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By Brian K. Sullivan

As Mississippi wages a battle against rising river waters along its border with Arkansas, Louisiana is preparing for fights on two major waterways.

A bulge of water rolling south down the Mississippi River drove the crest in Memphis to 47.87 feet, just under the record 48.7 feet set in 1937, and threatens to set more high-water marks before the flow splits in Louisiana, with 70 percent remaining in its channel and 30 percent running down the Atchafalaya River.

As the Mississippi River Commission comes closer to a decision on opening the Morganza spillway and boosting the Mississippi’s flow into the Atchafalaya basin, cities and towns on both waterways are preparing for flooding.

“We’re not waiting for that,” Governor Bobby Jindal said today. “We’re telling our people to prepare for the worst.”

Rising Mississippi waters also threaten operations at 10 Louisiana refineries that account for about 14 percent of U.S. operating capacity.

Flooding may affect 2,264 oil wells producing about 19,000 barrels a day, about 10 percent of Louisiana’s total, said Matt Ross, communications director for the Louisiana Oil and Gas Association. He said about 150 companies operate in the four- parish area in or near the spillway zone.

As much as 252.6 million cubic feet a day of gas may be threatened, Anna Dearmon, a spokeswoman for the Louisiana Department of Natural Resources, said in an e-mail.

Baton Rouge Prepares

City workers in Baton Rouge, Louisiana’s capital, have placed two miles of orange tubing filled with water on top of an earth and concrete levee to raise it above the expected record 47.5-foot (14-meter) crest the National Weather Service says may arrive by May 22.

“It’s been a grueling two-and-a-half to three weeks for us,” Mayor Melvin “Kip” Holdren said to a crowd of more than 200 at a public meeting today. “If there is a breach in the levee, we’re going to have some problems.”

In Melville, Louisiana, about 41 miles (66 kilometers) northwest of Baton Rouge, residents lined the banks of the Atchafalaya to watch its rising water rush under a seven-span lift bridge that carries Union Pacific Corp. trains.

“It looks like it is coming to get us,” said Gerry Krasgrow, who grew up in the town. “It’s like a monster coming down the river.”

Rivers Join

For weeks, the Mississippi and Ohio rivers, swollen by heavy rain and melted snow, have been inundating cities and towns, flooding croplands and disrupting shipping. The Ohio rose to 61.72 feet, a record in Cairo, Illinois, before joining the Mississippi there.

The threat of that flood reaching Baton Rouge and New Orleans has the Mississippi River Commission considering opening the 125 gates of the Morganza Floodway. Built in 1954, the floodway would release 600,000 cubic feet of water per second into central Louisiana and the Atchafalaya River, taking pressure off the Mississippi and the cities downstream, according to the U.S. Army Corps of Engineers.

The decision will be made if the flow at Louisiana’s Red River Landing north of Baton Rouge reaches 1.5 million cubic feet per second, said Ricky Boyette, a corps spokesman. The flow was at 1.46 cubic feet per second today.

Jindal said at a press conference today that the decision could come as early as the day after tomorrow.

‘Comfort’ to City

“We think it would give us a great deal of comfort it they open that,” said William Daniel, interim director of Baton Rouge’s department of public works.

The Corps of Engineers already opened the Bonnet Carre Spillway upstream from New Orleans to siphon Mississippi water into Lake Pontchartrain.

“This is the biggest train wreck in the history of Louisiana, but it’s the slowest train wreck in the history of Louisiana,” said Ryan Heck, who sells pumps for Hertz Service Pump & Compressor in Baton Rouge.

Before the high water hits Louisiana, it has to travel past Mississippi, where officials are most concerned about tributary flooding in the fertile Delta region in the northwestern corner of the state, Governor Haley Barbour said yesterday in a press conference.

Casinos Closed

In Vicksburg, Mississippi, workers at the Rainbow Casino Hotel stacked sandbags to shield it from the river, while 7 feet of water washed into the entrance to Caesars Entertainment Corp.’s Harrah’s Tunica, Mississippi’s largest casino.

The flood has shut 17 of Mississippi’s 19 river-based casinos in the U.S.’s third-largest gaming-employment market, jeopardizing thousands of jobs and $13 million a month in taxes. Flooding will slow the state’s recovery from a recession two years ago, already lagging behind the U.S., said Sohini Chowdhury, an economist with Moody’s Analytics in West Chester, Pennsylvania.

“There is no doubt that the casino closures will weigh on the state’s recovery,” Chowdhury said. “A month of inactivity would deprive the already cash-strapped local and state governments of critical funds.”

