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11 06, 2013 by Shreveport Times
Louisiana has long been a center of the oil and gas industry. Today, this sector supports more than 300,000 well-paying jobs and $75 billion in economic activity. And with an unmatched infrastructure of drilling platforms, refineries, pipelines and shipping capacity, Louisiana is in a perfect position to benefit from the ongoing U.S. energy boom.
Unfortunately, this bright future is being clouded by Louisiana’s poor lawsuit climate. Oil and gas companies in Louisiana are facing a perfect storm of lawsuit abuse driven by plaintiffs’ lawyers. The most recent example is the lawsuit filed by the Southeast Louisiana Flood Protection Authority-East against more than 100 oil and gas companies. The lawsuit accuses the companies of damaging Louisiana wetlands through the building of pipelines and canals.
These claims are scientifically questionable at best. Most evidence suggests government-built flood control projects, not energy companies, are responsible for the majority of erosion in Louisiana wetlands. In addition, the state was already working with many interested parties, including energy companies, on a long-term plan to restore the wetlands.
But that doesn’t matter to the SLFPAE and the private plaintiffs’ lawyers it hired to lead the case. They are convinced they can win a massive judgment against the companies — “many, many billions of dollars” as the lead plaintiffs’ lawyer told the New York Times.
And where will up to a third of those “many, many billions” go? Not towards wetlands restoration. Instead, the money will go straight into the pockets of the plaintiffs’ lawyers hired by the SLFPAE. It’s no wonder that Gov. Bobby Jindal, who opposes the lawsuit, accused the SLFPAE of being “hijacked” by plaintiffs’ lawyers.
These same lawyers are also behind the ongoing problem of “legacy” lawsuits. Brought by a small group of landowners, these cases allege environmental destruction by oil and gas companies often dating from decades earlier. Yet the plaintiffs are not required to prove any actual environmental damage by the companies. Nor are they required to spend settlement dollars on environmental remediation. With no environmental benefits, these cases have only one goal — lining the pockets of plaintiffs’ lawyers.
While the lawyers do well, Louisiana’s economy suffers. According to a study from Louisiana State University, legacy lawsuits have discouraged oil and gas development — costing the state 30,000 jobs and $10.5 billion in lost economic output.
Louisiana’s elected leaders realize the problem with legacy lawsuits. Last year, Gov. Jindal and the state legislature enacted legislation to restrict such cases. Yet a recent ruling by the Louisiana Supreme Court essentially gutted those reforms and allowed the abuses to resume — at a huge cost to Louisiana’s economy.
The SLFPAE case and the legacy lawsuit problem clearly demonstrate a Louisiana legal culture that is hostile to energy businesses. But they’re not the only businesses hurting.
A 2012 Harris Interactive survey of in-house business lawyers ranked Louisiana’s legal climate below all neighboring states and second worst in the entire country. In that same survey, 70 percent of corporate counsel said that a state’s legal climate had an impact on crucial business decisions, such as where to locate and expand.
At a time of heightened competition among states for jobs and investment, Louisiana just can’t afford to allow its legal climate to degrade.
Fortunately, Louisiana has an opportunity to fix its lawsuit system by enacting reforms next year that address abusive litigation against the oil and gas industry, as well as several other important reforms that the legislature has considered in the past like fixing the state’s venue laws, jury trial thresholds and the way asbestos litigation is brought. These steps will help Louisiana improve its legal climate, attract jobs and investment and establish a brighter future for the Pelican State.
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