Landlord and tenant disputes of the oil and gas variety are nothing new in south Louisiana.

Landowners and the oil and gas companies that lease property for exploration and production have long had different notions of what restoring land used to tap some of the state’s first wells in the early 20th century actually means.

It appears that battle will continue this year as industry lobbyists gear up to push for more controls on so-called “legacy” lawsuits, which allow landowners to recover the costs of cleaning up after oil and gas activity.

Unlike other states, the legacy damage awards are not tied to the value of the property in Louisiana. Oil and gas interests says those lawsuits are  growing in number and in award amounts and fear legacy lawsuit abuse will erode business.

Landowners and their attorneys say today’s landowners are simply more clued into the environmental damage years of oil and gas work can do than their ancestors were.

In this week’s CityBusiness I cover an industry proposal that would allow oil and gas companies to admit responsibility for clean up plans outlined by state regulators without having to admit to responsibility for additional private claims.

Indeed, Louisiana Department of Natural Resources records show around 30 legacy suits on average have been filed per year over the past eight years, up from seven filed in 2003. The DNR, the state oil and gas regulator, started monitoring environmental remediation tied to legacy lawsuits in 2006.

Interestingly, about half of the more than 270 cases tracked by the state regulator involved landowners represented by one law firm — Talbot, Carmouche and Marcello of Baton Rouge.

Industry leaders point to the firm as an example the greedy plaintiff lawyers they say form a cottage industry built to bring over-the-top environmental clean up cases to court in a gamble for a large damage award.

Don Carmouche, a partner at the law firm, said his firm is devoted almost exclusively to legacy lawsuit litigation because there is a need there. Carmouche, a former district attorney for Ascension, Assumption and St. James parishes, said he’s represented landowners for more than 20 years and has the expertise to help landowners who are still stumbling across the environmental aftermath of oil and gas work.

“They had no idea what was happening subsurface until one of their tractors fell into an old (oil and gas) pit or their drinking water was contaminated,” Carmouche said.

Like many on the landowner side of the argument, Carmouche sees the effort to push damage assessment to the state as a way for companies to shirk paying for the full cost of environmental clean up. He also questions whether the state has the ability to make international and national corporations that have long left Louisiana pay for past damage as the courts do.

Carmouche says a more appropriate solution may be to alter the state’s indemnity law. Under current law an oil and gas company that lets another entity take over a lease can require the successor to indemnify the original owner of any claims connected to the land, whether or not the original owner was negligent.

Altering the law would link environmental damage to a specific company rather than everyone who worked on the land, including small Louisiana operators, Carmouche said.

Carmouche said landowners have a simple demand in the meantime – that their land is cleaned of pollutants as lease contracts stipulate.

“We’re not asking you to dig to China, we’re asking you to clean it up,” Carmouche said.

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By AMY WOLD

Preparation and monitoring may have kept pollution from oil and gas operations in the Atchafalaya River Basin to a minimum as high water from the Mississippi River pours through the Morganza Spillway,  but officials are being urged to keep a closer eye on potential problems.

Thus far, oil sheen — mainly a result of machinery getting inundated with water — has been detected and addressed in 12 areas, but it’s early in the response, said Chris Piehler, administrator with the state Department of Environmental Quality’s Inspection Division.

A tank collapsed and released about 500 gallons of weathered oil at a site south of Butte La Rose, Piehler said. Boom and other cleanup measures were put in place, he said.

“That was the one exception we’ve had so far,” Piehler said.

Other than the tank collapse, no sheen incidents have involved large amounts of oil, Piehler said, adding that “it really doesn’t take much to make a sheen.”

Detection and response to such incidents are being coordinated through a group that includes the DEQ; the state Department of Natural Resources; the U.S. Coast Guard and the U.S. Environmental Protection Agency, he said.

The overall effort involves flyovers; site inspections; meetings and contact with potentially impacted facilities; and sampling of both water and sediment, officials said.

The Louisiana Bucket Brigade environmental group voiced concerns during a May 18 news conference about how flood waters coming down the Atchafalaya River could affect oil and gas wells; pipelines; and oil waste pits.

