Issue is 'legacy lawsuits,' civil actions filed by property owners alleging environmental damages and other claims against energy producers that have previously leased a plaintiff's land
BATON ROUGE -- It's a normal day at the Louisiana Capitol when two opposing interests battle openly in a legislative hearing, often with a predetermined outcome. It's not even strange when the business lobby occupies one side of the table, and the plaintiffs the other. But when the businesses involved are oil and gas producers -- from multinational energy giants to Louisiana-based independents -- and the plaintiffs attorneys represent many of the state's wealthiest corporate and individual landowners, well, that's a matchup that raises eyebrows.
Oil and gas industry interests and representatives of large land owners will face off in a Senate committee hearing today.It's billionaires and millionaires versus millionaires and billionaires, all with enough clout to make elected officials reluctant to take sides. And the stakes are high enough to have produced a public spat between the state's two most powerful Republicans: Gov. Bobby Jindal and U.S. Sen. David Vitter.
At issue are the law and regulations that govern "legacy lawsuits," the shorthand for civil actions filed by property owners alleging environmental damages and other claims against energy producers that have previously leased a plaintiff's land. Legislators have attempted to settle the issue before, adopting a new model as recently as 2006. Yet over the past few years, the business lobby has resurrected the fight, arguing that Act 312 -- originally billed as a compromise -- allows "a bonanza for trial lawyers" while failing to restore old oil fields.
The Senate Natural Resources Committee will convene today for the first public hearing of the dispute since a House panel rejected an industry-backed bill last year. None of the dozen-plus bills filed on the topic will be up for a vote. Lawmakers have willingly shelved their proposals for the first month of the session in hopes of some compromise mediated, at Jindal's urging, by Secretary of Natural Resources Scott Angelle.
"The two sides need a little pressure on them," said Sen. J.P. Morrell, D-New Orleans, sponsor of a proposal backed by the energy producers. "I don't know that either one of them really wants to take chances with future Legislatures, not knowing what they are going to look like. You'd be better off just trying for a compromise right now."
The two sides say they are willing to negotiate changes to the way that environmental damages are assessed and how state regulators engage in that process, with the intention to streamline the process. They concede the reality of a slow legal process since the last change to the law: Environmental damage has been mitigated in only a fraction of the 271 cases originating out of Act 312. But a major sticking point remains: whether the Department of Natural Resources should be compelled to set a cost for environmental damage and certify a cleanup plan before any judge or jury considers a case.
Litigation environment
Don Briggs, who runs the Louisiana Oil and Gas Association, said the industry wants an energy firm to be able, independent of any litigation, to accept cleanup responsibility and have the state certify a cleanup plan and its cost, with the result being admissible in a landowner lawsuit.
"We all agree that the responsible party should clean up the land," Briggs said. "Part of the problem is that right now we have this litigation bonanza that gets in the way."
Briggs and other industry leaders, along with Vitter, highlight an analysis by the LSU Center for Energy Studies that suggests the litigation environment has chilled exploration and processing to the effect of 30,000 lost jobs.
Jimmy Faircloth, an attorney for major landowner Roy O. Martin and lead negotiator for the landowners, said it is inappropriate for the state to be required to intervene even before private parties are engaged in litigation, with the state's opinion then mandated as evidence for the defense once a case reaches a jury.
"They want their exposure to be litigated in the executive branch" that is more "subject to political pressures" than a judge and jury, Faircloth said. "And they are engaging in propaganda to misrepresent how this process works in the first place."
The 2006 law, which oil and gas lobbyists were involved in crafting, requires DNR's Office of Conservation to participate in development of a mitigation plan, Faircloth noted. But the state's involvement occurs after a court has judged a party to be responsible or the parties have settled a case. The court still has the final approval of the plans. Those are roles, Faircloth said, that the court should continue to play without a predetermined outcome generated by another branch of government.
'The stakes are high'
Briggs said a required DNR assessment -- or, he said, one from the Department of Environmental Quality -- would not prejudice a jury: "There can be cross examination. There can be alternative evidence and plans." The central purpose, Briggs said, would be to establish a single responsible party rather than subject a litany of defendants -- the multiple producers who may have had a presence on a piece of property over many decades -- to a lawsuit.
As for the idea of a "bonanza" for either landowners or plaintiffs attorneys, Faircloth said, "Listen, the stakes are high. There are good lawyers on both sides doing what good lawyers do."
Complex litigation, he said, typically takes several years, with multiple rounds of pretrial motions, discovery, trial and appeals. A DNR report on the issue, submitted to lawmakers Feb. 1 in compliance with a 2011 legislative resolution, noted that constitutional challenges to Act 312 essentially kept the law from going into operation until 2009, meaning that Act 312 itself does not account for six years of delays.
If land isn't cleaned up once a settlement or verdict is reached, Faircloth said, the job rests with the responsible party or state regulators. State law requires that such judgments be used only for the purposes of addressing the damage. Act 312 does not affect private claims that fall outside the scope of the state's regulatory power, such as claims for crop damage or some lost economic opportunity tied to the environmental damage.
"Those are separate claims, separate damages," Faircloth said, adding that they should not be a part of the debate.
Briggs said industry players are not trying to inoculate themselves from other damages.
Strange bedfellows
The fight illuminates that old political axiom about strange bedfellows.
Morrell, a Democratic attorney whose profile might fit more cleanly with plaintiffs attorneys, is carrying an industry bill. Faircloth is working closely with Sen. Gerald Long, chairman of the Natural Resources Committee and a Republican. Now a private attorney, Faircloth was the first executive counsel to Jindal, who is rarely framed as anything other than a friend to the energy industry. Oil and gas executives, and their lobbyists, clearly are reticent to attack Jindal directly. But Vitter stood in for the industry last week, saying Jindal was exercising a "lack of leadership" by passively standing by with Angelle in his stead.
Vitter said Friday that he believes such a complicated issue, with such powerful interests, can be settled only by Jindal entering the fray directly. By not doing so, Vitter said, a business-friendly governor necessarily sides with "a giveaway to trial lawyers." Vitter, who has met personally with GOP legislators on the issue, said he endorsed the idea of a DNR-certified plan being admissible evidence.
In a written statement, Jindal's press office called Vitter "misinformed" and said Angelle's role has the parties "close to an agreement." The statement continued: "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."
Bill Barrow can be reached at bbarrow@timespicayune.com or 504.826.3452.