American Oil and Gas Reporter - February 2018 - 86

Coastal Erosion
Louisiana's economic woes persisted
through 2017, although genuine optimism was beginning to seep into business discussions at the turn of the New
Year, observes Hanks.
"We have been through three tough
years," he affirms. "Finally, we are seeing some light after the darkness."
The general slowdown in oil and
gas activity since 2015's calamitous
drop in oil prices was largely responsible
for the loss of jobs, investments and
tax revenue the state has experienced,
Hanks says.
It also is believed that oil and gas
investments have been directed away
from Louisiana because of an increase
in litigation aimed at the industry, Hanks
continues. Over the past three years, a
spate of lawsuits against operators were
filed related to historical contamination
issues and loss of coastal wetlands.
"Louisiana often is labeled as one
of the most litigious states in the country," Hanks remarks. "That resonates
in the board rooms of our industry, and
we are seeing direct results in a lack of
investment here."
The industry won an important victory last year when a federal appeals
court turned down a request to rehear a
case filed in 2013 seeking billions from
the industry.
The lawsuit brought by the Southeast
Louisiana Flood Protection AuthorityEast (SLFPA-E) contended that more
than 80 companies-ranging in size from
small operators to international oil companies such as ExxonMobil, Shell and
BP-were responsible for damage to the
state's coast. That case was dismissed
in February 2015 by a U.S. district
court judge, who noted the companies
were not contractually obligated to restore the wetlands (AOGR, March 2015,
pg. 16).
That decision was upheld last March
by a three-judge panel of the U.S. Court
of Appeals for the 5th Circuit, which
agreed with the lower court that SLFPA-E's complaint failed to offer viable
causes of action against the defendants
(AOGR, April 2017, pg. 17).
When the same appeals court declined
to rehear the case in April, that legal
avenue appeared closed, according to a
report published in Courthouse News.
"The favorable ruling at the federal
level seems to have kept some of these
parish lawsuits at bay," Hanks observes.
Governor Intervenes
In the meantime, Louisiana Governor
John Bel Edwards announced in Sep86 THE AMERICAN OIL & GAS REPORTER

tember 2016 that he would join lawsuits
against the industry and litigate through
state courts. He also urged all coastal
parishes to file as a means of raising
funds to support the state's $50 billion,
50-year coastal management master plan,
according to published reports.
The governor, however, appears to
have moderated some of the anti-industry
statements made during his 2015 election
campaign, Hanks says.
"Governor Edwards has gotten strong
pushback from industry and from many
of his supporters who may not be in the
industry, but have constituents whose jobs
were lost in the downturn," Hanks reveals.
"Still, we are looking for a change in direction or a change in administration."
Nevertheless, the reported erosion of
thousands of acres of coastal areas, from
a variety of sources and not only oil and
gas activity, continues to draw headlines
and concern from lawmakers. In late December, a report published by Bloomberg
said the state was finalizing a plan to relocate residents of coastal areas.
New home construction in coastal
areas deemed "high-risk" would be prohibited, homeowners would be bought
out, and taxes would be raised for those
refusing to leave, the Bloomberg report
stated. Nonresidential and commercial
building would be allowed, but bonds
would be required to pay for eventual
demolition, it said.
The report prompted the Louisiana
Office of Community Development to
issue a statement the next day that denied
it was working on such a plan. The
office noted it had begun a series of discussions with community leaders in six
coastal parishes to explore ways to prepare for the changes occurring along
the affected region.
"We must create a process for adaptation and to strategically respond to the
changing landscape," the OCD declared.
Legacy Liability
Hanks says the flip side to the legal
challenges facing the industry in Louisiana
are the ongoing battles companies are
fighting against what are referred to as
legacy lawsuits.
The question that continues to be litigated centers on who is responsible for
cleaning up contamination that originated
from a different operator under a different
regulatory regime, he explains.
"We have cases where a company
operated 50 years ago and was in compliance with the regulations in effect at
that time," he points out. "This latest
wave of lawsuits goes after the current
operator on the premise that he inherited
the cleanup responsibility when he ac-

quired the acreage."
In a statement published in December,
LOGA President Donald Briggs urges
Louisianans to join the call to reform the
state's legal system. "We must clean up
the polluted legal environment that
Louisianans and business leaders are
forced to deal with," Briggs declares.
"We have heard many times that the
reason oil and gas companies are not
willing to invest in Louisiana is the legacy
and coastal lawsuits.
"This issue is not dictated by geopolitical matters or the global market. It
has been instigated and encouraged by
the governor of our great state," he adds.
"We must change the way our state leaders
conduct the business of our state."
Briggs' views were supported in a report released in December by the American
Tort Reform Foundation (ATRF) that
ranked Louisiana as number eight on a
list of states for "unbalanced courts" and
"excessive litigation."
In explaining the state's ranking, ATRF
cites Governor Edwards' involvement in
lawsuits against the oil and gas industry
and his hiring of a political fundraiser to
represent the state in anticipation of new
lawsuits.
But remedies to the wave of legacy
lawsuits are available, maintains Vice
President Gifford Briggs. Litigation could
be avoided if the state conducted permit
reviews that considered allegations of
rules violations against an operator, he
insists. The state then could issue compliance orders that would allow the operator to address the complaints before a
lawsuit was filed, he says.
Hanks agrees, noting that his firm and
others in the land business offer clear advice and "kick the tires" when companies
come into Louisiana.
"We now have language in lease agreements to help address some of the potential
legal matters up front," Hanks states.
"We make it clear for both sides that the
operator is responsible for his actions
and he is not responsible for what a predecessor may have done."
Association Events
Leading up to its annual meeting,
LOGA hosts a series of "state of the industry" sessions across the state and in
Texas. Kicking off with a meeting Feb. 1
in Houma, La., state-of-the-industry sessions were scheduled in Houston, New
Orleans, Baton Rouge, Lafayette and
Shreveport, La.
Intended to inform LOGA members,
local elected officials and civic leaders,
state-of-the-industry discussions focus on
the "impact of low oil prices and whether
Louisiana will be ready when the market



American Oil and Gas Reporter - February 2018

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Contents
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