Threats to Louisiana’s Oil & Gas Economy

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There are countless Louisianans employed in the state’s oil and gas industry, and their livelihoods and future job opportunities are being threatened by Gov. John Bel Edwards and his administration.

Our state is blessed with abundant natural resources, which have helped power our economy, fuel job growth and build the foundations for hundreds of thousands of Louisiana families. Louisiana’s history as an oil and gas industry state is a rich one and has benefitted the state and nation as a whole.

Recently, however, there have been a number of liberal Louisiana politicians, as well as others from the radical environmental activism and rich trial lawyer realms, who are attempting to take our state’s most important job creators and tax contributors hostage. What is most insulting to so many Louisiana workers is that the actions of these individuals have come during one of the most difficult periods ever experienced in the oil and gas sector. One could assume that the timing of these assaults are not mere coincidences and most likely are a classic example of bullies kicking someone when they are already down.

During these difficult and uncertain times, it only makes sense that Louisiana should be encouraging and making clear paths for continued oil and gas investments. Instead, with Gov. Edwards at the helm, the state is putting up road blocks and directly attacking our state’s businesses, running off job creators and others looking to invest here.

“If you want to know what Louisiana would look like without the energy sector, all you have to do is look one state over to the east.”

So what exactly is at stake if we continue down this destructive path of hostility toward Louisiana’s No. 1 economic driver? To start, one study1 showed the industry generated approximately $73.8 billion in economic impact and provided jobs to nearly 300,000 Louisianans, which means our state’s oil and gas workforce is larger than the total enlistment for the entire U.S. Navy. Those jobs accounted for approximately $20.5 billion in wages in one year alone. If Saints owner Tom Benson had that much revenue, he could purchase every other team in the NFC South, as well as all of the teams in the NFC East. The study also says oil and gas industry companies contributed nearly $1.5 billion in state taxes and fees in 2013, which equals nearly 15 percent of all taxes and fees collected statewide. Renowned economist Dr. Loren Scott accurately described the enormous importance of oil and gas job creators to Louisiana, saying, “If you want to know what Louisiana would look like without the energy sector, all you have to do is look one state over to the east.”

While the jobs generated by oil and gas employers is obviously important to the state as a whole, it is even more vital to the survival of some of Louisiana’s local communities and residents. Oil and gas companies directly paid $410 million in taxes to local parish governments in one year, and historically the numbers continue to rise. In 43 of Louisiana’s 64 parishes, these taxes exceeded $1 million, and in 22 parishes, the number exceeded $5 million. These are significant figures to factor in when local governments assess their annual budget projections. It would be devastating to lose these funds, many of which are dedicated toward schools, flood protection, police and fire departments and many other essential services residents rely on.

With all of this at risk, why would anyone want to drive away industry companies looking to invest in our state? The answer is simple– greed. Because the industry is such a major financial contributor to Louisiana, it is constantly at risk of being preyed upon by those seeking to grab a sliver of the pie for themselves. In this case, wealthy attorneys disguising their intentions as being for the greater good of the state are, in reality, only seeing dollar signs in the form of lawsuits against oil and gas companies.

A few high-powered attorneys have made it their mission to take oil and gas companies to court and get as much money as they can. They often talk about the big bad oil company and its disregard for Louisiana, but what they fail to mention is that they are also suing dozens of small, independently-owned local oil and gas companies. They claim to be suing these job creators for the good of the state. How does scaring off our top employer make for a better Louisiana? And the basis of the lawsuits they feel so morally obligated to pursue? Many of them center around decades-old permits and contracts2 that no reasonable person would consider valid, let alone grounds for multi-billion dollar lawsuits. Fortunately, several of the lawsuits filed in the last few years have been tossed out3 and declared frivolous and lacking merit by many different court bodies.4

Before 2016, Louisianans could count on their leaders to keep greedy trial lawyers in check5 that were trying to cripple the industry and drive it away. The lawsuits had very little support aside from a few special interests and liberal environmental groups6 who were pushing their pro-lawsuit agenda and making wild, inflammatory accusations7 with no credible evidence. The election of Gov. Edwards’, however, opened the door for a bigger, bolder lawsuit, which could be worth billions of dollars and target hundreds8 of more employers statewide.

Gov. Edwards was “quietly” hiring some of his top campaign donors as attorneys in the oil lawsuit

Less than eight months into his first year as governor, Edwards shoved the lawsuits against the industry further and also empowered his key supporters to benefit personally from the cases. On Aug. 31, 2016, while the chaos and destruction of the historic flooding in parishes around the state kept most Louisianans distracted, Gov. Edwards was “quietly” hiring some of his top campaign donors as attorneys in the oil lawsuit. 9 One of those hired was trial lawyer Taylor Townsend and his law firm. Townsend currently leads the governor’s super PAC fundraising committee and donated $130,000 to Edwards and his transition team just months before his hiring.

In an opinion editorial10 following Gov. Edwards’ hiring of Townsend and his firm, The Advocate said, “… the governor appears to be supporting a scheme that could give the politically connected attorneys a big payout if a settlement of the cases is reached, deftly detouring the will of the Legislature. Cynics might be forgiven for assuming the worst — that Edwards is in the back pocket of the trial lawyers who so enthusiastically bankrolled his candidacy.”

