Legacy and coastal lawsuits tie up revenue for Louisiana

By Tricia Erickson | Mar 9, 2017

BATON ROUGE — As Louisiana faces another budget crisis after a $940 million deficit last year, the oil and gas industry says less litigation and more productivity could bring revenue to the state.

Gifford Briggs is the acting president of Louisiana Oil and Gas Association, which represents the independent and service sectors of the state's oil and gas industry. Briggs advocates that reform to the legal environment surrounding the industry is crucial to encouraging business investment in the state and increase the $500 million of direct revenue from the industry to the state. The increased litigation for oil and gas companies does not just impact the industry; Briggs said the residents are suffering from it as well.

“Our [state] budget is heavily dependent on oil revenue,” Briggs told the Louisiana Record. “When we’re not out there drilling and producing and finding new oil then our reserves deplete, which means we have less money for our state budget, less money for roads, less money for education, less money for health care and all the services that people have come to depend on.”

The main types of litigation that are on the rise and adding to the industry’s woes in Louisiana are legacy and coastal lawsuits. Legacy lawsuits are filed by landowners against oil and gas operations, claiming the property was damaged from pollution and contamination. Coastal lawsuits are similar to legacy lawsuits, but are instead allegations of violations of coastal-use permits filed by government entities instead of individual landowners.

Briggs estimated that there have been about 400 legacy lawsuits since 2003, which often involved five or more oil and gas companies in just one case. The constant flood of lawsuits against oil and gas companies makes seems to be making other companies wary of investing in the state.

“There’s no doubt that the legal environment in Louisiana is having a detrimental impact on the state’s budget,” Briggs said. “Louisiana is the only state that has this kind of type of environmental litigation, either legacy lawsuits or coastal lawsuits. They are both huge problems.”

Briggs noted that as other areas of the country are experiencing incredible growth and increasing the number of oil rigs, Louisiana is still experiencing historic lows.

“A big part of that is just because people are making investments in places where they’re not afraid of being sued, and certainly South Louisiana is a place where they’re very weary of potential legal impacts” Briggs said.

As reported earlier by the Louisiana Record, Louisiana ranked No. 37 in Chief Executive magazine’s annual CEO survey comparing state business climates. An anonymous comment by a surveyed CEO echoed Briggs’ analysis of litigation impacting business.

“The Louisiana litigation environment is awful; tort and legacy liability litigation appears to be a major industry,” a CEO was quoted as saying.

Briggs suggested that one way litigation could be avoided is if the state would review the permit and violation allegations and issue compliance orders to allow the oil and gas companies a chance to address the complaints.

“But because we’ve chosen not to go that route, the reality is it becomes more about lawsuits and lawyers … than it does about addressing any challenges that might be there,” Briggs said.

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