Louisiana Record

Friday, August 23, 2019

Suits filed against oil companies concerning to some industry groups

By Glenn Minnis | Jan 19, 2018

BATON ROUGE — Melissa Landry worries what impact lawsuits – filed by six south Louisiana parishes against hundreds of oil companies over the alleged impact the industry has had on the state’s coast over the last century – will have on Louisiana business in the here and now.

“What’s happening is some parishes have joined forces with the state agency that regulates the industry to file suit against nearly every major oil and gas operator in the state,” Landry, executive director of Louisiana Lawsuit Abuse Watch, told the Louisiana Record. "The say the companies violated the terms of their state issued permits. What’s most problematic is you have the state agency that issued these permits— the same agency that is responsible for regulating the industry and keeping these permits in compliance— is now among the plaintiffs. Last year, agency officials testified that they have not conducted one single independent investigation to identify permit violations that are alleged in these lawsuits.  It appears they’ve completely abandoned their enforcement powers and responsibilities, in essence the entire regulatory process, in exchange for a gunshot lawsuit approach. That’s both significant and dangerous. Regulation through litigation is a threat to the entire business community, not just the oil and natural gas industry.”

The suits individually charge companies operating in the Gulf of Mexico, including industry giants Chevron, Shell, BP, and ExxonMobil, as being responsible for infractions such as from oil spills and coastal erosion. Because of the lawsuit, oil companies will have to justify their practices in court, even if no specific violations against them are in question since development began in the 1930s, Inside Sources reported.

Louisiana Lawsuit Abuse Watch (LAWW) Executive Director Melissa Landry | Photo courtesy of Louisiana Lawsuit Abuse Watch

“Businesses have to have predictability in order to operate effectively,” Landry said. “And this puzzling legal approach creates anything but predictability. It is as if the state is attempting to use our courts to change the rules in the middle of the game.”

Landry argued the motivation behind the lawsuits seems much clearer.

“It appears to be all about money,” she said. “One of the lawyers involved in a similar suit that initiated this wave of litigation is on record as seeking many, many billions of dollars. Comments like that and the overall lack of substance in this litigation creates the perception that there is a very small, well-connected group of attorneys who specialize in this line of work who are soliciting public officials to become litigants with the false promise of a huge monetary windfall.”

In the end, Landry fears the litigation will do nothing to enhance the state’s reputation for business.

“This is another black eye on Louisiana and it negatively impacts the way the entire business environment is perceived,” she said. “It is certainly reasonable to suggest this legal shakedown approach will discourage other investments and business from coming to our state.”

Meanwhile, Investor’s Business Daily has reported Gov. John Bel Edwards has close ties to trial lawyers across the state, particularly Glad Jones, an attorney in New Orleans who litigates environmental and commercial cases.

A little more than a decade ago, Jones won $57 million in damages in a pollution and marshland suit against ExxonMobil that at the time was the largest judgment against an oil company in state history.

Jones, in particular, and trial lawyers, in general, strongly supported Edwards' campaign for governor. Inside Sources reported Edwards in 2016 met with representatives of more than 30 companies, asking them to settle the lawsuits behind closed doors and pay billions to restore the state’s coast.

All the breaks from decorum where Edwards is concerned haven’t been lost on Lauren Chauvin, Louisiana Association of Business Industry director of energy.

“The normal course of action would have been to send out a compliance order,” she told the Record. “They did it saying, ‘Just because you have a permit, we’re suing you.’ If this is about compliance, why haven’t they gone about this the right way?”

Don Briggs, president of the Louisiana Oil & Gas Association, said he thinks he knows why that is and laments the impact the actions are having.

“Look at the governor’s campaign record; he received a great deal of money from trial lawyers,” Briggs told the Record. “Right now, in Louisiana you have 52 rigs when normally we have 170. That’s a lot of jobs. Companies are not doing any work here, no one wants to invest in state and risk being sued by a suit happy governor and suit happy trial lawyers.”

A similar case was filed in 2013 when local oil companies were slapped with a suit seeking damages for coastal erosion. That case sought to force the oil companies to pay to fill in canals and restore wetlands before becoming bogged down in the system.  

But Briggs insists something about these proceedings seems much different.

“The governor has been so willing to encourage and support all of this,” he said. “He told them to file suit. We know the budget is bad and the state is regularly forced to raise taxes, and it’s all because of policies like these that are causing people in our most profitable industry to look to do business elsewhere.”

Indeed, the oil and gas industry has long been the backbone of Louisiana's economy, with entire generations of some families working in the industry.

Briggs wonders just how long residents may continue to have that option.                                                            

“You have to go work in places and states friendlier to the cause,” he said. “I’m not sure how you can be sued when you are following the rules and regulations. We have watched the exodus of the industry out of this state. If you have money you’re going to spend it where you can make money, not where you going to be sued without explanation.”

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Organizations in this Story

Louisiana Association of Business and Industry Louisiana Lawsuit Abuse Watch Louisiana Oil & Gas Association