Suit seeks damages from oil companies for coastal erosion

The Southeast Louisiana Flood Protection Authority - East’s potentially historic suit takes aim at the massive network of canals, pipelines and extraction systems that form a spider web through the wetlands near New Orleans, and St. Bernard and Plaquemines parishes.
The Southeast Louisiana Flood Protection Authority - East’s potentially historic suit takes aim at the massive network of canals, pipelines and extraction systems that form a spider web through the wetlands near New Orleans, and St. Bernard and Plaquemines parishes.

An audacious lawsuit charges that 100 energy companies should pay for putting the New Orleans area at greater risk of flooding by contributing to coastal erosion.

The suit is expected to be filed Wednesday morning by the Southeast Louisiana Flood Protection Authority-East, which oversees the east bank’s flood protection system.

The potentially historic suit takes aim at the massive network of canals, pipelines and extraction systems that snake through the wetlands southeast of New Orleans. The oil industry’s activity has greatly increased the intensity of storm surges in the region by eroding the coastline that once formed a natural buffer against storm surge, requiring ever-more expensive and complex flood protection systems to keep the area safe during hurricanes, flood protection authority Commissioner John Barry said.

“We’re an entity with a lot of responsibility, and that responsibility was made more difficult by land loss,” Barry said.

A successful suit could require corporations, including major oil producers, to pay the cost of restoring Louisiana’s wetlands and potentially bear some of the cost of maintaining the post-Hurricane Katrina flood protection system that the authority oversees.

The pipeline and canal work in the wetlands, some of which dates back nearly a century, has long been seen as a major cause of coastal erosion: Dredging projects carry away land, salt water intrusion kills vegetation, and poorly maintained canals lead to land loss.

The lawsuit puts the levee board at odds with some of the most powerful industries in Louisiana and throughout the country.

The list of defendants includes some of the largest and most politically influential oil companies in the world, including BP, Chevron, ConocoPhillips, ExxonMobil, Hess and Shell. The list also includes Koch Industries, owned by billionaire brothers Charles and David Koch, who have been major backers of conservative and Tea Party groups.

The case laid out by the authority centers rests on two main claims.

Permits approving the work done by the oil companies require them to maintain the areas being used to prevent erosion and restore them to their natural state once they are no longer needed. However, the suit alleges that restoration work was never done, and that the requirements remain in effect for either the original companies that built wells and pipes in the area or the corporations that succeeded them.

Further, the suit argues that by allowing more water to affect the flood protection system, the companies have harmed the levee board, and the companies must pay to fix the problem.

Plaintiffs and their attorneys did not speculate about how much money could be at stake in the suit, which does not call for a specific dollar figure. However, attorneys working on the case said they expect to spend millions of their firms’ money and resources researching and litigating the suit based on the promise of a share in whatever amount is awarded. The attorneys stand to get about 32.5 percent of any money collected up to $300 million and 22.5 percent of any money above that amount.

The suit lists a variety of methods the corporations could fix the damage, including wetland remediation, construction of land bridges or other features that could blunt a storm surge and damages that would be paid to the flood protection board. A settlement or judgement could also be used to pay for the maintenance of the levee system the board oversees. Commissioners have worried publicly about how they’ll be able to pay to keep up the levees.

Attorneys acknowledge that the damage to the wetlands over the last century is not solely due to oil and gas companies. In fact, the Mississippi River levees and other U.S. Army Corps of Engineers projects have been cited as other key factors.
But with the corps’ recent construction of a $14.5 billion flood protection system in the New Orleans region, attorney Gladstone Jones III argued that the federal government has already been paying to keep the area free of flooding.
“It’s a fair question to ask, ‘How much the federal government has spent to address this, and how much has the oil and gas industry spent?’ ” Jones said.

Attorneys have been quietly working on the case for six months at the request of some commissioners, though the flood protection board did not formally contract with them until last month. Barry said he’s briefed a number of officials on the suit, including members of the state’s congressional delegation and Garret Graves, head of the state’s Coastal Protection and Restoration Authority.

The authority’s board is made up of appointees selected by Gov. Bobby Jindal and confirmed by the state Senate. It is not yet clear how the administration or lawmakers will react to the suit, although Graves issued a statement late Tuesday that suggested the suit was misguided. An early indication of where the Jindal administration stands could come later this year, as both Barry and board President Tim Doody are now up for reappointment. Both of their terms expired at the end of June, but state law requires they remain on the board until they are reappointed or replaced.

Lawmakers could also try to pass legislation that would limit the energy companies’ liabilities in the case during next year’s session.

The power of oil companies in Louisiana’s economy has been a concern throughout the process of filing the suit. Barry said at least one attorney declined to participate because he feared it would hurt his career, and he worries about how other board member’s livelihoods might be affected.

One element of the contract between the attorneys and the board could dissuade any attempt to get them to give up on the suit. The law firms involved are required to pay all costs involved in the case regardless of its outcome. But the flood protection board would find itself on the hook for those expenses should it decide to drop the suit, a provision that could make it more difficult for state officials to quash the case by slowly replacing the members of the board.

Barry said the suit was inspired in part by other suits brought by governmental bodies against corporations.

“I always thought there should be a way to get at this and always thought about the tobacco lawsuits,” Barry said.

Though the levee board is a creature of the state, the board’s lawyers say that doesn’t mean that the board loses its legal standing if state regulators were derelict in enforcing oil companies’ permits. That’s because the board is a political subdivision rather than a state agency.

Officials with the flood protection authority have not been in touch with other agencies that might be able to file their own claims against the oil companies, including their counterparts in the Southeast Louisiana Flood Protection Authority-West. However, Barry said he expects others to make similar cases once the suit gets moving.

“I will not be surprised if once we go forward, other similar entities don’t consider going forward,” Barry said. “They may not be able to afford not to do it.”