The group also wrote to the DEQ and the DNR requesting specifics on their preparation and monitoring plans, said Anna Hrybyk, program manager with the Louisiana Bucket Brigade.

“Every oil and gas well has a pit with it, so there could be thousands,” Hrybyk said. And, she said, that’s in addition to the 4,000 abandoned oil waste pits in the area.

According to DNR, there are 3,131 waste pits registered within the projected flooded area and of those, 98 are open.

A “closed” pit means nothing can be stored inside — if it was a hole in the ground, it has been filled — and, if the pit was contained by levees, the levees have been knocked down, said Anna Dearmon, communications director with DNR.

For the 98 “open” pits, DNR Commissioner of Conservation James Welsh issued an emergency order on May 13 that included having facilities empty active pits of oil-and-gas exploration or production waste.

Hrybyk said there are also 13,000 oil and gas wells in the path of the flooding but DNR officials disputed that number, saying there are only 2,246 active wells in the expected flooded area and of those, 592 are producing wells.

State and federal officials said there has been a lot of preparation to get these facilities and sites ready for flood water in addition to current and post-flood monitoring plans.

The U.S. Army Corps of Engineers; the Geological Survey; the DEQ; the DNR; and the EPA are working together to decide what sampling will be done during and after the flooding, said Dave Bary, a spokesman with EPA Region 6, which includes Louisiana.

“This planning coordination includes potential water sampling to ensure the safety of emergency responders, as well as sampling sediment for re-entry,” according to information from Bary.

In addition, facilities are covered by one or more regulations, including the Oil Pollution Act and the Risk Management Plan provisions of the Clean Air Act, according to information from EPA, all of which was shared May 27 with the Louisiana Bucket Brigade, Bary said.

Hrybyk said she’s talked to state agencies and the EPA, but received very little information about contingency plans for making sure pollution doesn’t get mingled with flood water.

“Our curiosity is what the plans actually say. Are they just cut-and-paste like BP’s walruses,” she said, referring to the oil spill plan that surfaced after the Deepwater Horizon explosion last year and outlined plans for wildlife that don’t exist in the Gulf of Mexico.

Although the environmental group has received information about general monitoring and preparation for the flood, Hrybyk said they’re seeking specifics on the monitoring plan, such as what chemicals are being looked for and how the monitoring will be conducted.

Preparations to avoid impacts started long before the Morganza Spillway in Pointe Coupee Parish was opened on May 14, state officials said, and those plans are continuing.

Before the spillway opened, DEQ called 1,900 permit holders in the basin to discuss their preparations and has had staff looking for potential problems, which led to the removal of more than 200 containers at an abandoned warehouse, DEQ Assistant Secretary Sam Phillips has said.

The corps also held a number of meetings with potentially impacted facilities to discuss flood preparation and the U.S. Coast Guard contacted such facilities, according to information from Bary.

DNR also contacted more than 180 operators of well sites to discuss planning; shutdowns; and how to prevent containers from floating away, according to information from Bary.

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By Daniel McBride

CUT OFF — Towering more than 100 feet above the east side of La. 3235, a Nabor Drilling Co. oil derrick has split the earth nearly 10,000 feet deep. But the drill has another 4,000 feet to go before it will strike black gold, company officials said.

But this last leg of the project is being made more difficult and expensive by parish officials who, project managers contend, are misapplying local and federal regulations.

Parish President Charlotte Randolph disagrees, saying on-site trailers in which workers live fail to meet basic safety codes.

“This has absolutely nothing to do with the rig,” Randolph said. “It has everything to do with the safety issues with the buildings that the people are staying in. … FEMA and the state building code require certain elevations, require certain fire-safety issues.”

But drilling consultant Tony Hines, who is overseeing the project, said parish officials are misapplying those laws. Hines said the operation is a “temporary” work site that is not regulated by FEMA, but rather falls under the jurisdiction of the U.S. Department of Energy and the state Office of Conservation.

Both sides agree that the site falls under the requirements of the U.S. Occupational Safety and Health Administration.

