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03 28, 2012 by The Times-Picayune
Louisiana's oil and gas industry supports a tremendous number of direct and indirect jobs, is the fourth-largest producer of crude oil and is one of the nation's top producers of natural gas.
However, the current legal environment in Louisiana is harming the oil and gas industry and the state economy due to legacy lawsuits -- suits seeking a financial windfall for alleged environmental damage claims by certain landowners. Such lawsuits are unique to Louisiana, and discourage oil and gas exploration and production. But it doesn't stop there.
The LSU Center for Energy Studies recently released a report concluding that legacy lawsuits have cost Louisiana 1,200 new oil and gas wells over the past eight years, $6.8 billion in lost drilling investments and 30,000 jobs. Also due to the suits, Louisiana has lost $1.5 billion in wages for those directly and indirectly employed in the oil and gas industry, according to the study.
Legacy lawsuits are not a new problem for the oil and gas industry. A 2003 Louisiana Supreme Court decision triggered an exponential increase in the volume of cases filed.
In 2006, after several subsequent exorbitant damage awards, the state Legislature passed ACT 312, requiring a public hearing to determine the most feasible plan to clean up a given property.
These stipulations were put in place prior to any trial to neutralize plaintiffs' lawyers' ability to game the system. However, the trial bar is now manipulating the process by placing the public hearing at the end of the litigation. This allows plaintiffs' lawyers to deprive Louisiana juries of the government's objective valuation of property damage, thus enabling them to slap their own price tag on it to later extract inflated settlements.
Legacy lawsuits are having a detrimental impact on the future growth of the oil and gas industry in Louisiana. By 2010, of the top 50 crude oil producers in the state, 28 companies had been named in legacy lawsuits.
The burden on the jobs will continue to grow until these lawsuits end and the loopholes surrounding ACT 312 are closed.
Lisa A. Rickard
U.S. Chamber Institute for Legal Reform
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