Coastal Lawsuits Stretch the Law Beyond its Intent, Ignore Critical Facts and Replace Democracy with

LLAW opposes coastal lawsuits because they attempt to stretch the law far beyond its intentions, ignore critical facts and involve private lawyers in a space meant for democratically elected decision makers.

Decades-old claims against the job-creating energy industry cost jobs and deter investment:

• We all recognize the need to protect our families, businesses and communities from hurricanes, floods and other natural disasters; we are all impacted in one way or another by our rapidly changing environment.

• The 43 suits filed by plaintiffs’ lawyers on behalf of seven coastal parishes send the wrong message about Louisiana. Our natural resources have driven Louisiana’s economy for generations, transforming Louisiana into one of the nation’s leading oil and gas producers.

• In an unprecedented abuse of the Coastal Zone Management Act (CZMA), these suits attempt to outsource the enforcement of state-issued permits to local governing authorities.

• These misguided suits target more than 200 large and small producers, threatening Louisiana’s long-term economic growth, discouraging continued investment by the energy sector and reinforcing our long-held reputation as one of the worst states for doing business in the country.

• Since 2013, the parties have been mired in this litigation with no immediate resolution in sight. Even if these suits are successful, there is no requirement that the parishes or cities use any eventual settlement funds for remediation.

According to the 2019 The U.S Chamber Institute for Legal Reform’s Litigation vs. Restoration report:

• The oil and gas industry employs nearly two million Louisianans and pays hundreds of millions of dollars into the state treasury each year. It is at the core of Louisiana’s economy, and has been for many years. But over the last few decades, plaintiffs’ lawyers have recruited increasing numbers of private landowners and state and local officials to file lawsuits against oil and gas companies over allegedly contributing to coastal erosion. This litigation has reached a point that it threatens the future of the energy industry in Louisiana.

• Like earlier legacy lawsuits, the parish and city suits target any oil and gas company that ever worked within an identified operational area. This scheme incentivizes lawyers to bring these claims to obtain high payouts, with no real focus on restoration.

• The private attorneys hired by the parishes to represent them in the coastal erosion suits are likely to benefit the most from these lawsuits.

• Under the Gulf of Mexico Energy Security Act of 2006 (GOMESA), the state receives annual funding for coastal conservation, restoration and hurricane protection. Such funding allows the state to remediate costal erosion now, without having to wait for litigation to resolve.

• The state departments should be working together and collaborating with industry professionals to develop effective plans to restore the coastline, instead of initiating divisive litigation that halts progress towards remediation.

A 2019 Pelican Institute Economic Analysis of Coastal Litigation found:

• Lawsuits seeking to make oil and gas companies pay for damages to Louisiana’s coastal environment cost the state’s economy between $44.4 million $113 million per year.

• Between 53 and 74 fewer oil wells were drilled offshore than would have been drilled if the threat of lawsuits were lower in the state, and the lawsuit risk caused a decrease of more than 2,000 jobs, with a combined payroll of about $70 million per year.

Louisiana Accidents Slightly Higher than the National Average, Bodily Injury Claims Nearly Double

The number of accidents in Louisiana is slightly higher than the national average and the number of general accident claims is in line with the national average. Bodily injury claims, however, are nearly twice the national average. (Source: Property Casualty Insurers of America) Insure.com found that Louisiana drivers pay the second highest rates in the nation for auto insurance premiums:

• For the fourth year in a row, Louisiana has the second-highest auto insurance in the country, averaging $2,389 – 57 percent higher than the 2020 national car insurance average and 4 percent more than its 2019 rates.

• Among other factors for higher rates, Louisiana residents are considered to be some of the most litigious in the nation.

• Louisiana has a direct-action law that allows residents to sue insurers directly. Lawsuits of this kind drive up the cost of insurance for everyone in the Pelican State.

• Until lawmakers figure out a way to change this apparently broken system, auto insurance rates will likely continue to stay among the highest in the nation.

