NewsCovering Louisiana


First settlement in lawsuits against oil firms over coast

Posted at 7:17 PM, Sep 26, 2019
and last updated 2019-09-26 20:17:07-04

BATON ROUGE, La. (AP) - Lawyers representing coastal Louisiana parishes have negotiated their first settlement with one of the oil and gas companies accused of damaging the state's coast.

The settlement is with Freeport McMoRan Inc. and its subsidiaries, The New Orleans Advocate/The Times-Picayune reported.

The deal will result in payments totaling $100 million in cash and environmental credits over many years, attorney John Carmouche said.

"It's a big deal because we have been fighting for five years and an oil company has finally validated the claims and is willing to be involved in a business solution to solve the real and provable damages caused by the oil companies. And there's a lot more to come," Carmouche said in an interview Thursday.

Freeport's vice president of communications, Linda Hayes, confirmed the agreement.

Carmouche said nearly all of the money would be spent by the state or local governments to restore coastal marshes and wetlands.

The deal establishes a potential settlement template for the dozens of other companies that have been similarly sued. Carmouche said that Freeport's wells account for only 4% of those drilled in the coastal zone, suggesting that the $100 million could be just a fraction of any broader settlements, should they come to pass.

The lawsuits charged that oil and gas firms failed to follow state law in drilling wells, building canals, disposing of wastes, and in restoring the land and wetlands to their conditions before oil and gas operations began.

The Louisiana Oil and Gas Association and the Louisiana Mid-Continent Oil and Gas Association described the settlement Thursday as "the latest chapter in the trial lawyers' playbook to shakedown Louisiana oil and gas companies for legally conducting production activities, which were encouraged by state incentives and carried out under rigorous state and federal regulations many decades ago. ... Regardless of how one company may choose to handle their case, LOGA, LMOGA and our members remain confident these claims will not stand up in federal court."

The actual deal is with Freeport Sulphur and related companies "and protects those companies, along with their parents and affiliates including Freeport-McMoRan Inc., from any further litigation," Hayes said in an email Thursday. "While we believe the plaintiffs' theories of liability are unfounded, we recognize the importance of coastal restoration regardless of its cause. As a result, we decided to make an early investment in a creative solution rather than continue to engage in years of litigation."

The deal still requires the approval of 12 coastal parish governments, although Carmouche said he expects agreement from all 12 before year-end.

Parishes might still go to court against each other and the state if the planned distribution of the settlement money shortchanges their claims. And there is no guarantee that other oil and gas companies will be tempted to follow Freeport's lead.

Upon formally signing the settlement, Freeport would make an upfront payment of $15 million, would pay an additional $4.25 million each in 2023 and 2024, conditioned on the creation of a special fund by the Legislature to receive the money, and would contribute up to $76.5 million "subject to contemporaneous reimbursements from the proceeds of the prior sales of environmental credits," according to Hayes.

Carmouche estimated that Freeport would disburse the money over 22 years. But, he believes that the settlement creates a win-win situation for the state, the parishes and the company.

The Carmouche law firm and its legal partners first sued the oil and gas companies in 2013 and represent six south Louisiana parishes. The number of cases total 42, and they target 98 different companies.

The first case has yet to receive a trial date.

Any settlement money could speed the state's coastal restoration efforts because Louisiana lawmakers have resisted efforts to raise taxes to fund coastal projects.