Randolph said she does not know of any disjunction between OSHA and FEMA regulations. FEMA regulations make no special distinction for a “temporary” site, she said, and the Nabor Drilling site falls under the same rules that allow the parish to regulate dwellings at Port Fourchon.

Site managers have sought to meet parish requests in some ways, including adding lattice work to trailer stairwells and elevating those trailers — something that requires two 64-ton cranes working together, according to site operators.

Those regulations belong in the housing industry, project managers said, but not on a private industrial site that is closed to the public.

“The expense of it to the oil company is just going to be astronomical,” Hines said of elevating the trailers. “If you got to go do all this, it’s not even beneficial to come down here.”

Parish officials maintain the regulations do apply, and the company must bring the trailers into compliance.

“We’re doing all of this in the best interest of the people of Lafourche, because any exemptions or exceptions from the building code could result in our suspension from the flood-insurance program, and we can’t risk that for the 96,000 people who live here,” Randolph said. “We’ve been working with the company for a month, and they’ve refused to comply. And that’s disappointing, because we want to encourage business to come here.”

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BATON ROUGE — After a temporary stint as Louisiana’s lieutenant governor, Scott Angelle is back in charge of the Department of Natural Resources.

Angelle said his biggest challenge upon returning this week is mitigating the avalanche of new federal drilling rules being handed down by President Barack Obama’s administration.

Exactly how anti-oil is the national political environment?

The American Petroleum Institute, a pro industry lobby, believes there’s a possibility that the feds will not be able to hold a Gulf of Mexico lease sale in 2011 because of the onslaught of rules and regulations in the wake of the BP oil debacle.

For example, a new set of guidelines is supposed to improve workplace safety by reducing the risk of human error.

Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael R. Bromwich contends that before deepwater drilling resumes in the Gulf, his agency intends to inspect rigs for compliance. Already, the Obama administration has shuttered activities in the eastern Gulf Of Mexico, just a few miles off Florida, where exploration is already banned in state-owned waters there.

The Atlantic seaboard is off limits as well, with critics blaming the BP oil spill earlier this year.

Angelle predicts a protracted battle to protect energy investments in Louisiana.

“It’s going to take every fiber of our work ethic to overcome,” he said. “It’s a tough situation in Washington right now.”

Angelle is also catching up on action closer to home.

During his absence, the Louisiana Tax Commission approved a rule allowing parish assessors to increase the taxable value of horizontal wells.

The oil-and-gas lobby, in response, is mad.

“It’s a big issue and significant,” says Angelle, who was scheduled to be briefed on the rule for the first time this week. “It’s going to be a legal battle. That’s what I’ve heard.”

It’s highly unlikely that the Legislature will get involved, said Don Briggs, president of the Louisiana Oil and Gas Association, but there will be an administrative appeal after the rule takes effect next year.

Public hearings are expected to accompany the appeal process.

Unlike conventional wells that drill down to access a reservoir, horizontal wells include a stretch of pipe that jogs horizontally into the oil zone.

Up until recently, the lateral sections that help define horizontal wells were not taxed by parish assessors.

But in September, the Louisiana Tax Commission approved including lateral sections in the subsurface oil-and-gas property that’s allowed to be assessed.

Oil-and-gas issues in Louisiana now seem synonymous with Angelle’s name — shortly before Thanksgiving, Gov. Bobby Jindal announced that Angelle would remain the state’s point person on federal oil-and-gas permitting issues, which he had taken a lead on as interim lieutenant governor during the BP crisis.

“During his tenure, Scott demonstrated tremendous leadership by working diligently to secure funding from BP for seafood promotion and for our tourism industry, which have suffered in the wake of the Deepwater Horizon oil spill,” Jindal said in a news release. “In short, Scott has been a bulldog in fighting for the people of Louisiana.”

Then there’s politics. After voters elected Jay Dardenne, a Baton Rouge Republican, lieutenant governor on Nov. 2 — but before Angelle returned to his DNR post — Angelle held a fundraiser. But the former St. Martin Parish president has not said what office he is raising money for.

“My friends have more ambition for me than I have for myself,” he said.

While Angelle is no longer in the state’s No. 2 spot, he will remain Jindal’s legislative liaison.

