more like Foster Campbell than John Bel Edwards in terms of electability. You wouldn’t think the oil and gas industry would get behind Smith, and you really wouldn’t expect them to back a black Democrat who’s expected to get in like state representative Ted James. They aren’t going to do that.

On the other hand, there was this among the statements which popped out yesterday after Landry’s press conference…

“This settlement scheme is nothing more than a backroom deal that threatens the future of oil and gas jobs in Louisiana. This critical industry has been the driver of job creation, tax revenue, and economic growth in our state. It has contributed nearly a quarter-billion dollars to saving our coast in the past five years alone. Tax dollars generated by oil and gas provide more than 30 percent of the state’s funding for coastal restoration and hurricane protection projects. Oil and gas companies are not the enemies of our state. This secret settlement begins a dangerous path that leads to false promises, bankruptcies, and job losses. I’m certain it’s as dead this year in the legislature as it was last. I will work with my colleagues in the legislature to expose this shakedown, save those jobs, and fight for real solutions that restore our coast.”

Who’d that come from? None other than state senator Sharon Hewitt, who’s been floating around as a potential 2023 gubernatorial candidate.

Hewitt’s problem – one that she had in 2019 – was that she couldn’t find a donor base to finance a campaign from. In 2019 when Eddie Rispone got into the race it was a killer for her, because Rispone was in a position to rack up all the money Hewitt would have to get. And heretofore she’s had something of the same problem with Landry and Nungesser in the field.

But if oil and gas is really put out by what Landry did yesterday, Hewitt’s problem might be solved. She’s a retired oil company executive, after all, and she’s the most prominent actual conservative in the state senate. She’s the chair of the Senate and Governmental Affairs Committee, which puts her in position to affect two of the biggest Republican issues you’ll see this year nationally as they play out in Louisiana – election reform, or perhaps more specifically the purchase of new election machines in the state (we saw that play out on Wednesday), and redistricting. Hewitt is also reportedly handling the bill that would bring party primaries back to Louisiana. She’s likely going to be the single most prominent member of the state legislature over the next year, which could give her the kind of name recognition and top-of-mind awareness with Louisiana voters a politician can make a statewide run out of.

And if oil and gas decides to throw some money behind her, Sharon Hewitt might just become a viable alternative to Landry and Nungesser on the GOP side.

We’re not predicting anything. We’re just dealing in a little bit of semi-informed speculation. The thing about political calculation, particularly in Louisiana, is that there are always variables out there – and it can prove particularly difficult at times to account for them all.

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