Covering Louisiana

May 11, 2011 3:42 PM by Press Release

LOGA Releases Information About Lawsuits from Today's Meeting

Louisiana Oil and Gas Association Released the following information today:

A coalition of business leaders today announced their support for legislation to ensure that expert evaluation and remediation of "legacy" oilfield site claims take place promptly and that funds said to be needed for remediation are used for that purpose.

Legacy claims seek to address current and past environmental damages that occur on land used for oil and gas exploration and production.

"A handful of plaintiffs lawyers are filing lawsuits and seeking settlements for billions of dollars as they seek to circumvent Act 312, which requires that settlements be approved by the state and administered to remediate legacy sites," said Don Briggs of the Louisiana Oil & Gas Association which represents
independent oil producers. "The oil and gas industry is already an uncertain and speculative business; abusive legacy lawsuits take risk to a whole new level. Oil and gas companies can explore anywhere, and legacy lawsuits are taking Louisiana out of contention for onshore jobs and investment."

Act 312 was designed to prevent windfall awards and to require that remediation be approved and monitored by the Louisiana Department of Natural Resources, but it has not worked as anticipated, as some lawyers have found ways to circumvent the system. Legacy lawsuits drag on for years without any
remediation taking place. The proposed legislation would clarify the procedures in Act 312 and require that those who file legacy suits receive a state-­-monitored clean up rather than money that they are not required to spend on the land.

"The concept behind Act 312 was on target-to provide certainty in the system and require that sites be cleaned up," continued Briggs. "But we've seen an increasing number of lawsuits filed by a few lawyers whose goal is not environmental remediation or clean up, but to obtain windfall sums for them and their
clients."

"By clarifying Act 312, we can make sure that environmental impacts from oilfield activity will be cleaned up more quickly and claims resolved more efficiently," said state Representative Page Cortez, who introduced the legislation. "This bill ensures that the state experts in the Office of Conservation are brought into the process early to lend their knowledge, expertise, and resources to handle these issues. It clarifies the process and mechanism to remediate any potential contamination as originally intended by the legislature."

This effort is supported by the Louisiana independent producers, who are concerned that even one legacy lawsuit could close an independent producer's doors - particularly where the suit seeks inflated monetary damages rather sums that would be used to return the land to state regulatory standards.

Nearly 60 percent of the state's top 50 crude oil producers are named among the approximately 250 lawsuits that have been filed. Together, these affected companies represent more than half of the state's crude production as of 2010 - and by extension, a significant portion of Louisiana's economy. In total, more than 1500 companies and individuals have been named in Louisiana legacy lawsuits.

For David Russell, president of independent oil producer McGowan Working Partners, one element of the problem is insuring his Louisiana operations. "Obtaining proper insurance to cover non sudden or accidental (legacy) pollution liability for oilfield operations is not difficult to get - it's impossible. After 15 years of providing coverage, my company's provider declined pollution liability insurance coverage simply due to the legacy lawsuit issues in the state. Developments like this are going to shut this industry down - as far as Louisiana is concerned."
"The negative impacts associated with legacy lawsuits are felt throughout the Louisiana economy,"

Louisiana Association of Business & Industry (LABI) president Dan Juneau stated. "Not only do these lawsuits continue to diminish the vitality of Louisiana's oil and gas business - affecting economic investment, oilfield and related jobs and state tax revenues - this issue only compounds our state's reputation as a place where it can be difficult to grow a business. With the looming budget deficit, Louisiana cannot afford to allow onshore oil and gas exploration to be stifled and must begin to show a willingness to encourage job growth and investment in all business sectors."

Ginger Sawyer, vice president of LABI, expressed support for resolving the legacy issue. In addition, she read the following statement provided by U.S. Senator David Vitter. "Every Louisianan knows too well that the ongoing shutdown of Gulf production is directly tied to the federal permitting moratorium. But now, Louisianans face an additional hit to job security and job growth tied to onshore production threatened by these legacy lawsuits. I'm very concerned this declining business climate may be detrimental for the future of Louisiana's energy jobs and our capital investment in energy exploration and production. I strongly endorse the efforts of LOGA, Representative Cortez's legislation, and those
working to keep our jobs here in Louisiana."

Background: Under Act 312, through the Office of Conservation of the Department of Natural Resources, the State of Louisiana plays an active role in reviewing claims and in making sure that remediation occurs. Settlements of private litigation are not required to be administered by the Office of Conservation. As a result, without the involvement of the Office of Conservation, there is no assurance that the sites will be cleaned up.

The Louisiana Oil and Gas Association represents the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Its prima our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana's oil & gas industry and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

The Louisiana Association of Business & Industry Is the largest and most effective business lobbying group in Louisiana. LABI's mission is to foster a climate for economic growth by championing the principles of the free enterprise system and by representing the general interests of the business community through active involvement in
the political, legislative, judicial and regulatory processes.

 

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