Big Oil vs. Coast

For all intents and purposes, the oil and gas industry in southeast Louisiana is flying high.

The industry has rebounded since the 2010 Deepwater Horizon explosion and oil spill and is as good or better than most experts foresaw in their wildest dreams.

But with progress comes occasional possible pitfalls, and the oil and gas industry has one on its hands right now with the Southeast Louisiana Flood Protection Authority-East’s lawsuit versus 97 oil, gas and pipeline companies.

The board claims years of drilling and dredging for oil and gas has contributed to the loss of coastal wetlands that serve as a hurricane buffer for New Orleans and the surrounding regions.

“It couldn’t be more clear that the development of oil and gas in southeast Louisiana and the canals that were dug in our coastal areas have a huge impact on coastal loss. It’s been documented by the oil companies themselves, and scientists and even our state has recognized through the Coastal Protection Restoration Authority that it’s had a dramatic impact in accelerating our coastal loss,” said Gladstone Jones, one of the lawyers representing Southeast Louisiana Flood Protection Authority-East. 

“ … What we’ve asked is just that they go out and do what they’re supposed to do, what they promised that they would do in the beginning and maintain and fix these canals.”

Jones said that there is $10 billion worth of unfunded projects that are critical for saving the greater New Orleans area in the Southeast Louisiana Flood Protection Authority-East buffer zone.

“It’s only fair that the oil companies come and pay their fair share of that,” Jones said. “Depending on which study you look at, they could be responsible for between 20 and 60 percent out of the damage in that area, so we think it would be very fair and equitable and morally the right thing to do for them to come in and pitch in and pay to protect the New Orleans area.”

Many proponents of the oil and gas industry are not fans of the lawsuit, however.

“Look, anytime you are filing suit against 97 companies in a state, it is not good for the economy,” Louisiana Oil & Gas Association President Don Briggs said. “The oil and gas industry is the backbone of the state’s economy, but with the legal climate heading in the direction that it currently is, the impact will be huge. Companies will take their investment dollars elsewhere around the country where they won’t be sued for something that allegedly happened several decades ago.”

It’s the potential loss of businesses to other areas of the country that worries economic consultant Dr. Loren Scott as well. Even if oil, gas and pipeline companies did contribute to the loss of wetlands, Scott wonders if the reparations received will be worth the message sent.

“The state as a whole, the citizens as a whole, have to ask the question if we proceed with this, this is one of the most important industries in our state in terms of job creation and income creating and sales creation,” said Scott. “We’re going to kill the goose that laid the golden egg, and that’s just one of the problems when we have to decide, do we go with it, do we not go with it? You’ve got to weigh the money you might get from the oil and gas companies against the signal that you’re sending to them that they may react and say, ‘We’re going somewhere else.’”

Scott feels that the oil and gas industry is so tied to Louisiana’s economy that intended and unintended results of the suit could be disastrous.

“If we were Alabama or Mississippi, where there’s not much oil and extraction in the first place, this wouldn’t be that big of a deal. But this is a big deal in our state,” Scott said. “These are huge job creators and huge income creators in our state and huge revenue creators for state and local government, and you just gotta ask yourself, ‘Do we really want to give them a blow to the head or not?’”

Scott added that with the proliferation of fracking across America, there’s even more risk of potential financial loss.

“If we go back in the early 2000s, this lawsuit would probably not matter as much as it does today, cause back in the early 2000s there were only about five states that were producing significant amounts of oil and gas in the country, and so if something bad happens litigiously in one state, there really weren’t a whole lot of places oil companies could go somewhere else. That’s not the case anymore,” Scott argued. “Because of the fracking issue, there are now at least 20 states in the United States where oil companies can say, ‘Look, if you’re gonna treat us this way, we can go to one of those other states.’”

Jones called the fear of oil and gas companies leaving due to the suit “a scare tactic” and “the most ridiculous thing I’ve ever heard.”

“And they know that’s just completely false. Louisiana is experiencing huge economic growth right now. There’s never been more projects on the board in Louisiana from the oil and gas industry,” Jones said. “ … It’s just not factually supported, particularly given the time that we’re in right now… And what does that argument say about our democracy? That you can avoid responsibility because it may have an impact? It may cost somebody a job? That’s not how our system is designed to work.”

Louisiana lawmakers passed a bill in the 2014 legislative session forbidding the flood board from pursuing the suit, and Gov. Bobby Jindal, who staunchly opposes the suit, signed it into law.

“A good piece of legislation was passed this 2014 session regarding the flood board suit. While the opposition will attempt to appeal the suit, the industry feels the legislation is a step in the right direction,” Briggs said. 

Jones said he is pursuing a motion to declare the bill unconstitutional or non-applicable to the lawsuit. All motions filed by both sides will be heard at an oral argument Nov. 12, according to Jones.

Closer to home, Terrebonne Parish President Michel Claudet said he would like to see the suit dropped, based on the grounds that the suit was filed by a flood board, not individuals or companies directly affected by the damage.

“I don’t know what gives a levee district or a levee board the right to file suit for damages to other people’s properties,” Claudet said. “… They’ve asked us to file suits on behalf of the parish for similar items, and it is my belief that individuals or companies that have property that’s been affected by oil activities should be the ones that file the suit. Not the parish or levee entity. That should be a decision made by the people whose land was damaged in any way.”

Claudet added that lumbering, duck hunters, boat operators, subsidence and sea level rise are also to blame.

“It’s sometimes difficult to try to place a total or some percentage or amount that was done by oil and gas exploration,” Claudet said. “Now let me assure you this, there are certain oil and gas sites that certainly could be cleaned up and should be cleaned up, but that’s a determination by the people I believe who own the property where it’s situated.”

South Lafourche Levee District General Manager Windell Curole said there’s no doubt that pipeline canals have caused some issues throughout southeast Louisiana, but he didn’t agree with Southeast Louisiana Flood Protection Authority-East naming so many defendants in the case.

“They sued everybody, and some oil field companies are not very good companies but mostly are good, hard working people paying their taxes and employing a lot of people,” Curole said. “But for everybody to be put in the suit without any discretion, I don’t think was a very good idea. I don’t think it was fair either.”

Curole, however, is happy the issue came up because he feels the idea “absolutely needed the discussion.” He has been trying to get the various entities into a room to discuss how everyone involved could contribute to dealing with the land loss.

“I’m not sure if just the lawsuit, but how they approached the lawsuit and the way it was done, if I would agree with it, but what we need to do is get everyone working together to try to get something positive out of this situation,” Curole said. “ … We think there’s a large number of people, a large number of companies that would participate, we just need to see if it’s on the level that everybody agrees is fair. It is an extremely complicated issue.”

The suit could be dropped at any moment if the nine-member Southeast Louisiana Flood Protection Authority-East Board votes to do so. Since the board’s announcement to pursue litigation, Jindal has appointed four anti-lawsuit board members in Jeff Angers, Tyrone Ben, Joe Hassinger and Kelly McHugh, however a June board vote to kill the suit died with a 4-4 tally and one absence.

“I don’t see this lawsuit continuing in the future. I think when there are certain levee board members that are going to be having their terms expire, I truly believe that Gov. [Bobby] Jindal is going to appoint people that are going to be very amenable to his position, and I think that’s what’s gonna happen,” Claudet said.

Although he declined to answer when asked by The Times, Briggs told LaPolitics News Service last month he does not believe a settlement is imminent.

“I haven’t spoken to any companies or representatives of companies who think a global settlement is likely,” Briggs said, according to LaPolitics News Service.