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Lafayette has been pegged as the “state’s most aggressive” mover toward compressed natural gas as a viable alternative fuel for vehicles. And as other cities and parishes look to Lafayette as a leader for reducing fuel costs and curbing harmful emissions, some industry leaders say Louisiana could be tops in the nation for its natural gas use.

According to a report from The Advocate, Louisiana Oil and Gas Association Vice President Gifford Briggs says major American motor companies are finally investing in mass-produced trucks that run on both natural gas and gasoline. But like Lafayette’s CNG success story, the CNG movement is largely based on local governments using CNG for public fleets and the incentives offered for making the conversion.

As IND Monthly reported in June, Lafayette has used state and federal grant money to convert five of its buses to run on CNG. The end goal is to have more than 100 city-owned vehicles converted to CNG within two years, while also working with UL Lafayette and the Lafayette Parish School System to have their transit buses running on the clean-burning fuel within the same time frame.

The Advocate notes that Louisiana is home to 10 CNG public fueling stations, two of which are up and running in the Hub City. Privately owned Apache opened the city’s first public station on Verot School Road in July, while LCG’s public works facility has its own fueling station. LCG is also slated to open another CNG fueling station soon on North University Avenue, with long-term plans calling for a fourth station in the next few years along I-49 or I-10:

Louisiana has seen CNG advances because of its Haynesville Shale natural gas formation, LOGA, the energy industry, and companies like Chesapeake Energy Corp., Encana Corp., Petrohawk Energy Corp. and Apache Corp., Briggs said. But trying to get Mississippi, Alabama and Florida and other states that don’t have the energy infrastructure to support CNG has been more challenging.

That may be changing. Twenty-two states are part of an effort, led by the governors of Oklahoma and Colorado, to encourage automakers to make more affordable CNG vehicles for state fleets. Oklahoma Gov. Mary Fallin has said the governors hope their efforts will help overcome some of the obstacles automakers face in producing a wider variety of CNG vehicles.

State government buys only about 40 percent of the public-sector vehicle purchases, Ming said. Municipalities and other political subdivisions account for 60 percent of sales.

If the municipalities — city and parish governments — tag along, the CNG sales could be significantly higher, Ming said.

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The push for compressed natural gas vehicles has gained some major traction with commitments from Ford, Chevrolet, Dodge and General Motors, but energy industry experts say federal incentives will be needed if real transformation is to occur.

“It is extremely nice to see that it’s actually here. A lot of times you talk about those things like they’re unicorns,” said Gifford Briggs, vice president of the Louisiana Oil and Gas Association. “But now they’re here …. I think that is a huge first step towards making it (CNG) a little more mainstream acceptable.”

The energy industry has felt good about the direction CNG has taken for a while, Briggs said, but the advent of mass-produced pickups that can run on natural gas or gasoline opens the door on a national scale.

Louisiana has seen CNG advances because of its Haynesville Shale natural gas formation, LOGA, the energy industry, and companies like Chesapeake Energy Corp., Encana Corp., Petrohawk Energy Corp. and Apache Corp., Briggs said. But trying to get Mississippi, Alabama and Florida and other states that don’t have the energy infrastructure to support CNG has been more challenging.

That may be changing. Twenty-two states are part of an effort, led by the governors of Oklahoma and Colorado, to encourage automakers to make more affordable CNG vehicles for state fleets. Oklahoma Gov. Mary Fallin has said the governors hope their efforts will help overcome some of the obstacles automakers face in producing a wider variety of CNG vehicles.

Oklahoma Energy Secretary Michael Ming said if the participating states could buy 5,000 CNG vehicles that would be great, but 1,000 is more likely given the current economic climate.

State government buys only about 40 percent of the public-sector vehicle purchases, Ming said. Municipalities and other political subdivisions account for 60 percent of sales.

If the municipalities — city and parish governments — tag along, the CNG sales could be significantly higher, Ming said.

Chris Knittel, an economist at the Massachusetts Institute of Technology, described the states’ request as “interesting.”

The states presume the CNG vehicles available aren’t that affordable, Knittel said.

“There’s no magic wand that the automakers can wave that makes the CNG vehicles less expensive than gasoline-based vehicles,” Knittel said.

“But there are things that policymakers can do to level the playing field.”

States have to put policies in place with incentives that encourage consumers to switch, he said. Those incentives could involve making CNG fueling stations available, subsidizing vehicles or in-home fueling stations, or by lowering retail prices for natural gas.

