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Study: Coastal lawsuits cost state economy between $44 million and $113 million annually

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A study released this week claims lawsuits seeking to make oil and gas companies pay for damage to Louisiana’s coastal environment cost the state’s economy between $44.4 million $113 million per year.

Gavin Roberts, an assistant professor at Weber State University and former energy industry analyst, wrote the report for the Pelican Institute for Public Policy, a fiscally conservative think tank.

Roberts says “between 53 and 74 fewer oil wells were drilled offshore Louisiana than would have been drilled if the threat of lawsuits was lower in the state.” The lawsuit risk caused a decrease of more than 2,000 jobs with a combined payroll of about $70 million per year, he says.

“Given that the average royalty rate in the coastal zone of Louisiana is approximately 20 percent, we estimate Louisiana’s state and local governments lose $8.9 million per year to $22.6 million per year in royalty revenue,” he says.

In 2013, Plaquemines Parish and Jefferson Parish each filed lawsuits against nine oil and gas companies. our additional coastal parishes also eventually filed coastal lawsuits in 2016 and 2017. Gov. John Bel Edwards has supported the lawsuits.

Plaintiffs allege oil and gas companies damaged south Louisiana’s wetlands and violated state law and their permits by not restoring damaged areas. Freeport McMoRan became the first company to settle in September, agreeing to pay $100 million in cash and environmental credits over the next several years.

Roberts’ analysis relies in part on comparing activity before and after 2013 in Louisiana’s waters to the federal offshore region, where the litigation risk was assumed to be lower.

The Pelican Institute calls for reforms to Louisiana’s legal and regulatory policies in its “Jobs and Opportunity Agenda for Louisiana” report.

This week’s report is not the first to question Louisiana’s legal climate.

The American Tort Reform Association, which advocates for a pro-business legal climate, has identified the state as one of it’s “judicial hellholes.