That means he is the chief lobbyist for the administration.

In April, lawmakers convene their regular session.

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The state’s budget shortfall could reach $3 billion by then, and lawmakers will debate issues like taxes, health care and higher education.

“Add in that it’ll be a re-election year, too, and the drama gets ramped up exponentially,” Angelle said. “But I’m convinced that we’ll find a way to get through it. When you put your right hand in the air and agree to serve, that’s what you’re agreeing to do.”

Some environmental groups are asking Gov. Bobby Jindal to increase the fees industries pay to emit air pollution, saying the fees are too low.

In a letter sent Monday to Jindal, the Louisiana Bucket Brigade, the Environmental Integrity Project and a number of community environmental groups said Louisiana collects $15 per ton of pollutant on average while Texas collects on average $32 per ton.

The letter says the state Department of Environmental Quality doesn’t have the funding it needs to run the air quality inspections and other activities required by the Clean Air Act.

A DEQ spokesman disagrees, saying he doesn’t know how Texas runs its fee program, but in Louisiana, the fees collected have covered the costs of the program. DEQ press secretary Rodney Mallett said the exception is this year, when the $4.1 million collected in fees were less than the cost of the $5 million program.

Before DEQ collects more money from industry, there are efficiency measures within the agency that can be made, he said. Also, fee revenues accumulated in the Environmental Trust Fund will help offset the shortfall, he said.

Anne Rolfes, director of Louisiana Bucket Brigade said increasing the fees could add an additional $10 million a year for DEQ.

“We have a lot of examples of how they’re not doing the job they’re supposed to be doing,” Rolfes said. There have been many times over the years when staffing shortages at DEQ have been cited as why follow-ups on complaints can’t be made or why information requests can’t be filled quickly, she said.

According to the Louisiana Bucket Brigade, more than 30 percent of the state’s high priority violations went unaddressed for more than 270 days by the end of 2009.

According to DEQ, of the 22 high priority violations cited, 19 had enforcement actions issued in a timely manner in fiscal year 2009-2010.

“Why would they quarrel with getting additional staff and additional resources,” Rolfes said. “Show me any other agency in the state that would refuse $10 million.”

The nonprofit Environmental Integrity Program conducted the analysis, looking at fee differences. The group was formed in 2002 by former U.S. Environmental Protection Agency enforcement attorneys with a goal of raising awareness and getting action on failure to enforce environmental laws, according to the group.

The letter to Jindal also notes concerns about air pollution around petrochemical plants.

“We have repeatedly asked LDEQ (Louisiana Department of Environmental Quality) for help monitoring emissions around these plants, so the public can better understand what is in the air they breathe, only to be told that the state lacks the resources to respond,” the letter states.

Mallett said the current monitoring network meets all federal requirements and DEQ staff is looking at the network to determine where there might be redundancies. If those are found, that will free up monitors to be placed in other locations, he said.

The environmental groups also claim the state’s enforcement program “is relatively weak and we have no doubt that is partly due to budget shortfalls.” The letter says that information from the EPA shows that in 2008 and 2009 fewer than 50 percent of major facilities in the state received a full Clean Air Act compliance evaluation — something required every two years.

The evaluation schedule for Louisiana was approved by EPA due to the number of extra duties imposed on the staff after hurricanes Gustav and Ike, said Chris Piehler, DEQ surveillance division administrator.

Under that agreement, the 50 percent of the evaluations of major air pollution emitters was done every year within areas of non-attainment — essentially the five-parish Baton Rouge area. Although the state has submitted data to EPA showing that East Baton Rouge, West Baton Rouge, Livingston, Iberville and Ascension currently meet the ozone standard, officially the area is still labeled out of compliance.

In other areas of the state, EPA agreed to allow for 25 percent of the facilities to be evaluated a year, Piehler said, with an average of 33 percent statewide. Last fiscal year, a full 50 percent of the facilities were evaluated, he said. For the 2010-11 fiscal year, EPA agreed that 33 percent of the facilities statewide be evaluated due to the extra workload from the Deepwater Horizon oil leak, he said.

