Oil Companies Land a Victory in Louisiana Coastal Lawsuit

A federal appeals court on March 3 refused to revive a Louisiana levee board’s lawsuit blaming dozens of oil and gas companies for damage to the state’s fragile coast, a major victory for energy companies and their political supporters who cast the suit as an attack on a vital state industry.

The 5th U.S. Circuit Court of Appeals ruling upheld a federal judge’s 2015 decision in favor of energy companies that argued the Southeast Louisiana Flood Protection Authority-East lacked legal standing to bring its damage claims, which could have cost the oil companies billions of dollars.

The board had argued that damage to the coast done by decades of drilling and canal dredging by energy companies contributed to the loss of coastal wetlands. The wetlands form a hurricane buffer for New Orleans and the authority argued their loss meant more work and expense in protecting and maintaining levees.

When the lawsuit was filed in 2013, environmentalists hailed it as an effort to hold the industry accountable.

The suit appeared to catch the industry and others by surprise. Then-Gov. Bobby Jindal joined industry leaders in calling it a boon for trial lawyers that would damage an industry that’s among south Louisiana’s major employers.

Jindal, a Republican, mounted a partially successful effort to remove supporters of the lawsuit from the flood protection board as their terms ended and replace them with industry supporters. He also pushed for a law to prohibit state agencies and local governments from pursuing such lawsuits.

A few Louisiana coastal parishes have filed similar lawsuits that hinge on different legal issues.

Don Briggs, president of the Louisiana Oil and Gas Association, referenced those suits in a statement hailing the federal court ruling. “This ruling is a step in the right direction, but we have many more miles to cover,” Briggs said in a joint news release with the Louisiana Mid-Continent Oil and Gas Association.

“Our position remains validated by yet another court decision, further proving these allegations are baseless and without merit,” Chris John, president of the LMOGA said in the same release.

It was not immediately known whether the flood authority would continue to pursue the federal suit by asking for a 5th Circuit rehearing or going to the Supreme Court.

Attorneys with Jones, Swanson, Huddell & Garrison, handling the suit for the flood board, said they were conferring with their client and analyzing the opinion. In an email, Jim Swanson expressed disappointment and said oil and gas companies should pay their “fair share” for coastal restoration.

The firm declined to say how much money it has spent on the case. It was working under a contract in which the flood authority would not have to pay if the case is lost.

Richard Carbo, a spokesman for Jindal’s successor, Democratic Gov. John Bel Edwards, said it doesn’t appear that the ruling will affect the state lawsuits. Edwards has encouraged the oil industry to settle the suits to help Louisiana fund restoration efforts expected to cost tens of billions of dollars in the coming decades.

The lawsuit at issue was originally filed in state court in 2013 but the oil companies succeeded in getting it moved to federal court.

U.S. District Judge Nannette Jolivette Brown ruled in 2015 that federal and state law provided no avenue by which the flood board could successfully bring the suit. Her ruling said the authority’s levees were too far from, or too indirectly affected by, the damage allegedly caused by the industry. She also said the authority had no right to sue under permits issued by the state or the U.S. Army Corps of Engineers that allowed the companies’ energy exploration or transportation activities in the first place.

A three-judge 5th Circuit panel — Judge Carl Stewart, nominated by Democratic President Bill Clinton; Priscilla Owen, appointed by Republican President George W. Bush; and Gregg Costa, nominated by Democratic President Barack Obama — unanimously affirmed her ruling in a 22-page opinion.