Right now, the states aren’t guaranteeing anything to automakers, Knittel said.

“I think the states are just saying that if you build them, we’ll promise the consumers,” Knittel said. “I’m not sure that’s necessarily the case given the current structure of prices and the number of refueling stations around.”

There are roughly 1,000 fueling stations nationwide, and 123,000 CNG vehicles, Ming said.

In Louisiana, CNG vehicles make up less than 1 percent of the cars and trucks on the road, Briggs said. Nationwide, CNG vehicles are around 2 percent of the total.

But that can change if the state, local and federal governments and the private sector — the companies that operate fleets — work together, he said.

“I don’t think the federal government or the state government or the local government can do it by themselves, any more than I think the fleets can do it by themselves,” Briggs said.

But working together can make things happen, Briggs said. Just look at Lafayette, where the city-parish government and private sector have joined to make the state’s most aggressive move to CNG.

In July, Apache opened a public fueling station. The company also converted 15 of its vehicles in Lafayette, part of 300 conversions it will complete by yearend. The city-parish has converted five buses and announced plans to convert its entire fleet.

The city-parish is also trying to form a partnership with the University of Louisiana at Lafayette and the local school boards to convert all their vehicles, Briggs said. Acadian Ambulance is experimenting with CNG for its vehicles.

The East Baton Rouge City-Parish Government recently began looking into converting all of its vehicles to CNG. The city-parish expects the move will slash fuel costs, particularly for heavy-duty pickups and other vehicles that consume more fuel.

Chesapeake spokeswoman Katie McCullin said there is evidence across Louisiana that the state is leading the nation in natural gas usage.

For example, Shreveport has added 14 natural-gas powered buses, and Bossier City has added a second public fueling station. Holmes Honda in Shreveport and Bossier City received its first shipment of the Honda Civic Natural Gas, the only dedicated CNG vehicle now sold in the United States.

In total there are 10 public CNG stations in Louisiana, with more in the planning stages or under construction, McCullin said.

Chesapeake, a major player in the Haynesville Shale and other natural gas plays, is one of the leading proponents of CNG.

The Oklahoma-based company’s Fueling the Future Initiative is an effort to communicate how natural gas can reduce greenhouse gas emissions and end the United States’ dependence on foreign oil, McCullin said.

The company has a billboard off Interstate 10 near the state Capitol extolling the use of natural gas vehicles.

Chesapeake has participated and sponsored natural gas vehicle seminars nationwide and is converting its 5,000-vehicle fleet to CNG, McCullin said. UPS, Verizon Wireless, Waste Management, Disneyland Resorts and AT&T are also converting their fleets to CNG; in 2009, AT&T announced it would spend $350 million to buy 8,000 CNG vehicles.

McCullin said Chesapeake will also invest at least $1 billion over the next 10 years with Clean Energy, 3M Corp., GE and Sundrop Fuels in efforts to increase demand for CNG vehicles.

The work with 3M could revolutionize the design and manufacture of CNG tanks, the most expensive part of the CNG fueling system, McCullins said. The redesign is expected to lead to lighter, more durable and less expensive tanks.

Chesapeake expects these investments to be the tipping point that gives automakers the confidence to increase their production of CNG and liquefied natural gas vehicles, McCullin said.

Still, both Briggs and Knittel said federal incentives are needed if natural gas is to replace oil as a transportation fuel.

The federal government would be the best source for those incentives, Knittel said, because the benefits from CNG vehicles accrue to the nation, not just to the states.

Energy independence and a reduction in climate change help everyone in the United States, regardless of whether a Louisiana resident buys CNG vehicle, he said.

“When the benefits accrue to everyone, the best place to set the policies is at the higher federal level,” Knittel said.

Briggs said if the country wants to see “a monumental shift,” then Congress should pass the Natural Gas Act.

The act replaces CNG incentives that dropped off the books about three years ago, Briggs said.

That was about the same time that Louisiana passed its own CNG vehicle incentives, Briggs said.

Right now, with only the state incentives, a Louisiana consumer can recover the $10,000 it costs to convert to CNG in two years if he drives 15,000 to 20,000 miles a year.

Most people don’t drive that much, Briggs said. But if both federal and Louisiana incentives were in place, converting a vehicle would be free, and consumers would begin saving money instantly.