Rolfes said that’s the point of the environmental groups’ request: with additional money, the agency can hire more people so these types of agreements wouldn’t be necessary.

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BATON ROUGE — Louisiana’s environmental regulator needs to correct deficiencies in its accounting practices related to permitting fees and the Waste Tire Management Fund, according to a report released Monday by the state legislative auditor.

The Department of Environmental Quality has two separate database systems for billing and maintenance of permit fees, which were a source of $84.6 million in revenue in fiscal year 2009. The auditor said the two systems need better collaboration, such as accurately sharing information about past due accounts.

The auditor also said the department has not established written policies and procedures for the process used to make payments to waste-tire processors for recycling worn tires. In particular the department has not ensured that payment requests correspond to the supporting documentation before payments are made to processors.

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DEQ disbursed $700,000 from the waste-tire fund to the town of Vidalia in October 2007 under a state agreement before approval of the deal by the state’s division of administration. The money was provided three weeks before final approval of the agreement.

In a response to the audit, the agency agreed with most of the findings and pledged to implement a new data management system to address the problems. DEQ Undersecretary Vince Sagnibene said the early payment to Vidalia was the agency’s only incident of a premature waste-tire disbursement.

Monday’s report was the result of a routine audit conducted of DEQ’s books for the period July 2007 to June 2009.

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Five people have died and 15 people have been injured in Louisiana in the 10 years leading up to 2010 because of ruptured natural gas distribution and transmission lines, according to information from the federal pipeline agency.

In statistics compiled by the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration, the last fatality in the state from onshore transmission lines and distribution lines was in 2007.

In comparison, national statistics show that over that same time period there has been a total of 2,454 incidents with distribution and transmission lines resulting in 461 fatalities and 1,350 injuries, according to the administration’s numbers posted on the Internet.

Interest in the safety of the 50,000 miles of natural gas transmission and distribution lines in Louisiana has increased in light of the Sept. 9 blast in San Bruno, Calif., that destroyed or heavily damaged 56 homes and left four people dead.

In Louisiana, the inspection of natural gas lines that run within the state are inspected by staff at the state Department of Natural Resources Office of Conservation Pipeline Division.

The goal of the division is to annually inspect all of the 296 pipeline operators that fall within the state’s jurisdiction, said Brent Campbell, Pipeline Division director.

Those inspections can range from reviewing tests of valves, going through paperwork reviews to actual inspections of pipelines, he said. For the High Consequence Areas — primarily where there is a higher number of people living or working — those inspections are more stringent because the possible consequences of a failure are so much higher than they would be for pipeline problems going through rural areas or marsh.

For example, pipelines going through populated areas may need to be inspected using a “smart pig,” which is essentially a computer that can be run through the lines to check for pipe integrity, said James Mergist, assistant director of the pipeline division.

In addition to annual inspection of some part of the operations, every three years the staff will do a more comprehensive inspection of each operator, which includes looking over pipelines and record reviews, Campbell said.

The state’s program and operations are also audited by the federal government.

According to information from the safety administration, from 2000 to 2009 there were 69 significant incidents involving transmission lines and 11 significant incidents involving distribution lines in Louisiana.

A significant incident for natural gas has to meet certain criteria such as whether someone requires hospitalization or dies, or it costs more than $50,000 to get back online.

Natural gas transmission lines are the larger “main trunks” of the system with the smaller distribution lines branching off that to deliver natural gas to homes and businesses.

Although gas explosions have destroyed homes and killed people more recently, most of these incidents involve fixtures inside the homes, not the pipeline, said Robert Combs, spokesman for the Baton Rouge Fire Department.

Combs said most of the natural gas explosions they respond to in homes have to do with connections within the house such as appliances that aren’t hooked up properly.

In addition, Campbell said many of the incidents on the smaller distribution lines comes from a third party who breaks the line through other activity such as digging.

“That’s one of our continual messages is, call before you dig,” he said.

In addition to doing public awareness of the 811 phone number people need to call before they dig, the pipeline safety division also holds an annual pipeline safety seminar to help get pipeline operators up to date on the newest regulations and requirements, he said.

