Levee board’s suit could be landmark case

In the days since levee board commissioners filed a bombshell suit alleging about 100 oil and gas companies owe billions to restore coastal wetlands, supporters have already begun talking about the case as a potential legal milestone, elevating it into a pantheon of historic lawsuits that have shifted policy and debate permanently.

In its scope, the suit has been compared to the tobacco litigation brought by state attorneys general in the late 1990s, which eventually ended with a settlement worth hundreds of billions of dollars. Others have drawn parallels to cases closer to home: the legacy lawsuits over oil company pollution on properties throughout the state, and an unsuccessful effort to sue the U.S. Army Corps of Engineers for the failure of the levees during Hurricane Katrina.

But while the suit bears some similarities to those and other landmark cases, experts say the Southeast Louisiana Flood Protection Authority - East’s effort doesn’t map neatly onto those or other cases, and that could bring its own challenges for the board.

“Some of the things that this case will turn on haven’t been the subject of great amounts of writing or litigation,” said Mark Davis, director of Tulane University’s Institute on Water Resources Law and Policy.

The flood protection authority’s suit, filed Wednesday, accuses oil and gas companies of massive damage to coastal wetlands through the dredging of canals and the construction of pipelines and wells. That destruction occurred despite permits requiring the companies to maintain and restore the properties where they were operating. The loss of wetlands, which can help to blunt storm surge, led to the need for higher and costlier flood protection systems to defend the New Orleans area, the suit alleges.

Roughly 1,900 square miles of wetlands have been lost in the last century, and the oil and gas companies need to pay for their share of restoring them, said Gladstone Jones, an attorney hired by the flood protection authority.

While scientists differ on exactly how much of the state’s coastal damage is attributable to oil and gas operations, there is a consensus that they played at least some role in the loss of land. Likewise, there is agreement that the lost land would have mitigated storm surge, but varying estimates about its exact impact.

But those factors may play less of a role in the suit than the legal issues at play.

“There’s a difference between being factually responsible for something and legally responsible for something,” Davis said.

Keith Hall, director of the Louisiana State University Law Center’s Mineral Law Institute, said he doesn’t believe the levee board will be able to make those connections in court and questioned the validity of the authority’s case.

“I think there are other cases that are somewhat analogous, but for the most part those didn’t work out well for the plaintiffs,” Hall said.

Both Davis and Hall agreed the first challenge for the levee board will be merely making it into a courtroom in the face of procedural challenges.

Jindal administration officials have already argued the levee board did not have the authority to unilaterally file the suit, citing a state law that requires both the governor and the attorney general to sign off on contracts between state boards and outside attorneys. In addition, the amounts of money at stake in the case, and the contract promising attorneys 32.5 percent of the first $300 million they win and 22.5 percent of any additional money, have been a particular focus of the administration as it argues against the case, with state Coastal Protection and Restoration Authority Chairman Garret Graves referring to the deal as an appropriation of “$1 billion or more in public funds to a trial attorney void of any public discussion or consideration by political leaders that are accountable to the public.” Graves arrived at that figure using a hypothetical $5 billion judgment. Members of the flood protection authority counter that they’re guided by a law governing levee boards that requires only the attorney general to approve the attorneys involved and the payment plan. That approval came earlier this month.

It isn’t the first time Jindal has been involved in a dispute over whether an arm of state government can enter into a lawsuit over the administration’s objections.

When then-Attorney General Richard Ieyoub joined his peers’ suit against the tobacco companies, Gov. Mike Foster’s administration objected, arguing the state should not go after companies selling a legal product. In an unsuccessful attempt to get that suit thrown out, the companies filed affidavits from Foster and Jindal, who was then serving as the administration’s secretary of health and hospitals, attesting that they had not authorized the suit.

The companies said that should be grounds to quash the suit, but that effort was shot down.

The board also did not vote to file the suit, though it did publicly vote to hire the law firms to investigate coastal erosion claims last month. Attorneys had been quietly working on the case in the months leading up to that vote to determine whether it was viable.

Assuming the contract is determined to be valid, the board will have to show it has standing to sue, Hall said.

The question could be further complicated by the one-year statute of limitations on suits in Louisiana, though the plaintiffs have said that because the costs and damage are on-going, they believe they can still bring the case.