As many as 3,900 people may be affected by flooding in northern Louisiana, above the spillway, Jindal said at a press conference yesterday. A century-old secondary levee in northeastern Louisiana was overrun by water for the first time, threatening 10,000 acres of farmland, the Monroe News Star reported today.

Protecting Levees

Opening the Morganza probably will mean the river won’t rise as high as forecast in Baton Rouge, although it may only be a foot lower, said Bryan Harmon, deputy director of the public works department. The river is expected to crest at 19.5 feet in New Orleans, which is protected by levees to 20 feet, unless the spillway is used, according to the Corps of Engineers.

Harmon said he favors anything to help Baton Rouge’s levee.

“A catastrophic failure would impact 100,000 people,” Harmon said.

As a line of last defense, Harmon said the city was keeping all its sandbags and wouldn’t give any to the public. If the levee fails, building a sandbag ring around a house won’t help, he said.

Dikes and sandbags are going up around towns and homes in the spillway area. Jindal said opening the spillway could flood 3 million acres in south Louisiana.

Krasgrow and neighbor Darrell Porche said they wouldn’t evacuate Melville, even though both thought the river would rise high enough to push on the earth levee that protects it. Porche said the levee broke during the 1927 flood.

If the town does flood, “I’ll take my important papers and leave,” Porche said. “I’d have a couple of cats to board.”

“I feel safe in Melville,” Krasgrow said. “We’ve got levees on four sides of us.”

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A coalition of Louisiana’s oil and natural gas producers on Wednesday threw their support behind proposed legislation that they say would tighten the state’s process for handling so-called “legacy sites,” in which landowners have leased property for drilling and later sued for alleged contamination from oil-field wastes and saltwater.

Led by Rep. Page Cortez, R-Lafayette, the plan aims to clarify Act 312 of the 2006 regular session, which gave local courts the authority to determine fault in oil site contamination cases, before the Department of Natural Resources presents a plan for cleanup. The court would have to consider that plan among the proposed solutions for cleanup, then the court would choose a plan and determine the cost.

Under the proposed legislation, introduced last month, state officials would oversee the cleanup and have more authority over the claims process, including those already filed but lacking an approved plan to evaluate potential enviromental damage.

At a press conference Wednesday in Baton Rouge, Don Briggs, president of the Louisiana Oil and Gas Association, an industry group that represents offshore drillers, said the litigation associated with legacy sites can often last several years, further delaying site cleanup as the claims go through the courts.

Briggs said the lawsuits have “created a tremendous burden on these companies.”

Nearly 60 percent of the state’s top 50 crude oil producers are named among about 250 filed lawsuits, and 40 new cases were filed in 2010, the group said Wednesday.

The proposed legislation, assigned to the state House Natural Resources and Environment Committee, has gained support from U.S. Sen. David Vitter, R-La., describing an industry reeling months after the White House lifted the moratorium on deepwater drilling and now facing “an additional hit to job security and job growth.”

“I’m very concerned this declining business climate may be detrimental for the future of Louisiana’s energy jobs and our capital investment in energy exploration and production,” Vitter said in a statement Wednesday.

Industry leaders say a 2003 lawsuit over site contamination that led to a $54 million award, when the land was worth about $108,000, has since spurred more landowners to file claims for damages.

“I don’t think that we can any longer accept years and years and years of delays in court proceedings before we clean up our environment,” Cortez said at the press conference. “I think that needs to be done as soon as possible.”

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By Mike Hasten

BATON ROUGE — Lafayette Rep. Page Cortez says HB563 is designed to force oil and gas companies to clean up land that’s been polluted during exploration and production and possibly head off lawsuits that linger for years.

“My goal is to see the environment is cleaned up,” he said.

Cortez, a supporter of the oil and gas industry, says he knows there are some “bad apples out there” who don’t want to clean up messes that they or their predecessors left behind but others take care of property they’ve leased.

He says he’s also aware of some landowners who just want the money from lawsuits against the companies and don’t clean up their property once they get an award or settlement.

Cortez said his legislation could eliminate some frivolous lawsuits filed by landowners who actually don’t have damage and it could speed up the process for people who want messes cleaned up.

“All it does is make the commissioner of conservation the first stop when there’s a pollution problem,” Cortez said. Current law, adopted in 2006, “says the commissioner can prescribe a remedy. This says he must.”

Another provision of the bill grants the commissioner authority to go to court if companies refuse to follow his orders.

HB563 is a “tweaking” of the 2006 “legacy sites” legislation authored by Sen. Robert Adley, R-Benton.