Nationally, there are concerns that pipeline safety requirements need to be tightened to ensure better coverage to areas outside the High Consequence Areas.

During a U.S. House of Representative subcommittee on railroads, pipelines and hazardous materials hearing, Carl Weimer, executive director of the Pipeline Safety Trust, pushed for more pipeline miles to be included under more stringent inspections now afforded to areas where there are high population concentrations.

These “integrity management rules” are currently only required in High Consequence Areas, according to the written testimony he gave.

“This is extremely important when you consider that of all the deaths caused by these types of pipelines since 2002 over 75 percent of them have occurred along pipelines that are outside HCAs (High Consequence Areas),” Weimer wrote.

The trust was formed in the wake of the 1999 Olympic Pipeline incident in Bellingham, Wash., where a gas line exploded and killed three people.

The goal of the trust is to work for better pipeline safety regulations and more transparency about how that safety is enforced and inspected.

“Many progressive pipeline operators already apply integrity management rules to significantly more miles of their pipelines than required by federal regulations. These companies do this because they think it is good business, and we couldn’t agree more,” he wrote.

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The U.S. Environmental Protection Agency opposes the “berms” Gov. Bobby Jindal wants to build as protection from oil coming ashore and suggests stopping the work already begun, according to a letter released late Wednesday.

In the letter written to the U.S. Army Corps of Engineers, which would permit Jindal’s $360 million project, Miguel I. Flores, director of the EPA’s Water Quality Protection Division in the region that covers Louisiana, questioned whether the 6-foot high sand bars, called berms, are blocking the oil that spewed for three months after the BP Deepwater Horizon explosion in April.

“Specifically, we question the timeliness of berm construction and the ability of the berm to substantially reduce the amount of oil reaching wetlands, barrier islands, and interior waters, especially in light of the capping of the wellhead,” wrote Flores, of Dallas. The EPA has the legal ability to unilaterally void any permit granted by the Corps should its officials feel the project compromises water quality.

“Given the questionable effectiveness of this proposed project and the potential of significant adverse environmental impacts, we recommend that the Corps not permit construction activities in areas beyond the six reaches already authorized,” Flores wrote.

Jindal did not return calls and e-mails seeking his comment. But his chief aide on the issue, Garret Graves, disagreed with the EPA’s assessment.

“There is clear documentation that the oiling that has happened on these berms is well beyond anything that would be considered light,” Graves said in an interview late Wednesday. He noted that in another part of the EPA letter, Flores raised concerns about the health impacts from “contaminated berm sediments.”

As of late last week, Graves said, workers had collected about 700 barrels of oil on the berms west of the Mississippi River and about 1,500 pounds of oil and debris from those to the east.

Jindal is seeking a regular permit for construction of six berms that were begun under emergency permission granted on May 27. Shaw Environmental and Infrastructure Group, the contractor, reports that about 4 miles of the berms have been built. But state records show about one-third — $120 million — of the money set aside by BP for the six berms has been spent, with about 30 miles to go.

Jindal also wants the Corps’ permission to build 13 other berms for a total of 101 miles.

The EPA’s comments join a group of letters from other federal agencies, such as the U.S. Geological Survey, U.S. Fish and Wildlife Service and National Marine Fisheries Service, that have raised a number of questions about the project from using up scarce sand resources to disrupting marine life habitats.

Critic Barry Kohl, president of the Louisiana Audubon Council, said late Wednesday: “This is not just the environmental community raising concerns about the project and its design. The federal agencies tasked with protecting the nation’s resources have done the same.”

Corps spokesman Ricky Boyett, of New Orleans, said late Wednesday the Corps would send the comments to the state for a response.

Graves said the permit process could take another 12 months for the Corps to complete and by then the work on the six berms under the “emergency use authorization” will be complete.

Flores also asked the Corps to allow no further work on the six berms until the plan is changed to follow the accepted protocol of restoring barrier islands.

Graves said once the oil crisis has passed Jindal wants to use the berms as a start to restoring the barrier islands, which some scientists say would slow hurricane storm surges. He said the costs would be far less because the dredging equipment already is in place.

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