“You’re saving a dollar, a dollar fifty, two dollars a gallon,” Briggs said.

“That would register with the American public overnight.”

Briggs pays around 45 cents per gallon by fueling up at LOGA’s office station, he said.

At Apache’s Lafayette station, the cost is around $1.79 a gallon, which is still only about half the price of gasoline.

Briggs said there is enormous support for the Natural Gas Act, but he doesn’t expect Congress to pass the legislation anytime soon.

And Knittel said any new policies that involve handing out more money have little chance in Congress these days.

“Still, I could certainly see both sides of the aisle supporting CNG,” Knittel said.

The rhetoric from both parties suggests they would support natural gas vehicles, he said.

Meanwhile, the price of natural gas is lower than it’s ever been, and with shale gas so plentiful, prices are expected to remain low for some time, Knittel said. In the past, natural gas prices have been very volatile; the price might fall but no one expected it to stay there.

Now, natural gas is expected to remain at less than $5 per thousand cubic feet for the foreseeable future, Knittel said.

Briggs said the United States is the Saudi Arabia of natural gas.

“We have more natural gas than we know what to do with. We’re trying to export it,” Briggs said.

The country has so much natural gas that it’s going to run out of storage capacity, Briggs said.

“I think if the federal government … is serious about eliminating our dependency on foreign oil, the only viable alternative is natural gas,” Briggs said.

Congress should pass the Natural Gas Act, he said.

“Let’s get it on the books, and let’s see if we can get started transforming America’s transportation infrastructure” Briggs said.

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Apache Corporation (NYSE, Nasdaq: APA) was joined by the Lafayette, La., city-parish president and other local dignitaries to commemorate the opening of the company’s first public-access compressed natural gas (CNG) fueling station in Louisiana.

“The state of Louisiana is a leader in supporting increased use of natural gas,” said Rod Eichler, Apache’s president and chief operating officer. “The addition of this CNG fueling station in Lafayette is a step toward building the infrastructure needed to fuel America’s cars and trucks with natural gas, a cleaner-burning and abundant domestic resource.”

Eichler and several Louisiana dignitaries attended the opening ceremony held at the Apache-branded station at 515 East Verot School Road. The event showcased a variety of natural gas-powered vehicles, including some of the city’s natural gas-powered buses. Lafayette is in the process of converting its entire fleet of buses and many of its city vehicles to natural gas power.

Dignitaries on hand to show their support for the station included: Joey Durel, Lafayette city-parish president; Keith Mosing, chairman and CEO of Frank’s; Rob Guidry president and CEO of the Greater Lafayette Chamber of Commerce; and Gifford Briggs, vice president of the Louisiana Oil and Gas Association, which has been a strong partner with Apache in its efforts to increase the use of CNG in vehicles.

“The infrastructure investment to enable Lafayette’s deployment of CNG is critical,” Durel said. “This investment is helping to forge partnerships, both public and private, that are decreasing the operating costs of private companies and governments in our area. Congratulations to Apache, and thank you to our many partners who are helping to ensure that this investment will be a true success for all of Lafayette.”

Guidry said the station helps provide momentum for increased CNG conversion.

“This event reflects a major advancement of the Chamber’s goal of expanding the market for CNG,” said Guidry. “Apache’s leadership in investing in this infrastructure provides strong impetus to those considering conversion programs.”

The site of the station was chosen in large part because of its proximity to a concentration of large public and private natural gas fleet vehicles. Apache’s CNG fueling station will provide local government, private industry and the public with an economic and environmentally friendly alternative to gasoline.

“Frank’s is pleased to do its part in getting this natural gas filling station opened,” said Mosing of Frank’s, which provided the land for the Apache-branded station. “There is an abundance of natural gas available and I believe we are heading in the right direction to continue to develop and use natural gas as a fuel source.”

CNG-powered vehicles showcased at the event included:

Lafayette City-Parish bus

Lafayette Parish Sheriff’s patrol car

Frank’s 3/4-ton Chevrolet field service truck

Apache Corp.’s Tahoe and Chevrolet Silverado

Ford Westport LD OEM F-250 truck

LEAM Drilling service vehicle

Ford Expedition of Gifford Briggs, vice president of the Louisiana Oil and Gas Association

Acadian Ambulance as converted by Tony Parich, owner of Control Tech.

The station boasts two dual-hose fueling dispensers capable of fueling four cars simultaneously at a rate of three-to-four gallons equivalent per minute. The self-service station accepts a broad range of credit cards, as well as standard fleet cards.

