State officials sue mining, energy companies for damage to Louisiana wetlands

August 29, 2013

Wetlands

Last month, a Louisiana flood protection board filed a lawsuit against dozens of energy companies, claiming that their practice of carving out thousands of miles of wetlands for access and pipeline canals has done extensive damage to the coastal marshes that serve as a “natural first line of defense against flooding.”

Governor Bobby Jindal released a statement criticizing the lawsuit, saying the board had “overstepped its authority” and usurped the role of the Coastal Protection and Restoration Authority (CPRA), among other agencies and offices.

“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,” Jindal said.

CPRA Chairman Garret Graves explained he believes oil and gas companies’ operations are “only a piece of the larger picture” and stakeholders need to take a strategic approach that addresses the full range of relevant issues.

For instance, navigation and flood-control systems designed by the Army Corps of Engineers have limited the amount of sediment that the Mississippi River delivers to the wetlands, contributing to their decline. However, Gladstone N. Jones III, an attorney for the flood protection board, noted that the federal government has also funded extensive reconstruction of the state’s hurricane defenses in recent years.

Now, the board believes it is time for oil and gas companies “to come and pay their fair share.” Jones added that the plaintiffs would be seeking to recover “many billions of dollars” in damages from the defendants.

John Barry, a vice president of the Southeast Louisiana Flood Protection Authority-East, told reporters that the “board is independent and arrived at its position based on its collective scientific and policy judgment.”

Lawsuit connected to massive sinkhole also moving forward

In another case, Governor Jindal has joined with state Attorney General Buddy Caldwell to file a lawsuit against Texas Brine Company, which is accused of causing a sinkhole in Assumption Parish, about 40 miles south of Baton Rouge. The company was mining at the edge of an underground salt dome in the area, which the plaintiffs claim led to a collapse that created the sinkhole.

The state is seeking reimbursement for emergency response costs, as well as civil penalties and funding to mitigate damage to local wetlands. According to Patrick Courreges, a spokesman for the Louisiana Department of Natural Resources, the state has spent at least $12 million in connection with the incident.

New York-based Occidental Chemical Corporation, from which Texas Brine leased the site in Assumption Parish, is also named as a defendant in the lawsuit.

The sinkhole continues to grow, meaning there is significant potential for new liabilities to emerge. In addition to resolving the legal challenge that has been initiated by the state, Texas Brine must still make arrangements with private property owners who have been affected by the disaster.

According to the Associated Press, at least 63 homeowners have accepted buyouts from the company. Others are reportedly still negotiating with the company or hoping to eventually be allowed to return to their homes in the evacuation zone. In the meantime, Texas Brine has been providing housing subsidies to displaced residents.

These cases offer a compelling example of why companies should take a proactive approach to managing their environmental liabilities.

For more information contact:

Tim Powers

PPM Consultants

225-293-7270