Once again, the Louisiana Legislature will spend much time during the coming months trying to control, if not eliminate, lawsuits that seek compensation for damage caused years ago by the oil and gas industry.
Some legislators want to change the laws that allowed the Southeast Louisiana Flood Protection Authority-East to file a lawsuit last July in Orleans Civil District Court against 97 oil, gas and pipeline companies.
The litigation seeks damages for the extensive network of canals cut by energy companies since the 1930s through wetlands areas. The companies had promised to repair the damage but did not. The canals allow corrosive saltwater to intrude into the marshes, which kills the vegetation that serves as buffer to hurricane storm surges.
Energy companies may quibble about the volume of damage over the past 80 years.
But, there’s no dispute that canals crisscross fast receding marshes, not to mention the scattering of rusting equipment, ponds of tainted liquids, and other artifacts of long ago drilling and production activities.
The oil and gas producers argue that they performed the cleanup required by the state at the time, so it is unfair to come back years later and demand a different level of cleanup.
The problem is that state regulators did little back in the day, so the courts have become the place to force oil companies to pay for cleanups.
“It’s going to be very difficult to know how to approach this issue now, without knowing how the regulatory agencies approached regulations in the ’30s, ’40s and ’50s,” said state Sen. Gerald Long, R-Winnfield, chairman of the Senate Natural Resources committee. “It would be very difficult to hold someone responsible if they met the standards they were asked to hold back then.”
One of the lawmakers drafting legislation is state Sen. Robert Adley, R-Benton, an unapologetic supporter of the energy industry. He’s taking special aim at the lawsuit filed against oil and gas companies by the Southeast Louisiana Flood Protection Authority-East. He hopes to finish in the next week or two.
State laws already forbid most state boards and commission from hiring private lawyers to file lawsuits and get paid a cut of the damages. The law creating the flood authority doesn’t include that prohibition. But looking at the law overall, “it seems pretty clear, you can’t be doing this,” Adley said.
“We are the only state in America with this problem. No other. That tells me something,” Adley said.
The day after the lawsuit was filed, Gov. Bobby Jindal was at the Aspen Institute speaking on a forum with three other GOP governors. He blasted the lawyers’ contingency-fee arrangement with the flood authority.
Jindal later asked his Coastal Protection and Restoration Authority to ensure the courts understand that the lawsuit “is not authorized, that the levee board did not have the legal authority to do this.”
With contingency fees, lawyers are not paid unless their clients are awarded damages. The lawyers get a cut, about 30 percent in most cases.
Because of tight budgets, more and more government entities are choosing to pursue litigation with this payment arrangement.
The lawyers who usually defend such lawsuits are paid hourly. The average billing rate for a partner in a law firm was $536 per hour in 2012, according to the ABA Journal, a magazine published by the American Bar Association.
Stephen Waguespack, president of the Louisiana Association of Business and Industry and Jindal’s former chief of staff, says he opposes contingency fees because those contracts are hammered out behind closed doors. LABI also is hard at work on legislation that would limit the ability to sue businesses.
The flood authority is probably the most publicized case, but Waguespack says a number of public entities, including school boards, public employee pension plans and the Attorney General’s Office, use the contingency fee system. LABI released a “white paper” last week that quotes the conservative American Legislative Exchange Council calling contingency fee arrangements “a perfect storm” for litigation in that it combines the far-reaching prosecutorial power of an attorney general with a profit-motivated lawyer.
Still, Sen. Long says whatever the legislature decides on lawsuits against the oil and gas industry inevitability ends up in court for interpretation.
“Rarely can you find a legislative answer,” Long said. “This thing is going to be settled in a court of law.”
Mark Ballard is editor of The Advocate Capitol news bureau. His email address is email@example.com