Adley said at a press conference that his legislation, which became Act 312, requires “money collected in lawsuits must go to the cost of cleanup.” He said he’s found that “companies are willing to clean up anything they’re required to clean up.”

However, when cases were settled out of court “people put the money in their pockets and went home. When they settle suits, lawyers walk away with money, landowners walk away with money and our land is not being cleaned up,” he said.

Don Briggs, president of the Louisiana Oil and Gas Association, said the problem with legacy lawsuits started in 2002 when a court awarded in the Corbello decision “an $83 million settlement for an $83,000 cleanup cost. That created a new cottage industry” of attorneys who filed lawsuits and ones that defended companies.

Briggs said that since then, 243 lawsuits were filed involving 1,500 defendants because, over the years, companies buy and sell rights to explore and produce on the same pieces of properties and some companies change ownership. He said that since there are basically four to six major companies, the rest of the defendants are independent companies.

Of those 243 lawsuits, 60 were found to have no pollution, he said.

The likelihood of being sued has put a damper on companies willing to drill in Louisiana, Briggs said.

David Russell, whose company operates 500 producing wells spread out in 20 oil fields across the state, said he has talked to several independents and “they’re all scared to death” of being hit with lawsuits.

He said that since the oil fields he’s drilling in have been around since the 1950s and ’60s, a number of companies were there before him.

“The problem is plaintiffs are suing for more than the cost of cleanup,” Russell said.

Ginger Sawyer, vice president of the Louisiana Association of Business and Industry, said her organization supports the legislation because “we want to protect the viability of the oil and gas industry.”

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Louisiana Oil and Gas Association Released the following information today:

A coalition of business leaders today announced their support for legislation to ensure that expert evaluation and remediation of “legacy” oilfield site claims take place promptly and that funds said to be needed for remediation are used for that purpose.

Legacy claims seek to address current and past environmental damages that occur on land used for oil and gas exploration and production.

“A handful of plaintiffs lawyers are filing lawsuits and seeking settlements for billions of dollars as they seek to circumvent Act 312, which requires that settlements be approved by the state and administered to remediate legacy sites,” said Don Briggs of the Louisiana Oil & Gas Association which represents

independent oil producers. “The oil and gas industry is already an uncertain and speculative business; abusive legacy lawsuits take risk to a whole new level. Oil and gas companies can explore anywhere, and legacy lawsuits are taking Louisiana out of contention for onshore jobs and investment.”

Act 312 was designed to prevent windfall awards and to require that remediation be approved and monitored by the Louisiana Department of Natural Resources, but it has not worked as anticipated, as some lawyers have found ways to circumvent the system. Legacy lawsuits drag on for years without any

remediation taking place. The proposed legislation would clarify the procedures in Act 312 and require that those who file legacy suits receive a state-­-monitored clean up rather than money that they are not required to spend on the land.

“The concept behind Act 312 was on target-to provide certainty in the system and require that sites be cleaned up,” continued Briggs. “But we’ve seen an increasing number of lawsuits filed by a few lawyers whose goal is not environmental remediation or clean up, but to obtain windfall sums for them and their

clients.”

“By clarifying Act 312, we can make sure that environmental impacts from oilfield activity will be cleaned up more quickly and claims resolved more efficiently,” said state Representative Page Cortez, who introduced the legislation. “This bill ensures that the state experts in the Office of Conservation are brought into the process early to lend their knowledge, expertise, and resources to handle these issues. It clarifies the process and mechanism to remediate any potential contamination as originally intended by the legislature.”

This effort is supported by the Louisiana independent producers, who are concerned that even one legacy lawsuit could close an independent producer’s doors – particularly where the suit seeks inflated monetary damages rather sums that would be used to return the land to state regulatory standards.

Nearly 60 percent of the state’s top 50 crude oil producers are named among the approximately 250 lawsuits that have been filed. Together, these affected companies represent more than half of the state’s crude production as of 2010 – and by extension, a significant portion of Louisiana’s economy. In total, more than 1500 companies and individuals have been named in Louisiana legacy lawsuits.

For David Russell, president of independent oil producer McGowan Working Partners, one element of the problem is insuring his Louisiana operations. “Obtaining proper insurance to cover non sudden or accidental (legacy) pollution liability for oilfield operations is not difficult to get – it’s impossible. After 15 years of providing coverage, my company’s provider declined pollution liability insurance coverage simply due to the legacy lawsuit issues in the state. Developments like this are going to shut this industry down – as far as Louisiana is concerned.”

