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If every lawsuit filed in Louisiana were legitimate as Gordon McKernan suggests in his letter (“Frivolous suits already illegal,” Sept. 18), then presumably our state would not have a national reputation as a potential “judicial hellhole” and be ranked as the second-worst legal climate in the country.

While it is true that Louisiana law technically prohibits the filing of frivolous lawsuits, unfortunately our courts profoundly underutilize this law. Take for example the niche sector of legacy “oilfield” lawsuits, which have had a devastating impact on Louisiana’s oil and gas industry over the past decade.

In these cookie-cutter suits, plaintiffs’ attorneys and their clients seek millions of dollars for environmental damage that allegedly occurred years or decades ago. But after the Louisiana Legislature began investigating the issue last year, data compiled by the Louisiana Department of Natural Resources showed 78 percent of the cases filed presented no evidence of actual damages, according to state standards.

If that is not frivolous, I do not know what is. Yet these legacy cases remain in the system clogging up our courts. Fortunately, the Legislature took action earlier this year to help address the legacy lawsuit issue, but this is just the tip of the iceberg. Louisiana’s legal system is still a mess, for the most part, and we must continue working to clean it up.

Don Briggs, president
Louisiana Oil & Gas Association
Baton Rouge

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A survey by the Fraser Institute has ranked Louisiana as the 15th-best place in the world and 10th-best place in the United States to make oil and gas investments among 147 jurisdictions evaluated.

Experts said Louisiana can do better.

“We have to continue creating a positive atmosphere that will attract the oil and gas industry and not deter it,” Louisiana Oil and Gas Association President Don Briggs said. “This happens when individual parishes on up to the federal government realize that increasing government oversight is not the answer.”

The Fraser Institute’s sixth annual survey studied investment barriers, including higher taxes, the cost of regulatory compliance, uncertainty over environmental regulations and other existing regulations, quality of infrastructure, labor availability and skills, disputed land claims and the legal system.

Oklahoma, Mississippi and Texas were named the top three places, not only in this country, but in the world, to make oil investments. Their taxation regime, environmental regulations, clarity over protected areas, cost of regulatory compliance and legal system were more attractive than Louisiana’s, according to the survey.

“So many factors fall into play when looking at the overall picture of an industry like oil and gas,” Briggs said. “However, the litigious climate in Louisiana is stifling to the industry.”

According to a recent survey from the U.S. Chamber of Commerce, Louisiana is ranked 49 out of 50 for its legal climate. That same survey ranked Louisiana second out of 50 for tax climate for new firms — a picture different from the one painted by Fraser.

“The industry has been faced with these so called ‘legacy lawsuits’ where the idea is to litigate first, then regulate,” Briggs said. “This is a direct hindrance to those wanting to invest in the industry. Other factors such as taxes, regulations and politics also play a role in effecting the oil and gas industry.”

The survey noted that Louisiana’s labor availability and skills are the most attractive in the world. It also placed the state’s political stability and fiscal terms as encouragements to investment. Infrastructure, labor regulations and trade barriers were in the middle of the pack.

Louisiana has hovered around No. 15 in the survey over the past four years, but the state and area has continued to attract oil and gas companies. Lafayette Economic Development Authority Director Gregg Gothreaux used Halliburton’s new manufacturing facility as an example of growth.

“It was a competition to bring Halliburton here, and the competition was against other communities in Texas and in other places and that competition was won by Lafayette and the state of Louisiana,” Gothreaux said. “And a great part of it was that they knew that doing business in Lafayette, La., from the experience from other divisions, is beneficial to their bottom line.”

Briggs pointed to Haynesville Shale as an indicator of Louisiana’s prosperity. Haynesville Shale has been the No. 1 producing natural gas field in America for the last four years.

“Around 80 percent of the nation’s offshore oil and gas resources come from or through Louisiana. This is equal to nearly 30 percent of the entire energy consumption for the United States moving along the highways of Louisiana,” Briggs said.

“Looking at these statistics alone, Louisiana is the key player in oil and gas for our country.”

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Sabine Pipe Line LLC and Vermilion Parish landowners will be in federal court today over an effort by Sabine to expropriate land for its pipelines and other facilities that are part of the Henry Hub near Erath.

