By May 11, 2011 0 Comments Read More →

Bill targets contamination suits


Proposed legislation could fundamentally change the way the state handles disputes over cleaning up land contaminated by oil and gas wells drilled years or even decades ago, those supporting it say.

Among other things, the legislation would prevent landowners from hiring attorneys to sue oil and gas companies on a contingency basis. Landowners would have to pay the fees of attorneys and experts upfront, rather than covering those costs through any court judgment or settlement.

The Louisiana Oil and Gas Association says the legislation is needed to stop so-called “legacy lawsuits.” Such lawsuits typically involve a company being sued for environmental damage caused years earlier by previous well operators.

LOGA claims the threat of these lawsuits — 40 were filed last year statewide — is causing onshore exploration and production to stagnate.

“With more than 240 legacy lawsuits and 1,500 defendants, how can any company risk investing exploration dollars in Louisiana?” LOGA president Don Briggs said in a statement. “The oil and gas industry is already an uncertain and speculative business; abusive legacy lawsuits take risk to a whole new level.”

The association is holding a news conference to discuss the issue 1 p.m. Wednesday at the Louisiana Association of Business and Industry’s offices at 3113 Valley Creek Drive. Briggs, LABI Vice President Ginger Sawyer, and state Rep. Page Cortez, R-Lafayette, and co-author of the legislation, are scheduled to speak.

LOGA says millions of dollars in judgments are being paid to attorneys rather than being used for cleaning up contaminated property. LOGA members worry that investment, jobs and tax revenue will continue fleeing to other states, which don’t have the problem and already have more exploration and production activity.

LABI President Dan Juneau said with the looming budget deficit, the state can’t afford to stifle onshore exploration.

Mary Lee Orr, executive director of the Louisiana Environmental Action Network, said both LEAN and the Sierra Club oppose the legislation.

For one thing, the proposed law is unconstitutional, Orr said. The legislation would strip landowners of their property rights and would also be applied retroactively to contamination claims that have already been filed.

J. Michael Veron, a Lake Charles plaintiff attorney, said the proposed legislation is part of an intensive propaganda campaign by the oil industry.

The industry wants to shift blame for the massive contamination from thousands of wells, Veron said. The timing is surprising, since oil companies are churning out both record profits and record amounts of contamination, he said.

The proposed legislation will do two things, Veron said. First, the new laws will rid the oilfield operators from any potential liability, and second, the laws will prevent landowners from seeking a remedy for their polluted property.

Veron, who described himself as a pro-business Republican, said LOGA is pandering to anti-lawyer sentiment.

“While the oil companies make record profits, they say in so many words, ‘Don’t let landowners sue for contamination because their lawyers will get a fee if they’re successful,’ ” Veron said. “You have to ask yourself: ‘What is wrong with attorneys making an honest living? When did oil companies start giving gasoline away at the pump?’ ”

According to LOGA, legacy lawsuits have been around for decades. But the number of lawsuits has grown rapidly since 2003, when the state Supreme Court upheld a lower court’s judgment in the Corbello case. In that case, landowners whose property was worth $108,000 won a $54 million judgment, with $33 million for restoration costs.

The property has not been cleaned up, and the Supreme Court ruled that the restoration funds don’t have to be used for mitigation and restoration, according to LOGA.

Veron, the plaintiff attorney in the Corbello case, said he got into this area of litigation because Shell contaminated his great-grandfather’s farm and the family asked him for help.

The property hasn’t been remediated because the U.S. Army Corps of Engineers refused to issue a wetlands permit for the work, Veron said. He said he believes attorneys for Shell and Exxon lobbied against the permit, and that the oil industry doesn’t want the property cleaned up so it can keep the issue alive.

In 2006, the Legislature passed a law giving the state Office of Conservation oversight of cleaning up well-contaminated properties. However, the law allowed the state and landowners to recover attorney and expert fees.

LOGA says the law was a good first step but the process for resolving the remediation claims is still being abused by a handful of plaintiff attorneys. These attorneys are in some cases demanding billions of dollars for “unrealistic and excessive” cleanup plans that dwarf the costs estimated by state experts, according to LOGA.

According to LOGA, if the situation remains the same, the state could suffer potentially devastating economic effects. Legacy lawsuits could drive jobs, tax income and infrastructure investment to other states, the organization says.

“The contrast between Louisiana’s stagnant onshore drilling activity and the more robust activity in other states already presents a stark picture of the impact of legacy suits,” according to LOGA.

Veron said energy companies drill for oil and gas because they think those highly lucrative resources lie beneath the ground being leased. The companies are driven by profit, not job creation, he said.

“You’ll never have an oil company say, ‘We didn’t think there was oil and gas below the ground here, but we drilled so we could create jobs,’” Veron said.

And oil companies don’t drill because the laws are less restrictive in one area than another, Veron said.

The problem for Louisiana is that the oil industry has a culture whose members believe they are above the law, Veron said. Lawsuits are the only way that landowners can hold the oilfield operators accountable, he said.

Original Article

Posted in: Daily News

About the Author:

The Louisiana Oil & Gas Association (known before 2006 as LIOGA) was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Our primary goal is to provide our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana’s oil & gas industry, warding off tax increases, changing existing burdensome regulations, and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

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