The station is unattended, but customers may contact an Apache representative with questions about CNG refueling anytime by calling a toll-free number posted on the fueling pumps.

Apache currently has converted 274 vehicles to run on CNG and plans to convert a total of 350 of its fleet by year’s end. By 2015, the company expects to have 80 percent of its 1,000-plus fleet in the U.S. converted.

Apache also offers financial incentives to its full-time employees who choose to switch to CNG. All full-time Apache employees who purchase a new dedicated CNG vehicle or convert their vehicle to CNG receive a $5,000 Visa credit card for purchasing fuel.

Currently, there are more than 120,000 natural gas vehicles on U.S. roads today and more than 15 million worldwide, according to NGVAmerica. Industry data shows that vehicular natural gas nearly doubled between 2003 and 2009. In 2010, natural gas displaced more than 350 million gasoline gallon equivalents. The International Association for Natural Gas Vehicles estimates that within 10 years there will be more than 50 million natural gas vehicles – or, about 9 percent of the world’s transportation fleets – on the road worldwide.

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Louisiana as a whole is “way behind” on the use of compressed natural gas as a cheaper and cleaner fuel for vehicles, but leave it to Lafayette to once again distinguish itself a leader in the state for its efforts to lower the city’s carbon emissions with CNG-run government vehicles and natural gas fueling stations for the public.

Lafayette Consolidated Government Planning Manager Mike Hollier says the city is roughly 2.5 years into its five-year plan to convert all of the city’s buses and most city-owned vehicles (more than 100) to run on CNG.

The benefits for the city and its residents are two-fold, Hollier says, because CNG is both cheaper (about $1.80 per gas gallon equivalent) and helps to lower the EPA-monitored carbon footprint in Lafayette.With grant money in place from both the state and the federal government, Lafayette has already converted five of its buses to run on CNG. Hollier hopes to have more than 100 city-owned vehicles converted to CNG within two years, while also working with UL Lafayette and the Lafayette Parish School System to have their transit buses running on the clean-burning fuel within the same time frame.

The city currently has two CNG fueling stations in operation — the privately owned Apache station on Verot School Road and the LCG-owned station at the public works facility — and a third slated to open in the next few months. That one, on North University Avenue, will be LCG-owned and open to the public. The five-year plan, if successful, will also bring a third public fueling facility (Apache is open to the public) to an undetermined location along I-49 or I-10.

“After two years and a lot of study, it was decided that CNG was the way to go both in the short term and the long term,” Hollier says. “There’s a very positive cost benefit. There’s an additional capital outlay up front, [but] once you make those conversions, the benefits begin to pay off in a matter of years.”

Louisiana is the nation’s top producer of natural gas, according to Louisiana Oil and Gas Association Vice President Gifford Briggs, a factor Hollier says played a role in the city’s decision to invest in CNG.

“It’s home-produced and readily available all around us,” Hollier says.

CNG conversion is a no-brainer for oil and gas industry advocates like Briggs, who notes that the U.S. has a 100- to 150-year supply of natural gas.

Briggs, who commutes daily from his home in Lafayette to the LOGA office in Baton Rouge, has so much faith in the future of natural gas he decided to “put his money where his mouth is” and converted his own Ford Expedition to a “bi-fuel” SUV that runs on both gasoline and CNG. The LOGA lobbyist is able to take advantage of two different types of CNG fueling stations — the Apache station on Verot as well as a home fueling station that’s been installed at LOGA’s office, the Jimmy Davis House in Baton Rouge.

“Apache donated the whole thing,” Briggs explains. “For all practical purposes it’s a box with a hose coming out of it that’s connected to our natural gas line. It’s similar to what we’d do to electric vehicles.”

Money, however, is one of the reasons natural gas hasn’t taken off as quickly as many had hoped in terms of replacing gasoline as the primary means of fueling vehicles. As a recent Wall Street Journal report notes, government agencies using dump trucks, buses and other gas guzzlers and heavy polluters are more eager to jump on board with the start-up costs that come with CNG conversion. The average American is less enthusiastic about conversion costs that run in the thousands, and before recently factories weren’t even churning out CNG-ready vehicles for consumers to consider.

But the nation and Louisiana are finally catching up with the rest of the world when it comes to CNG, Briggs says, with Ford, Dodge and Chevrolet all slated to place bi-fuel pickup trucks on the market soon, albeit in limited availability.