Sabine filed suit to expropriate the land in November, even though its lease doesn’t expire until 2018.

The land is owned by the heirs of Aristide Broussard, a descendant of one of the first Acadians to settle the area. The property has been in the family for more than 100 years.

Broussard and the Texas Co. signed a lease in September 1942. On that land, the company and its successors, including Sabine Pipe Line LLC, built pipelines and other facilities that today make up the Henry Hub.

Close to a dozen interstate and intrastate natural gas pipelines interconnect at Henry Hub, a locus named after the Henry Gas Processing plant there. The facility is so integral to natural gas production in the U.S. that its name is used for the index price of natural gas on the New York Mercantile Exchange. Flooding at the facility after Hurricane Rita in September 2005 caused a disruption in natural gas service nationwide.

In its legal filing Sabine Pipe Line claims that, as part of a “legacy lawsuit” in state court over environmental damage to the property, the landowners indicated they might seek to terminate the lease before 2018.

The company said that’s why it filed the federal expropriation lawsuit: to ensure that the flow of natural gas continues. It claims the right to condemn or take the land through the federal Natural Gas Act.

The landowners said Sabine Pipe Line is “a limited liability company wholly owned by Chevron Pipe Line Company, which itself is a wholly owned subsidiary of Chevron Corporation.”

The Broussard heirs intervened in the legacy lawsuit in 1998, alleging negligence by Chevron and its affiliates caused environmental damage to the same land Sabine wants to expropriate.

Sabine filed to take the land just a few months after the landowners’ experts concluded in the legacy lawsuit that it would cost Chevron millions to clean up the pollution on their property, the landowners said.

They further assert that, if Sabine is allowed to expropriate the land, they may lose their standing to seek compensation for environmental damage in the legacy lawsuit against Chevron.

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Sen. David Vitter has formally thanked Gov. Bobby Jindal for signing into law a legacy lawsuit solution passed by the Louisiana Legislature.

“I want to thank the state Legislature for passing this strong solution to the legacy lawsuit issue which Governor Jindal signed into law,” Vitter (R-La.) said. “It will help clean up real contamination and shut down the trial lawyer bonanza, which has been hurting job creation in our energy sector.  [The solution] happened for one reason – legislators did their job, faced a tough issue and voted the right way in the House, and in the Senate.”

Legacy lawsuits proved to be a contentious issue for legislators during their 2012 regular session. The state Senate and House of Representatives ultimately accepted a procedural compromise presented by state Sen. Bret Allain.

“Landowners wanted more oversight,” Allain (R-Jeanerette) said after presenting SB-731 an alternative to HB-618 in April. “So what I did was set up as an oversight committee comprised of the Department of Natural Resources, Commission of Conservation, Department of Environmental Quality, Wildlife and Fisheries, Department of Agriculture, Department of Health and Hospitals and, in coastal parishes, and the Coastal Protection and Regulation Authority. “

Allain argued that by giving each agency a say in the matter, individual cases would be fully addressed without landowners and oil companies having to come back later to address added complaints.

Throughout legislative debate, Vitter argued that a stalemate regarding legacy lawsuits favored trial attorneys who he said seek millions in damages, above actual cleanup costs.

“The Louisiana Oil and Gas Association would like to give particular praise to Sen. Vitter for his leadership as a driving force that resulted in this much-needed solution to these frivolous legacy lawsuits,” LOGA President Don Briggs said. “While this was not a Capitol Hill battle, Sen. Vitter made his voice heard in our home state of Louisiana. These two pieces of legislation successfully passing out of the state legislature would not have been possible without his willingness to speak out on behalf of the industry and keep the issue on the forefront of the public debate.”

“The Louisiana Landowners Association appreciates that the Governor’s Office has helped to achieve this compromise,” Louisiana Landowners Association Executive Director Paul Frey said. “We add a special thanks to Sen. Allain who is a key advocate for landowners.”

“To reach a compromise, it was important that we came to a balance that enables us to continue to lead the country in energy production and also be good stewards of the environment,” Natural Resource Secretary Scott Angelle said in the news release from the governor’s office. “This compromise provides for transparency in the process, accelerates clean up of the environment and protects innocent parties from punitive damages.”

