…it’s an ugly look for the Landry administration, at least for the bulk of its base voters.

Nolan McKendry has the story of where the case is today here at the site…

A historic trial that could compel oil and gas companies to pay billions for Louisiana’s coastal wetlands restoration reached its climax this week, with closing arguments delivered Thursday at the Louisiana 25th Judicial District Court in lower Plaquemines Parish.

The lawsuit, pitting the parish against companies including Chevron USA, Inc., is the first of 42 similar cases filed since 2013 to reach trial, accusing the industry of violating state permitting laws and exacerbating wetlands loss.

Chevron, The Texas Company, Atlantic Richfield Company, ConocoPhillips, and The Louisiana Land and Exploration Company all filed a motion in opposition in 2022 to keep the case in federal court.

After over a decade of legal battles, Plaquemines Parish, led by attorney John Carmouche, is seeking nearly $3 billion in damages. A victory could set a precedent, potentially forcing oil companies to pay tens of billions across all cases — funds legally mandated for coastal restoration.

The lawsuit has picked up a good bit of attention in the national media of late, and on the conservative and business side the attention is…not good.

Forbes’ writeup isn’t very complimentary…

Undoubtedly these lawsuits will enrich trial lawyers if successful. They will not remedy the coastal erosion problems afflicting the state, however. Making matters even worse, these lawsuits are discouraging needed income and job growth for residents by exacerbating Louisiana’s anti-growth policies.

There is a clear connection between a state’s business environment and sustainable income growth for residents. States that promote a low-tax burden, reasonable regulatory structure, and do not over-empower litigious attorneys generate prosperity for the citizens. The states that promote the opposite – high taxes, burdensome regulations, and a litigious friendly environment – suffer slower economic growth.

Louisiana scores poorly across all these policy areas. The Tax Foundation ranks Louisiana’s tax climate as one of the worst (40^th) in the nation. According to the Cato Institute, Louisiana’s regulatory policies are also below average (32^nd) and its litigation environment is the 3^rd worst in the country (48^th).

Not surprising, as the chart below from the Federal Reserve illustrates, Louisiana’s share of the national economy has declined for decades. This weak economic growth hurts the average family as illustrated by the fact that the median household income in Louisiana is nearly 29 percent smaller than the U.S. average. No wonder Louisiana’s population has been declining over the same period.

Here’s the chart, and it’s ugly…

Being barely more than 1 percent of the national economy when Louisiana has the natural resources we do is an atrocity, and it’s getting worse as the oil and gas industry throws up its hands and vacates the state for greener pastures in places like west Texas. That chart is an abject indictment of John Bel Edwards’ time in office.

But it confers both an opportunity and a responsibility for Jeff Landry to make a major improvement in Louisiana’s economic performance.

Which is why the Wall Street Journal’s coverage, in the form of a guest column by Michael Toth of the Civitas Institute in Austin, was even worse than Forbes’ story…

Less than a year after fleeing California’s extreme environmental laws, Chevron now finds itself in a Louisiana courthouse defending itself against a $3 billion claim that World War II-era oil production caused erosion of the state’s coast. The mastermind of the swampland stickup is a politically connected trial lawyer who has leveraged his ties with the state’s Gov. Jeff Landry and Attorney General Elizabeth Murrill—both Republicans—to lead a statewide fight to make oil and gas companies pay for exploration dating back to the 1940s. With friends like these, who needs Gavin Newsom?

Yikes.

Toth goes on to note that the jury deliberations in Plaquemines Parish could open the floodgates in all those other coastal lawsuits…

Such an outcome would be a boon to plaintiffs’ lawyers, but a disaster for Louisiana’s ability to lead the Trump administration’s energy dominance agenda. In 2022 the New Orleans-based Pelican Institute estimated that Louisiana had 53 to 74 fewer oil wells and would lose between $44 million and $113 million dollars annually because of the litigation risk associated with the coastal lawsuits.

The plaintiffs’ lawyers in the land-loss case now under way contend that oil companies should be held liable for the 2,000 square miles of Louisiana wetlands and barrier islands lost to coastal erosion since the 1930s. The primary cause of the coastal land loss is well known. Researchers agree that the leveeing of the Mississippi River in the early 1900s is the main culprit.

The Mississippi River has no assets, so the plaintiffs’ bar is targeting energy companies instead. The firm behind the coastal lawsuits argues that the defendants’ World War II-era dredging and oil production on the Gulf Coast accelerated wetland erosion. Those operations were a war-effort obligation commenced under federal contracts to produce high-octane aviation gasoline. Sensitive to these facts, Louisiana explicitly grandfathered those projects into a permitting regime the state crafted for coastal oil drilling in 1980.

