Over the last decade, coastal Louisiana parishes have filed a total of 42 lawsuits against more than 200 energy companies. The parishes allege that the defendants’ federally authorized oil and gas exploration and production activities caused coastal land loss. In March 2021, Louisiana Attorney General Jeff Landry announced that he had agreed to a $100 million settlement proposed by lawyers and one defendant company, Freeport McMoRan.

The Legislature will be asked to consider legislation that will establish the framework for the Coastal Zone Restoration Fund and an environmental credit scheme. The proposals will create a Coastal Zone Recovery Authority (CZRA), an unelected bureaucracy tasked with implementing the settlement agreement, including establishing the rules and regulations for the environmental credit scheme. The proposals only guarantee that 60% of the funds will be dedicated to the Coastal Master Plan. The remainder of the funds, to the extent they materialize,
could be spent on pet projects within the settling parishes.

In addition to identifying how settlement funds can be spent, the legislation would also create “environmental credits” based on the environmental benefit provided by the projects. Those credits could later be purchased by developers or other entities that must provide environmental mitigation as required by state or federal regulation. The inclusion of salable credits appears to be an enticement to potential defendants, encouraging them to settle with the promise that settlement money could be recovered through the sale of environmental credits, reducing the total liability cost to companies.

The limited nature of the environmental benefits must be weighed against other economic costs and potential benefits of the settlement. If legislators are supporting the proposal because they believe it will dramatically increase coastal restoration, they may find that is not the case.

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