The 100 percent CNG Honda Civic could be available for purchase at Moss Motors within six months thanks to the Apache CNG station that recently opened and the plans for more CNG stations to come. Briggs notes that Honda does not allow dealerships to sell the CNG model unless there’s a fueling station within 25 miles.

“We have enough natural gas to fuel transportation infrastructure, and we rely heavily on oil from countries outside the U.S.,” Briggs says. “It’s cheaper; it’s better for the environment. It seems like it’s such an obvious win for Louisiana because we could very easily become energy independent.”

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East Baton Rouge is attempting to go green, and it’s starting with its vehicles.

Department of Public Works Director William Daniel said the city-parish is beginning the process of transforming its vehicles into a fleet that’s run by compressed natural gas.

Natural gas is a less expensive alternative fuel source to diesel and gasoline, and its harmful emissions are lower, Daniel said.

“We can save money (on fuel costs) and serve the people of the parish more efficiently by doing this,” Daniel said, noting that the switch is part of Mayor-President Kip Holden’s sustainability plan for city-parish government.

The city-parish selected a consultant, Professional Engineers Consultants Corp., to oversee the transformation, Daniel said. The contract is still in negotiations and will go before the council for approval within the next few weeks.

Next, the city-parish will seek requests for proposals from contractors. Costs, funding strategies, the time line and scope will be determined by the contractor who lands the bid, Daniel said.

There are hundreds of vehicles operated by the city-parish, but the contractor will ultimately recommend how many vehicles and what departments should be converted to CNG, Daniel said.

David Guillory, assistant DPW director, said his agency will be particularly interested in replacing its maintenance and operations vehicles, which include heavy dump trucks, tractors and large pickup trucks.

“We do have a lot of passenger vehicles, but it’s the heavy-duty pickups that we’d really like to save on fuel and burn cleaner fuel sources,” Guillory said.

The initial investment to convert to CNG is expensive because it requires new vehicles and fueling stations.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, said it costs about $10,000 to convert a vehicle to CNG, and fueling stations are between $1 million and $2 million to build.

Daniel said he expects there will be federal and state funds available to assist with financing. Also, he said, the city-parish could make an arrangement with the contractor to finance the project through the city-parish’s expected fuel cost savings over several years.

Briggs said CNG costs about $1.79 per “gasoline gallon equivalent,” and can run as cheap as 50 cents a gallon equivalent if an entity is using its own fueling station.

Baton Rouge follows in the footsteps of Lafayette and Shreveport, which already have some city buses that run on CNG.

Baton Rouge’s bus system, the Capital Area Transit System, is quasi-independent from the city-parish and has opted to pursue hybrid-electric buses rather than CNG partly because of the initial investment.

Lafayette also has about 41 other “nonbus” vehicles, Briggs said, ranging from police to public works vehicles, that use CNG.

But Briggs cautioned that it does not always make financial sense to convert.

“It depends on the source of the funding, and it depends on the mileage that a vehicle travels in any given year and how much fuel they consume,” he said. “If you’re using local or state tax dollars it may not make much economic sense because of the conversion costs.”

Briggs said converting makes sense for the “heaviest users of fuel,” which includes buses, street sweepers, garbage trucks and vehicles that travel more than 12,000 miles per year.

But, he added, “if the money comes from a grant, and you get the conversion costs for free, then anything makes sense because you’ll save on fuel regardless.”

Briggs said there should be plenty of federal funding opportunities for the city-parish, noting that when federal stimulus money was made available to the state in recent years, there were not enough applicants to spend the money.

Baton Rouge has a few CNG stations already, Briggs said — including at least three that are run by Entergy.

The city-parish also has a CNG station that was funded by a grant more than five years ago, Guillory said.

The grant also paid for five Honda Civics that run on CNG and are used by DPW inspectors.

But, Briggs said, the technology has changed since that station was built, and CNG vehicles are now built differently.

He said those cars have smaller fuel tanks than new CNG vehicles, and the station fuels cars very slowly.

Daniel said he hopes the first phase of the conversion will begin by next year.

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Over-reaching by federal regulators and local governments could stop the Tuscaloosa Marine Shale from ever booming in Louisiana and shift drilling activity to the Mississippi side of the oil-rich formation, Louisiana Oil and Gas Association Vice President Gifford Briggs said Thursday.

