To the Editor:
This week, Dr. David Dismukes with the LSU Center for Energy Studies released a report on the impact of Legacy Lawsuits on conventional oil and gas drilling in Louisiana. Legacy Lawsuits are simply court-sanctioned extortion taking place at the expense of companies that drilled on a given piece of property with little or no proof from the landowner or plaintiff that any environmental damage to the property even exists. Legacy Lawsuits find their name from, according to Dr. Dismukes, "cases based on claims in which the purportedly damaging actions were taken not recently, but several decades into the past". Vast majorities of the Legacy Lawsuits have taken place in South Louisiana.
Trial lawyers do not agree with the oil and gas industry on the massive impact the Legacy Lawsuits are having on the people of Louisiana. To date, more than 270 Legacy Lawsuits have been filed with more than 1,500 defendants. You cannot sue that many defendants without having an impact on where companies explore for oil and gas. The LSU study estimates that Legacy Lawsuits have led to the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing 6.8 billion dollars in lost drilling investments. The study also highlights how Louisiana has lost over 30,000 jobs as a result of these frivolous suits.
David Russell, President of McGowan Working Partners, said that within the last year, he sought to obtain "contamination insurance" for his Louisiana oil and gas properties. Each insurance carrier he contacted declined to write him a policy directly due to the Legacy Lawsuit environment in Louisiana. However, the insurance companies said they would write policies for his properties in Arkansas, Mississippi and Texas. Russell continued by saying, "At a recent prospect expo, I sat down with investors willing to spend hundreds of millions of dollars to explore for oil and gas deals, but when they heard we were from Louisiana, they would not even speak with us due to the Legacy Lawsuits."
Independent producers like McGowan Working Partners face not only time consuming lawsuits, but are forced to spends hundreds of thousands of dollars to defend their case before the first dollar is spent on any land remediation if the verdict so demands. While some of the larger oil and gas corporations have strong defense attorneys and sizeable budgets, it is the independent oil and gas companies that will potentially be forced out of business due to these suits.
In 2006, the Louisiana Legislature passed ACT 312, which would hopefully solve the Legacy Lawsuit problems. However, a recent study conducted by the Louisiana Department of Natural Resources for the House Natural Resources Committee revealed data showing that 210 of 270 cases were brought to the courts with no environmental data submitted to the Louisiana Office of Conservation, which is required by ACT 312.
While the Legacy Lawsuits seem to have no end in sight, the burden on oil and gas companies will continue to grow until this problem is corrected.
President of the Louisiana Oil and Gas Association