Appeals court rules Louisiana oil-and-gas lawsuits must be heard in federal court

A federal appeals court has dealt a blow to proponents of dozens of environmental lawsuits aimed at oil and gas companies that have operated in Louisiana.

The state and six coastal parishes have filed 42 lawsuits against 200 fossil fuel companies since 2013 over coastal erosion and wetland loss, with some allegations dating back as far as World War II.

The 5th U.S. Circuit Court of Appeals ruled in favor of oil-and-gas defendants in two lead coastal land loss cases, saying they should be re-examined in federal district court since they involve operations that were federally overseen at the time.

The ruling reverses a previous decision that allowed the cases to be heard in state court, which the plaintiffs had sought.

The decision is significant because trial lawyers tend to prefer state courts because of the dynamics involved in electing judges, according to Louisiana Lawsuit Abuse Watch. Federal judges are appointed and, therefore, not subject to local elections.

Louisiana Oil & Gas Association President Mike Moncla applauded the decision.

“Since the beginning of the coastal litigation process, the oil and gas industry in Louisiana has been on the decline. These frivolous lawsuits have hurt jobs, bankrupted marine service companies and operators, and have decimated the state’s tax revenue it receives from energy production,” Moncla said in a statement.

Louisiana is a major energy producer, according to the U.S. Energy Information Administration. It ranks in the top five states for natural gas production and proved reserves, while operating 17 oil refineries accounting for nearly one-fifth of the nation’s refining capacity.

The Institute for Energy Research cites Louisiana as the nation’s fourth-largest producer of oil and electricity rates 28% below the national average.

The industry’s success, however, comes at the expense of unique coastal wetlands, according to lawsuit plaintiffs.

Together, they argue companies such as BP America Production Company, Chevron, ConocoPhillips, Exxon Mobil Corporation and Shell failed to follow state law when drilling wells, disposing waste and dredging canals, among other activities.

If successful, the high-stakes lawsuits could cost the companies billions of dollars.

In the meantime, Daniel Erspamer, chief executive officer of the New Orleans-based Pelican Institute, said the barrage of legal actions is costing the Louisiana economy.

A Pelican Institute study found the dozens of coastal lawsuits have cost the state $44 million to $113 million each year since they were filed. At least 2,000 jobs were affected over the first two-year period alone, the study said.

“Our state government shouldn’t be in the business of suing job creators, particularly considering the fact that these lawsuits kill jobs without guaranteeing funding will go towards coastal restoration efforts,” Erspamer said.