A Plaquemines Parish jury’s decision on Friday to hold Chevron USA liable for $744 million in damages for its role in the erosion of Louisiana coastal lands will undermine the state’s energy industry and overall economic growth, critics say.
The jury verdict in the civil case Plaquemines Parish v. Chevron USA Inc. is the first trial to be completed out of 42 lawsuits brought by parishes. The lawsuits allege that oil and gas drilling activities over many decades have degraded the state’s wetlands. In turn, the erosion has made Louisiana more vulnerable to hurricanes and other storms, according to environmental agencies.
The size of the verdict fits the public relations company Marathon Strategies’ definition of a “thermonuclear verdict” – that is, a verdict in excess of $100 million. Critics say the damages award is the result of the state’s litigious climate and a continuing trend toward “jackpot justice” that provides a revenue stream for trial attorneys.
Louisiana Lawsuit Abuse Watch (LLAW), which advocates for legal reforms in the state, said the decision in the 25th Judicial District Court represents a warning that job creators should think twice before conducting business in Louisiana.
“Lawsuits are not economic development, yet these coastal suits have become a cottage industry for a small number of well-heeled firms pursuing big payouts,” Lana Venable, LLAW’s executive director, said in a statement emailed to the Louisiana Record. She added that the verdict only bolsters the state’s reputation for “excessive lawsuits, outrageous damage awards and a legal climate that favors the trial bar over taxpayers and job creators.”
LLAW indicated that the jury’s decision will create a long-term threat to economic growth in the state.
“This verdict is a bellwether for the remaining coastal lawsuits, reinforcing Louisiana’s long-held reputation as one of the worst states for doing business in the country, making us less competitive compared to neighboring states,” LLAW said.
The Louisiana Mid-Continent Oil & Gas Association (LMOGA) suggested that fixing the coastal erosion problem was not the true goal of the litigation, which was handled by the parish’s lead attorney, John Carmouche.
“These lawsuits were never about restoring the coast,” LMOGA said in a prepared statement. “As the No. 1 private investor in our working coast, the energy industry is already doing that. … This is deep-pocketed trial lawyers driving baseless lawsuits, hoping to make millions in legal fees. …”
Will Green, the president and CEO of the Louisiana Association of Business and Industry (LABI), echoed the criticism, arguing that such verdicts could lead to a migration of industry players to other, more business-friendly states.
“Louisiana’s oil and gas industry supports more than 250,000 jobs and contributes billions of dollars annually to our state’s economy, funding critical infrastructure, education and coastal restoration projects,” Green said. “This verdict – which should absolutely be appealed – not only threatens those economic benefits but also sends a chilling message to businesses across the country about the risks of operating in Louisiana.”
Excessive litigation undermines efforts between government and industries to work together to find real solutions to coastal erosion by driving away companies with both financial resources and expertise, according to Green.
The Louisiana Coastal Protection and Restoration Authority reports that the state is in danger of losing 3,000 square miles of coastal land over the next five decades.
Pelican Institute for Public Policy CEO Daniel Erspamer said the verdict would siphon away hundreds of millions of dollars for energy production in the state.
“For more than a decade, coastal lawsuits like this one have unfairly targeted energy producers for activities that were lawfully conducted decades ago,” Erspamer said. “This misguided litigation is based on a dangerous premise: that companies can and should be held retroactively liable for actions that were legally permitted, and often encouraged, by the very governments now seeking massive damages.”