ACI's 2nd Annual Oil and Gas Litigation Conference

The comprehensive playbook to mitigate damages and liability in “traditional” oil and gas cases.

     When: Thursday, September 12, 2013 Where: Hilton Post Oak Hotel, Houston, TX View Agenda Here To learn more and register: Click Here  

Industry Related News

 Industry related article by   on , posted on 07/24/2013.

Louisiana officials filed a lawsuit on Wednesday against dozens of energy companies, hoping that the courts will force them to pay for decades of damage to fragile coastal wetlands that help buffer the effects of hurricanes on the region.
“This protective buffer took 6,000 years to form,” the state board that oversees flood-protection efforts for much of the New Orleans area argued in court filings, adding that “it has been brought to the brink of destruction over the course of a single human lifetime.”
The suit, which was denounced by Louisiana’s governor, Bobby Jindal, was filed in civil district court in New Orleans by the board of the Southeast Louisiana Flood Protection Authority-East. The board argues that the energy companies, including BP and Exxon Mobil, should be held responsible for fixing damage done by cutting thousands of miles of oil and gas access and pipeline canals through the wetlands. It alleges that the network functioned “as a mercilessly efficient, continuously expanding system of ecological destruction,” killing vegetation, eroding soil and allowing salt water into freshwater areas. “What remains of these coastal lands is so seriously diseased that if nothing is done, it will slip into the Gulf of Mexico by the end of this century, if not sooner,” the filing stated. Mr. Jindal, a Republican, harshly criticized the lawsuit, releasing a statement saying the levee board had “overstepped its authority” and would damage Louisiana’s ability to tackle coastal issues effectively. “We’re not going to allow a single levee board that has been hijacked by a group of trial lawyers to determine flood protection, coastal restoration and economic repercussions for the entire state of Louisiana,” he said. John M. Barry, an author and a member of the flood protection authority board, said the board had not been hijacked, but had investigated its ability to hire the outside law firm and conferred with the state’s attorney general before proceeding. He added, “Our board is independent and arrived at its position based on its collective scientific and policy judgment.” Mr. Barry said there were other causes of coastal wetlands loss, including decisions by the Army Corps of Engineers over the decades to design navigation and flood-control systems for the Mississippi River that kept its waters from delivering the sediment that once nourished the wetlands. Still, he said, “we just want them to fix what they broke.” Gladstone N. Jones III, a lawyer for the flood protection authority board, said the plaintiffs were seeking damages equal to “many billions of dollars. Many, many billions of dollars.” Mr. Jones noted that whatever role the government might have had in wetlands loss, Washington had spent billions on repairing and strengthening hurricane defenses since the system built by the Corps of Engineers failed after Hurricane Katrina in 2005. By taking the companies to court, he said, “we want them to come and pay their fair share.” A spokeswoman for BP said the company would have no comment. A spokesman for Exxon Mobil said the company had no comment at this time. The role of the industry is well documented in scientific studies and official reports. In calling for remediation efforts, a 2012 report by the state’s Coastal Protection and Restoration Authority stated, “Dredging canals for oil and gas exploration and pipelines provided our nation with critical energy supplies, but these activities also took a toll on the landscape, weakening marshes and allowing salt water to spread higher into coastal basins.” The suit argues that the environmental buffer serves as an essential protection against storms by softening the blow of any incoming hurricane before it gets to the line of levees, flood walls, and gates and pumps maintained and operated by the board. Losing the “natural first line of defense against flooding” means that the levee system is “left bare and ill-suited to safeguard south Louisiana,” the lawsuit says. The “unnatural threat” caused by exploration, it states, “imperils the region’s ecology and its people’s way of life — in short, its very existence.” The lawsuit relies on well-established legal theories of negligence and nuisance, as well as elements of law more particular to the Louisiana Civil Code, including “servitude of drain,” which relates to changing patterns of water flow and drainage across the Bayou State. Even though the industry has been producing oil and gas for 100 years, because the damage is continuing to occur, the board argues, the statute of limitations should not apply. Walter Olson, a Cato Institute expert on litigation who often expresses skepticism about civil litigation, said that he could not comment extensively without seeing the filing, but that “it sounds like the sort of thing you couldn’t dismiss out of hand.” He said some environmental lawsuits, like one against power companies over the effects of climate change on sea-level rise and its effect on the Alaskan town of Kivalina, incorporate creative legal arguments that may not stand up in court. “It’s not Kivalina,” he said, if the plaintiffs can point to specific people or entities causing specific damage. He added that proving causation in court, however, “can be a big headache.” No other state agencies have joined the lawsuit, and Mr. Barry said that during preparation of the suit, his board had not discussed the case with other levee boards. The politically powerful oil and gas industries might bring pressure to bear on others who might be inclined to join, Mr. Jones said, but now that the case has been filed, “it really raises the question that’s going to be asked at a whole lot of boards across southern Louisiana: Can we really afford not to do this?”