What are the key issues in lawsuit against oil & gas companies for coastal loss?

29th July 2013   ·   0 Comments

By Bob Marshall
http://thelensnola.org

Since the 1970s, researchers have that shown oil and gas activities are one of the major causes for the catastrophic loss of 2,000 square miles of coastal wetlands — a slow-moving disaster that has steadily moved the Gulf closer to New Orleans. Since then, some have asked the question: Why doesn’t someone sue those companies for the damage?

That’s why the lawsuit filed Wednesday in a New Orleans civil court, which does just that, could be called historic. It made national news and brought an outcry from the oil and gas industry’s friends in state government, starting with the governor.

People have many questions about the suit. Here are some answers.

To discuss these and any other questions you may have, come back at 12:30 p.m., when I’ll discuss these and other issues with readers.

What is this lawsuit about?
Decades of drilling and dredging by the oil and gas industry have contributed to the dramatic loss of wetlands in southeast Louisiana, which help reduce storm surges pushing against the region’s flood protection levees. About 2,000 square miles of land have disappeared in Louisiana; various studies say the oil and gas industry is responsible for anywhere from 16 to 50 percent of that.

The Southeast Louisiana Flood Protection Authority-East claims that the loss of wetlands in its jurisdiction means levees and floodwalls must be built higher, resulting in a dramatic increase in their costs for building and maintaining levees and floodwalls.

The agency wants 97 companies named in the lawsuit to repair the damage, and if that’s not possible, to help defray the cost of flood protection now and in the future.

What are the claims being made against the industry?
The suit makes three major claims.

First, most of the work was done under permits that required the companies to repair environmental damage. The board says that was never done.

Second, the suit claims that by turning marsh into open water, the projects put more stress on flood protection levees. The suit says that violates the federal Rivers and Harbors Act, which prohibits any activity that “impairs the effectiveness of a levee.”

Third, by turning marsh to open water, the projects increased the amount of storm surge that moves into the metro area during tropical storms and hurricanes. The suit claims that violates a principle of civil law called “servitude of drainage,” which prohibits one person from increasing the flow of water onto someone else’s property. The properties do not have to be contiguous.

While most of the attention in this case centers around the loss of land at or above the surface, the filing also lists 10 other oil industry impacts, including road dumps, watercraft navigation and impoundments.

Is “servitude of drainage” a reach for the plaintiffs?
Not at all. This is a well-established point of civil law going back to Roman times; it’s been a regular issue in Louisiana courts since people started clearing low-lying coastal areas for development.

Of course, the key here is proving that the loss of wetlands increased the flow of water against the authority’s levees.

What is the Southeast Louis­i­ana Flood Protection Author­ity-East, and what right does it have to sue?
The authority is an independent political subdivision created in the wake of Hurricane Katrina by a voter-passed amendment to the state constitution. It was set up that way to shield it from political influence, which was found to be a reason why some local levee boards had done a poor job before Katrina.

The authority is charged with providing flood protection for St. Bernard, Orleans and Jefferson parishes. That includes overseeing the local levee boards and maintaining the Hurricane and Storm Damage Risk Reduction System, the $14.5-billion chain of levees and floodwalls built by the U.S. Army Corps of Engineers after Hurricane Katrina.

The authority is overseen by nine unpaid board members, who serve four-year terms. Three seats come open each year.

Board members are nominated by a committee that includes the deans of engineering schools at LSU, Tulane, UNO and Southern universities, representatives from professional engineering organizations, and the Public Affairs Research Council.

Board nominees must have experience in engineering or other careers relevant to flood protection. For each open seat, the committee sends two names to the governor, who selects one for approval by the state Senate. Only one member can reside in the parishes in the board’s jurisdiction.

What is the key to a win for the Flood Protection Authority?
Their lawyers must convince a jury that any of this issues has increased the risk of flooding from storm surges in the Flood Authority’s jurisdiction – roughly the basins of lakes Borgne and Pontchartrain.

That isn’t a slam-dunk.

Storm surge modeling is a relatively new and complicated science. Scientists agree that the friction of marsh plants slows and reduces the surge of smaller storms. But when big storms bury the marsh under many feet of water, that friction effect is lost.

Some modelers think the difference that marsh loss makes in how much water hits levees in large storms is a matter of inches, not feet.

A more important factor could turn out to be the relationship between rising storm surges and increased subsidence of the coastal zone, in the estuaries as well as near shore.

