On April 16, 2014, the Louisiana State Senate passed Senate Bill 553 which would unwind a carefully watched lawsuit against 97 oil and gas companies filed by the South Louisiana Flood Protection Authority - East ("SLFPA-E") for damages associated with coastal erosion.
The suit filed by the SLFPA-E is being prosecuted by private attorneys, hired on a contingency fee basis, who maintain that canal building, dredging and other construction projects by oil and energy extraction and pipeline companies have caused extensive coastal damage and erosion. In the unlikely event the suit is completely successful, the contingency fee agreement could result in hundreds of millions, if not billions, of dollars being paid to the small group of attorneys representing the SLFPA-E.
The fight is among the most contentious of the legislative session. At issue is the best way to seek restoration money and whether the oil and gas industry should be held responsible for the destruction of Louisiana’s wetlands.
Senate Bill 553 amends a current law which requires state boards and commissions to secure written approval of the Governor and the Attorney General to employ special counsel by expanding the law's application retroactively to regional flood protection authorities. According to the Bill, it is the Legislature's intent that agreements that do not comply with this retroactive requirement are contrary to public policy and void ab initio.
The Senate Bill also amends the law to require certain state boards, commissions and flood protection authorities to obtain prior approval of contingency fee agreements for the engagement of special counsel from the Joint Legislative Committee on the Budget. The Bill now moves to the House of Representatives for debate.
The Louisiana Oil and Gas Association views the Senate's passage of Bill 553 as a positive first step in its effort to protect industry against a litigious legal climate which forces companies to spend millions of dollars on legal fees and court costs. Meanwhile, environmentalists and coastal protection groups maintain the suit as a symbol of the state's environmental future and are urging their members to contact their representatives to vote against Senate Bill 553.
There have been other bills introduced this legislative session designed to protect the oil and gas industry from an onslaught of similar lawsuits. The topics of the bills vary (coastal management issues HB 862, legacy lawsuit reform SB 667, and attorney general bill HB 799, regarding contingency fees). Nevertheless, it will be interesting to see whether SB 553 will remain fully intact following its debate in the House of Representatives and what impact, if any, the House debate will have on this oversized lawsuit against the Louisiana oil and gas industry.