The Environmental Protection Agency has been trying to take control of the hydraulic fracturing permitting process from state governments for a long time, Briggs said.

The energy industry fears that any allegation of a problem could result in an instant ban on hydraulic fracturing, the same way that federal regulators placed a moratorium on offshore drilling after the BP well disaster.

“That would give the federal government the ability to shut down the oil and gas industry in the state with the swipe of a pen,” Briggs said. “That is very terrifying, and that is a very real concern that industry has.”

Briggs spoke at the Greater Baton Rouge Industrial Alliance’s annual meeting.

Most wells are drilled using hydraulic fracturing, where millions of gallons of water, mixed with sand and chemicals, are forced underground under high pressure to crack rock formations and release natural gas or oil. Environmentalists and some residents say the practice could contaminate surface water and water tables. There are also concerns about the enormous amount of water used in the process — a Colorado State University study found the average horizontal well in that state used 2.7 million gallons of water — and the effects of disposing wastewater from fracking.

Briggs said federal regulation would likely increase the time and the cost involved in drilling a well.

Meanwhile, Louisiana’s continuing budget shortfalls could mean the end for the severance tax break that drillers get for horizontal wells, Briggs said.

In 1994, Louisiana made horizontal wells exempt from severance taxes until a company recovers the cost of the well or for 24 months, whichever happens first.

At the time, the technology was fairly new, and legislators were trying to encourage drilling. In 2010 and 2011, the exemption meant that Louisiana didn’t collect around $300 million in severance taxes.

The energy industry says it creates billions of dollars in economic activity and investment, which generates tax dollars in other ways.

The Haynesville Shale, for example, had $31 billion in economic impact during the past two years, creating more than 60,000 jobs, Briggs said.

Briggs said he expects the tax break will be the No. 1 target in the next legislative session, even though Louisiana’s economy is heavily dependent on the oil and gas industry.

Drilling is already practically impossible in the Haynesville Shale, due to depressed natural gas prices, Briggs said. Without that incentive, the cost of drilling goes up incredibly, making it even less likely that drilling will take place, and the same goes for the Tuscaloosa Marine Shale.

Finally, drilling companies face problems at the local government level, Briggs said.

Once the Haynesville Shale got going, every local government wanted to create its own well permits, fees, road-use taxes and everything else to capitalize on the boom, Briggs said.

“And I’m sure those parishes in the Baton Rouge area, when they looked at what was going on, they said, ‘Well if we can just get that kind of activity and that kind of economic growth in our area we would do anything,’ ” Briggs said. “Well the Tuscaloosa shows up, and now all of a sudden we’ve got local ordinance issues in every parish that we’ve never had before.”

The local issues vary wildly, Briggs said.

In Beauregard and Vernon parishes, there were efforts to ban hydraulic fracturing. Other local governments have asked drillers to disclose the chemicals used in hydraulic fracturing, he said.

Many of the proposed ordinances duplicate state regulations, while others would make drilling companies repair road damage; the industry is willing to pay for repairs, but oil and gas companies don’t have expertise in road repair.

Briggs said all of these challenges could mean that the much-anticipated Tuscaloosa Marine Shale boom might never materialize.

Drilling companies have an option, he said. They can just move their operations to the Mississippi side of the formation.

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Legislation intended to clean-up decades of on-shore contamination from oil and gas extraction could become stained with bureaucratic pollution according to one watchdog group.

Louisiana Law Abuse Watch Executive Director Melissa Landry said a bill addressing legacy lawsuits and passed last week by the state House of Representatives was accepted by both the oil industry and landowners.

Landry added, however, that substitute legislation, authored by state Sen. Bret Allain (R-Jeanerette), and being debated in the state Senate this week, could serve to prolong litigation. The result would be plaintiff attorneys remaining on the case and their client’s payroll longer, because of required oversight from multiple agencies.

“It is a complete bureaucratic quagmire,” Landry said after Senate Bill 731 went to committee on Friday.

SB-731 was filed as an alternative to House Bill 618, which passed 83-18 last Wednesday.

Authored by state Rep. Neil Abramson (D-New Orleans), HB-618 changes the process of deciding responsibility associated with property damages related to oil and gas production. If made law, cases could be settled by mitigation with enforcement oversight by the Department of Natural Resources Commission of Conservation before going to court.

The plan includes covering costs associated with admitting evidence related to subsequent lawsuits, filed by landowners against energy companies to whom property had been leased. Any decision would ultimately remain subject to a judge’s approval.

