Appeals court thwarts oil industry petition, but wetlands case hangs in balance

By Michael Carroll | Feb 24, 2016

Former Louisiana Attorney General James "Buddy" Caldwell  

NEW ORLEANS — Louisiana oil and gas companies lost a legal skirmish last week over a challenge to a flood protection authority’s use of private law firms, but the much larger issue of financial responsibility for coastal wetlands damage remains to be settled.

A state appellate court on Thursday rejected the Louisiana Oil and Gas Association’s lawsuit challenging the Southeast Louisiana Flood Protection Authority-East’s use of private firms to sue nearly 100 oil, natural gas and pipeline companies. The authority’s legal efforts aim to restore coastal wetlands to ensure better natural protection from storm surges.

The state’s 1st Circuit Court of Appeal affirmed a district judge’s earlier dismissal of a challenge by the industry group. The appeals court concluded that former Attorney General Buddy Caldwell acted correctly by approving the flood authority’s decision to hire private counsel and enter into an agreement involving contingency fees as high as 32.5 percent, as well as other financial provisions.

The oil and gas association president, Don Briggs, said the association couldn’t comment in detail on pending litigation.

"We're disappointed by the decision of the court," Briggs told the Louisiana Record.

Robert Mahtook Jr., who represented the association in the case, said the industry’s appeal argued that the flood authority was actually a state entity rather than a “political subdivision.” State entities cannot enter into such contingency fee agreements without first getting approval from the state legislature, Mahtook said.

A three-judge panel for the 1st Circuit, however, sided with the authority, which views itself not as a state-funded entity, but one that receives funding through local property taxes within its jurisdiction for the specific purpose of levee maintenance and construction as well as hurricane and flood protection. The 1st Circuit also affirmed the former attorney general’s approval of the flood authority’s agreement to hire private counsel.

In addition, the attorney general, as counsel to flood protection authorities, is required to represent such districts “only when called upon to do so,” according to the judicial panel decision.

"We argued that the attorney general is the designated authority whenever the authority needs an attorney, but the court disagreed with us again," Mahtook told the Louisiana Record.

The oil and gas association now must bear the costs associated with the decision handed down by the court.

The outcome of the appeal means the next venue in the main wetlands legal battle will be the 5th U.S. Circuit Court of Appeals, where arguments are scheduled to be heard on Monday. The flood authority at that time will challenge a decision by U.S. District Court Judge Nannette Jolivette Brown in February 2015 that dismissed the authority’s lawsuit seeking billions of dollars to restore coastal wetlands degraded by oil industry operations.

Those wetlands are key to protecting Louisiana against catastrophic hurricanes, the authority argued in its original 2013 lawsuit.

Mahtook, of the Lafayette-based firm Mahtook & LaFleur, said that if the 5th Circuit sides with the flood authority and reverses the district court ruling, the oil and gas association may decide to appeal last week's ruling on the private attorney issue to the Louisiana Supreme Court.

"We are studying whether to do that, but it will depend on the 5th Circuit," Mahtook said. "If it affirms the district court, there may be no need for us to seek a writ from the (state) Supreme Court."

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Louisiana Oil & Gas Association Louisiana Supreme Court

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