• Not only does Louisiana have a high percentage of uninsured drivers (13 percent) but 40 percent of those that are insured only carry state minimum coverage levels.

• Since the majority of drivers are uninsured or underinsured, many turn to the court system to get larger payouts when an accident occurs. To compensate for this onslaught of lawsuits, Louisianans are forced to pay higher premiums.

From the American Property Casualty Insurance Association, 2020):

• Phantom Damages (Collateral Source Rule): When judges and juries decide how much should be paid in lawsuit damages, that decision should be based on what was actually paid for medical expenses, instead of artificially inflated phantom costs.

• Jury Trial Threshold: Louisiana denies access to a jury trial until damages reach at least $50,000. This jury threshold is the highest in the country – three times more than the next highest state (Maryland has a threshold at $15,000). There are 36 states with no threshold at all.

• Direct Action: Louisiana is one of only three states where a plaintiff can sue you AND your insurance company. It also permits the presentation of evidence of liability insurance to the jury.

• Seat Belt Gag Rule: Although seat belts are required by Louisiana law and they help prevent injuries, it is illegal to tell a jury whether seat belts are being used at the time of a crash. Nearly 87 percent of drivers in Louisiana use seat belts. They save lives, and according to National Highway Transportation Safety Administration (NHTSA), are the single most effective thing you can do to protect yourself in a crash.

Lawsuit abuse has a real economic impact on Louisiana families and businesses.

Louisiana’s legal climate was ranked second-worst in the nation in the 2019 Lawsuit Climate Survey by the US Chamber Institute for Legal Reform:

• Families and businesses in Louisiana were forced to pay nearly $7 billion in expenses related to tort litigation in 2016 – equivalent to more than $4,000 for every Louisiana household.

• The impact of this hidden “tort tax” on the Louisiana economy ranks among the top five states in the nation, with litigation costs equating to almost 3 percent of the state’s Gross Domestic Product (GDP).

• Lawsuit abuse costs totaled $429 billion nationwide in 2016, with costs in Louisiana among the highest of any state.

Louisiana came in at #4 on the list of the nation’s Judicial Hellholes in the American Tort Reform Foundation’s 2019 – 2020 Report:

• On top of high auto insurance rates, excessive tort costs create a burden for Louisiana residents who lose their abilities to create a livelihood due to job losses and resulting losses in personal income.

• Based on claims that the energy industry caused coastal erosion, millions of dollars have been spent on legal fees related to coastal lawsuits while accomplishing nothing for the coast. Local and parish governments have hired contingency fee lawyers to file these lawsuits.

A 2019 Perryman Group Study for Citizens Against Lawsuit Abuse benchmarked Louisiana against Ohio and found the following:

• The total current impact of excessive tort costs on the Louisiana economy amounts to estimated losses of $1.9 billion in annual output (gross product) annually.

• This amounts to about 19,800 lost jobs and losses of $1.2 billion annually in personal income for hardworking Louisiana citizens.

• The resulting reduction in business activity due to civil justice costs leads to lower-than-expected gross product, which results in a hidden “tort tax” of more $400 per person.

• All major industry groups are negatively impacted, with retail trade, business services, health services and other service industries showing the greatest losses.

• The yearly fiscal losses (as of 2019) are estimated at $100.3 million in state revenues and $84 million to local governments.

• Reforms resulting in the greatest reduction are those aimed at reducing frivolous lawsuits, capping appeal bonds, setting negligence standards and limiting noneconomic damages.

• Economic benefits occur because legal reform enhances the efficiency, fairness and predictability of the civil justice system.

• A flawed civil justice system that generates exorbitant levels of damages or numbers of awards and is unpredictable in its outcomes may result in negative impacts through the misallocation of both economic and human resources.

• States that have implemented reforms have seen improved judicial efficiency and measurable improvement in economic performance.