Lawyers for landowners complained that Abramson’s plan risks prejudicing a jury when it considers private damages that go beyond violation of state environmental regulations.

In an effort to appease those that questioned HB-618, Alain composed SB-731. “I asked the landowners what gave them heartburn about HB-618,” Allain said. “I wanted to find a compromise.”

According to Allain, landowners accepting HB-618 remained concerned that only the DNR commissioner was designated to make the ultimate decision in most cases. He said this group felt that too much power was being placed in one person’s hands.

“Landowners wanted more oversight,” Alain said. “So what I did was set up was an oversight committee comprised of the secretary of DNR, which is different from the commission of conservation, secretary of Department of Environmental Quality, secretary of Wildlife and Fisheries, commissioner of the Department of Agriculture, the Department of Health and Hospitals and, in costal parishes, the Coastal Protection and Regulation Authority. “

Allain said his bill instructs that commission to design reasonable plans when faced with state clean-up standard 29-b.

The strict definition of 29-b means no oversight is needed. “A lot of times in these cases a variance is given to be allowed to make it a more feasible plan,” Allain said. “Everything from changing a standard to not making them comply with certain parts of the standard.

“[Under HB-618] a $50 million cleanup could turn into a $1 million cleanup,” the state senator added. “The landowners fear that is what would happen without extended oversight.”

HB-618 allows a defendant to offer limited admission of responsibility. SB-731 adds that a required admission be made within 120 days of the landowner filing suit. The oil company’s remediation proposal would be submitted within 60 days after admission. In all, there would be a 240-day window between the civil complaint being made and a remediation plan being filed.

Sen. David Vitter was among the first responders to both pieces of legislation. He applauded the industry-backed HB-618 and called it a solution litigation that had lawsuits filed against every oil producer that ever used a given lease, even if only the initial company was to blame for environmental damages.

Vitter then called SB-731 a win for trial lawyers currently working on approximately 250 existing cases. “The Allain bill has unrealistic deadlines that will nearly ensure that a credible and admissible cleanup plan will not be developed in most future cases,” he said.

Vitter noted that delays in completing cases would only profit lawyers while keeping both landowners and oil companies from reaching their objectives.

“The two bills do look similar on the surface,” Louisiana Oil and Gas Association Vice President Gifford Briggs said. “But when you get down into it, subtle word changes have far reaching impact. It would be hard for the industry to agree with the [Allain] bill without amendments.”

Louisiana Landowners Association Executive Director Paul Frey said that Allain’s bill “needs a little work” but offers greater versatility to meet the concerns of oil producers, environmentalists and landowners.

“[SB-731] has a lot of concessions oil wanted and assurances for landowners,” Frey said. He insisted that involving several state departments would assure any possible concern being adequately represented when negotiating settlements on specific cases. “These agencies collaborate all the time. It is nothing new for them to work together to make sure everyone’s interests are protected.”

Frey said it is unfair to hold independent oil companies responsible if damages took place under a different lease ownership, but the process needs to focus on cleaning contaminated property as a bottom line.

“Actually, both these bills are very similar,” Abramson said after comparing his and Allain’s work.

“HB 618 is pretty straight forward and is supported by the business community and legal reform advocates,” Landry said.

“The purpose of the bill is it doesn’t resolve liability, but it puts the cleanup before litigation. The goal was to help get properties mediated more quickly.”

“I went one step further in my amendment,” Allain said. “I also included protection for independent oil producers.”

Allain said his measure protects independents from being held accountable for harm caused by another company possibly 50 or more years earlier.

“Small producers were getting it from both sides when they would have to pay for an original owner’s damage then try to sue for compensation from big companies,” Allain said. “So, my amendment says ‘OK major oil companies, whoever the responsible party is, you can admit to liability in this section of the law so you can get cleanup, but you cannot chase the next guy down the line if you caused the damage.’

“If you admit you are the responsible party, you buy it,” Allain continued. “I think that is a fair thing because it helps the independent guy still in Louisiana, trying to make money, invest in the field. The major oil companies sold these leases many years ago, but they are trying to stick the current [lease holders] with the bill. I just thought that was very unfair.”

“I can’t speak to their intentions, but I can say that if the goal is to expedite cleanup of these properties, adding five and possibly six other agencies into the approval process is not the way to accelerate an already broken system,” Landry said.