“The negative impacts associated with legacy lawsuits are felt throughout the Louisiana economy,”

Louisiana Association of Business & Industry (LABI) president Dan Juneau stated. “Not only do these lawsuits continue to diminish the vitality of Louisiana’s oil and gas business – affecting economic investment, oilfield and related jobs and state tax revenues – this issue only compounds our state’s reputation as a place where it can be difficult to grow a business. With the looming budget deficit, Louisiana cannot afford to allow onshore oil and gas exploration to be stifled and must begin to show a willingness to encourage job growth and investment in all business sectors.”

Ginger Sawyer, vice president of LABI, expressed support for resolving the legacy issue. In addition, she read the following statement provided by U.S. Senator David Vitter. “Every Louisianan knows too well that the ongoing shutdown of Gulf production is directly tied to the federal permitting moratorium. But now, Louisianans face an additional hit to job security and job growth tied to onshore production threatened by these legacy lawsuits. I’m very concerned this declining business climate may be detrimental for the future of Louisiana’s energy jobs and our capital investment in energy exploration and production. I strongly endorse the efforts of LOGA, Representative Cortez’s legislation, and those

working to keep our jobs here in Louisiana.”

Background: Under Act 312, through the Office of Conservation of the Department of Natural Resources, the State of Louisiana plays an active role in reviewing claims and in making sure that remediation occurs. Settlements of private litigation are not required to be administered by the Office of Conservation. As a result, without the involvement of the Office of Conservation, there is no assurance that the sites will be cleaned up.

The Louisiana Oil and Gas Association represents the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Its prima our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana’s oil & gas industry and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

The Louisiana Association of Business & Industry Is the largest and most effective business lobbying group in Louisiana. LABI’s mission is to foster a climate for economic growth by championing the principles of the free enterprise system and by representing the general interests of the business community through active involvement in the political, legislative, judicial and regulatory processes.

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By TED GRIGGS

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.

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The American Petroleum Institute, the largest trade group representing the oil and gas industry, said it backs an overhaul of the U.S. tax code rather than ending benefits for selected energy companies.

Increasing taxes paid by Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips, Royal Dutch Shell Plc (RDSA) and BP Plc (BP/), as proposed by Democrats, would lower oil and natural gas output and raise costs for gasoline and electricity, the institute, the U.S. Chamber of Commerce, Americans for Tax Reform and the Small Business & Entrepreneurship Council said today at a Washington news conference.

“Let’s look at everyone, let’s look at every company across the board, not just pick five,” said Brian Johnson, senior tax adviser at the Washington-based American Petroleum Institute. “You’re clearly trying to form winners and losers.”

Senate Democrats propose repealing about $21 billion in tax breaks in the next 10 years for Exxon, Chevron, ConocoPhillips (COP), BP and Shell, including a $12 billion tax deduction for manufacturing. The money would be used to reduce the federal deficit, Jon Summers, a spokesman for Senate Majority Leader Harry Reid, said today in an e-mail.

Oil companies “don’t need taxpayer handouts,” Reid of Nevada said today on the Senate floor. “As gas prices and oil company profits keep rising, each senator will have a chance to stand with the millionaires or middle class.”

Reid didn’t say when the Senate will vote on the Democratic tax plan, which hasn’t been released as legislation.

Republican Opposition

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said repealing tax breaks for the largest oil and gas companies would increase gas prices and make the U.S. more dependent on imported oil.

Republicans don’t support revising the tax code as part of a long-term deficit reduction plan being negotiated with the Obama administration. Senator Jon Kyl of Arizona, the Senate’s No. 2 Republican, said in a May 7 radio interview that he and House Majority Leader Eric Cantor of Virginia oppose tax increases as part of such an agreement. As envisioned by administration, the overhaul would include closing loopholes to help boost revenue to the Treasury.

Exxon, the world’s largest company by market value, had a profit of $10.7 billion in the first quarter, its largest in almost three years, the Irving, Texas-based company said on April 28.

‘Huge Deficits’

An environment of “huge and uncontrolled deficits” and a looming vote to raise the U.S. debt limit are fueling lawmaker backing for fiscal changes, such as raising taxes on energy companies, that may slow the economic growth, said Martin Regalia, chief economist at the U.S. Chamber of Commerce.

“The political dynamics change, and some people think, well, now, we can probably push this through,” he said at the conference. “What you end up with is a messed-up tax code.”

The top U.S. corporate tax rate is 35 percent, though many companies pay much lower effective rates because of breaks and deductions.

A tax overhaul should be coupled with a lower corporate rate, said API’s Johnson. The rate needs to be “in 20s for us to compete internationally,” he said today.

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