Oilfield Cleanup a Big-Money Dispute in Louisiana

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A behind-the-scenes firestorm in Louisiana’s legislative session centers on a big-money, years-long dispute between landowners and the oil and gas industry over how cleanup should be handled of environmental damage from drilling years ago.

More than a dozen bills have been filed on the issue of so-called “legacy lawsuits.” Leaders of the House and Senate natural resources committee hope a compromise can be reached without public and contentious disputes in the Legislature.

The Louisiana Oil and Gas Association says frivolous lawsuits over the cleanup are choking the industry and stifling exploration in the state. Landowners say they want to remediate property, but also want to preserve legal rights over damage claims.

Gov. Bobby Jindal’s natural resources secretary, Scott Angelle, is trying to mediate a compromise.

“We feel like the best approach is to give a reasonable period of time. We’re going to try to give them at least another two weeks to try to bring some type of consensus, and then we’ll hold a hearing,” said Sen. Gerald Long, R-Winnfield, chairman of the Senate Natural Resources Committee and sponsor of a bill for the landowners’ group.

The last time lawmakers took up the issue — six years ago — the matter uncomfortably put legislators in the midst of a dispute between multiple sets of powerful lobbying groups and campaign donors: landowners, trial lawyers and one of Louisiana’s biggest industries, oil and gas.

Jindal faces the same dilemma this time, with the strong oil and gas companies on one side and on the other side the governor’s former top lawyer, Jimmy Faircloth, and his big-money contributor Roy O. Martin, whose company is the largest private landowner in the state with thousands of acres and pending legacy lawsuits.

Legacy lawsuits, often totaling millions of dollars, are filed by landowners who leased their property to energy companies and claim environmental damage for the drilling on their land, like contamination of ground water resources.

Six years ago, lawmakers gave new power to the state Department of Natural Resources in devising cleanup plans and the costs associated with that.

Don Briggs, president of the Louisiana Oil and Gas Association, or LOGA, said that new authority hasn’t helped settle cleanup disputes. He said more than 270 lawsuits are pending with over 1,500 defendants, and he accused trial lawyers of dragging out cases to force companies — particularly small and independent producers — to settle rather than pay for the legal costs of continuing litigation.

“They sue you, don’t provide any data and force you to spend money to prove that you’re innocent, and it’s costly,” Briggs said. “This created an incredible cottage industry for the trial bar.”

Briggs said the lawsuits stifle exploration in Louisiana, and he said in many instances settlements aren’t being used to clean up property. He cites an LSU Center for Energy Studies report that said legacy lawsuits over the past eight years have led to a loss of 1,200 new wells and $6.8 billion in drilling investments in Louisiana.

“You can’t sue 1,500 different defendants in all these different cases and not have an impact on where people decide where they want to invest and to drill for oil and gas. It does in fact have an impact,” Briggs said.

LOGA wants a process to take responsibility for cleaning up sites without accepting liability for damage to landowners, which could then be pursued in separate lawsuits.

But Faircloth said LOGA’s proposal would center primary jurisdiction for these cases in administrative law judge hearings in Baton Rouge, rather than in local courts. He called it the industry’s attempt to “manipulate the outcome of private litigation” and erode the court’s jurisdiction.

“If I’m a landowner, I definitely don’t want to have to hire a lobbyist and go down to Baton Rouge to fight,” Faircloth said.

In a letter to lawmakers, Faircloth argues a potential conflict for the natural resources department to promote and police the industry at the same time.

“Simply put, oil and gas companies have considerable influence over the ability of DNR to fulfill its mission of promoting the development of our state’s natural resources and related economic opportunities,” Faircloth wrote

Faircloth said he’s offering a proposal that would allow small oil and gas companies, who he said are being held responsible for damage done years ago by the bigger companies that drilled years ago, to get out of lawsuits while holding the “majors” responsible for the mess they left behind.

The governor’s spokesman Kyle Plotkin issued a statement that seemed to ally him with Faircloth and Martin, while pressing for a compromise.

“It’s important that all the different stakeholders on this issue work together and try to seek consensus. Where there’s environmental damage, the responsible party must be held responsible for cleaning it up, and the independent oil and gas producers, who are not responsible for the damage, must be protected from lawsuits,” Plotkin in a statement.

Long said he’s hopeful, but not sure, an agreement can be reached behind the scenes.

“Almost every day I get mixed signals. One day someone will tell me, `Boy they’re real close. They ought to have this thing worked out in the next day or two.’ The next day they tell me they’re still at a crossroads,” Long said.

The main bills are Senate Bills 528 and 555.