Recent research by a scientist at the Louisiana Universities Marine Consortium shows that subsidence in an area increased as the rate of oil and gas extraction rose, and fell when the rate of extraction dropped. Subsidence is a well-known cause of wetlands loss.

This is one area where the believability of each side’s expert scientists will be crucial.
How can a state agency sue a company for work done under permits approved by the state?
First, the Flood Protection Authority is not a state agency. Headlines you may have read stating otherwise are inaccurate.

So, too, were comments by Gov. Bobby Jindal that the Flood Protection Authority was setting policy for the whole state. It can’t.

Second, the permits required the holder to “maintain and restore” the area of the project, which the suit claims was not done.

What if the companies involved were told by the government they had done enough?
A two-part answer: First, attorneys for the board said after spending months combing through U.S. Corps of Engineers records, they could find none indicating any of these 97 companies had received such approval, or that the permits had been closed.

Second, even if the companies were told by government agencies that they had abided by the terms of the permits, that doesn’t absolve them from injuring a third party – in this case, the Flood Protection Authority.

Some of the work blamed in the lawsuit took place years ago. Isn’t there a statute of limitations?
Another two-part answer. First, the authority’s attorneys claim there is no statute of limitations on damage to a third party.

Second, since there is no documentation showing the permit-holders were released from the terms of the contract — again, according to the attorneys — the plaintiffs will claim those terms are still in effect.

Haven’t levees on the rivers caused much of the land loss in Louisiana?
Without question, those levees were a death sentence for the deltas because they blocked the flow of sediment from the rivers. However, researchers believe that loss would have occurred at a much slower rate — perhaps taking centuries to reach their current state — without the oil and gas industry’s canals and extraction.

John Barry, vice president of the board, said the authority doesn’t claim that the oil and gas industry is solely responsible for the damage. It asks only that the industry mitigate for the damage it caused.

Even if a jury agrees that oil and companies caused land loss, how can anyone tell how much was caused by each of those 97 firms?

The attorneys can devise a formula apportioning responsibility. But there is a feature in civil law, solidary liability, in such group cases, which gives the court flexibility.

What are the political risks for the Flood Protection Auth­ority?
The swift and scathing condemnation of the suit by Gov. Bobby Jindal is likely only the first step in the pushback from the state’s political leaders. Most of them are longtime cheerleaders for the energy industry, which has poured millions into their campaign chests over the years. Remember, during the Deepwater Horizon spill many of them spent most of their time objecting to the drilling moratorium and opposing tighter regulations proposed for the industry.

However, the state constitutional amendment that created the board was written in such a way to remove the possibility of political intervention. Neither the governor nor the Legislature can fire board members, all of whom serve without pay.

Barry’s term expired in June (members continue to serve until replacements are approved), and his leadership role in the suit makes it unlikely he will be kept on the board. And because the vote was unanimous, the rest of the board could face resistance to re-nomination from the governor and the Senate.

Though the board itself is shielded from influence, the authority’s annual operating bud­get of about $500,000 comes through the Coastal Protection and Restoration Authority, whose chief, Garret Graves, has already voiced his disapproval of the suit in press statements and on Twitter.

Expect to see more than one bill filed in the next session of the Legislature targeting the suit. For example, attempts could be made to limit or remove the liability of oil and gas companies, or prohibit the Flood Protection Authority from filing suits against them. Lawmakers could get pretty creative.

What can you tell us about the law firms representing the Flood Protection Authority?
The lead firm is Jones, Swanson, Huddell and Garrison of New Orleans, and the lead counsel is Gladstone “Glad” Jones. The firm has a track record of winning judgments against oil companies in so-called “legacy lawsuits,” for damages in coastal areas that were caused by operations years earlier.

Two other firms are involved: Veron, Bice, Palermo & Wilson of Lake Charles and Fishman Haygood Phelps Walmsley Willis & Swanson of New Orleans.

How much are they being paid?
If they win, the firms will get 32.5 percent of any money collected up to $300 million and 22.5 percent of any money above that amount; if they lose, nothing.

However, in recognition of the possibility of political interference, the contract has a clause that says if the Flood Protection Authority pulls out of the case, it is liable for all expenses incurred by the firms.

Jones estimates the firms already have spent about $300,000 in the six months they have been preparing the case.

This article was reported by The Lens, an independent, nonprofit news site in New Orleans.

This article originally published in the July 29, 2013 print edition of The Louisiana Weekly newspaper.