The Proposed Freeport McMoran Settlement: Ineffective by Design
The proposed settlement is heralded by some as a major victory, supposedly securing $100 million for the state to use for coastal restoration. In reality, the proposed settlement, if adopted, would yield nowhere near $100 million and divert much of the money it did raise to unrelated government spending. Two key flaws undermine the settlement’s purported goals.
First, the settlement lacks the clear rules and careful oversight necessary for a successful restoration program. While securing a payout intended for environmental work brings favorable press, ensuring that money is well-spent is comparatively thankless. For this reason, trust funds with broad spending rules and limited oversight—as in the proposed settlement—tend to be squandered.
Second, almost the entire settlement is based on a crediting scheme, whereby Freeport McMoRan will fund restoration that generates credits that can be sold to other companies to offset their own regulatory obligations. This makes the vast majority of the “$100 million” settlement a mirage—if the restoration merely displaces other restoration work that would have occurred anyway, there is no net gain.
Much of the political discussion surrounding the settlements makes them out to be a referendum on the petroleum industry writ large. But the ineffective proposed settlement should be concerning to all Louisianans, regardless of their position on the coastal lawsuits. To those who consider the lawsuits frivolous, an ineffectual settlement is salt in the wound. But to those in support, a settlement that forecloses the possibility of future action without guaranteeing any actual coastal restoration should be even less palatable.
As written, the settlement is designed to fail, providing an easy victory for those spearheading the litigation but ultimately doing little to nothing for coastal restoration. Before becoming effective, the settlement needs buy-in from 12 coastal parishes and the Louisiana legislature. So far, disagreements among parishes and failed bills in the legislature have prevented the settlement from taking hold. This is for the best, and there is no reason Louisiana legislators should consider accepting such a shoddy settlement in the future.
