NEW ORLEANS – The full extent of the controversy surrounding legacy lawsuits, in which lawsuits are filed against primarily oil producers over environmental damage, is being examined in a multi-part series by reporters David Hammer and Mike Perlstein that began airing on WWL-TV in New Orleans on July 8.
The legacy lawsuit issue has been one of perennial concern for oil companies and lobbyists, as well as those alleging the lawsuits are abusive, who have squared off against plaintiffs attorneys and large landowners time and again.
A 2012 study released by David Dismukes, LSU Energy Center assistant director and professor, estimated that over the years the state may have missed out on at least $6.8 billion in revenue due to legacy lawsuits. The study also calculated that due to missed opportunities for drilling around 30,000 jobs worth about $1.5 billion in wages statewide may have been created if the threat of legacy lawsuits were removed from the state’s oil production economics.
Shortly after the study was released, plaintiffs’ attorneys unsuccessfully attempted to depose Dismukes in an attempt to reveal that the study was funded by what they deemed as a “who’s who” list of energy industry proponents.
The Dismukes’ study was later refuted in an academic paper by fellow professors Ed Whitelaw and Bryce Ward, of ECONorthwest and the University of Oregon, who called the study biased and “fatally flawed.”
One of the main concerns of those pushing for changes in the way legacy lawsuits are handled is that even when settlements are reached with landowners or judgments are granted, the property in contention is not cleaned up. Although a law was later passed that was meant to separate damages from remediation awards, Hammer and Perlstein report that the effect has not been felt:
"Only 12 of 137 properties with state-verified contamination have been cleaned up to state standards, according to a database kept by the Office of Conservation, a department within the state Department of Natural Resources, which regulates on-shore oil and gas activities," he reports.
One of the larger rewards WWL reveals in its reporting is a $33 million remediation award provided to the Corbello family as part of a $73 million overall award. The Corbellos are the owners of a tract of land in Calcasieu Parish that was only valued at $110,000.
Noting the Corbello case as a prime example of how poorly Louisiana’s sue-and settle system for handling legacy lawsuits works, Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch said, “The defendants paid out more than $33 million for remediation many years ago, and to this day the Corbello property has not been cleaned up. What more proof do you need that these lawsuits are about making green, not being green?”
Over the course of the past five legislative sessions regulations have passed through the Louisiana legislature that sought to more properly regulate the way legacy lawsuit cases are handled and to ensure that the lands are eventually cleaned up and not left unattended. However, laws passed in both 2010 and 2012 were later overturned or ignored by the judicial system.
The latest attempt to remedy this issue was passed in the 2014 legislature and includes a number of provisions designed to curtail meritless litigation and help get properties that are in need of remediation cleaned up more quickly under the supervision of the courts with guidance from the Department of Natural Resources.
In addition, the new legislation provides an exact definition for the term “contamination,” it provides attorneys fees to parties who receive dismissals, such as in cases where lawsuits are brought without hard evidence of contamination, and provides for what kind of damages can be recovered in such suits.
Some believe the new law will prevent lawsuit abuse.
“Our state’s history on legacy issues has been to sue first, and talk later. That model was flipped on its head today. This legislation will help speed up responsible remediation of property,” said Stephen Waguespack, president of the Louisiana Association of Business and Industry, after the law was passed.
Others, such as Jimmy Simien, partner at Baton Rouge personal injury law firm Simien & Simien, claim that the measures were enacted to assuage oil companies and that the DNR will not provide the care necessary to clean up the lands.
“Much more power over landowners’ contract and tort claims against oil companies has been given to the government and the same regulatory agencies that were charged with having prevented these problems in the first place,” he said.
To date, more than 360 legacy lawsuits have been filed in Louisiana, but according to DNR, three quarters of those cases failed to provide evidence of actual damages according to state standards. The 2014 law applies to all existing and future cases. However, as in the past, the new regulations are likely to be challenged in state court and could be overturned.