The case differs from otherwise similar legacy suits that have sought to force oil companies to fix environmental damage they directly caused to property owners. While the impact of coastal land loss on the levee board is less direct, the requirements under the permits, and the increased costs the wetlands damage has shifted onto the levee system, could be enough to prove the authority has a dog in the fight, Davis said. The case could therefore turn more on property and contract law than on laws governing mineral rights.

“Unfulfilled promises when you’re talking about coastal restoration and hurricane protection down here is essentially giving up on your future,” Davis said.

The ability of the levee authority to enforce those contracts could be complicated by their status as a third party to those agreements, but there is potentially some precedent. In the tobacco suits, the states were also third parties; they successfully claimed they faced higher Medicaid costs because of the actions of the companies and smokers.

The difficulty could come from showing that energy companies should be liable because the corps and levee authority “decided it was a prudent decision to spend more money to protect property we’re not the owners of because of something the defendant did,” Hall said.

Jones, who is representing the levee board, said the case boils down to three interconnected issues.

“Did the oil and gas companies cause damage to the area? Did the damage cause harm to the levee authority? What are the damages?” Jones asked.

He also dismissed concerns that the levee board couldn’t seek to enforce the permits.

“To the extent the federal or state government didn’t go out there and enforce the obligation to restore, shame on them,” Jones said.

From a scientific perspective, the case may have some similarities to the recent suit filed against the corps for levee failures at the Mississippi River - Gulf Outlet during Katrina. Issues of maintenance of levees and erosion played a role in the case, which initially resulted in success for the plaintiffs.

That victory was overturned by an appeals court, which ruled the corps had immunity from suits brought against it for discretionary policy decisions it made. The U.S. Supreme Court then declined to take up the case.

But the fact that courts could be persuaded of the corps’ liability in that case could be good news for the flood protection authority in this one, said Joseph Bruno, the attorney who represented the plaintiffs in that case.

“I would say there’s a better than even chance,” Bruno said. “There’s no question the oil companies dug the channels and didn’t fill them in, and there’s no question that there is damage to the wetlands and there’s no question that the damage to the wetlands has hurt their ability to protect us.”

Political wrangling over the case also remains a possibility. Officials with the levee authority expressed concerns this week that the administration or lawmakers could attempt to block the suit, slowly replace board members with new commissioners who would agree to drop it or seek to limit the authority’s power or abolish it entirely. Graves sent a letter to board President Tim Doody Friday calling for a meeting with commissioners so the Jindal administration can make its arguments for dropping the case.

John Barry, vice president of the board, responded with his own letter inviting Graves to the Aug. 15 meeting to discuss the issue.

The administration has argued that even if successful, the case could do less to help the coast than other efforts such as seeking a more substantial share of federal oil and gas revenues. In addition, the suit might complicate or conflict with other efforts the administration is engaged in, and usurp the authority of the Coastal Protection and Restoration Authority, which is in charge of implementing a 50-year, $50-billion master plan for repairing damage to those areas.

“The debate here is not about whether or not historic oil and gas activities in the coastal zone contributed to wetlands loss. The scars are there,” Graves said. “Those practices were clearly lacking our current understanding of coastal science. The key here is what we do to help restore our coast.”

Success for the levee board would result in some requirement that the energy companies repair the wetlands, with the burden of that cost being shared among the companies based on their liability for the damage. Other factors, including the Mississippi River levees, have also played a role in coastal erosion, which would limit the energy companies’ liability.

Where restoration is impossible — some of the sites listed in the suit are now open water — the companies could be ordered to pay the flood protection authority to compensate for their additional costs.

All that could add up to billions of dollars.

It cost Bruno’s firm $14 million to pursue the case against the corps when scientific modeling, attorneys fees and other expenses were taken into account.

“This is an expensive exercise,” Bruno said. “If you go after those boys, you better be ready for the long haul.”

Whether the case becomes a landmark one will depend on more than just who wins and who loses, Davis said.

“If this lawsuit is pursued and won and nothing achieved that actually makes the levees more defensible and the coast more vibrant, I don’t think it’ll be worth a thing,” Davis said. “If it’s defended successfully and the message is nobody should ever have to pay a dime for the protection and the vibrance of the coast, then it won’t be worth anything either.”