Vitter highlighted key components that he fought for and that became part of the solution. The senator’s contributions to legislation allows operators to accept responsibility and be credited for cleaning up sites, calls for pretrial public hearings and makes sure the clean-up plan is publicly available and admissible in court.

The term legacy lawsuits refer to claims brought by landowners against oil and gas operations in relation to contamination of property related to drilling and extraction sites.  These lawsuits are often filed against every operator who has ever worked a section of property.

Until now, lawsuits could include multiple companies, even if some lease-holding companies are not the ones responsible for contamination that occurred prior to their ownership.

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The governor also signed a pair of bills — House Bill 618 and Senate Bill 555 — that will change the complex legal process for dealing with so-called “legacy lawsuits” that seek millions of dollars in damage claims and that the oil and gas companies claim are stymieing energy exploration in the state.

At issue is the state’s procedures for cleaning up environmental damage to property caused years ago when energy companies searched, developed and exploited oil and natural gas fields. Following acceptable procedures of the time, the energy companies often left messes on-site, then sold the leases to others, usually smaller oil companies.

Landowners contend that litigation, which carries the threat of an expensive verdict, seems the only motivation to get the oil companies to clean up.

Big oil companies counter that agreeing to a cleanup opens them to much larger verdicts for less documented damages, such as financial losses from being unable to use the land.

In order to accelerate cleanup, the compromise outlined in SB555 and HB618 would allow a party to admit responsibility for environmental damage and to clean it to the regulatory standard.

The changes would set certain benchmarks and timelines in handling cases.

Once the oil company admits responsibility, the Department of Natural Resources would draft a feasible cleanup plan, according to the two bills. Two other agencies, the Department of Environmental Quality and the Department of Agriculture, would also weigh in on the cleanup plan.

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Over-reaching by federal regulators and local governments could stop the Tuscaloosa Marine Shale from ever booming in Louisiana and shift drilling activity to the Mississippi side of the oil-rich formation, Louisiana Oil and Gas Association Vice President Gifford Briggs said Thursday.

The Environmental Protection Agency has been trying to take control of the hydraulic fracturing permitting process from state governments for a long time, Briggs said.

The energy industry fears that any allegation of a problem could result in an instant ban on hydraulic fracturing, the same way that federal regulators placed a moratorium on offshore drilling after the BP well disaster.

“That would give the federal government the ability to shut down the oil and gas industry in the state with the swipe of a pen,” Briggs said. “That is very terrifying, and that is a very real concern that industry has.”

Briggs spoke at the Greater Baton Rouge Industrial Alliance’s annual meeting.

Most wells are drilled using hydraulic fracturing, where millions of gallons of water, mixed with sand and chemicals, are forced underground under high pressure to crack rock formations and release natural gas or oil. Environmentalists and some residents say the practice could contaminate surface water and water tables. There are also concerns about the enormous amount of water used in the process — a Colorado State University study found the average horizontal well in that state used 2.7 million gallons of water — and the effects of disposing wastewater from fracking.

Briggs said federal regulation would likely increase the time and the cost involved in drilling a well.

Meanwhile, Louisiana’s continuing budget shortfalls could mean the end for the severance tax break that drillers get for horizontal wells, Briggs said.

In 1994, Louisiana made horizontal wells exempt from severance taxes until a company recovers the cost of the well or for 24 months, whichever happens first.

At the time, the technology was fairly new, and legislators were trying to encourage drilling. In 2010 and 2011, the exemption meant that Louisiana didn’t collect around $300 million in severance taxes.

The energy industry says it creates billions of dollars in economic activity and investment, which generates tax dollars in other ways.

The Haynesville Shale, for example, had $31 billion in economic impact during the past two years, creating more than 60,000 jobs, Briggs said.

Briggs said he expects the tax break will be the No. 1 target in the next legislative session, even though Louisiana’s economy is heavily dependent on the oil and gas industry.

Drilling is already practically impossible in the Haynesville Shale, due to depressed natural gas prices, Briggs said. Without that incentive, the cost of drilling goes up incredibly, making it even less likely that drilling will take place, and the same goes for the Tuscaloosa Marine Shale.

Finally, drilling companies face problems at the local government level, Briggs said.