“I’m a landowner and have been working with the oil industry for 30 years, but I have no vested interest in [SB-731],” Allain said when asked if his bill carried personal benefits. “It was just the fair thing to do. I made a good faith attempt to listen to everybody and incorporate what would encompass everything. Neal Abramson’s bill is good. I just changed two things that made sense to me.”

“That’s what’s so hilarious about SB-731,” Landry said. “They are suggesting that it is a compromise bill and something everybody should be happy with. From the perspective of grass roots folks, for the pure purpose of working toward a solution to resolve litigation, I can’t imagine that the current version of SB-731 would help do that.”

Legacy lawsuits refer to cases where landowners claim oil producers using their properties left the areas polluted and contaminated. In turn, landowners sought financial compensation and state law required cleanup at the oil producer’s expense.

Companies responsible for the damage might be long gone or sold the lease to another company by the time a case was ready for argument, leaving the newest owner accountable for a previously occurring incident.

In some legacy lawsuits, landowners secured a cash win-fall beyond covering cleanup costs. Frey said that is not the issue at hand.

“Plaintiff’s attorneys have an agenda,” Frey said. “Oil and gas has an agenda. Landowners have an agenda. They all want it cleaned up.”

“It seems this Senate bill will ensure that legacy abuse will continue [by adding more contributors to the mix],” Landry said. “If the goal is to expedite the process and get our land cleaned up more quickly, it is clear the Senate bill is not the solution.”

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A state Senate committee early Thursday advanced an alternative to the Louisiana House-passed legislation that addresses “legacy lawsuits.”

Senate Bill 731 was advanced by the state Senate Natural Resources Committee on a 3-2 vote, which would allow the full Senate to consider the legislation early next week.

The Louisiana House approved House Bill 618 late Wednesday on an 82-19 vote. The measure is awaiting a committee assignment in the state Senate.

Lobbyists and legislators portray HB618 as the oil industry’s solution, while SB731 is what big landowners support.

At issue is litigation stemming from the contamination of land by oil and gas drilling activities over the decades, called legacy lawsuits.

The oil industry say though operators were following legal and accepted practices at the time, the companies are willing to clean up well sites that were damaged by drilling and production years ago. But the civil lawsuits expose the companies to all sorts of other claims that could cost millions of dollars.

The owners of the land counter that oil companies are only willing to clean up after being sued and are trying develop procedures that would limit the amount of cleanup necessary and the amount compensation paid for other damages.

The sponsors of HB618 and SB731 said Thursday their individual measures are attempts to develop legislation after months of fruitless negotiations between oil companies and the landowners. “This is a good honest effort to try to find common ground to propose a solution,” said state Sen. Bret Allain II, R-Franklin, who sponsored SB731.

“Actually, both of these bills are very similar,” said state Rep. Neil Abramson, D-New Orleans, adding that there is plenty of room for agreement.

Abramson notes some significant differences. For instance, Abramson’s bill does not address indemnification. Allain’s includes a way to nullify agreements in which current owners of the right to drill agreed to assume the responsibilities of all the previous owners of the leases.

But the two sides are not far apart on some other issues, Abramson said.

For instance, Allain’s SB731 would require about a half-dozen state agencies to authorize any exceptions to the regulations that govern how extensive cleanup will be.

“The exception is where the value is,” said Jimmy Faircloth, a lawyer representing some of the state’s largest landowners. “The difference in the exceptions could be the difference between $1 million cleanup and a $25 million cleanup.”

Abramson said he could agree with having the agency, whose rules are being used as part of the exception, sign off on the cleanup plan. But a half-dozen authorizations are too many, he said.

Gifford Briggs, vice president of Louisiana Oil and Gas Association, said the provision as written, however, gives veto power to seven state agencies.

Faircloth said the language is broadly written. That language could be tweaked, he said.

“Adding agencies that are supposed to lend some oversight is always good,” said Baton Rouge lawyer Donald Carmouche, who represents landowners in legacy lawsuits. But he opposes both bills, arguing that the current system, though cumbersome, works to clean damaged sites and recompense landowners for their losses.

Briggs said the industry supports Abramson’s HB618 but is open to negotiations on Allain’s SB734.

“The two bills do look similar on the surface. But when you get down into it subtle word changes that have far-reaching impact,” Briggs said. “It’d be hard for the industry to agree with the (Allain) bill without amendments.”

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