LSU study estimates state economy has lost $6.8 billion due to 'legacy lawsuits'

By Kyle Barnett | Mar 9, 2012

David Dismukes, PhD

BATON ROUGE – Damage to the economy by so-called "legacy lawsuits" aimed at past environmental pollution by energy producers are at the heart of a study released by Louisiana State University.

The study, released in late February by David Dismukes Professor and Associate Director of the LSU Center for Environmental Studies, claims environmental lawsuits meant to punish energy producers who have polluted land are hurting the economy due to large payouts often received by plaintiffs.

Despite increased profits due to much higher gas prices in recent years Louisiana was found to be near the bottom amongst top energy producers in energy exploration in the lower 48 states. The study estimates over 150 more wells per year could have been drilled in the state over the past eight years, which can be correlated to the number of new legacy lawsuits filed each year.

Dismukes claims the reduced drilling activity is equivalent to a cumulative $6.8 billion loss for the state over that time period. The study also says approximately 30,291 more jobs worth about $1.5 billion in wages statewide could have been created in the absence of legacy lawsuits.

The focus of many of the lawsuits appears on the surface to concern less than optimal disposal of drilling by-products in less regulated eras of energy exploration. Discarded materials including radioactive drilling waste were often, up until the 1980s, left in unlined bury pits on land formerly used for drilling and in some cases leaked into drinking aquifers.

Despite the often times real pollution, multimillion dollar payouts for the damage have not been required to be used to clean up the land. Industry officials also claim plaintiffs in most legacy lawsuits have very little real damage and they file lawsuits solely due to the possibility of winning a large settlement because drilling activity once took place on their land.

The American Tort Reform Association claims trial attorneys file legacy lawsuits with the mentality of playing the lottery due to such large payouts. In a case settled in 2003 a landowner even won an award of $54 million for contamination on a piece of land reportedly worth only $108,000.

"A case can remain unresolved for years, sometimes a decade, without any hard evidence of contamination being proffered or cleanup undertaken," ATRA communications director Darren McKinney said. "And rather than eventually risk a runaway jury verdict, the defendant or defendants often choose to be more safely extorted by settling out of court."

A 2006 reform law was passed to address legacy lawsuits and is supposed to address cleanup concerns by handing part of the process over to the Louisiana Department of Natural Resources. ATRA claims the reform law did not go far enough and that lawyers are often able to get around those requirements. Enviromental critics of the law say the one case that has gone on to be mediated by the LDNA has moved so slowly through the system that no environmental remediation has been completed over the past three years.

The introduction of state laws aimed at legal reform of legacy lawsuits are expected to be a major issue in the upcoming 2012 Louisiana legislative session beginning March 12.

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