Two Louisiana bills that put the brakes on the burgeoning litigation finance industry have advanced through initial hurdles, as lawmakers hope to take advantage of a change in governors after last year’s effort fell short with a veto.

One bill requires parties to disclose litigation finance agreements within 60 days after filing a civil action. The state House approved that measure, and it is pending with the Senate Judiciary Committee.

The second bill requires parties to disclose the presence of litigation finance in lawsuits if a foreign entity is the source of funding. That legislation cleared the state Senate and the House Committee on Civil Law and Procedure and needs approval by the full House.

The bills are part of a push in several states to restrict the practice of investors paying for the cost of lawsuits in return for a piece of the proceeds in successful cases. The US Chamber of Commerce is pushing for legislation, saying the $15.2 billion litigation finance industry encourages frivolous lawsuits.

Democratic Governor John Bel Edwards last year vetoed legislation sent to him by the Republican-controlled House and Senate in Louisiana, saying the bill to require disclosure of litigation finance favored large corporations in civil suits. Republican lawmakers, who again hold majorities in both state bodies, hope for a different result this year with a member of their party, Jeff Landry, as the governor.

Republican Representative Emily Chenevert this year has modeled her disclosure bill (HB336) on the one Edwards vetoed. It allows parties to redact the dollar amount financed, makes the contracts subject to discovery and bars funders from directing or influencing litigation.

“The appetite was there already within the legislature and so now it’s like, let’s attempt this and let’s see with a new House and some new senators what could happen,” Chenevert said in an interview. “Let’s do this again, give it another shot.”

Chenevert’s bill was deferred in the Senate Judiciary Committee after the chairman announced that there were 56 proponents and 67 opponents in attendance in line to speak at a hearing. A new date has not yet been scheduled.

The second bill (SB355), introduced by the state Senate majority leader, Jeremy P. Stine, requires disclosure of litigation financed by governments in foreign countries of concern to the state Attorney General, such as China, Russia and Iran. It mirrors legislation brought forward at the federal level last year by Senator John Kennedy (R-La.) and House Speaker Mike Johnson (R-La.).

Other bills

Litigation finance bills have faced mixed results in state legislatures. Earlier this year, Indiana enacted legislation into law that blocks foreign entities from funding lawsuits.

West Virginia updated an existing law to include litigation finance. The statute requires investors to provide a copy of contracts to consumers and does not allow firms to assign or securitize a contract to another party, among other regulations.

In Florida, a bill requiring disclosure of litigation finance agreements and of foreign investments stalled in the House. A bill in Kansas is pending and would allow discovery of litigation funding agreements.

The US Chamber backs the state efforts and earlier this month warned of the risks of litigation finance.

With outside funding, “plaintiffs face minimal risk in bringing forward claims, legitimate or not,” Matt Webb, a senior vice president for the Chamber’s Institute for Legal Reform, wrote in a post. “This dynamic often pressures businesses to settle out of court to avoid the costs and uncertainties of protracted litigation, even when the claims against them lack merit.”

In Louisiana, the Chamber backs Chenevert’s bill though calls Stine’s proposal “under inclusive.” The Stine proposal “addresses foreign funding only, but there are plenty of ways frankly that foreign dollars could be put into US investment vehicles and influences litigation,” said Nathan Morris, a vice president at the Chamber’s legal reform institute.

Litigation finance has defenders in state houses.

“The Chamber’s intentionally approaching states where there is not litigation financing, such as Louisiana, in an attempt to pass a bill that can then be used as a domino in support of national regulation,” said Dai Wai Chin Feman, managing director at funder Parabellum Capital.

He spoke out against Chenevert’s bill as a representative of the industry’s trade group, the International Legal Finance Association, but described Stine’s bill as “acceptable to our industry.”

Green wastewater-treatment infrastructure could save billions of dollars and avert millions of tons of carbon emissions in the United States in the coming decades, according to a new study.

To facilitate this, wastewater treatment could be folded into carbon markets, moving water quality from a local to a globally traded resource, the study suggests.

Conventional wastewater-treatment facilities such as sewage plants that remove nutrients like nitrogen and phosphorus from wastewater are known as “gray” infrastructure. Such facilities currently account for 2% of U.S. energy use and 45 million metric tons of carbon emissions annually.

Wastewater-treatment standards are likely to become more stringent in the future, which will increase the power needed for water treatment, and the corresponding carbon emissions—especially because gray-infrastructure technologies able to meet these standards are energy-intensive and not terribly efficient.

In the new study, researchers investigated the potential for different forms of green wastewater-treatment infrastructure to contribute to water quality standards. Green approaches range from reducing the amount of fertilizer spread on farmland to creating human-made wetlands to filter water before it enters a river.

As well as reducing the need to beef up wastewater treatment plants, such approaches could address non-point source pollution from fertilizer runoff, urban development, and wildfires.

The researchers gathered data on nutrients coming into more than 22,000 wastewater treatment facilities throughout the contiguous United States. Then they calculated the emissions, costs, and treatment capabilities of standard wastewater treatment plants compared to green infrastructure of various sorts.

Utilities in the United States are already allowed to trade point-source for non-point source water quality improvements. But these mechanisms haven’t been used very widely. So the researchers investigated the potential for carbon markets to provide a source of capital to finance green wastewater infrastructure.

Essentially this approach would trade on the carbon-reducing potential of green infrastructure, with the water quality benefits coming along for the ride.

Green wastewater-treatment infrastructure could save $15.6 billion and 30 million metric tons of carbon emissions over four decades, the researchers report in the journal Nature Communications Earth & Environment.

Green wastewater infrastructure designed to achieve the most stringent water quality standards could sequester more than 4.2 million metric tons of carbon emissions per year and generate revenue of $679 million per year via carbon markets.

The main limitation on green treatment methods’ ability to remove nutrients is a lack of agricultural land in some areas, and the fact that not all green technologies can be used in all areas. “While green treatment methods can only treat less than 40% of nitrogen and 25% of phosphorus needed in the United States, this would still represent a large decrease in infrastructure compared to the scenario where green treatment methods are not used,” the researchers write.

Green wastewater-treatment infrastructure has lower carbon emissions than gray infrastructure in every water basin across the country—although it is not carbon-negative everywhere.

Nor are green treatment technologies cheaper than gray ones everywhere. But when potential carbon financing revenues are accounted for, basins where green technologies are cheaper account for 94.6% of nitrogen and 91.9% of phosphorus treated in the contiguous United States. Much of the cost of green infrastructure comes from the need to pay farmers to implement the technologies, in some cases yearly.

“As the grid evolves with less environmental impact, carbon credits generated by offsetting gray infrastructure with green infrastructure will be reduced,” the researchers write, “which mean that the window of opportunity for leveraging carbon markets to incentivize a shift from gray to green infrastructure may be limited.” They are now conducting additional studies to develop the carbon-credit methodology.

Source: Limb B.J. et al. “The potential of carbon markets to accelerate green infrastructure based water quality trading.” Communications Earth & Environment 2024.

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