The American Tort Reform Foundation (ATRF) echoed The Advocate’s concerns in a statement,11 adding that these and other misguided lawsuits against Louisiana’s oil and gas industry would inevitably hurt the state’s economic future. “[Gov. Edwards’] high-rolling bet may come up snake-eyes if energy companies and other industries decide that expanding in or relocating to Louisiana isn’t worth the risk,” the ATRF says.

Other Louisiana elected officials also harshly criticized Gov. Edwards’ hiring of the attorneys for the lawsuit. U.S. Rep. Garret Graves (R-LA), asserted that the attorneys hired for the litigation are only interested in their own personal gains rather than the well-being of our state’s coast.

“Coastal Louisiana is worth saving– not politicizing or using as a tool to enrich friends and supporters,” Rep. Graves said in a letter to Gov. Edwards.12 “These attorneys that have been suddenly self-designated as coastal advocates are new to the scene. We both know that they are not doing this because they believe in the coastal mission– people and the environment. Rather, they are motivated by the allure of driving a new Mercedes to the coast with the proceeds of this lawsuit.”

Rep. Graves also noted the damage the lawsuit could do to the state budget as well as to the workforce, which have already been negatively impacted by declining oil prices13 in recent years.The same energy companies that you are attempting to sue comprise one of the top employment sectors in the State of Louisiana. However, recent energy volatility has resulted in more than one-third of the oil and gas workforce in the state losing their jobs,” Rep. Graves said. We all know workers that have lost these jobs. How are you going to explain further job losses in the energy sector to the thousands of affected families across our state?”

Suing on behalf of the state was not enough for Gov. Edwards. Many local governments understand the importance of oil and gas employers to their communities and are opposed to joining the lawsuit. So, in order to continue the expansion of the lawsuits, Gov. Edwards threatened and strong armed coastal parish officials,14 by forcing them to join the lawsuit or risk not receiving any of the potential settlement funding. “That’s a much more aggressive role than the state has ever before taken on the issue, and it would represent a major expansion of the legal effort already underway in four parishes,” The Advocate said in its article on the announcement.

Gov. Edwards prioritizes the needs of his donors and political cronies over the nearly 300,000 oil and gas industry workers in our state.

Through his continued hostile actions toward Louisiana’s main economic engine, it is clear that Gov. Edwards prioritizes the needs of his donors and political cronies over the nearly 300,000 oil and gas industry workers in our state. The simple truth is that if we continue down this path, energy companies will invest elsewhere. This is the most competitive time for oil and gas production in the history of the business, with states like Texas, North Dakota, Oklahoma and others all working to attract new projects to their states. In fact, Louisiana has been slowly falling behind the competition since before the recent historic drops in oil prices. Some recent reports show15 that over a three year period, the number of active oil rigs operating in Texas, Oklahoma and North Dakota rose 10 percent or more, while Louisiana rig counts actually decreased by 34 percent.

If we allow trial lawyers to sue our state’s most important job creators indiscriminately, other oil producing states will continue taking business from us and Louisiana-based operations will uproot to look for safer investments. This is an issue everyone in Louisiana must stand up for and fight against. We cannot sacrifice the future of our state for the benefit of a small group of the governor’s lawyer friends and political donors.

Footnotes:

1 http://www.lmoga.com/assets/2014_Loren_Scott_Economic_Impact_Study_FINAL.pdf
2 http://louisianarecord.com/stories/510990692-jefferson-parish-suits-against-gulf-oil-gas-industries-dismiss-after-parish-fails-to-correctly-review-permits
3 http://www.nola.com/environment/index.ssf/2015/02/federal_judge_dismisses_east_b.html

4 http://www.theadvertiser.com/story/news/local/louisiana/2017/03/03/appeals-court-hands-oil-companies-victory-coastal-lawsuit/98692370/

5 http://www.nola.com/politics/index.ssf/2014/06/bobby_jindal_signs_bill_to_kil.html

6 http://america.aljazeera.com/articles/2014/3/11/environmental-activistshopealawsuitopensanewchapterinlahistory.html

7 http://www.newsweek.com/former-army-general-lambasts-oil-industry-hijacking-democracy-269086

8 http://bigstory.ap.org/article/33edf3f304aa41b1b0480e71966f2676/louisiana-pols-go-court-blaming-big-oil-coastal-ruin

9 http://www.theadvocate.com/baton_rouge/news/environment/article_36a72414-6fd3-11e6-84fb-533941a35403.html

10 http://www.theadvocate.com/baton_rouge/opinion/article_7feb7246-711e-11e6-995c-63be8cf5e692.html?sr_source=lift_amplify

11 https://www.businessreport.com/article/tort-reform-group-slams-edwards-pursuit-oil-gas-lawsuits

12 https://jnswire.s3.amazonaws.com/jns-media/e1/76/468874/graves.pdf

13 http://www.theadvocate.com/baton_rouge/news/business/article_c9c890a2-1358-5c37-bc09-a655b35df471.html

14 http://www.theadvocate.com/baton_rouge/news/environment/article_37c3d7bc-801c-11e6-8778-0bb43f7b2319.html

15 http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTI4OTcyfENoaWxkSUQ9Mjk4NDg3fFR5cGU9MQ==&t=1