Source: The Advocate, March 19, 2012
By: Michelle Millhollon
The Jindal administration is trying to broker a compromise between landowners and the oil and gas industry on legislation involving what are known as “legacy lawsuits.”
At issue is how to resolve often decades-old pollution caused by oil and gas drilling.
The oil and gas industry wants to be able to admit liability for the cleanup, and allow a court to tackle related financial claims such as loss of income from not being able to use polluted land.
Landowners contend that the oil and gas industry is trying to shirk its responsibility.
Foreseeing a nasty battle over the issue at the State Capitol, legislative leaders are hoping that the Jindal administration can help create a compromise.
“It’s important that all the different stakeholders on this issue work together and try to seek consensus,” said Kyle Plotkin, the governor’s communications director. “Where there’s environmental damage, the responsible party must be held responsible for cleaning it up, and the independent oil and gas producers, who are not responsible for the damage, must be protected from lawsuits.”
A recent LSU study concluded that legacy lawsuits caused Louisiana to lose $6.8 billion in drilling investments over the past eight years.
There are 11 bills in the Louisiana House and five in the state Senate related to legacy lawsuits. Backers include the competing interests of the oil and gas industry and landowners.
The legislation includes House Bills 618, 235, 655, 897, 460, 463, 678, 500, 454, 482 and 642 and Senate Bills 443, 555, 240, 528 and 480.
House Speaker Chuck Kleckley, R-Lake Charles, said he is hoping the legislation does not come up for committee hearings until later in the legislative session.
“We continue to encourage both sides to work through it,” Kleckley said.
The legislative session must end by 6 p.m. on June 4.
Several backers of the bills said state Department of Natural Resources Secretary Scott Angelle planned to hold a meeting last week between oil and gas interests and trial lawyers to try to reach a compromise.
Angelle did not respond to multiple requests for comment.
In Louisiana, oil companies’ cleanup costs are not limited to the value of the polluted property.
A landmark case resulted in a $33 million award by a jury to landowners on 320 acres in southwest Louisiana that Shell Oil Co. claimed was worth $108,000.
Don Briggs, president of the Louisiana Oil and Gas Association, said he is not certain a compromise can be reached on the legislation.
He said the industry wants to clean up the pollution and separately litigate private claims such as devalued land.
Currently, Briggs said, oil and gas companies cannot admit liability for the pollution because a remediation plan isn’t determined until the end of the legal process, giving trial lawyers leverage to extort money from them.
“We have compromised everything,” Briggs said. “The industry has been losing and the trial lawyers have been winning.”
On behalf of citizen organizations, public relations consultant Cheron Brylski said landowners are under attack.
“Remarkably, the Louisiana Oil and Gas Association has launched a massive campaign to convince the public that oil and gas operators should not be held to the contracts they signed in order to go onto private lands and produce the oil and gas. Simply put, they want a special favor giving them immunity from contamination —something that no other industry has,” Brylski said in a prepared statement.
State Sen. Gerald Long, R-Winnfield, filed Senate Bill 528 on behalf of attorney Jimmy Faircloth, who represents Roy O. Martin, a lumber company that is a large landowner in Louisiana.
Faircloth used to be Gov. Bobby Jindal’s executive counsel.
Among other things, the legislation asserts that “it is not the intent of the legislature to limit the right of private litigants to assert private claims for remediation damages.”
The oil and gas industry is not in favor of Long’s legislation.
Long said he agreed to file the legislation with the caveat that he would not move forward with the bill until a compromise is reached among trial lawyers, landowners and the oil and gas companies.
He said he thinks there needs to be a balance in which landowners can sue without putting a chokehold on drilling activity.
“It will give some common sense to litigation so litigation can take place but not to the extreme that it literally discourages oil and gas companies from drilling,” Long said.
State Rep. Jack Montoucet, D-Crowley, said he filed legislation to protect people who own property but do not own the mineral rights.
He said an oil company can tear up a farmer’s crop to drill without compensating the farmer.
“An oil company can come in, start drilling and not be accountable to anyone,” Montoucet said.
State Sen. J.P. Morrell, D-New Orleans, is authoring what are being referred to as the oil and gas industry bills.
He said his biggest concern is the ambiguity on how damages are to be spent.
A legislator as well as a lawyer, Morrell said many people assume that if landowners are awarded $30 million by a jury to clean up their property, then they are obligated to do so. He said that is not the case.
He said his goal is to clarify the law and to end cases from dragging on for years.
Morrell said the Jindal administration is attempting to mediate and reach a compromise.
“A good compromise means everyone’s upset,” he said.
State Rep. Page Cortez, R-Lafayette, said the impetus should be on polluted land being cleaned.
“There has been considerable effort for the past several weeks to try to find some resolution,”Cortez said. “This all could be solved, with diplomacy.”