Once the Haynesville Shale got going, every local government wanted to create its own well permits, fees, road-use taxes and everything else to capitalize on the boom, Briggs said.

“And I’m sure those parishes in the Baton Rouge area, when they looked at what was going on, they said, ‘Well if we can just get that kind of activity and that kind of economic growth in our area we would do anything,’ ” Briggs said. “Well the Tuscaloosa shows up, and now all of a sudden we’ve got local ordinance issues in every parish that we’ve never had before.”

The local issues vary wildly, Briggs said.

In Beauregard and Vernon parishes, there were efforts to ban hydraulic fracturing. Other local governments have asked drillers to disclose the chemicals used in hydraulic fracturing, he said.

Many of the proposed ordinances duplicate state regulations, while others would make drilling companies repair road damage; the industry is willing to pay for repairs, but oil and gas companies don’t have expertise in road repair.

Briggs said all of these challenges could mean that the much-anticipated Tuscaloosa Marine Shale boom might never materialize.

Drilling companies have an option, he said. They can just move their operations to the Mississippi side of the formation.

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The 90-day 2012 Louisiana legislative session has come to a close. While most sessions have their ups and downs, this particular session was an all-out battle for the oil and gas industry. Several pieces of legislation were filed that would have been injurious to the industry, and numerous other bills were filed that would benefit the industry and offer new ideas of how to better the future of oil and gas in Louisiana. Overall, the bad bills were killed and the good bills were passed, and the oil and gas industry is pleased at the outcome.

Specifically, the oil and gas industry was able to work with the necessary legislators and stakeholders to pass two bills designed to reduce the backlog of the so-called “legacy lawsuits” and speed up remediation of landowners’ properties. House Bill 618 by Rep. Neal Abramson and Senate Bill 555 by Sen. Robert Adley have now passed out of both chambers and are on their way to the governor’s desk for his signature. State Representative Gordon Dove (R-Houma) was recently quoted in reference to the new legislation as saying, “It allows oil companies to take responsibility for the environmental portion of the site only, clean it up and have that admissible in court.” The Legacy issue has caused, according to a report released by the LSU Center for Energy Studies, the loss of nearly 1,200 new wells in Louisiana, translating to an astonishing $6.8 billion dollars in lost drilling investments, and the forfeiture of over 30,000 jobs.

Also an ultra-deep units bill, HB 504, passed allowing the Department of Natural Resources to consolidate leased lands so operational costs for ultra-deep drilling exceeding 22,000 feet could be shared. This bill enhances drilling in the southern portion of the state of Louisiana allowing for new economic development to take place. Not only will this bill help bring about new jobs directly tied to the drilling itself, but it creates a ripple effect for that region adding jobs to industries such as the hotel, restaurant and transportation sectors.

Other positive pieces of legislation were passed pertaining to hydraulic fracturing, water usage, coastal restoration and alternative fuel for vehicles. Individually, these bills each touch the process of how oil and gas companies conduct their day-to-day activities. If

regulations are set at appropriate levels, the oil and gas industry is able to focus on exploration and production and not be bogged down by the red tape of laws that only hinder operations. When the industry is able to work with the legislators and come to peaceful compromise, we get the opportunity to see our democracy at work.

While this session brought about countless conversations, negotiations, and compromise, the end result was positive for the oil and gas industry.

The next step in the process is for the necessary bills to be signed into law, and the industry move forward in a positive direction, not only for oil and gas, but also for the entire state of Louisiana.

Don Briggs is president of the Louisiana Oil and Gas Association (LOGA).

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1 of the most acrimonious issues facing Louisiana lawmakers this session has wrapped up.

The House gave final, unanimous passage Thursday to compromise legislation involving a dispute between the oil and gas industry and landowners over how to clean up environmental damage done in drilling years ago.

The pair of bills will change the complex legal process for dealing with so-called “legacy lawsuits” that seek millions of dollars in damage claims and that the oil and gas companies claim are stymieing energy exploration in the state.

Supporters say the changes will require companies to start cleaning damaged areas to regulatory standards, while other, more extensive damages claims can be pursued in the courts. Certain benchmarks and timelines will be set in handling cases.

The bills head to the governor’s desk.

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