And then Toth takes direct aim at Landry, while noting the uncomfortable reality of the hold that Big Plaintiff has on Louisiana…

Unfortunately, powerful Louisiana Republicans are backing Mr. Carmouche. As state attorney general, Mr. Landry signed a joint prosecution agreement with Mr. Carmouche in 2016 to coordinate efforts in the coastal lawsuits. During opening arguments in Plaquemines, a lawyer representing the Landry administration and the attorney general’s office underscored that the case was about the “sins of the past.”

The politics of the present may be the real story. In 2015 Mr. Carmouche’s firm deployed $2 million in television ads against Republican gubernatorial candidate David Vitter, then a U.S. senator. Mr. Carmouche mocked Mr. Vitter as “big oil’s boy” for his opposition to frivolous lawsuits. Democrat John Bel Edwards, a former trial attorney, defeated Mr. Vitter and promptly amped up the state’s involvement in the coast litigation, declaring that if all coastal parishes didn’t bring lawsuits against the energy industry, the state would pursue litigation.

In 2023 Mr. Landry ran successfully for governor with the backing of trial lawyers, including Mr. Carmouche and his law partners, who donated $300,000 to a pro-Landry super PAC. Mr. Landry appointed Mr. Carmouche to the Louisiana State University board of supervisors. Mr. Carmouche has also contributed to judicial campaigns. One of the judges he’s supported—Michael Clement of Louisiana’s 25th Judicial District Court—is presiding over the Plaquemines trial. Mr. Carmouche’s firm and an associated PAC have contributed at least $10,500 to Judge Clement’s campaigns.

The problem with Landry’s flirtations with the trial bar is twofold, as we see it, though we would choose to be hopeful and note that he has the ability to turn those relationships into a net positive.

Earlier this week we talked a bit about the insurance crisis in the state and how that’s negatively impacting Landry’s popularity and political capital. That he was on a turkey-hunting trip with famous/infamous billboard lawyer Gordon McKernan a few days ago while those four constitutional amendments failed, and in advance of a legislative session in which tort reform is almost the only thing that matters, brings this to a head.

And then there is Carmouche’s coastal lawsuit, which has the potential to clear out all the major oil and gas players from the state, because “legacy” lawsuits like this, in which oil companies are targeted for what amounts to highway robbery in that they’re being given demands to remediate harms they only dubiously can be accused of causing based on activity that the state and its local subsidiaries gave permits for at the time, signal that this is an incredibly risky, Third World place to do business.

What Landry needs to do is to settle both issues. Fast.

On Wednesday, the Governor is rolling out an agenda on tort reform, the contours of which haven’t been quite established that we know of. It’s likely going to involve doing something about lawyer advertising, but also we’ve heard that Landry wants to give Insurance Commissioner Tim Temple the power to force down insurance rates. That could be effective or it could backfire, and in any event it’ll be controversial (not to mention stoking a fight between Temple and Landry which has been simmering for a while), and there could well be other measures that Republicans in the Legislature want. Landry’s position is that fixing the insurance crisis isn’t going to get resolved just on the backs of the trial lawyers, which is a position that in the abstract is fine but depending on the details could put him at odds with his base.

And on the coastal lawsuit, volumes could be written about this issue (and it feels like we’ve written them here over the years), but what’s most important is that we actually have an oil and gas industry at the end of the day. It’s obvious we aren’t going to have much of one while these lawsuits persist, and we’re probably at the point where the majors are done with Louisiana.

That might be OK, actually. None of the majors have headquarters in Louisiana, they’ve all had declining interest in doing business here and Chevron and Shell and BP are generally more woke-corporate multinational actors than oil companies at this point anyway.

So maybe the answer is to rebuild the oil and gas industry with independent producers, and particularly Louisiana-based companies who can fill the void left when the majors abandon the state. Who knows, maybe one or more of the independents can grow enough to rival the big dogs.

It’s not impossible that a host of independent producers can rise even after Carmouche has run the established Big Oil players out of the state with those lawsuits. Except it is impossible for the independents to grow, or even to want to, if they have any reason to believe that they could fall victim to the same piracy that Carmouche is likely to get away with in Plaquemines Parish.

Which means that the sweet spot might be in Landry getting some semi-reasonable settlement for those coastal lawsuits crammed down on both the legacy oil players and the John Carmouches of the world, and then bringing a series of bills through the legislature which indemnify the oil and gas industry for whatever old sins might constitute the next round of lawsuits and then set Louisiana up as the most advantageous, drill-friendly state in America for oil and gas companies to plant a flag or a drillbit.

It would have been better if these coastal lawsuits had never happened, or if they’d been aggressively squelched. Landry isn’t really the chief villain there; Edwards was. But Landry made his peace with Carmouche, in the likely correct recognition that warring against him as Vitter and Eddie Rispone did would cost him the governorship, and so we are where we are.

What can’t happen is for the coastal lawsuit issue to linger any longer, just as the insurance crisis has to be resolved. These are two major impediments to a successful governorship, and Landry’s going to have to clear them out of the way soon.