Memo: Information about the Freeport/Mosaic Settlement Agreement
Background about the settlement agreement
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. Defendants named in these lawsuits range from major oil and gas companies like Freeport, Chevron, and BP, to dozens of smaller operators.
In March 2021, Louisiana Attorney General Jeff Landry announced that he agreed to the terms of a settlement proposed by one of the defendants, Freeport McMoRan. The Freeport settlement purports to provide $100 million in funds paid over 20 years. It calls for three initial payments totaling $23.5 million (Y1:$15M, Y2: $4.25, Y3: $4.25) to be placed in a Coastal Zone Recovery Fund for coastal restoration projects that will generate environmental credits, the sale of which will be used to offset Freeport’s remaining $76.5 million obligation. However, the agreement is designed such that Louisiana’s coast could see little of the money from the settlement.
This session, the Legislature will be asked to consider bills (SB 233 & HB 569) establishing the framework for the Coastal Zone Restoration Fund and 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 used for pet projects within the settling parishes. Further, Freeport’s entire initial payment of $15 million could be used by the state to indemnify private parties for damage to property and natural resources.
Attorneys involved in the litigation have stated that it is their hope that the Freeport settlement will bring other defendants to the bargaining table. Parties like Freeport can walk away from these questionable claims for pennies and trial lawyers will eventually collect their fee, but there’s no guarantee the coast will benefit. Louisiana’s Legislature should not endorse settlements that amount to an ATM for trial lawyers.
