The Louisiana Association of Business and Industry has waded further into the litigation between parishes and energy firms over coastal erosion responsibilities, arguing that the issues involved reverberate far beyond the oil and gas industry.
In conjunction with the state’s two oil and gas associations and the Louisiana Chemical Association, LABI filed an amicus brief last week that challenges a three-judge panel’s decision last month. That U.S. Fifth Circuit appeals court ruling concluded the cases should be sent to state courts.
A loss in state courts could put energy companies on the hook for billions of dollars in damages to address coastal degradation over decades of time.
The energy companies named as defendants are appealing the panel’s decision to the full Fifth Circuit. A key part of the argument involves how the energy industry was operating in response to the federal government’s efforts to fight World War II.
“During World War II, the federal government took over these leases and took over a lot of the oil and gas industry and told them what to do and told how much they had to produce and how they had to produce it,” Lauren Chauvin, who directs LABI’s Civil Justice Reform and Energy councils, told the Louisiana Record.
Any move to try the parish lawsuits in state courts and ignore this federal role creates uncertainties for businesses throughout Louisiana during the coronavirus pandemic, according to the amicus brief the business associations filed.
“This includes businesses whose operations are temporarily commandeered to some extent under the Defense Production Act of 1950 – which may occur in a broad variety of circumstances, such as a car maker pressed to make tanks during wartime, a textile manufacturer compelled to make masks during a health emergency or a shipping-container company directed to build temporary housing units following a natural disaster,” the brief states.
Setting such a precedent in the Fifth Circuit raises key concerns for companies that might be asked to do something in a national emergency, according to many of the defendants’ supporters.
“If the federal government is telling you that you have to do this and then decades later you get sued by a state and the state says you shouldn’t have done that, that affects anyone who is being asked by the government to do something -- any industry,” Chauvin said.
Louisiana small businesses such as grocery stores, catering companies and dry cleaners can all see their fortunes sag when the energy sector struggles, she said.
“You had Russia and Saudi Arabia doing a supply glut, then you had coronavirus plummeting demand,” Chauvin said. “That’s a huge hit to our industry.”
LABI’s president and CEO, Stephen Waguespack, also criticized the direction of the parish lawsuits.
““For decades, our state has been able to balance the production of critical resources with protection of our bountiful sportsman’s paradise,” Waguespack said in a prepared statement. “These lawsuits will disrupt that balance and devastate our state’s economy.”